UNITED STATES

               SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, DC 20549


                            FORM 10-Q

                           (Mark one)

   [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934

        For the quarterly period ended September 30, 2002

                               OR

  [  ] 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 jurisdiction             (I.R.S. Employer
      of incorporation)                 Identification No.)


               2311 Cedar Springs Road, Suite 400
                       DALLAS, TEXAS 75201
             (Address of principal executive offices)

                         (214) 777-4100
      (Registrant's telephone number, including area code)


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

On November 11, 2002, 52,323,701 shares of the registrant's
common stock, $.00002 par value per share, were outstanding.

<PAGE>

                       NOVO NETWORKS, INC.

                   QUARTERLY REPORT FORM 10-Q
                              INDEX



                                                       PAGE NO.
PART I:   FINANCIAL INFORMATION

  Item 1.   Financial Statements

       Consolidated Balance Sheets as of
       September 30, 2002 and June 30, 2002.............  3

       Consolidated Statements of Operations
       for the three months ended September
       30, 2002 and 2001................................  4

       Consolidated Statements of Cash Flows
       for the three months ended September
       30, 2002 and 2001................................  5

       Notes to Consolidated Financial Statements.......  6

  Item 2. Management's Discussion and
            Analysis of Financial Condition
            and Results of Operations................... 10

  Item 3. Quantitative and Qualitative
            Disclosures About Market Risk............... 19

  Item 4. Controls and Procedures....................... 19


PART II:    OTHER INFORMATION

  Item 1. Legal Proceedings............................. 19

  Item 2. Changes in Securities and Use of Proceeds..... 20

  Item 3. Defaults Upon Senior Securities............... 20


  Item 4. Submission of Matters to a Vote of
            Securities Holders.......................... 20

  Item 5. Other Information............................  20

  Item 6. Exhibits and Reports on Form 8-K.............  20

SIGNATURES.............................................  21

CERTIFICATIONS.........................................  22


                               -2-


<PAGE>


                       NOVO NETWORKS, INC.
                   CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                 September 30, 2002    June 30, 2002
                                                                 ------------------  ------------------

                                                              <c> (unaudited)     <c>
                    ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                      $        9,213,992  $        9,871,305
  Note receivable and other receivables,
     net of allowance ($3,724,760 and $3,603,299, respectively)                   -                   -
  Prepaid expenses                                                          206,806             275,324
                                                                 ------------------  ------------------
                                                                          9,420,798          10,146,629
                                                                 ------------------  ------------------

LONG-TERM ASSETS
  Prepaid expenses                                                          147,049             187,153
  Deposits                                                                    5,745               5,745
  Property and equipment, net                                               500,547             526,775
  Equity investments                                                              -             264,751
                                                                 ------------------  ------------------
                                                                            653,341             984,424
                                                                 ------------------  ------------------
                                                                 $       10,074,139  $       11,131,053
                                                                 ==================  ==================

                    LIABILITIES & STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                               $           12,142  $           28,335
  Accrued other                                                           1,678,527           1,841,465
  Customer deposits                                                           2,000               2,000
                                                                 ------------------  ------------------
                                                                          1,692,669           1,871,800
                                                                 ------------------  ------------------

COMMITMENTS AND CONTINGENCIES                                                     -                   -

STOCKHOLDERS' EQUITY

  Preferred stock, $0.00002 par value, $1,000 liquidation
     preference per share,   authorized 25,000,000, issued and
     outstanding 26,999 and 26,839,
     liquidation value - $26,999,000 and $26,839,000, respectively                -                   -
  Common stock, $0.00002 par value, authorized 200,000,000,
     issued and outstanding, 52,323,701                                       1,050               1,050
  Additional paid-in capital                                            256,671,658         256,511,879
  Accumulated deficit                                                  (248,291,238)       (247,221,732)
  Deferred compensation                                                           -             (31,944)
                                                                 ------------------  ------------------
                                                                          8,381,470           9,259,253
                                                                 ------------------  ------------------
                                                                 $       10,074,139  $       11,131,053
                                                                 ==================  ==================

</TABLE>


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


                                       -3-


<PAGE>


                               NOVO NETWORKS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

<TABLE>
<CAPTION>

                                                  For the three months ended
                                                          September 30,
                                                  ---------------------------
                                                      2002           2001
                                                  ------------   ------------

                                               <c>            <c>
Revenues                                          $          -   $  8,687,677

Operating expenses:
  Direct costs                                               -      9,537,886
  Selling, general and administrative expenses         724,026      5,868,680
  Impairment loss                                            -        121,932
  Depreciation and amortization                         37,862        644,220
                                                  ------------   ------------
                                                       761,888     16,172,718
                                                  ------------   ------------
Loss from operations, before
     other (income) expense                           (761,888)    (7,485,041)

Other (income) expense:
  Interest (income) expense, net                       (81,468)        40,405
  Equity in loss of investments                        264,751        419,292
  Foreign currency loss                                      -          6,433
  Other                                                (35,444)      (445,789)
                                                  ------------   ------------
                                                       147,839         20,341
                                                  ------------   ------------
Net loss                                              (909,727)    (7,505,382)

Series D preferred dividends                          (159,779)      (147,610)
                                                  ------------   ------------

Net loss allocable to common shareholders         $ (1,069,506)  $ (7,652,992)
                                                  ============   ============

Net loss per share - (basic and diluted)          $      (0.02)  $      (0.15)
                                                  ============   ============
Weighted average number of shares
     outstanding - (basic and diluted)              52,323,701     52,323,701
                                                  ============   ============

</TABLE>

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


                               -4-


<PAGE>



                       NOVO NETWORKS, INC.
              CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (unaudited)


<TABLE>
<CAPTION>

                                                       For the three months ended
                                                                September 30,
                                                       ---------------------------
                                                           2002           2001
                                                       ------------   ------------

                                                    <c>            <c>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                            $   (909,727)  $ (7,505,382)
   Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation and amortization                           37,862        644,220
     Other non-cash charges and credits:
       Stock-based compensation                              31,944        134,569
       Bad debt expense                                     121,461      2,460,000
       Equity in loss of investments                        264,751        419,292
       Loss on sale of property and equipment                     -          1,373
       Impairment loss                                            -        121,932
     Change in operating assets and liabilities:
       Accounts receivable                                        -     (1,684,586)
       Note receivable and other receivables               (121,461)             -
       Prepaid expenses                                     108,622       (224,332)
       VAT receivable                                             -       (331,447)
       Restricted cash                                            -         (7,345)
       Accounts payable                                     (16,193)     5,905,932
       Accrued other                                       (162,938)        17,876
       Accrued interest payable                                   -         60,466
       Customer deposits and deferred revenues                    -       (259,693)
                                                       ------------   ------------
Net cash used in operating activities                      (645,679)      (247,125)
                                                       ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Deposits made                                                  -        (15,517)
   Purchase of property and equipment                       (11,635)             -
   Sale of property and equipment                                 -         87,235
   Distributions from investments                                 -        386,997
                                                       ------------   ------------
Net cash (used in) provided by investing activities         (11,635)       458,715
                                                       ------------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments on capital leases                                     -       (546,041)
                                                       ------------   ------------
Net cash used in financing activities                             -       (546,041)
                                                       ------------   ------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                    (657,314)      (334,451)
CASH AND CASH EQUIVALENTS, beginning of year              9,871,305     16,696,537
                                                       ------------   ------------
CASH AND CASH EQUIVALENTS, end of year                 $  9,213,992   $ 16,362,086
                                                       ============   ============

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

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

   Cash paid for interest                              $          -   $    130,224
                                                       ============   ============
   Cash paid for taxes                                 $          -   $          -
                                                       ============   ============








</TABLE>

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


                               -5-


<PAGE>


                       NOVO NETWORKS, INC.
           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
telecommunications 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, as Adina, Inc., which was incorporated in Delaware on
June 24, 1987.

During fiscal 2002, our principal operating subsidiaries filed
voluntary petitions under Chapter 11 of the bankruptcy code,
described more fully below. We will refer to the subsidiaries
that have filed bankruptcy proceedings under Chapter 11 of the
bankruptcy code as our "debtor subsidiaries" throughout this
Report. At present, our debtor subsidiaries are pursuing a plan
of complete liquidation confirmed by the bankruptcy court.

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

(b)  Bankruptcy Proceedings

On April 2, 2001, another one of our subsidiaries, iGlobal filed
a voluntary petition for protection 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.

On July 30, 2001, the debtor 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
                                         Date      November 11,    Bankruptcy Plan
        Wholly Owned Subsidiary        Acquired        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           9/22/99    Inactive        Yes, Chapter 11
    Services, Inc.

  Novo Networks Global Services, Inc.   9/22/99    Inactive        Yes, Chapter 11



                                 -6-


<PAGE>
                                                   Status as of      Subject to
                                         Date      November 11,    Bankruptcy Plan
        Wholly Owned Subsidiary        Acquired        2002*       or Proceedings?
  ----------------------------------- -----------  -------------  ----------------
  Web2Dial Communications, Inc.         9/22/99    Inactive              No

  Novo Networks Metro Services, Inc.    9/22/99    Inactive        Yes, Chapter 11

  Novo Networks Metro Services          9/22/99    Inactive              No
    (Virginia), 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.

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, Qwest Communications Corporation
and its affiliates ("Qwest"), 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.
During the quarter ended September 30, 2002, 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.

(c)  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. John L. Higgins, a former employee and
consultant. For further details regarding this lawsuit, see Part
II, "Item 1. 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 the benefit of Novo
Networks.



                               -7-


<PAGE>


2.   Liquidity And Capital Resources

At September 30, 2002, we had consolidated current assets of $9.4
million, including cash and cash equivalents of approximately
$9.2 million and $7.7 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 filed
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 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 new secured
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 effective
September of 2001 and December of 2001, respectively. Since the
latter 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
fiscal 2002, 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 other potential
opportunities. As noted above, we do not believe that any of the
traditional funding sources will be available to us and that our
only source of funding will likely be cash on hand. Consequently,
failure to implement a new business plan will jeopardize Novo
Networks' ability to continue as a going concern. Due to these
factors, we are 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.



                               -8-


<PAGE>

3.   General

The accompanying consolidated financial statements as of and for
the three month periods ended September 30, 2002 and 2001, have
been prepared by the Company, without audit, pursuant to the
interim financial statements rules and regulations of the United
States Securities and Exchange Commission ("SEC"). In our
opinion, the accompanying consolidated financial statements
include all adjustments necessary to present fairly the results
of the Company's operations and cash flows at the dates and for
the periods indicated. The results of operations for the interim
periods are not necessarily indicative of the results for the
full fiscal year. The accompanying consolidated financial
statements should be read in conjunction with the Company's
audited consolidated financial statements included in the
Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 2002, as filed with the SEC.

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires us 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 the Company and all wholly owned subsidiaries not
currently in liquidation.

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. As of June 30, 2002, the assets and liabilities of the
debtor subsidiaries were deconsolidated, as the liquidating trust
controls the assets of the debtor subsidiaries. For further
details 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.

Certain fiscal 2002 balances have been reclassified for
comparative purposes to be consistent with the fiscal 2003
presentation. Such reclassifications have no impact on reported
net loss. All significant inter-company accounts have been
eliminated.

4.   Long-lived Assets

The Company's long-lived assets consist of property and
equipment. The Company evaluates impairment of its long-lived
assets in accordance with the Financial Accounting Standards
Board ("FASB") Statement of Financial Accounting Standards
("SFAS") No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets." SFAS No. 144 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. SFAS No. 144 supercedes SFAS No. 121,
"Accounting for the Impairment of Long-lived Assets and for
Long-lived Assets to be Disposed of" and the accounting and
reporting provisions of APB Opinion No. 30. SFAS No. 144 is
effective for fiscal years beginning after December 15, 2001.

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 the Company. No impairment losses were recorded
during the three months ended September 30, 2002. During the
three months ended September 30, 2001, certain network elements
were rejected as part of the bankruptcy proceedings, resulting in
an impairment charge of $0.1 million. During fiscal 2002, long-
lived assets related to the debtor subsidiaries were written off
by recording a charge of approximately $7.4 million to the net
gain on liquidation of debtor subsidiaries account.

Property and equipment consists of leasehold improvements,
computer equipment and furniture and fixtures. Each class of
assets is depreciated over its estimated useful life using the
straight-line method.



                               -9-


<PAGE>

5.   Net Loss 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 less preferred
dividends divided by the weighted average number of common shares
outstanding for the period. 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, an additional
18,924,628 shares of common stock would have been included in the
diluted earnings per share calculation for the quarter ended
September 30, 2002. For purposes of computation of EPS, the
shares issued for the acquisition of 67% of e.Volve (11,365,614
shares during 1999) were deemed to have been in existence for the
entire period.

6.   Equity Investments

We have minority equity investments in development stage Internet
and communications companies. We account for the majority of our
investments using the equity method. For the three months ended
September 30, 2002, our proportionate share of equity losses
totaled approximately $0.3 million. We anticipate that our
strategic investments will continue to incur operating losses,
however we do not expect to record future charges to earnings as
we have recorded our proportionate share of such losses incurred
by the investee up to the cost of that investment. Due to
declining market conditions, negative operating results of the
investee companies, lack of investee liquidity and other
uncertainties surrounding the recoverability of these
investments, we have recorded impairment losses of $13.2 million
in prior fiscal periods. For those equity investments, which have
been impaired completely, we ceased recording our share of losses
incurred by the investee.

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

The following Management's Discussion and Analysis of Financial
Condition and Results of Operations contains forward-looking
statements. We have based these forward-looking statements on our
current expectations and projections about future events.

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 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
          and the liquidation of 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,
          our remaining resources will limit our ability to
          pursue other opportunities to a single investment;
     *    risks associated with preserving the net operating loss
          carryforwards 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.



                              -10-


<PAGE>


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.

Additional factors that could cause actual results to differ
materially from those reflected in the forward-looking statements
include those discussed in this section, elsewhere in this report
and the risks discussed in the "Business Considerations" section
included in our Annual Report on Form 10-K for our fiscal year
ended June 30, 2002, filed with the SEC. Readers are cautioned not
to place undue reliance on these forward-looking statements, which
reflect the Company's analysis, judgment, belief or expectation
only as of the date of this Quarterly Report. We undertake no
obligation to publicly revise these forward-looking statements to
reflect events or circumstances that arise after the date of this
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 fiscal 2002,
our operating subsidiaries filed voluntary petitions under
Chapter 11 of the bankruptcy code. For further details regarding
such filings, see footnote 1(b) entitled "Business - Bankruptcy
Proceedings" in the financial statements. At this same time, we
announced that we were exploring the option of diversifying our
business by entering into other lines of business.

As of September 30, 2002, we effectively had no operations, no
sources of revenue and no profits, and we 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 three months ended September 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 other opportunities. For the three months ended
September 30, 2001, revenues were generated by AxisTel and
e.Volve. e.Volve's only significant customer was Qwest, which
accounted for approximately 64% of consolidated revenues for the
three months ended September 30, 2001. Subsequent to September
30, 2001, AxisTel and e.Volve ceased all operations, and as part
of our debtor subsidiaries' amended plan, substantially all of
the assets associated with such services are being liquidated.

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.

Basis of Presentation

The accompanying consolidated financial statements for the three
months ended September 30, 2002, include the accounts of Novo
Networks and our non-debtor subsidiaries. The debtor subsidiaries
assets and liabilities were deconsolidated effective June 30,
2002. The financial statements, consisting primarily of cash,
investments and office equipment, have been prepared in
accordance with generally accepted accounting principles
applicable to a going concern.



                              -11-


<PAGE>


For the three months ended September 30, 2001, the consolidated
financial statements include Novo Networks and our wholly owned
subsidiaries, including the debtor subsidiaries. The debtor
subsidiary financial statements were prepared in accordance with
AICPA Statement of Position 90-7 "Financial Reporting by Entities
in Reorganization under the Bankruptcy Code." 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 three months ended September 30, 2001, all of the revenues
and direct costs reflected in our consolidated financial
statements resulted from the operations of e.Volve and AxisTel.

Revenues.  For the quarter ended September 30, 2002, there were
no revenues generated. Historically, we derived substantially all
of our consolidated revenues from the sale of telecommuncations
services of AxisTel and e.Volve, two of our indirect wholly-owned
operating subsidiaries. For the quarter ended September 30, 2001,
e.Volve's only significant customer was Qwest, which accounted
for approximately 64% of consolidated revenues. 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. We
are currently not providing any products or services of any kind
(including telecommunications services) to any customers. We
currently do not anticipate that AxisTel, e.Volve or any of the
debtor subsidiaries will have revenue from telecommunications or
any other services.

We do not expect to generate any 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.  For the quarter ended September 30, 2002, there
were no direct costs incurred. Historically, direct costs
included per minute termination charges, lease payments and fees
for fiber optic cable.

For the three months ended September 30, 2001, we provided
wholesale telecommunication services from the United States of
America 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 risks associated with fluctuations in the exchange rate
between the Mexican peso and the United States dollar. We did not
maintain financial hedges against the effects of such
fluctuations. 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 the risks associated with fluctuations in
the exchange rate between the Mexican peso and the United States
dollar.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  These expenses
include general corporate expenses, management salaries,
professional fees, travel expenses, benefits, rent 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 September 30,
2002, we had an outstanding receivable from the debtor
subsidiaries relating to the provision of such administrative
services of approximately $0.6 million. Due to the uncertainty
surrounding the collection of the receivable, it has been fully
reserved.

IMPAIRMENT LOSS.  Impairment loss results from an assessment as
to whether the net book value of the assets can be recovered
through projected undiscounted future cash flows.  Due to the
bankruptcy of the debtor subsidiaries, the Company recorded an
impairment loss during the three months ended September 30, 2001,
related to certain network elements.

DEPRECIATION AND AMORTIZATION.  Depreciation and amortization
represents the depreciation of property and equipment. Due to the
significant impairment losses recorded during fiscal years 2001
and 2002, and the liquidation accounting for our debtor
subsidiaries, our depreciation and amortization costs have
decreased significantly and we do not expect these costs to
increase in the near term.

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 investee's operating losses is included in equity in
loss of investments. We anticipate that our strategic investments
will continue to incur operating losses, however we do not expect
to record future charges to earnings as we have recorded our
proportionate share of such losses incurred by the investee up to
the cost of that investment. For those equity investments that
were impaired completely in prior fiscal periods, we ceased
recording our share of losses incurred by the investee.



                              -12-


<PAGE>


Summary of Operating Results

The table below summarizes our operating results.

<TABLE>
<CAPTION>

                                                          Three Months Ended September 30,
                                                       --------------------------------------
                                                           2002           2001          %
                                                       ------------   ------------   -------

                                                    <c>            <c>             <c>
Revenues                                               $          -   $  8,687,677    100.0%

Operating expenses:
  Direct costs                                                    -      9,537,886    109.8%
  Selling, general and administrative expenses              724,026      5,868,680     67.6%
  Impairment loss                                                 -        121,932      1.4%
  Depreciation and amortization                              37,862        644,220      7.4%
                                                       ------------   ----------------------
                                                            761,888     16,172,718
                                                       ------------   ------------
Loss from operations, before
  other (income)  expense                                  (761,888)    (7,485,041)   (86.2%)

Other (income) expense:
  Interest (income) expense, net                            (81,468)        40,405      0.5%
  Equity in loss of investments                             264,751        419,292      4.8%
  Foreign currency (gain) loss                                    -          6,433      0.1%
  Other                                                     (35,444)      (445,789)    (4.1%)
                                                       ------------   ----------------------
                                                            147,839         20,341
                                                       ------------   ------------
Net loss                                                   (909,727)    (7,505,382)   (86.4%)

Series D preferred dividends                               (159,779)      (147,610)
                                                       ------------   ------------

Net loss allocable
  to common shareholders                               $ (1,069,506)  $ (7,652,992)
                                                       ============   ============

Net loss per share - (basic and diluted)               $      (0.02)  $      (0.15)
                                                       ============   ============
Weighted average number of shares
  outstanding - (basic and diluted)                      52,323,701     52,323,701
                                                       ============   ============


</TABLE>



Three Months Ended September 30, 2002 Compared to Three Months
Ended September 30, 2001

REVENUES.  During the three months ended September 30, 2002, no
revenues were generated as compared to approximately $8.7 million
during the three months ended September 30, 2001. No revenues
were generated based on (i) the termination of operations of our
debtor subsidiaries, which have historically provided all of our
significant revenues and (ii) uncertainty surrounding our plans
to explore other opportunities. Prior to the elimination of our
operations, revenues for the three months ended September 30,
2001, were generated through the sale of (i) 96% voice services
and (ii) 4% broadband services.

No minutes were transmitted during the three months ended
September 30, 2002, versus 210.2 million minutes during the three
months ended September 30, 2001. No revenues were generated
during the three months ended September 30, 2002, due to the
termination of operations of the data, wholesale and prepaid card
businesses for AxisTel, as well as the cessation of the wholesale
business of e.Volve.

We do not expect to generate any 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.   No direct costs were incurred during  the  three
months  ended  September 30, 2002, as compared  to  approximately
$9.5 million during the three months ended September 30, 2001, as
we currently have no operations.



                              -13-


<PAGE>


SELLING, GENERAL AND ADMINISTRATIVE.  Selling, general and
administrative expenses decreased to approximately $0.7 million
during the three months ended September 30, 2002, from
approximately $5.9 million in the prior reporting period, a
decrease of 88%. Selling, general and administrative expenses
during the three months ended September 30, 2002, decreased
primarily due to (i) downsizing of the workforce, (ii) closing
facilities, (iii) termination of operations as a result of the
various bankruptcy proceedings and (iv) professional fees related
to such proceedings. Selling, general and administrative expenses
for the three months ended September 30, 2002, consisted
primarily of (i) $0.3 million of salaries and benefits, (ii) $0.1
million of bad debt expense, (iii) $0.1 million of business
insurance and (iv) $0.2 million of other operating expenses.
Selling, general and administrative expenses for the three months
ended September 30, 2001, consisted primarily of (i) $0.8 million
of salaries and benefits, (ii) $1.4 million of legal and
professional fees, (iii) $2.4 million of bad debt expense, (iv)
$0.4 million of rent expense and (v) $0.9 million of other
operating expenses. We anticipate that selling, general and
administrative expenses will remain relatively constant or
decrease slightly as (i) we currently have no operations, (ii) we
completed personnel reductions during the current quarter period
and (iii) the pending conclusion of the various bankruptcy
proceedings. Our selling, general and administrative expense is
expected to be approximately $0.15 to $0.2 million per month
until we are able to develop an alternative business strategy, if
at all.

IMPAIRMENT LOSS.  During the three months ended September 30,
2001, the Company recorded an impairment loss of approximately
$0.1 million related to the write off of certain network
elements. No impairment was recorded for the three months ended
September 30, 2002.

DEPRECIATION AND AMORTIZATION.  During fiscal 2001, all of our
goodwill was written off. Depreciation recorded on fixed assets
during the current period totaled approximately $38,000 compared
to approximately $0.6 million for the three months ended
September 30, 2001. Reduced depreciation expense during the
current quarter is the result of asset impairment charges and the
write off of capital assets of the debtor subsidiaries resulting
from the bankruptcy proceedings, all of which were taken during
fiscal 2002.

INTEREST (INCOME) EXPENSE, NET.  We recorded interest income, net
of interest expense from cash investments nd the new secured note
from our debtor subsidiaries, of approximately $81,000 for the
three months ended September 30, 2002, compared to interest expense,
net of interest income from cash investments of $40,000 for the
three months ended September 30, 2001. The increase in interest
income during the September 30, 2002 quarter resulted from
(i) recording interest income related to the new secured note that
has been reserved for as bad debt expense in selling, general and
administrative expenses, (ii) not having interest expense from
capital lease obligations during the current quarter, and (iii) the
net decrease in interest income resulting from lower cash balances.

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 of our
investment's operating losses is included in equity in loss of
investments. Equity in loss of investments was approximately $0.3
million during the three months ended September 30, 2002,
compared to approximately $0.4 million in the three months ended
September 30, 2001. The current period loss resulted from our 22%
equity interest in Gemini Voice Solutions (formerly
PhoneFree.com). We anticipate that our strategic investments will
continue to incur operating losses, however we do not expect to
record future charges to earnings as we have recorded our
proportionate share of such losses incurred by the investee up to
the cost of that investment. For those investments that were
impaired completely in prior fiscal periods, we have ceased
recording our share of losses incurred by the investee.

OTHER.  For the three months ended September 30, 2001, we
received a liquidation payment from Launch Center 39 of
approximately $0.4 million.  The distribution was for the
recovery of a previously written off equity investment.



                              -14-


<PAGE>


Liquidity and Capital Resources

At September 30, 2002, we had consolidated current assets of $9.4
million, including cash and cash equivalents of approximately
$9.2 million and $7.7 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 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, our debtor subsidiaries filed
voluntary petitions for protection 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 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. During
the three months ended September 30, 2002, we advanced the trust
$0.1 million in additional funding, for a current balance of
approximately $3.0 million. Due to the uncertainty surrounding
the collection of the new secured note, it has been fully
reserved.

Historically, we derived substantially all of our consolidated
revenues from the sale of telecommunications services of AxisTel
and e.Volve, two of our indirect wholly-owned operating
subsidiaries. For the quarter ended September 30, 2001, e.Volve's
only significant customer was Qwest, which accounted for
approximately 64% of consolidated revenues. 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. We do not expect to
generate any 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.

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 other potential
opportunities. As noted above, we do not believe that any of the
traditional funding sources will be available to us, and our only
source of funding will likely be cash on hand. Due to these
factors, we are 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 business opportunities (See "Plan of Operation-Current
Opportunity," below).



                              -15-


<PAGE>

CASH FLOWS USED IN OPERATING ACTIVITIES.  Cash used in operating
activities for the three months ended September 30, 2002, totaled
approximately $0.6 million compared to approximately $0.2 million
for the three months ended September 30, 2001. The increased use
of cash in our operating activities is primarily attributable to
the downturn of operations resulting from the bankruptcy
proceedings. During the three months ended September 30, 2002,
cash flow used by operating activities primarily resulted from
operating losses, net of non-cash charges, totaling approximately
$0.4 million and an increase in accounts payable and accrued
liabilities of approximately $0.2 million. During the three
months ended September 30, 2001, cash flow used by operating
activities primarily resulted from operating losses, net of non-
cash charges, totaling approximately $3.7 million and an increase
in accounts receivable of approximately $1.7 million, partially
offset by a net increase in accounts payable of approximately
$5.9 million.

CASH FLOWS FROM INVESTING ACTIVITIES.  Net cash used in investing
activities was approximately $12,000 for the three months ended
September 30, 2002, compared to net cash provided by investing
activities of approximately $0.5 million for the prior period
quarter. Net cash provided by investing activities in the current
period consisted of cash paid for the purchase of property and
equipment. Investing activities in the prior period quarter
consisted primarily of cash received from one of our equity
investments of approximately $0.4 million.

CASH FLOWS FROM FINANCING ACTIVITIES.  No financing activities
occurred during the three months ended September 30, 2002, as
compared to net cash used in financing activities for the three
months ended September 30, 2001, of approximately $0.5 million
for capital lease payments.

Ability to Continue as a Going Concern

Our independent accountants have previously included an
explanatory paragraph in their report on our financial statements
for the year ended June 30, 2002 contained in our most recent
Annual Report on Form 10-K, that states that our financial
statements have been prepared assuming that we will continue as a
going concern, but that substantial doubt exists as to our
ability to do so.

Plan of Operation

On  August  21,  2001, we announced that we  were  attempting  to
redeploy  some  or  all of our existing cash assets.  Since  that
time,  we  have discussed and conducted preliminary due diligence
on  various  investment  opportunities.  Nevertheless,  we  later
determined that these specific opportunities were not in our best
interest, and we elected not to pursue them. As described in more
detail  below,  our  Board of Directors,  in  essence,  has  been
granted  unlimited  flexibility in the  investments  that  it  is
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.



                              -16-


<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.

Current Opportunity

As part of our overall plan to redeploy our cash assets, we are
continuing to consider various opportunities across a broad
spectrum of industry groups. In our Annual Report on Form 10-K
for the year ended June 30, 2002, we announced that we were
focusing on an opportunity in Texas. We subsequently decided not
to pursue that particular transaction, which did not result in
any agreement on principal terms.

However, on November 5, 2002, we did enter into a non-binding
letter of intent with a retail food product and service company
in Texas. According to this letter, we would make an initial
investment of $2.5 million in exchange for approimately a 33%
ownership interest in the target company.  The invested proceeds
are intended to be used for concept expansion, capital improvements,
debt reduction and working capital. In addition, we would have a
two-year option to acquire approximately an additional 17% ownership
interest in the target company upon the payment of an additional $1.5
million. The letter of intent also provides for such board
representation in the target company as would be commensurate with
our ownership interest, a fee to be paid to us for the provision of
administrative services to the target company, revised salaries for
the existing officers of the target company, and a procedure through
which management decisions would be made in the target company. Due
to the non-binding nature of the letter of intent, these provisions
are subject to change.



                              -17-


<PAGE>


Although we have not made a conclusive decision with respect to
any particular opportunity or industry group, we have elected to
focus our attention on the target company. At this time, we have
not conducted a sufficient amount of due diligence to determine
whether or not to pursue this opportunity and enter into a
definitive agreement. Nevertheless, we expect that, if a
transaction were to proceed, it would do so relatively quickly
and without further notice to our shareholders.

Some of the risks and difficulties that we expect to encounter in
pursuing the target company 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

     *    the uncertainties inherent in locating, investigating
          and consummating a business transaction of this nature.

The time, effort and expense associated with electing a revised
business model, and therefore, an appropriate investment strategy
for our remaining cash assets, cannot be predicted with any
degree of accuracy. Further, we have expended, and expect to
continue to expend, a significant amount of time dealing with the
administration of the amended plan of our debtor subsidiaries. If
we do not devote adequate time to the investigation, due
diligence and negotiation of appropriate investment
opportunities, we may be unable to successfully redeploy our
remaining cash assets. We cannot assure you that we will be
successful in protecting, segregating or 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.

As of September 30, 2002, we maintained cash and cash equivalents
of $9.2 million. 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. We do not currently believe
that additional funding sources will be available to us in the
near term. Accordingly, the cash assets potentially available for
redeployment will be limited. Consequently, we will probably not
be in a position to make a large number of investments and broad
diversification is unlikely. Our probable 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.

We do not intend to provide information to our stockholders
regarding potential business opportunities being considered by
the Company. 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,
stockholders in Novo Networks will have no effective voice in
decisions made by the Board of Directors and will be entirely
dependent on its judgment in the selection of an appropriate
investment opportunity and the negotiation of the specific terms
thereof.

As previously indicated, we may not re-enter the communications
industry (although we reserve the right to invest in any suitable
opportunity). Consequently, we do not have any history on 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 those with appropriate industry experience;
          and

     *    overcome the reputational issues associated with the
          failure of our previous business model.

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 that if we do redeploy our assets, that we will
successfully address these risks.



                              -18-


<PAGE>

Competition for Suitable Investment Opportunities

We expect to encounter intense competition from other entities
that have a similar business objective. Many 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 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.

Other than the aforementioned non-binding letter of intent, we do
not have any current agreements or understandings with respect to
any investment opportunity. 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;

     *    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 issues relevant to Novo Networks in the debtor
          subsidiaries' amended plan;

     *    the potential impairment of the Company's reputation
          and relationships; and

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


Item 3.   Quantitative and Qualitative Disclosures About Market Risk

Novo Networks is exposed to the impact of interest rate and other
risks. We have investments in money market funds of approximately
$9.2 million at September 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 4.   Controls and Procedures

Within the 90 days prior to the filing date of this Form 10-Q, we
have carried out an evaluation, under the supervision and with
the participation of our Principal Executive Officer and
Principal Accounting Officer, of the effectiveness of the design
and operation of the Company's disclosure controls and procedures
as defined in Rule 13a-14 of the Securities Exchange Act of 1934.
Based upon that evaluation, the Principal Executive Officer and
the Principal Accounting Officer concluded that the Company's
disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company
(including its consolidated subsidiaries) required to be included
in this Quarterly Report on Form 10-Q. There have been no
significant changes in the Company's internal controls or in
other factors, which could significantly affect internal controls
subsequent to the date the Company carried out its evaluation.



                              -19-


<PAGE>


PART II:  OTHER INFORMATION

Item 1.   Legal Proceedings

As previously reported, we and the liquidating trust filed a
lawsuit against Qwest and Mr. Higgins in the Eighth Judicial
District Court of Clark County, Nevada, on June 17, 2002, and
Qwest filed a motion to stay the litigation and compel
arbitration on August 14, 2002. The hearing to determine the
proper forum for the disputes to be heard has been rescheduled
from October 17, 2002 to November 26, 2002.

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
quarterly report because they have not been terminated and there
have not been any material developments during the period ended
September 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 2.   Changes in Securities and Use of Proceeds

None.

Item 3.   Defaults Upon Senior Securities

None.

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

None.

Item 5.   Other Information

None.

Item 6.   Exhibits and Reports on Form 8-K

  (a)  Exhibits

  99.1     Certifications pursuant to Section 906 of the
           Sarbanes-Oxley Act of 2002.

  (b)  Reports on Form 8-K

  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
  September 5, 2002.




                              -20-


<PAGE>



SIGNATURES

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



NOVO NETWORKS, INC.


Date:  November 14, 2002      By:  /s/  BARRETT N. WISSMAN
                                  --------------------------
                                  Barrett N. Wissman
                                  President and Director
                                 (Principal Executive Officer)



Date:  November 14, 2002      By:  /s/  SUSIE C. HOLLIDAY
                                  --------------------------
                                  Susie C. Holliday
                                  Senior Vice President
                                  (Principal Accounting Officer)












                            -21-


<PAGE>


I, Barrett N. Wissman, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Novo
     Networks, Inc.

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

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

4.   Our other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and
     procedures (as defined in Exchange Act Rules 13a-14 and 15d-
     14) for Novo Networks and we have:

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

     b)   evaluated the effectiveness of our disclosure controls
          and procedures as of a date within 90 days prior to the
          filing date of this quarterly report (the "Evaluation
          Date"); and

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

5.   Our other certifying officer and I have disclosed, based on
     our most recent evaluation, to our auditors and our audit
     committee:

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

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

6.   Our other certifying officer and I have indicated in this
     quarterly report whether or not there were significant
     changes in internal controls or in other factors that could
     significantly affect internal controls subsequent to the
     date of our most recent evaluation, including any corrective
     actions with regard to significant deficiencies and material
     weaknesses.

Date: November 14, 2002

/s/  BARRETT N. WISSMAN
--------------------------------------
Barrett N. Wissman
President and Director
(Principal Executive Officer)



                              -22-


<PAGE>


I, Susie C. Holliday, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Novo
     Networks, Inc.

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

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

4.   Our other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and
     procedures (as defined in Exchange Act Rules 13a-14 and 15d-
     14) for Novo Networks and we have:

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

     b)   evaluated the effectiveness of our disclosure controls
          and procedures as of a date within 90 days prior to the
          filing date of this quarterly report (the "Evaluation
          Date"); and

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

5.   Our other certifying officer and I have disclosed, based on
     our most recent evaluation, to our auditors and our audit
     committee:

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

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

6.   Our other certifying officer and I have indicated in this
     quarterly report whether or not there were significant
     changes in internal controls or in other factors that could
     significantly affect internal controls subsequent to the
     date of our most recent evaluation, including any corrective
     actions with regard to significant deficiencies and material
     weaknesses.

Date: November 14, 2002

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




                              -23-



<PAGE>

                        INDEX TO EXHIBITS

   EXHIBIT
   NUMBER     DESCRIPTION
------------- --------------------------------------------------


    99.1      Section 906 Certifications Pursuant to Section 906
              of the Sarbanes-Oxley Act of 2002.