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 March 31, 2003

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

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

On May 14, 2003, 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 March 31,
              2003 and June 30, 2002                        3

            Consolidated Statements of Operations for
              the Three and Nine Months Ended March 31,
              2003 and 2002                                 4

            Consolidated Statements of Cash Flows for
              the Nine Months Ended March 31, 2003
              and 2002                                      5

       Notes to Consolidated Financial Statements           6

  Item 2.   Management's Discussion and Analysis
              of Financial Condition and Results of
              Operations                                   14

  Item 3.   Quantitative and Qualitative Disclosures
              About Market Risk                            27

  Item 4.   Controls and Procedures                        27


PART II:    OTHER INFORMATION

  Item 1.   Legal Proceedings                              27

  Item 2.   Changes in Securities and Use of Proceeds      28

  Item 3.   Defaults Upon Senior Securities                28

  Item 4.   Submission of Matters to Vote of
              Securities Holders                           28

  Item 5.   Other Information                              28

  Item 6.   Exhibits and Reports on Form 8-K               28

SIGNATURES                                                 29

CERTIFICATIONS                                             30


                               -2-

<PAGE>

                       NOVO NETWORKS, INC.
                   CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                                                                                       March 31,      June 30,
                                                                                         2003           2002
                                                                                     ------------   ------------
ASSETS                                                                               (unaudited)

                                                                                  <c>            <c>
CURRENT ASSETS
   Cash and cash equivalents                                                         $  5,182,685   $  9,871,305
   Note receivable and other receivables,
    net of allowance ($3,938,080 and $3,603,299, respectively)                                  -              -
   Prepaid expenses                                                                       465,732        275,324
                                                                                     ------------   ------------
                                                                                        5,648,417     10,146,629
                                                                                     ------------   ------------

LONG-TERM ASSETS
   Prepaid expenses                                                                        66,840        187,153
   Deposits                                                                                 5,745          5,745
   Property and equipment, net                                                            416,337        526,775
   Equity interests                                                                     2,368,494        264,751
                                                                                     ------------   ------------
                                                                                        2,857,416        984,424
                                                                                     ------------   ------------
                                                                                     $  8,505,833   $ 11,131,053
                                                                                     ============   ============

LIABILITIES & STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable                                                                  $     11,100   $     28,335
   Accrued other                                                                        1,614,185      1,841,465
   Customer deposits                                                                        2,000          2,000
                                                                                     ------------   ------------
                                                                                        1,627,285      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                                                         256,997,330    256,511,879
   Accumulated deficit                                                               (250,119,832)  (247,221,732)
   Deferred compensation                                                                        -        (31,944)
                                                                                     ------------   ------------
                                                                                        6,878,548      9,259,253
                                                                                     ------------   ------------
                                                                                     $  8,505,833   $ 11,131,053
                                                                                     ============   ============


</TABLE>

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



                               -3-

<PAGE>





                       NOVO NETWORKS, INC.
              CONSOLIDATED STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>
                                                                For the Three Months           For the Nine Months
                                                                   Ended March 31,               Ended March 31,
                                                            ---------------------------   ---------------------------
                                                                2003           2002           2003           2002
                                                            ------------   ------------   ------------   ------------
                                                                     (unaudited)                       (unaudited)

                                                         <c>            <c>            <c>            <c>
Revenues                                                    $          -   $          -   $          -   $ 10,486,982

Operating expenses:
 Direct costs                                                          -         94,031              -     14,614,766
 Selling, general and administrative expenses                  1,035,099      1,813,057      2,553,094     10,183,242
 Impairment loss                                                       -              -              -        121,932
 Depreciation and amortization                                    36,555         51,749        113,012      1,337,033
                                                            ------------   ------------   ------------   ------------
                                                               1,071,654      1,958,837      2,666,106     26,256,973
                                                            ------------   ------------   ------------   ------------
Loss from operations, before
   other (income) expense                                     (1,071,654)    (1,958,837)    (2,666,106)   (15,769,991)

Other (income) expense:
  Interest (income) expense, net                                (108,072)       (60,036)      (262,094)        62,209
  Equity in loss of investments                                  131,506        366,478        396,257      1,429,127
  Foreign currency loss                                                -          3,007              -         98,135
  Net (gain) loss on liquidation of debtor subsidiaries          (74,000)     1,634,054       (288,000)   (14,067,282)
  Other (income) expense                                         (62,515)        73,114        (99,620)      (377,133)
                                                            ------------   ------------   ------------   ------------
                                                                (113,081)     2,016,617       (253,457)   (12,854,944)
                                                            ------------   ------------   ------------   ------------

Net loss                                                        (958,573)    (3,975,454)    (2,412,649)    (2,915,047)

Series D preferred dividends                                    (162,672)      (152,548)      (485,451)      (455,116)
                                                            ------------   ------------   ------------   ------------

Net loss allocable to common shareholders                   $ (1,121,245)  $ (4,128,002)  $ (2,898,100)  $ (3,370,163)
                                                            ============   ============   ============   ============

     Net loss per share                                     $      (0.02)  $      (0.08)  $      (0.06)  $      (0.06)
                                                            ============   ============   ============   ============

     Weighted average number of shares outstanding            52,323,701     52,323,701     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


<TABLE>
<CAPTION>
                                                            Nine Months Ended March 31,
                                                            ---------------------------
                                                                2003           2002
                                                            ------------   ------------
                                                                     (unaudited)

                                                         <c>            <c>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                 $ (2,412,649)  $ (2,915,047)
   Adjustments to reconcile net loss to net cash used
     in operating activities:
     Depreciation and amortization                               113,012      1,337,033
     Other non-cash charges and credits:
       Stock-based compensation                                   31,944        366,521
       Bad debt expense                                          434,352      2,460,000
       Equity in loss of investments                             396,257      1,429,127
       Net gain on sale of fixed assets                           (1,661)        63,680
       Impairment loss                                                 -        121,932
       Write off of VAT receivable                                     -      1,405,929
       Net gain on liquidation of debtor subsidiaries           (288,000)   (14,067,282)
     Change in operating assets and liabilities:
       Accounts receivable                                             -       (316,929)
       Note receivable and other receivables                    (434,352)             -
       Prepaid expenses and other receivables                    (70,095)       196,720
       Restricted cash                                                 -         18,830
       Accounts payable                                          (17,235)     7,061,854
       Accrued other                                              60,720       (755,955)
       Accrued interest payable                                        -        115,688
       Customer deposits and deferred revenue                          -       (257,693)
                                                            ------------   ------------
Net cash used in operating activities                         (2,187,707)    (3,735,592)
                                                            ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Deposits received                                                   -         23,080
   Purchase of property and equipment                            (11,633)             -
   Sale of property and equipment                                 10,720        183,326
   (Investments in) distributions from investments            (2,500,000)       391,479
                                                            ------------   ------------
Net cash (used in) provided by investing activities           (2,500,913)       597,885
                                                            ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments on capital leases                                          -     (1,119,486)
                                                            ------------   ------------
Net cash used in financing activities                                  -     (1,119,486)
                                                            ------------   ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                       (4,688,620)    (4,257,193)
CASH HELD BY SUBSIDIARIES IN BANKRUPTCY TO BE LIQUIDATED               -         72,716
CASH AND CASH EQUIVALENTS, beginning of year                   9,871,305     16,696,537
                                                            ------------   ------------
CASH AND CASH EQUIVALENTS, end of period                    $  5,182,685   $ 12,512,060
                                                            ============   ============

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

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

     Cash paid for:
        Interest                                            $          -   $    496,839
        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 the
operating subsidiaries and the registrant under the Securities
Exchange Act of 1934. Prior to September 22, 1999, we were a
publicly held company with no material operations. We were
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 telecommunications operating
subsidiaries, including AxisTel Communications, Inc. ("AxisTel"),
e.Volve Technology Group, Inc. ("e.Volve") and Novo Networks
Operating Corp. ("NNOC") filed voluntary petitions under Chapter
11 of Title 11 of the United States Code (the "Bankruptcy Code")
as described more fully below. We will refer to the subsidiaries
that have filed for bankruptcy protection as our "debtor
subsidiaries" throughout this quarterly report (this "Quarterly
Report"). During the second quarter of fiscal 2003, we purchased
an ownership interest in an Italian gelato company, as described
more fully below.

On December 19, 2002, we executed a purchase agreement (the
"Purchase Agreement") with Ad Astra Holdings LP, a Texas limited
partnership ("Ad Astra"), Paciugo Management LLC, a Texas limited
liability company and the sole general partner of Ad Astra
("PMLLC"), and the collective equity owners of both Ad Astra and
PMLLC, being Ugo Ginatta, Cristiana Ginatta and Vincent Ginatta
(collectively, the "Equity Owners"). Pursuant to the Purchase
Agreement, we acquired a 33% membership interest in PMLLC and a
32.67% limited partnership interest in Ad Astra, which results in
our holding an aggregate interest, including the PMLLC general
partnership interest, in Ad Astra equal to 33% (the "Initial
Interest"), for a purchase price of $2.5 million.

In addition, we hold an option, exercisable for a period of two
years from December 19, 2002, to purchase a 17.3% membership
interest in PMLLC and a 17.127% interest in Ad Astra (the
"Subsequent Interest") for $1.5 million. Together, the Initial
Interest and the Subsequent Interest would result in our holding
a 50.3% membership interest in PMLLC and a 49.797% limited
partnership interest in Ad Astra, for a total aggregate interest
in Ad Astra, including the PMLLC general partner interest, of
50.3%.

Collectively, Ad Astra and PMLLC, through a number of wholly
owned subsidiaries, own and manage a gelato manufacturing,
retailing and catering business operating under the brand name
"Paciugo." Throughout this Quarterly Report, we refer
collectively to Ad Astra, PMLLC, and their subsidiaries as
"Paciugo." Under the terms of the Purchase Agreement, we provide
services to support the business operations of Paciugo, including
administrative, accounting, financial, human resources,
information technology, legal, and marketing services (the
"Support Services"). The Support Services expressly exclude
providing certain capital expenditures as well as services that
are customarily performed by third party professionals. In
exchange for our providing the Support Services, we receive an
annual amount equal to the greater of $0.25 million or 2% of the
consolidated gross revenues of Paciugo (excluding any gross
revenues shared with third parties under existing contractual
arrangements). Effective January 1, 2003, we receive a monthly
payment from Paciugo in the amount of $20,833, with the positive
cumulative difference, if any, between 2% of such gross revenues
and $20,833 per month to be paid within ten days of the end of
such month. Paciugo may not cancel or alter the scope of the
Support Services without our prior approval or consent.

We are entitled, under the terms of the Purchase Agreement, to
such representation on the governing board of PMLLC (the "Board
of Managers") as is proportionate to our ownership interests
therein. Effective as of December 19, 2002, PMLLC's Board of
Managers was composed of Ugo Ginatta and Cristiana Ginatta, as
the Equity Owners' designees, and Barrett N. Wissman, as our
designee. PMLLC, as the sole general partner of Ad Astra, is
empowered to make all decisions associated with Ad Astra, except
for those requiring the approval of the limited partners, as set
forth in the limited partnership agreement of Ad Astra or under
applicable law.


                               -6-

<PAGE>


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.
Presently, we record other income from the provision of the
Support Services to Paciugo as agreed upon in the Purchase
Agreement.

(b)  Bankruptcy Proceedings

On April 2, 2001, another one of our subsidiaries, Internet
Global Services, Inc. ("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 (the
"Texas Bankruptcy Court") due to iGlobal's inability to service
its debt obligations and contingent liabilities, as well as 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 during fiscal 2001, the majority of which
related to non-cash goodwill recorded in connection with our
acquisition of iGlobal. During April of 2003, iGlobal's trustee
filed an adversary proceeding against us. For further details
regarding this proceeding, see Note 8 "Legal Proceedings."

On July 30, 2001, the debtor subsidiaries filed voluntary
petitions for protection under the Bankruptcy Code in the United
States Bankruptcy Court for the District of Delaware (the
"Delaware Bankruptcy Court") 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.(1)

<TABLE>
<CAPTION>

                                                                     Subject to
                                         Date      Status as of    Bankruptcy Plan
        Wholly Owned Subsidiary        Acquired    May 14, 2003(2) or Proceedings?
  ----------------------------------- -----------  -------------  ----------------
  
                                 <c>          <c>            <c>
  Novo Networks Operating Corp.          2/8/00(3) Active          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
  Novo Networks Metro Services, Inc.    9/22/99    Inactive        Yes, Chapter 11
  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(3)  Active(4)            No


</TABLE>

     (1)  Web2Dial Communications, Inc., Novo Networks Metro
          Services (Virginia), Inc., Novo Networks Media Services,
          Inc. and Novo Networks (UK) Ltd., which are not debtor
          subsidiaries, have been dissolved.

     (2)  "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 an estate
          pursuant to a bankruptcy filing or plan.

     (3)  Indicates date of incorporation, if organized by us.

     (4)  This entity has no operations other than to hold
          certain equity interests.


                               -7-

<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, Qwest Communications Corporation
(and its affiliates) ("Qwest"), a determination was made that the
continued viability of the debtor subsidiaries was not realistic.
An amended plan and disclosure statement were filed with the
Delaware 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 the Bankruptcy Code, instead
of a reorganization as previously planned.

On January 14, 2002, the Delaware Bankruptcy Court approved the
amended disclosure statement, with certain minor modifications,
and on March 1, 2002, the Delaware Bankruptcy Court confirmed the
amended plan, 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 liquidating 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 first quarter of fiscal 2003, we provided additional
funding of $0.1 million to the liquidating trust. We are in the
process of amending the new secured note to approximately $3.5
million, which includes $0.35 million of additional funding (yet
to be paid) to the liquidating trust. We expect to finalize this
amendment in the near future. Interest for the new secured note
is accrued on a monthly basis. No assurance can be given that
the liquidating trust will be successful in liquidating
substantially all of the debtor subsidiaries' 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 described in
the amended plan and disclosure statement.

(c)  Litigation Against Qwest

On June 17, 2002, we, along with 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. For further details regarding this litigation, see
Note 8 "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.

2.   Liquidity and Capital Resources
     -------------------------------

At March 31, 2003, we had consolidated current assets of $5.6
million, including cash and cash equivalents of approximately
$5.2 million and net working capital of $4.0 million.
Historically, we have funded our subsidiaries 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) expenses related to the bankruptcy
plan administration process. Due to our financial performance,
the lack of stability in the capital markets and the economy's
downturn, our only current source of funding is expected to be
cash on hand.

As discussed in Note 1(b), our debtor subsidiaries filed
bankruptcy proceedings under 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 this
credit facility to approximately $1.9 million, which was 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. The 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. In
addition, the credit facility maintained a default interest rate
of prime plus 5.0% per annum.


                               -8-

<PAGE>

In connection with the amended plan being confirmed by the
Delaware 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, certain payroll expenses, 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, certain payroll expenses
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 first quarter of
fiscal 2003, we provided additional funding of $0.1 million to
the liquidating trust. We are in the process of amending the new
secured note to approximately $3.5 million, which includes $0.35
million of additional funding (yet to be paid) to the liquidating
trust. We expect to finalize this amendment shortly. Interest for
the new secured note is accrued on a monthly basis. Due to the
uncertainty surrounding the collection of the new secured note,
it has been fully reserved.

For the six months ended December 31, 2001, AxisTel and e.Volve
provided telecommunications services. These debtor subsidiaries
ceased operations effective September of 2001 and December of
2001, respectively. Since the latter date, neither we 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' amended plan,
certain causes of action have been brought against Qwest.

We currently anticipate that we will not generate any revenue
from operations 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, (ii) the early stages of our relationship
with Paciugo after our purchase of the Initial Interest and the
promulgation of its business plan, (iii) the uncertainties
surrounding our potential acquisition of the Subsequent Interest
or, potentially more than the Subsequent Interest in Paciugo, and
(iv) the uncertainties surrounding other potential business
opportunities that we may consider, if any. However, if we choose
to purchase a greater than 50% interest in Paciugo (such as the
acquisition of the Subsequent Interest), we expect to consolidate
its revenues and operations into our consolidated financial
statements at that time. In the meantime, we will continue to
record other income from the provision of the Support Services to
Paciugo as agreed upon in the Purchase Agreement. For further
details regarding the Support Services, see Note 1(a) entitled
"Business - General."

As noted above, we do not believe that any of the traditional
funding sources will be available to us and that our only option
will likely be cash on hand. Consequently, our failure to (i)
purchase the Subsequent Interest or any additional interest in
Paciugo,  (ii) implement a successful business plan for Paciugo
and (iii) identify other potential business opportunities,  if
any, will jeopardize our 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 bankruptcy plan
administration process, (ii) our ongoing general and
administrative expenses and (iii) the undetermined capital
requirements of Paciugo and such other business opportunities as
may arise in the future, if any.

3.   General
     -------

The accompanying consolidated financial statements as of and for
the three and nine month periods ended March 31, 2003, and 2002,
respectively, have been prepared by us, 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 our 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 audited consolidated financial
statements included in our Annual Report on Form 10-K for the
fiscal year ended June 30, 2002.

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 disclosures 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 not
currently involved in the bankruptcy plan administration process.


                               -9-

<PAGE>


The consolidated financial statements for us and our
subsidiaries, which are not involved in such bankruptcy
proceedings have been prepared in accordance with accounting
principles generally accepted in the United States of America as
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 their assets. For further
details regarding the bankruptcy proceedings, see Note 1(b)
entitled "Business - Bankruptcy Proceedings." We have recorded an
accrual of approximately $0.9 million in the accompanying
financial statements for the estimated costs of liquidating
substantially all of the assets and liabilities of the debtor
subsidiaries. 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 the
reported net loss. All significant intercompany accounts have
been eliminated.

4.   Long-lived Assets
     ----------------

Our long-lived assets consist of property and equipment. We
evaluate impairment of our 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.

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 the impairment
occurs. No impairment losses were recorded during the nine months
ended March 31, 2003. However, during the nine months ended
March 31, 2002, 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 $15.7 million to the net gain on liquidation of the
debtor subsidiaries' account.

Property and equipment consist 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.

5.   Net Earnings (Loss) Per Share
     -----------------------------

We calculate earnings (loss) per share in accordance with SFAS
No. 128, "Earnings Per Share" ("EPS"). SFAS No. 128 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 (loss) 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. For the nine months ended March 31, 2003, and 2002,
respectively, diluted EPS are not presented, as the assumed
conversion would be antidilutive.

6.   Equity Interests
     ----------------

Subsidiaries whose results are not consolidated, but over whom we
exercise significant influence, are generally accounted for under
the equity method of accounting.  Whether we exercise significant
influence with respect to a subsidiary depends on an evaluation
of several factors, including, without limitation, representation
on the subsidiary's governing board 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, the subsidiary's accounts will not be reflected in
our consolidated financial statements. Our proportionate share of
a subsidiary's operating earnings and losses will be included in
the caption "Equity in Earnings or Loss of Investments" in our
consolidated statements of operations.



                              -10-

<PAGE>

Currently, we have minority equity interests in Paciugo and certain
development stage Internet and communications companies. During
the second fiscal 2003 quarter, we purchased the Initial Interest
in Paciugo. For further details regarding this transaction, see
Note 1(a) "Business - General." The Initial Interest is accounted
for under the equity method. At such time as our aggregate
ownership interest in Paciugo is increased to greater than 50%
(such as the acquisition of the Subsequent Interest), we will use
the consolidation method of accounting. Companies in which we
directly or indirectly own more than 50% of the outstanding
voting securities are generally accounted for in such a way.
Under the consolidation method, Paciugo's accounts will be
reflected within our financial statements.

We account for the majority of our interests using the equity
method. For the nine months ended March 31, 2003, our
proportionate share of equity losses totaled approximately $0.4
million. The value of our outstanding equity interests, other
than Paciugo, have been reduced to zero either by recording our
proportionate share of losses incurred by the subsidiary up to
the cost of that interest or from impairment losses. Due to
declining market conditions, negative operating results of those
companies, lack of subsidiary liquidity and other uncertainties
surrounding the recoverability of those interests, we recorded
impairment losses of $13.2 million in prior fiscal periods. For
those equity interests previously impaired completely, we ceased
recording our share of losses incurred by the subsidiary.

Equity interests consists of the following at March 31, 2003:


<TABLE>
<CAPTION>

                                                % Ownership           Accounting
         Company Name                        Common    Preferred        Method           Balance
------------------------------------------------------------------------------------------------------

                                          <c>       <c>            <c>            <c>
Paciugo                                       33.0%       0.0%          Equity       $    2,368,494
Gemini Voice Solutions (f/k/a PhoneFree)      17.2%      31.7%          Equity                    -
ORB Communications & Marketing, Inc.          19.0%     100.0%          Equity                    -
FonBox, Inc.                                  14.0%      50.0%          Equity                    -
Launch Center 39 ("LC39")                      0.0%       2.1%          Cost                      -
Spydre Labs                                    5.0%       0.0%          Cost                      -
                                                                                     --------------
                                                                                     $    2,368,494
                                                                                     ==============

</TABLE>
At March 31, 2003, Paciugo met the criteria for a "significant
subsidiary" as set forth in Rule 1.02(w) of Regulation S-X under
the Exchange Act. Summarized unaudited financial information for
Paciugo as of and for the three months ended March 31, 2003 is as
follows:

          Financial position information:
                 Current assets                $   1,760,699
                 Non-current assets                1,754,210
                 Current liabilities                 566,655
                 Non-current liabilities             492,253
                 Net assets                        2,456,001
          Income statement information:
                 Revenues                            377,300
                 Gross profit                        311,133
                 Net loss                           (398,502)

          Our equity in Paciugo's net loss     $    (131,506)

7.   Stock Options
     -------------

At March 31, 2003, the Company sponsors two stock option plans,
the 1999 Omnibus Securities Plan ("the 1999 Plan") and the 2001
Equity Incentive Plan ("the 2001 Plan"). The Company has elected
to account for those plans under Accounting Principles Board
Opinion ("APB") No. 25, "Accounting for Stock Issued to
Employees."



                              -11-

<PAGE>


On February 21, 2003, we issued 1.575 million options to officers
and directors of the Company under the 1999 Plan. Our three Board
of Directors were issued 25,000 shares each, which vested
immediately. Our three Officers were issued 0.5 million shares
each, vesting over four years, with the first year beginning on
February 21, 2003. The exercise price for all of the options
granted is $0.055. The options expire no later than ten years
after the date the stock option is granted.

The Company has adopted the disclosure-only provision of SFAS
123, "Accounting for Stock Based Compensation." SFAS 123 requires
pro forma information to 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 2003 was estimated as of the date of grant using
the Black-Scholes option-pricing model with the following
assumptions:

                                   Fiscal
                                    2003
                                   ------
     Expected volatility           4865.0%
     Risk-free interest rate          3.9%
     Dividend yield                   0.0%
     Expected life (years)            9.9

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>

                                                               For the Three Months          For the Nine Months
                                                                  Ended March 31,               Ended March 31,
                                                            ---------------------------   ---------------------------
                                                                2003           2002           2003           2002
                                                            ------------   ------------   ------------   ------------
Pro forma net loss                                                   (unaudited)                    (unaudited)

                                                         <c>            <c>            <c>            <c>
Net loss allocable to common shareholders as reported       $ (1,121,245)  $ (4,128,002)  $ (2,898,100)  $ (3,370,163)
Additional compensation expense under SFAS 123                   (24,833)    (4,500,888)    (2,294,840)    (8,549,451)
                                                            ------------   ------------   ------------   ------------
Net loss allocable to common shareholders, pro forma        $ (1,146,078)  $ (8,628,890)  $ (5,192,940)  $(11,919,614)
                                                            ============   ============   ============   ============

Net loss per share, pro forma                               $      (0.02)  $      (0.16)  $      (0.10)  $      (0.23)
Net loss per share, as reported                             $      (0.02)  $      (0.08)  $      (0.06)  $      (0.06)

</TABLE>

8.   Legal Proceedings
     -----------------

On April 1, 2003, Robert Newhouse, the trustee for iGlobal, filed
an adversary proceeding against us in the Texas Bankruptcy Court.
The lawsuit seeks to avoid certain alleged preferential and
fraudulent transfers of approximately $0.3 million. In addition,
it seeks to disallow our claim in the bankruptcy proceeding. We
have denied the receipt of any improper payments or transfers,
and we intend to vigorously defend against the assertions of Mr.
Newhouse and protect our rights. Since the process has not
proceeded beyond the initial pleadings stage, no realistic
assessment can be made with respect to the potential exposure,
except to refer to the amount of the purported preferential and
fraudulent transfers and note that Mr. Newhouse also seeks to
recover interest, costs of court and attorneys' fees.

As previously reported, Chad E. Coben, our former Senior Vice
President of Finance and Corporate Development, filed a demand
for arbitration against us with the American Arbitration
Association on August 28, 2002. Mr. Coben asserted that he had
"good reason" under his employment agreement to resign and
receive certain contractual payments totaling in excess of $0.5
million. On April 24, 2003, we reached a settlement with Mr.
Coben under which we agreed to pay him approximately $0.26
million in exchange for a complete release and dismissal of the
arbitration and any other related legal proceedings with
prejudice. The settlement agreement was fully executed on April
29, 2003.



                              -12-

<PAGE>

As previously reported, Eos Partners, LP, Eos Partners SBIC, LP,
Eos Partners (Offshore), LP, Kuwait Fund for Arab Economic
Development and TBV Holdings Ltd. (collectively, the
"Plaintiffs") filed a lawsuit against us, Fred Vierra, Barrett N.
Wissman, Clark K. Hunt, Mark R. Graham, Olaf Guerrand-Hermes,
Stuart Subotnick, Jan Robert Horsfall, Stuart Chasanoff, John
Stevens Robling, Jr., Samuel Litwin, Mitchell Arthur, BDO
Seidman, LP, Hunt Asset Management, LLC, HW Partners, LP, HW
Finance, LLC, HW Capital, LP and HW Group, LLC (collectively, the
"Defendants") in the 190th Judicial District Court of Harris
County, Texas, on December 19, 2002. The lawsuit alleged breach
of contract, fraud and conspiracy in connection with the
Plaintiffs' purchase of certain of our Series C Convertible
Preferred Stock in December of 1999 and January of 2000. The
Defendants have denied the allegations and intend to vigorously
defend against the Plaintiffs' claims and seek all other
appropriate relief. Since the process has not proceeded beyond
the initial pleading stage, no realistic assessment can be made
with respect to the potential exposure, except to refer to the
amounts paid for the Series C Stock, approximately $12 million,
and note that the Plaintiffs seek to recover compensatory and
exemplary damages, interest, costs of court and attorneys' fees.
The Defendants have submitted the claims to their insurance
carriers.

As previously reported, we, along with 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. On March 13, 2003, a hearing was
held to determine the proper forum for the various claims. After
listening to oral arguments, the district judge granted Qwest's
motion. On April 2, 2003, we, along with the liquidating trust,
filed a petition with the Supreme Court of Nevada, asking it to
direct the district judge to reconsider her order.

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
March 31, 2003. Readers are encouraged to refer to our prior
reports 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.



                              -13-

<PAGE>

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, as well
          as any capital needs of Paciugo;

     *    statements regarding our ability to successfully
          redeploy our remaining cash assets whether through the
          purchase of the Subsequent Interest or any additional
          interest in Paciugo or otherwise;

     *    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; 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;

     *    risks inherent in our ability to deploy our remaining
          assets in any new business venture;

     *    risks that, after deploying our cash to purchase our
          Initial and Subsequent interests in Paciugo, our
          remaining resources will not allow us to pursue other
          potential business opportunities;

     *    our ability to successfully prosecute claims against
          Qwest and other third parties;

     *    risks associated with not having any current operations
          or revenues;

     *    risks associated with preserving the net operating loss
          carryforwards of our debtor subsidiaries;

     *    risks associated with competition in a new business
          sector or industry; 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.

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
quarterly report (this "Quarterly Report"), Quarterly Reports on
Forms 10-Q for our fiscal quarters ended September 30, 2002 and
December 31, 2002 and the "Business Considerations" section
included in our Annual Report on Form 10-K for our fiscal year
ended June 30, 2002. Readers are cautioned not to place undue
reliance on these forward-looking statements, which reflect our
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.



                              -14-

<PAGE>


Acquisition of the Initial Interest in Paciugo
----------------------------------------------

On December 19, 2002, we executed a purchase agreement (the
"Purchase Agreement") with Ad Astra Holdings LP, a Texas limited
partnership ("Ad Astra"), Paciugo Management LLC, a Texas limited
liability company and the sole general partner of Ad Astra
("PMLLC"), and the collective equity owners of both Ad Astra and
PMLLC, being Ugo Ginatta, Cristiana Ginatta and Vincent Ginatta
(collectively, the "Equity Owners"). Pursuant to the Purchase
Agreement, we purchased a 33% membership interest in PMLLC and a
32.67% limited partnership interest in Ad Astra, which results in
our holding an aggregate interest, including the PMLLC general
partnership interest, in Ad Astra equal to 33% (the "Initial
Interest"), for a purchase price of $2.5 million.

In addition, we hold an option, exercisable for a period of two
years from December 19, 2002, to purchase a 17.3% membership
interest in PMLLC and a 17.127% interest in Ad Astra (the
"Subsequent Interest") for $1.5 million. Together, the Initial
Interest and the Subsequent Interest would result in our holding
a 50.3% membership interest in PMLLC and a 49.797% limited
partnership interest in Ad Astra, for a total aggregate interest
in Ad Astra, including the PMLLC general partner interest, of
50.3%.

Collectively, Ad Astra and PMLLC, through a number of wholly
owned subsidiaries, own and manage a gelato manufacturing,
retailing and catering business operating under the brand name
"Paciugo." Throughout this Quarterly Report, we refer
collectively to Ad Astra, PMLLC, and their subsidiaries as
"Paciugo." Under the terms of the Purchase Agreement, we provide
services to support the business operations of Paciugo, including
administrative, accounting, financial, human resources,
information technology, legal, and marketing services (the
"Support Services"). The Support Services expressly exclude
providing certain capital expenditures as well as services that
are customarily performed by third party professionals. In
exchange for our providing the Support Services, we receive an
annual amount equal to the greater of $0.25 million or 2% of the
consolidated gross revenues of Paciugo (excluding any gross
revenues shared with third parties under existing contractual
arrangements). Effective January 1, 2003, we receive a monthly
payment from Paciugo in the amount of $20,833, with the positive
cumulative difference, if any, between 2% of such gross revenues
and $20,833 per month to be paid within ten days of the end of
such month. Paciugo may not cancel or alter the scope of the
Support Services without our prior approval or consent.

We are entitled, under the terms of the Purchase Agreement, to
such representation on the governing board of PMLLC (the "Board
of Managers") as is proportionate to our ownership interests
therein. Effective as of December 19, 2002, PMLLC's Board of
Managers was composed of Ugo Ginatta and Cristiana Ginatta, as
the Equity Owners' designees, and Barrett N. Wissman, as our
designee. PMLLC, as the sole general partner of Ad Astra, is
empowered to make all decisions associated with Ad Astra, except
for those requiring the approval of the limited partners, as set
forth in the limited partnership agreement of Ad Astra or under
applicable law.

Bankruptcy Proceedings
----------------------

During fiscal 2002, our principal telecommunications operating
subsidiaries, including AxisTel Communications, Inc. ("AxisTel"),
e.Volve Technology Group, Inc. ("e.Volve") and Novo Networks
Operating Corp. ("NNOC") filed voluntary petitions under Chapter
11 of Title 11 of the United States Code (the "Bankruptcy Code").
We will refer to the subsidiaries that have filed for bankruptcy
protection as our "debtor subsidiaries" throughout this Quarterly
Report. At this same time, we announced that we were exploring
the option of diversifying our business by entering into other
lines of business.

On April 2, 2001, another one of our subsidiaries, Internet
Global Services, Inc. ("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 (the
"Texas Bankruptcy Court") due to iGlobal's inability to service
its debt obligations and contingent liabilities, as well as 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 during fiscal 2001, the majority of which
related to non-cash goodwill recorded in connection with our
acquisition of iGlobal. During April 2003, iGlobal's trustee
filed an adversary proceeding against us. For further details
regarding this proceeding, see Item 1 entitled "Legal
Proceedings."



                              -15-

<PAGE>

On July 30, 2001, the debtor subsidiaries filed voluntary
petitions for protection under the Bankruptcy Code in the United
States Bankruptcy Court for the District of Delaware (the
"Delaware Bankruptcy Court") in order to stabilize their
operations and protect their assets while attempting to
reorganize their businesses.

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.
An amended plan and disclosure statement were filed with the
Delaware 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 the Bankruptcy Code, instead
of a reorganization, as previously planned.

On January 14, 2002, the Delaware Bankruptcy Court approved the
amended disclosure statement, with certain minor modifications,
and on March 1, 2002, the Delaware Bankruptcy Court confirmed the
amended plan, 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 liquidating 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 first quarter of fiscal 2003, we provided additional
funding of $0.1 million to the liquidating trust. We are in the
process of amending the new secured note to approximately $3.5
million, which includes $0.35 million of additional funding (yet
to be paid) to the liquidating trust. We expect to finalize this
amendment in the near future. Interest for the new secured note
is accrued on a monthly basis. Due to the uncertainty surrounding
the collection of the new secured note, it has been fully reserved.
No assurance can be given that the liquidating trust will be
successful in liquidating substantially all of the debtor
subsidiaries 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 described in the amended plan and disclosure statement.

Operations Summary
------------------

As of March 31, 2003, 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 such time, if any, as we
choose to purchase the Subsequent Interest or any additional
interest in Paciugo and promulgate a new business plan, either as
it relates to Paciugo or another opportunity, if at all. During
the prior fiscal quarter, we purchased an Initial Interest in
Paciugo. For further details regarding Paciugo, see Item 2
entitled "Acquisition of the Initial Interest in Paciugo." We
cannot predict when or if our business plan for Paciugo will be
put into place, what they may entail or whether we will be
successful in such a new business venture or other potential
business opportunities that we may consider, if any.

During the nine months ended March 31, 2003, no revenues from
operations were generated based on (i) the termination of
operations of our debtor subsidiaries, which have historically
provided all significant revenues for us, (ii) the early stages
of our relationship with Paciugo after our purchase of the
Initial Interest and the promulgation of a business plan (iii)
the uncertainties surrounding our potential acquisition of the
Subsequent Interest or, potentially more than the Subsequent
Interest in Paciugo, and (iv) the uncertainties surrounding other
potential business opportunities that we may consider, if any.
However, if we choose to purchase a greater than 50% interest in
Paciugo (such as the acquisition of the Subsequent Interest), we
expect to consolidate its revenues and operations into our
consolidated financial statements at that time. In the meantime,
we will continue to record other income from the provision of the
Support Services to Paciugo as agreed upon in the Purchase
Agreement. For further details regarding the Support Services,
see Item 2 entitled "Acquisition of the Initial Interest in
Paciugo."


                              -16-

<PAGE>

During the nine months ended March 31, 2002, revenues were
generated from operations of two of our debtor subsidiaries:
AxisTel and e.Volve. e.Volve's only significant customer was
Qwest, which accounted for approximately 70% of consolidated
revenues for the nine months ended March 31, 2002. Subsequent to
December 31, 2002, 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 were 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 were
sold, and they will be unable to provide such services in the
future.

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

The accompanying consolidated financial statements for the nine
months ended March 31, 2003, include our accounts and those of
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 as applicable to a going
concern.

For the nine months ended March 31, 2002, the consolidated
financial statements include us and our wholly owned
subsidiaries, including the debtor subsidiaries. The consolidated
financial statements as of and for the nine month period ended
March 31, 2002, as contained in this Quarterly Report, are
reflective of two separate accounting methodologies. For us and
our subsidiaries not involved in the bankruptcy plan
administration process (such subsidiaries have nominal
operations), the financial statements, consisting primarily of
cash, investments and office equipment, have been prepared in
accordance with generally accepted accounting principles as
applicable to a going concern. For our debtor subsidiaries, which
are involved in the bankruptcy plan administration process, the
financial statements have been prepared in accordance with
generally accepted accounting principles as applicable to
liquidating entities. We recorded an accrual estimate of $0.9
million in the accompanying financial statements for the costs of
completing such bankruptcy proceedings, including, without
limitation, liquidating the assets of these entities. The
estimated realizable values and settlement amounts may be
different from the proceeds ultimately received or payments
ultimately made. During the nine months ended March 31, 2002, 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 quarters ended March 31, 2003, and March 31,
2002, no revenues were generated. Historically, we derived
substantially all of our consolidated revenues from the sale of
telecommunications services of AxisTel and e.Volve. These debtor
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
such time, if any, as we choose to purchase an interest in
Paciugo which represents greater than a 50% interest (such as the
acquisition of the Subsequent Interest), at which time we would
consolidate its operations into our financial statements, or we
successfully redeploy some or all of our remaining cash assets in
another business venture, if at all. No assurances can be given
that we will purchase a greater than majority interest in
Paciugo, whether through the acquisition of the Subsequent
Interest or otherwise, or generate revenues from operations in
the future.

DIRECT COSTS.  For the quarter ended March 31, 2003, no direct
costs were incurred. Historically, direct costs included per
minute termination charges, lease payments and fees for fiber
optic cable.


                              -17-

<PAGE>

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. Initially,
the agreement dictated 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 some of 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
March 31, 2003, we had an outstanding receivable from the debtor
subsidiaries relating to the provision of such administrative
services of approximately $0.65 million. Under the terms of the
administrative services agreement, any payments to us are
deferred until such time that the trustee receives any funds from
the positive outcome of the Qwest litigation. 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. Due to the
significant impairment losses recorded during fiscal years 2002
and 2001, 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 interests that are accounted
for under the equity method of accounting. Under the equity
method, our proportionate share of each of our subsidiary's
operating loss is included in equity in loss of investments.
During the second quarter of fiscal 2003, we purchased the
Initial Interest in Paciugo. For further details regarding
Paciugo, see  Item 2 entitled "Acquisition of the Initial
Interest in Paciugo." The value of our outstanding equity
interests, other than Paciugo, have been reduced to zero either
by recording our proportionate share of prior period losses
incurred by each subsidiary up to the cost of that investment or
from impairment losses. We anticipate that our previous strategic
investments will continue to incur operating losses. However, we
do not expect to record future charges related to those losses as
they are completely impaired. We will record our proportionate
share of future earnings or losses related to our Initial
Interest in Paciugo, unless we purchase an additional interest in
Paciugo (such as the acquisition of the Subsequent Interest),
resulting in our holding a greater than 50% interest in Paciugo,
at which time, we would begin to consolidate its operations into
our financial statements.

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 the
bankruptcy plan administration process. All debtor subsidiary
assets were stated at estimated realizable values. Similarly,
liabilities were reflected at estimated settlement amounts,
subject to the approval of the Delaware Bankruptcy Court, with
those liabilities secured by specific assets being offset against
such assets, as allowed. The estimated realizable values and
settlement amounts may be different from the proceeds ultimately
received or payments ultimately made.

OTHER INCOME.  Other income results from the Support Services we
provided to Paciugo, pursuant to the Purchase Agreement and
administrative services we provided to our debtor subsidiaries
pursuant to an administrative services agreement approved by the
Delaware Bankruptcy Court. For further details regarding the
Support Services to Paciugo, see Item 2 entitled "Acquisition of
the Initial Interest in Paciugo." The administrative services
agreement with our debtor subsidiaries initially dictated 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 some of
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 March 31, 2003, we
had an outstanding receivable from the debtor subsidiaries
relating to the provision of such administrative services of
approximately $0.65 million. Under the terms of the
administrative services agreement, any payments to us are
deferred until such time that the trustee receives any funds from
the positive outcome of the Qwest litigation. Due to the
uncertainty surrounding the collection of the receivable, it has
been fully reserved.



                              -18-

<PAGE>



Summary of Operating Results
----------------------------

The table below summarizes our operating results.


<TABLE>
<CAPTION>

                                                       Three Months Ended March 31,       Nine Months Ended March 31,
                                                       ----------------------------  -------------------------------------
                                                           2003           2002           2003           2002          %
                                                       ------------   ------------   ------------   ------------   -------
                                                               (unaudited)                   (unaudited)

                                                    <c>            <c>            <c>            <c>            <c>
Revenues                                                          -   $          -   $          -   $ 10,486,982    100.0%

Operating expenses:
   Direct costs                                                   -         94,031              -     14,614,766    139.4%
   Selling, general and administrative expenses           1,035,099      1,813,057      2,553,094     10,183,242     97.1%
   Impairment loss                                                -              -              -        121,932      1.2%
   Depreciation and amortization                             36,555         51,749        113,012      1,337,033     12.7%
                                                       ------------   ------------   ------------   ------------   -------
                                                          1,071,654      1,958,837      2,666,106     26,256,973
Loss from operations, before
   other (income) expense                                (1,071,654)    (1,958,837)    (2,666,106)   (15,769,991)  (150.4%)

Other (income) expenses:
   Interest (income) expense, net                          (108,072)       (60,036)      (262,094)        62,209      0.6%
   Equity in loss of investments                            131,506        366,478        396,257      1,429,127     13.6%
   Foreign currency loss                                          -          3,007              -         98,135      0.9%
   Net (gain) loss on liquidation of debtor
     subsidiaries                                           (74,000)     1,634,054       (288,000)   (14,067,282)  (134.1%)
   Other (income) expense                                   (62,515)        73,114        (99,620)      (377,133)    (3.6%)
                                                       ------------   ------------   ------------   ------------   -------
                                                           (113,081)     2,016,617       (253,457)   (12,854,944)  (122.6%)
                                                       ------------   ------------   ------------   ------------   -------

Net loss                                               $   (958,573)  $ (3,975,454)  $ (2,412,649)  $ (2,915,047)
                                                       ============   ============   ============   ============

   Series D dividends for the period                   $   (162,672)  $   (152,548)  $   (485,451)  $   (455,116)
                                                       ------------   ------------   ------------   ------------
Net loss allocable to common shareholders              $ (1,121,245)  $ (4,128,002)  $ (2,898,100)  $ (3,370,163)
                                                       ============   ============   ============   ============

Net loss per share                                     $      (0.02)  $      (0.08)  $      (0.06)  $      (0.06)
                                                       ============   ============   ============   ============

Weighted average number of shares outstanding            52,323,701     52,323,701     52,323,701     52,323,701
                                                       ============   ============   ============   ============



</TABLE>

Three months ended March 31, 2003 Compared to Three months ended
March 31, 2002
----------------------------------------------------------------

REVENUES.  No revenues were generated during either period
presented. No revenues were generated based on (i) the
termination of all operations of our debtor subsidiaries by
December of 2001, which have historically provided all of our
significant revenues, (ii) the early stages of our relationship
with Paciugo after our purchase of the Initial Interest and the
promulgation of a business plan, (iii) the uncertainties
surrounding our potential acquisition of the Subsequent Interest
or, potentially more than the Subsequent Interest in Paciugo and
(iv) the uncertainties surrounding other potential business
opportunities that we may consider, if any. However, if we choose
to purchase a greater than 50% interest in Paciugo (such as the
acquisition of the Subsequent Interest), we expect to consolidate
its revenues and operations into our consolidated financial
statements at that time. In the meantime, we will continue to
record other income from the provision of the Support Services to
Paciugo as agreed upon in the Purchase Agreement. For further
details regarding the Support Services, see Item 2 entitled
"Acquisition of the Initial Interest in Paciugo."


                              -19-

<PAGE>


We do not expect to generate any revenues from operations until
such time, if any, we choose to purchase an interest in Paciugo
which represents greater than a 50% interest (such as the
acquisition of the Subsequent Interest), at which time, we would
consolidate its operations into our financial statements, or we
successfully redeploy some or all of our remaining cash assets in
another business venture, if at all. No assurances can be given
that we will purchase a greater than majority interest in
Paciugo, whether through the purchase of the Subsequent Interest
or otherwise, or generate revenues from operations in the future.

DIRECT COSTS. No direct costs were incurred during the three
months ended March 31, 2003, as compared to approximately $0.1
million during the three months ended March 31, 2002, as we
currently have no operations.

SELLING, GENERAL AND ADMINISTRATIVE.  Selling, general and
administrative expenses decreased to approximately $1.0 million
during the three months ended March 31, 2003, from $1.8 million
during the three months ended March 31, 2002, a decrease of 44%.
The drop in selling, general and administrative expenses is
primarily due to (i) the downsizing of the workforce, (ii) the
termination of operations as a result of the various bankruptcy
proceedings, (iii) the reduction in professional fees relating to
the bankruptcy plan administrative process and (iv) an overall
reduction of overhead related to office rent, telephone, office
expenses and travel and entertainment.

Selling, general and administrative expenses for the three months
ended March 31, 2003, consisted primarily of approximately (i)
$0.2 million of salaries and benefits, (ii) $0.3 million of legal
and professional fees, (iii) $0.2 million of bad debt expense,
(iv) $0.15 million of business insurance and (v) $0.15 million of
other operating expenses. Selling, general and administrative
expenses for the three months ended March 31, 2002, consisted
primarily of approximately (i) $0.5 million of salaries and
benefits, (ii) $0.55 million of legal and professional fees,
(iii) $0.2 million of office rent, (iv) $0.15 million of business
insurance and (v) $0.4 million of other operating expenses. We
anticipate that selling, general and administrative expenses will
remain relatively constant as (i) we currently have no
operations, (ii) we completed personnel reductions and (iii) we
continue to work toward the conclusion of the various bankruptcy
proceedings. We expect our selling, general and administrative
expense to continue to be approximately $0.2 million per month
until such time, if any, as we choose to purchase the Subsequent
Interest or any additional interest in Paciugo or we are able to
develop an alternative business strategy, if at all.

DEPRECIATION AND AMORTIZATION.  Depreciation recorded on fixed
assets during the three months ended March 31, 2003, totaled
approximately $37,000, as compared to approximately $52,000 for
the three months ended March 31, 2002. The decrease in
depreciation expense is the result of asset impairment charges
taken during prior fiscal periods. We expect our depreciation
expense to remain relatively constant until such time, if any, as
we choose to purchase the Subsequent Interest or any additional
interest in Paciugo or we are able to develop an alternative
business strategy, if at all.

INTEREST (INCOME) EXPENSE, NET.  We recorded interest income from
cash investments and the new secured note from our debtor
subsidiaries, of approximately $0.1 million for the three months
ended March 31, 2003, as compared to approximately $60,000 for
the three months ended March 31, 2002. The overall increase in
interest income during the current quarter is a result of
interest income related to the new secured note that has been
reserved for as bad debt expense in selling, general and
administrative expenses, and no longer having interest expense
from debtor subsidiary capital lease obligations, net of a
general reduction 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 non-impaired
interests that are accounted for under the equity method of
accounting. Under the equity method, our proportionate share of
each of our subsidiary's operating loss is included in equity in
loss of investments. During the three months ended March 31,
2003, there was approximately $0.1 million of equity in loss of
investment expense , as compared to $0.4 million during the three
months ended March 31, 2002. The current fiscal quarter loss
resulted from our 33% Initial Interest in Paciugo. For further
details regarding Paciugo, see Item 2 entitled "Acquisition of
the Initial Interest in Paciugo." The value of our outstanding
equity interests, other than Paciugo, have been reduced to zero
either by recording our proportionate share of prior period
losses incurred by each subsidiary up to the cost of that
investment or from impairment losses. We anticipate that those
interests will continue to incur operating losses. However, we do
not expect to record future charges related to them since they
are completely impaired. We will record our proportionate share
of future earnings or losses related to our Initial Interest in
Paciugo, unless we purchase an additional interest in Paciugo
(such as the acquisition of the Subsequent Interest), resulting
in our holding a greater than 50% interest in Paciugo, at which
time, we would begin to consolidate its operations into our
financial statements.


                              -20-

<PAGE>

NET (GAIN) LOSS ON LIQUIDATION OF DEBTOR SUBSIDIARIES.  During
the three months ended March 31, 2003, we recorded a net gain on
liquidation of debtor subsidiaries of approximately $0.1 million
related to a reduction of estimated liquidation costs for the
debtor subsidiaries. For the three months ended March 31, 2002,
we recorded a net loss on liquidation of debtor subsidiaries of
approximately $1.6 million related to (i) an accrual estimate of
$1.0 million for the costs of liquidating substantially all of
the assets of the debtor subsidiaries, (ii) $1.3 million in cash
expenditures to settle administrative claims associated with the
bankruptcy and (iii) a net gain on the write off of debtor
subsidiary assets and liabilities of $0.7 million.

OTHER (INCOME) EXPENSE.  During the three months ended March 31,
2003, we recorded approximately $63,000 in other income, as
compared to other expense of approximately $73,000 during the
three months ended March 31, 2002.  Other income for the three
months ended March 31, 2003, consisted primarily of monthly
payments of $20,833 from Paciugo for the provision of the
Support Services, beginning in January of 2003.  For further
details regarding the Support Services, see Item 2 entitled
"Acquisition of the Initial Interest in Paciugo."  Other
expense for the three months ended March 31, 2002, consisted of
loss on the sale of fixed assets.

Nine Months Ended March 31, 2003 Compared to Nine Months Ended
March 31, 2002
---------------------------------------------------------------

REVENUES.  During the nine months ended March 31, 2003, no
revenues were generated, as compared to approximately $10.5
million during the nine months ended March 31, 2002. No revenues
were generated based on (i) the termination of operations of our
debtor subsidiaries, which have historically provided all of our
significant revenues, (ii) the early stages of our relationship
with Paciugo after our purchase of the Initial Interest and the
promulgation of a business plan, (iii) the uncertainties
surrounding our potential acquisition of the Subsequent Interest
or, potentially more than the Subsequent Interest in Paciugo and
(iv) the uncertainties surrounding other potential business
opportunities that we may consider, if any. However, if we choose
to purchase a greater than 50% interest in Paciugo (such as the
acquisition of the Subsequent Interest), we expect to consolidate
its revenues and operations into our consolidated financial
statements at that time. In the meantime, we will continue to
record other income from the provision of the Support Services to
Paciugo as agreed upon in the Purchase Agreement. For further
details regarding the Support Services, see Item 2 entitled
"Acquisition of the Initial Interest in Paciugo." Prior to the
elimination of our operations, revenues for the nine months ended
March 31, 2002, were generated through the sale of (i) 97% voice
services and (ii) 3% broadband services.

No minutes were transmitted during the nine months ended March
31, 2003, versus 134.1 million minutes during the nine months
ended March 31, 2002. No revenues were generated during the nine
months ended March 31, 2003, due to the termination of AxisTel's
operations of data, wholesale and prepaid card businesses, as
well as the cessation of the wholesale business of e.Volve.

We do not expect to generate any revenues from operations until
such time, if any, we choose to purchase an interest in Paciugo
which represents greater than a 50% interest (such as the
acquisition of the Subsequent Interest), at which time, we would
consolidate its operations into our financial statements, or we
successfully redeploy some or all of our remaining cash assets in
another business venture, if at all. No assurances can be given
that we will purchase a greater than majority interest in
Paciugo, whether through the purchase of the Subsequent Interest
or otherwise, or generate revenues from operations in the future.

DIRECT COSTS.  No direct costs were incurred during the nine
months ended March 31, 2003, as compared to approximately $14.6
million during the nine months ended March 31, 2002, as we have
no operations.

SELLING, GENERAL AND ADMINISTRATIVE.  Selling, general and
administrative expenses decreased to approximately $2.5 million
during the nine months ended March 31, 2003, from approximately
$10.1 million during the nine months ended March 31, 2002, a
decrease of 75%. The decrease in selling, general and
administrative expenses is primarily due to (i) the downsizing of
the workforce, (ii) the termination of operations as a result of
the various bankruptcy proceedings, (iii) the reduction in
professional fees relating to the bankruptcy plan administrative
process and (iv) an overall reduction of overhead related to
office rent, telephone, office expenses and travel and
entertainment.

Selling, general and administrative expenses for the nine months
ended March 31, 2003, consisted primarily of approximately (i)
$0.8 million of salaries and benefits, (ii) $0.5 million of legal
and professional fees, (iii) $0.4 million of bad debt expense,
(iv) $0.4 million of business insurance and (v) $0.4 million of
other operating expenses. Selling, general and administrative
expenses for the nine months ended March 31, 2002, consisted
primarily of approximately (i) $1.9 million of salaries and
benefits, (ii) $2.0 million of legal and professional fees, (iii)
$2.5 million of bad debt expense, (iv) $0.9 million of office
rent, (v) $0.4 million of stock based compensation, (vi) $0.45
million of business insurance and (vii) $1.95 million of other
operating expenses. We anticipate that selling, general and
administrative expenses will remain relatively constant as (i) we
currently have no operations, (ii) we completed personnel
reductions and (iii) we continue to work toward the conclusion of
the various bankruptcy proceedings. We expect our selling,
general and administrative expense to continue to be
approximately $0.2 million per month until such time, if any, as
we choose to purchase the Subsequent Interest or any additional
interest in Paciugo or we are able to develop an alternative
business strategy, if at all.


                              -21-

<PAGE>

DEPRECIATION AND AMORTIZATION.  Depreciation recorded on fixed
assets during the nine months ended March 31, 2003, totaled
approximately $0.1 million as compared to approximately $1.3
million for the nine months ended March 31, 2002. The decrease in
depreciation expense is the result of asset impairment charges
taken during prior fiscal periods. We expect our depreciation
expense to remain relatively constant until such time, if any, as
we choose to purchase the Subsequent Interest or any additional
interest in Paciugo or we are able to develop an alternative
business strategy, if at all.

INTEREST (INCOME) EXPENSE, NET.  We recorded interest income from
cash investments and the new secured note from our debtor
subsidiaries, of approximately $0.3 million for the nine months
ended March 31, 2003, as compared to interest expense, net of
interest income from cash investments of $0.1 million for the
nine months ended March 31, 2002. The overall increase in
interest income during the current period is a result of interest
income related to the new secured note that has been reserved for
as bad debt expense in selling, general and administrative
expenses, and no longer having interest expense from debtor
subsidiary capital lease obligations, net of a general reduction
in interest income resulting from lower cash balances.

EQUITY IN LOSS OF INVESTMENTS.  Equity in loss of investments
resulted from our minority ownership interests that are accounted
for under the equity method of accounting. Under the equity
method, our proportionate share of each of our subsidiary's
operating loss is included in equity in loss of investments. For
the nine months ended March 31, 2003, equity in loss of
investments decreased 71%, to approximately $0.4 million compared
to $1.4 million during the nine months ended March 31, 2002. The
current fiscal period loss resulted from our 22% equity interest
in Gemini Voice Solutions (formerly PhoneFree.com) and our 33%
Initial Interest in Paciugo. For further details regarding
Paciugo, see Item 2 entitled "Acquisition of the Initial Interest
in Paciugo." The value of our outstanding equity interests, other
than Paciugo, have been reduced to zero either by recording our
proportionate share of prior period losses incurred by each
subsidiary up to the cost of that investment or from impairment
losses. We anticipate that those interests will continue to incur
operating losses. However, we do not expect to record future
charges related to them since they are completely impaired. We
will record our proportionate share of future earnings or losses
related to our Initial Interest in Paciugo, unless we purchase an
additional interest in Paciugo (such as the acquisition of the
Subsequent Interest), resulting in our holding a greater than 50%
interest in Paciugo, at which time, we would begin to consolidate
its operations into our financial statements.

FOREIGN CURRENCY LOSS.  There was no foreign currency loss during
the nine months ended March 31, 2003, compared to a loss of
approximately $0.1 million during the nine months ended March 31,
2002. This variance was the result of the unfavorable exchange
rate fluctuations in the Mexican peso compared to the United
States dollar from wholesale telecommunication services
previously offered through e.Volve's operations. Since we have no
plans to re-enter the telecommunications business, we do not
expect to have any foreign currency risk in the near future.

NET GAIN ON LIQUIDATION OF DEBTOR SUBSIDIARIES.  During the nine
months ended March 31, 2003, we recorded a net gain on
liquidation of debtor subsidiaries of approximately $0.3 million
related to a reduction of estimated liquidation costs for the
debtor subsidiaries. For the nine months ended March 31, 2002, we
recorded a net gain on liquidation of debtor subsidiaries of
approximately $14.0 million related to (i) a write down of long-
lived assets of $7.5 million, (ii) an accrual estimate of $1.0
million for the costs of liquidating substantially all of the
assets of the debtor subsidiaries, (iii) $1.3 million in cash
expenditures to settle administrative claims associated with the
bankruptcy proceedings, (iv) a gain on the write off of capital
lease obligations of $7.7 million and (v) a net gain on the write
off of debtor subsidiary assets and liabilities of $16.1 million.

OTHER INCOME.  During the nine months ended March 31, 2003, we
recorded approximately $0.1 million in other income, as compared
to other income of $0.4 million during the nine months ended
March 31, 2002. Other income for the nine months ended March 31,
2003, consisted primarily of monthly payments of $20,833 from
Paciugo for the provision of the Support Services, beginning in
January of 2003. For further details regarding the Support
Services, see Item 2 entitled "Acquisition of the Initial
Interest in Paciugo." During the nine months ended March 31,
2002, 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.



                              -22-

<PAGE>



Liquidity and Capital Resources
-------------------------------

At March 31, 2003, we had consolidated current assets of $5.6
million, including cash and cash equivalents of approximately
$5.2 million and net working capital of $4.0 million. 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 plan administration process.
Historically, we have funded our subsidiaries' 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 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) expenses related to the bankruptcy plan administration
process. Due to our financial performance, the lack of stability
in the capital markets and the economy's downturn, our only
current source of funding is expected to be cash on hand.

During December of 2002, we purchased the Initial Interest in
Paciugo for $2.5 million. For further details regarding Paciugo,
see Item 2 entitled "Acquisition of the Initial Interest in
Paciugo." Assuming that we choose to purchase the Subsequent
Interest in Paciugo in December 2004, with no current return,
except as defined in the Purchase Agreement for Support Services,
and given our expected obligations for that period between now
and then, we do not expect to have cash available with which to
continue our operations or make other acquisitions. Consequently,
we expect our purchase of the Initial Interest, and potentially
the Subsequent Interest, to be the only such interests we are
able to purchase with our remaining cash assets. Further
diversification is possible, should we find another suitable
opportunity, but it seems unlikely at the present time.

Current obligations include (i) funding working capital, (ii)
funding the liquidating trust and (iii) funding the Qwest
litigation. No assurances can be given that we will choose to
purchase the Subsequent Interest or any additional interest in
Paciugo or that we will successfully redeploy some or all of our
remaining cash assets in another business venture, if at all, or
that, if deployed, we can continue as a going concern with the
new business model.

As discussed in Item 2 entitled "Bankruptcy Proceedings", our
debtor subsidiaries filed bankruptcy proceedings under 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 this credit facility to approximately $1.9
million, which was 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. The
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. In
addition, the credit facility maintained a default interest rate
of prime plus 5.0% per annum.

In connection with the amended plan being confirmed by the
Delaware 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, certain payroll expenses, 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, certain payroll expenses
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 first quarter of fiscal 2003, we
provided additional funding of $0.1 million to the trust. We are
in the process of amending the new secured note to approximately
$3.5 million, which includes $0.35 million of additional funding
(yet to be paid) to the liquidating trust. We expect to finalize
this amendment in the near future. Interest for the new secured
note is accrued on a monthly basis. Due to the uncertainty
surrounding the collection of the new secured note, it has been
fully reserved.


                              -23-

<PAGE>


For the nine months ended March 31, 2002, two of our 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 we nor any of the
debtor subsidiaries have conducted operations or generated
revenue. We are not currently 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' amended plan,
certain causes of action have been brought against Qwest. We do
not expect to generate any revenues from operations until such
time, if any, we choose to purchase an interest in Paciugo which
represents greater than a 50% interest (such as the acquisition
of the Subsequent Interest), at which time, we would consolidate
its operations into our financial statements, or we successfully
redeploy some or all of our remaining cash assets in another
business venture, if at all. No assurances can be given that we
will purchase a greater than majority interest in Paciugo,
whether through the purchase of the Subsequent Interest or
otherwise, or generate revenues from operations in the future.

We currently anticipate that we will not generate any revenue
from operations 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, (ii) the early stages of our relationship
with Paciugo after our purchase of the Initial Interest and the
promulgation of a business plan, (iii) the uncertainties
surrounding our potential acquisition of the Subsequent Interest
or, potentially more than the Subsequent Interest in Paciugo and
(iv) the uncertainties surrounding other potential business
opportunities that we may consider, if any. However, if we choose
to purchase a greater than 50% interest in Paciugo (such as the
acquisition of the Subsequent Interest), we expect to consolidate
its revenues and operations into our consolidated financial
statements at that time. In the meantime, we will continue to
record other income from the provision of the Support Services to
Paciugo as agreed upon in the Purchase Agreement. For further
details regarding the Support Services, see Item 2 entitled
"Acquisition of the Initial Interest in Paciugo."

As noted above, we do not believe that any of the traditional
funding sources will be available to us and that our only option
will likely be cash on hand. Consequently, our failure to (i)
purchase the Subsequent Interest or any additional interest in
Paciugo, (ii) implement a successful business plan and (iii)
identify other potential business opportunities, if any, will
jeopardize our 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 bankruptcy plan
administration process, (ii) our ongoing general and
administrative expenses and (iii) the undetermined capital
requirements of Paciugo and such other business opportunities as
may arise in the future, if any.

CASH FLOWS USED IN OPERATING ACTIVITIES.  Cash used in operating
activities for the nine months ended March 31, 2003, totaled
approximately $2.2 million as compared to approximately $3.7
million for the nine months ended March 31, 2002. During the nine
months ended March 31, 2003, cash flow used by operating
activities primarily resulted from operating losses, net of non-
cash charges, totaling approximately $1.7 million, and an
increase in the note receivable and other receivables for funding
the debtor subsidiaries bankruptcy proceedings of approximately
$0.4 million. During the nine months ended March 31, 2002, cash
flow used by operating activities primarily resulted from
operating losses, net of non-cash charges, totaling $9.8 million,
and an increase in accounts receivable of $0.3 million, partially
offset by a net increase in accounts payable and accrued
liabilities of $6.3 million

CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES.  Net cash
used in investing activities was approximately $2.5 million for
the nine months ended March 31, 2003, as compared to net cash
provided by investing activities of approximately $0.6 million
for the nine months ended March 31, 2002. Net cash used in
investing activities in the current period consisted primarily of
the purchase of our Initial Interest in Paciugo. Investing
activities in the prior period presented consisted primarily of
cash received from one of our equity interests of approximately
$0.4 million.

CASH FLOWS USED IN FINANCING ACTIVITIES.  No financing activities
occurred during the nine months ended March 31, 2003, as compared
to net cash used in financing activities for the nine months
ended March 31, 2002, of approximately $1.1 million for capital
lease payments.

                              -24-

<PAGE>


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, which 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 into one or more
new business ventures. During December of 2002, we purchased an
Initial Interest in Paciugo for $2.5 million. For further details
regarding Paciugo, see Item 2 entitled "Acquisition of the
Initial Interest in Paciugo." Before purchasing our Initial
Interest, we discussed and conducted preliminary due diligence on
various investment opportunities, including Paciugo, and
considered many factors, including, without limitation, the
following in deciding upon an appropriate use 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 companies in the particular industry or
          opportunity.

The foregoing is not an exhaustive list of the factors that we
considered in our evaluation of potential business opportunities.
Eventually, we determined that the Initial Interest in Paciugo
was the best opportunity for us to pursue in an attempt to forge
a new operating model and maximize shareholder value.

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 bankruptcy plan administration process;

     *    minimizing, to the extent possible, the expenses and
          liabilities incurred by us as the ultimate parent of
          the debtor subsidiaries;

     *    determining, whether a viable plan exists to redeploy
          our assets in other business opportunities, if any, in
          addition to the development of our interest in Paciugo;

     *    maintaining the current number of employees until such
          time as we locate additional business opportunities, if
          any, or we purchase the Subsequent Interest or any
          additional interest in Paciugo; and

     *    avoiding significant expenses outside of our historical
          burn rate pending our decision to purchase the
          Subsequent Interest or any additional interest in
          Paciugo or location of another business opportunity, if
          any.


                              -25-

<PAGE>


Our plan of operation for the upcoming twelve months as it
relates to Paciugo calls for the following:

     *    opening approximately two to four new store locations
          and one small "store within a store" outlets;

     *    improving operations through the use of strategic
          partnering or automatic production equipment;

     *    improving labor costs by staffing stores with the
          minimum full-time personnel and additional part-time
          staff during peak store hours;

     *    improving utilization of inventory levels at both the
          production facility and the individual retail sales
          outlets;

     *    expanding product availability at the store outlets
          including, without limitation, gelato pies, Italian
          chocolates and candies and other complementary items;
          and

     *    increasing marketing and advertising for the retail
          outlets as well as the catering and wholesale services.

Funding for these items will come from the proceeds of our
Initial Interest in Paciugo, current cash flow from operations,
the possibility of refinancing existing bank debt on more
favorable terms, the possibility of additional bank financing, as
well as the possibility of the proceeds of our Subsequent
Interest.

Some of the risks and difficulties that we expect to encounter in
our new business venture with Paciugo include, without
limitation:

     *    we lack specific industry experience;

     *    we will be functioning as an early stage company;

     *    we may not be in a position to diversify our business
          beyond the Initial or Subsequent Interest in Paciugo;

     *    we may not be able to adequately fund our new business
          venture with Paciugo;

     *    we may not be able to continue as a going concern; and

     *    we could be negatively affected by the bankruptcy
          proceedings of our debtor subsidiaries.

As of March 31, 2003, we maintained cash and cash equivalents of
approximately $5.2 million. Assuming that we choose to purchase
the Subsequent Interest in Paciugo in December 2004, with no
current return, except as defined in the Purchase Agreement for
Support Services, and given our expected obligations for that
period between now and then, we do not expect to have cash
available with which to continue our operations or make other
acquisitions. Consequently, we expect our purchase of the Initial
Interest, and potentially the Subsequent Interest, to be the only
such interests we are able to purchase with our remaining cash
assets. Further diversification is possible, should we find
another suitable opportunity, but it seems unlikely at the
present time.

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 additional acquisitions 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 the decision to purchase the Subsequent Interest or any
additional interest in Paciugo or to take action on other
potential business opportunities, if any. Our Board of Directors
has 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 its judgment in the selection of an appropriate
investment opportunity and the negotiation of the specific terms
thereof.


                               -26-

<PAGE>

Item 3.   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 $5.2
million at March 31, 2003. 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 Quarterly
Report, we 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 our 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 our disclosure
controls and procedures are effective in timely alerting them to
material information relating to us (including our consolidated
subsidiaries) required to be included in this Quarterly Report.
There have been no significant changes in our internal controls
or in other factors, which could significantly affect such
internal controls, subsequent to the date we carried out our
evaluation.

PART II:  OTHER INFORMATION

Item 1.   LEGAL PROCEEDINGS

On April 1, 2003, Robert Newhouse, the trustee for iGlobal, filed
an adversary proceeding against us in the Texas Bankruptcy Court.
The lawsuit seeks to avoid certain alleged preferential and
fraudulent transfers of approximately $0.3 million. In addition,
it seeks to disallow our claim in the bankruptcy proceeding. We
have denied the receipt of any improper payments or transfers,
and we intend to vigorously defend against the assertions of Mr.
Newhouse and protect our rights. Since the process has not
proceeded beyond the initial pleadings stage, no realistic
assessment can be made with respect to the potential exposure,
except to refer to the amount of the purported preferential and
fraudulent transfers and note that Mr. Newhouse also seeks to
recover interest, costs of court and attorneys' fees.

As previously reported, Chad E. Coben, our former Senior Vice
President of Finance and Corporate Development, filed a demand
for arbitration against us with the American Arbitration
Association on August 28, 2002. Mr. Coben asserted that he had
"good reason" under his employment agreement to resign and
receive certain contractual payments totaling in excess of $0.5
million. On April 24, 2003, we reached a settlement with Mr.
Coben under which we agreed to pay him approximately $0.26
million in exchange for a complete release and dismissal of the
arbitration and any other related legal proceedings with
prejudice. The settlement agreement was fully executed on April
29, 2003.

As previously reported, Eos Partners, LP, Eos Partners SBIC, LP,
Eos Partners (Offshore), LP, Kuwait Fund for Arab Economic
Development and TBV Holdings Ltd. (collectively, the
"Plaintiffs") filed a lawsuit against us, Fred Vierra, Barrett N.
Wissman, Clark K. Hunt, Mark R. Graham, Olaf Guerrand-Hermes,
Stuart Subotnick, Jan Robert Horsfall, Stuart Chasanoff, John
Stevens Robling, Jr., Samuel Litwin, Mitchell Arthur, BDO
Seidman, LP, Hunt Asset Management, LLC, HW Partners, LP, HW
Finance, LLC, HW Capital, LP and HW Group, LLC (collectively, the
"Defendants") in the 190th Judicial District Court of Harris
County, Texas, on December 19, 2002. The lawsuit alleged breach
of contract, fraud and conspiracy in connection with the
Plaintiffs' purchase of certain of our Series C Convertible
Preferred Stock in December of 1999 and January of 2000. The
Defendants have denied the allegations and intend to vigorously
defend against the Plaintiffs' claims and seek all other
appropriate relief. Since the process has not proceeded beyond
the initial pleading stage, no realistic assessment can be made
with respect to the potential exposure, except to refer to the
amounts paid for the Series C Stock, approximately $12 million,
and note that the Plaintiffs seek to recover compensatory and
exemplary damages, interest, costs of court and attorneys' fees.
The Defendants have submitted the claims to their insurance
carriers.


                               -27

<PAGE>


As previously reported, we, along with 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. On March 13, 2003, a hearing was
held to determine the proper forum for the various claims. After
listening to oral arguments, the district judge granted Qwest's
motion. On April 2, 2003, we, along with the liquidating trust,
filed a petition with the Supreme Court of Nevada, asking it to
direct the district judge to reconsider her order.

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
March 31, 2003. Readers are encouraged to refer to our prior
reports 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


    EXHIBIT
      NO.     DOCUMENT DESCRIPTION
  ----------  --------------------------------------------------

    10.1      NonQualified Stock Option Agreement between the
              Registrant and Barrett N. Wissman

    10.2      NonQualified Stock Option Agreement between the
              Registrant and Steven W. Caple

    10.3      NonQualified Stock Option Agreement between the
              Registrant and Jan Robert Horsfall

    10.4      NonQualified Stock Option Agreement between the
              Registrant and John Stevens Robling

    10.5      NonQualified Stock Option Agreement between the
              Registrant and Russell W. Beiersdorf

    10.6      NonQualified Stock Option Agreement between the
              Registrant and Patrick Mackey

    10.7      NonQualified Stock Option Agreement between the
              Registrant and Susie C. Holliday

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




  (b)  Reports on Form 8-K

  On January 3, 2003, we filed a Report on Form 8-K, disclosing
  that we executed a purchase agreement with Ad Astra Holdings
  LP ("Ad Astra") and Paciugo Management LLC, the sole general
  partner of Ad Astra ("PMLLC"), and the collective equity
  owners of both Ad Astra and PMLLC, being Ugo Ginatta,
  Cristiana Ginatta and Vincent Ginatta and describing the
  material terms on December 19, 2002.

  On January 30, 2003, we filed a Report on Form 8-K, disclosing
  the resignation of Barrett N. Wissman as our President, his
  subsequent selection as our new Chairman and the appointment
  of Steven W. Caple as our new President.

  On March 4, 2003, we filed a Report on Form 8-K/A, Amendment
  No. 1, disclosing the audited combined financial statements of
  Paciugo Management, LLC for the year ended December 31, 2002
  and unaudited pro forma condensed consolidated financial
  statements of the Company for the year ended June 30, 2002 and
  the six months ended December 31, 2002 giving effect to the
  acquisition of the Initial Interest in Paciugo.



                              -28-

<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:  May 15, 2003      By:     /s/ Steven W. Caple
                            -------------------------------
                              Steven W. Caple
                              President
                              (Principal Executive Officer)



Date:  May 15, 2003      By:     /s/ Susie C. Holliday
                            --------------------------------
                              Susie C. Holliday
                              Senior Vice President
                              (Principal Accounting Officer)



                              -29-

<PAGE>

I, Steven W. Caple, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q (this
     "Quarterly Report") of Novo Networks, Inc. ("Novo
     Networks").

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.   The 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 have:

     a)   designed such disclosure controls and procedures to
          ensure that material information relating to Novo
          Networks, 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 the evaluation as of the Evaluation
          Date.

5.   The other certifying officer and I have disclosed, based on
     the most recent evaluation, to Novo Networks' auditors and
     the audit committee:

     a)   all significant deficiencies in the design or operation
          of internal controls that could adversely affect the
          ability to record, process, summarize and report
          financial data and have identified for Novo Networks'
          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 Novo Networks' internal controls.

6.   The 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 the most recent evaluation, including any corrective
     actions with regard to significant deficiencies and material
     weaknesses.

Date: May 15, 2003

   /s/ Steven W. Caple
-------------------------
Steven W. Caple
President
(Principal Executive Officer)




                              -30-

<PAGE>

I, Susie C. Holliday, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q (this
     "Quarterly Report") of Novo Networks, Inc. ("Novo
     Networks").

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.   The 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 have:

     a)   designed such disclosure controls and procedures to
          ensure that material information relating to Novo
          Networks, 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 the evaluation as of the Evaluation
          Date.

5.   The other certifying officer and I have disclosed, based on
     the most recent evaluation, to Novo Networks' auditors and
     the audit committee:

     a)   all significant deficiencies in the design or operation
          of internal controls that could adversely affect the
          ability to record, process, summarize and report
          financial data and have identified for Novo Networks'
          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 Novo Networks' internal controls.

6.   The 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 the most recent evaluation, including any corrective
     actions with regard to significant deficiencies and material
     weaknesses.

Date: May 15, 2003

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




                              -31-

<PAGE>


                        TABLE OF EXHIBITS
                       ------------------


    EXHIBIT
      NO.     DOCUMENT DESCRIPTION
  ----------  --------------------------------------------------

    10.1      NonQualified Stock Option Agreement between the
              Registrant and Barrett N. Wissman

    10.2      NonQualified Stock Option Agreement between the
              Registrant and Steven W. Caple

    10.3      NonQualified Stock Option Agreement between the
              Registrant and Jan Robert Horsfall

    10.4      NonQualified Stock Option Agreement between the
              Registrant and John Stevens Robling

    10.5      NonQualified Stock Option Agreement between the
              Registrant and Russell W. Beiersdorf

    10.6      NonQualified Stock Option Agreement between the
              Registrant and Patrick Mackey

    10.7      NonQualified Stock Option Agreement between the
              Registrant and Susie C. Holliday

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





                              -32-