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, 2002

                               OR

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

 For the transition period from _____________ to ______________


                 COMMISSION FILE NUMBER 0-28579


                       NOVO NETWORKS, INC.
      (Exact name of registrant as specified in its charter)


          DELAWARE                         75-2233445
     (State or other                    (I.R.S. Employer
jurisdiction of incorporation)          Identification No.)


                 300 CRESCENT COURT, SUITE 1760
                       DALLAS, TEXAS 75201
             (Address of principal executive offices)

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


     Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                        Yes   X    No
                            -----     -----

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

On May 13, 2002, 52,323,701 shares of the registrant's common
stock, $.00002 par value per share, were outstanding.


<PAGE>

                       NOVO NETWORKS, INC.

                   QUARTERLY REPORT FORM 10-Q
                              INDEX



                                                     PAGE NO.
PART I:   FINANCIAL INFORMATION                      --------

Item 1.Financial Statements

       Consolidated Balance Sheets as of
          March 31, 2002 and June 30, 2001............   3

       Consolidated Statements of Operations
         for the three and nine months ended
         March 31, 2002 and 2001......................   4

       Consolidated Statements of Cash Flows
         for the nine months ended March
         31, 2002 and 2001............................   5

       Notes to Consolidated Financial Statements.....   6

Item 2.Management's Discussion and Analysis of
        Financial Condition and Results of
        Operations....................................  13

Item 3.Quantitative and Qualitative Disclosures
        About Market Risk.............................  25


PART II:    OTHER INFORMATION

Item 1.Legal Proceedings..............................   26

Item 2.Changes in Securities and Use of Proceeds......   26

Item 3.Defaults Upon Senior Securities................   27

Item 4.Submission of Matters to a Vote
          of Securities Holders.......................   27

Item 5.Other Information..............................   27

Item 6.Exhibits and Reports on Form 8-K...............   27

Signatures............................................   28



                               -2-

<PAGE>

                       NOVO NETWORKS, INC.
                   CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>


                                                              March 31,       June 30,
ASSETS                                                          2002           2001
                                                            ------------   ------------
                                                             (unaudited)


                                                         <c>            <c>
CURRENT ASSETS
  Cash and cash equivalents                                 $ 12,512,060   $ 16,696,537
  Accounts receivable, less allowances for
    doubtful accounts ($4,589,647 at June 30, 2001)                    -      2,521,408
  Prepaid expenses and other receivables                         583,522      1,066,518
  Deposits                                                        67,108        420,379
  VAT receivable                                                       -      1,405,929
  Assets to be liquidated                                        718,776              -
                                                            ------------   ------------
                                                              13,881,466     22,110,771
                                                            ------------   ------------
LONG-TERM ASSETS
  Restricted cash                                                      -         94,180
  Deposits                                                         8,979        811,482
  Network equipment under capital leases, net                          -      4,404,587
  Property and equipment, net                                    562,546      5,699,577
  Equity investments                                           2,956,166      4,776,772
                                                            ------------   ------------
                                                               3,527,691     15,786,598
                                                            ------------   ------------
                                                            $ 17,409,157   $ 37,897,369
                                                            ============   ============

LIABILITIES & STOCKHOLDERS' EQUITY

LIABILITIES
  Capital leases                                            $          -   $  8,865,698
  Accounts payable                                               455,234      3,601,650
  Accrued other                                                2,854,153      7,480,259
  Restructuring accrual                                                -        426,297
  Accrued interest payable                                             -        134,683
  Customer deposits and deferred revenues                          2,000        742,486
                                                            ------------   ------------
                                                               3,311,387     21,251,073
                                                            ------------   ------------


COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
  Preferred stock, $0.00002 par value, $1,000
    liquidation preference, authorized 25,000,000
    shares, issued and outstanding, 26,697 and
    26,395 shares, respectively                                        -              -
  Common stock, $0.00002 par value, authorized
    200,000,000 shares, issued and outstanding,
    52,323,701 shares                                              1,050          1,050
     Additional paid-in capital                              256,363,564    255,908,448
     Accumulated deficit                                    (242,193,927)  (238,823,764)
     Deferred compensation                                       (72,917)      (439,438)
                                                            ------------   ------------
                                                              14,097,770     16,646,296
                                                            ------------   ------------
                                                            $ 17,409,157   $ 37,897,369
                                                            ============   ============
</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,
                                                       ---------------------------    ---------------------------
                                                           2002           2001            2002           2001
                                                       -------------  -------------   -------------  ------------
                                                                (unaudited)                    (unaudited)

                                                    <c>            <c>             <c>            <c>
Revenues                                               $           -  $  19,749,715   $  10,486,982  $  58,940,396

Operating expenses:
  Direct costs                                                94,031     19,244,797      14,614,766     57,278,922
  Selling, general and administrative expenses             1,776,626      7,256,348       9,816,721     22,260,358
  Stock-based compensation                                    36,431              -         366,521              -
  Reorganization and restructuring charge                          -        (19,499)              -      4,305,952
  Impairment loss                                                  -    111,862,461         121,932    111,862,461
  Depreciation and amortization                               51,749      6,539,092       1,337,033     19,479,700
                                                       -------------  -------------   -------------  -------------
                                                           1,958,837    144,883,199      26,256,973    215,187,393
                                                       -------------  -------------   -------------  -------------
Loss from operations, before
  other (income) expense                                  (1,958,837)  (125,133,484)    (15,769,991)  (156,246,997)

Other (income) expense
  Interest expense (income), net                             (60,036)        40,513          62,209       (413,812)
  Equity in loss of investments                              366,478      1,880,052       1,429,127      7,292,626
  Foreign currency loss                                        3,007         40,521          98,135         62,702
  (Gain) loss on net assets to be liquidated               1,634,054              -     (14,067,282)             -
  Other                                                       73,114        186,301        (377,133)       281,321
                                                       -------------  -------------   -------------  -------------
                                                           2,016,617      2,147,387     (12,854,944)     7,222,837
                                                       -------------  -------------   -------------  -------------

Net loss                                               $  (3,975,454) $(127,280,871)  $  (2,915,047) $(163,469,834)
                                                       -------------  -------------   -------------  -------------


Imputed preferred dividend                                         -              -               -     (2,299,750)
Series D dividends for the period                            152,548              -         455,116              -
                                                       -------------  -------------   -------------  -------------

Net loss available to common
  shareholders                                         $  (4,128,002) $(127,280,871)  $  (3,370,163) $(165,769,584)
                                                       =============  =============   =============  =============

  Net loss per share - (basic and diluted)             $       (0.08) $       (2.43)  $       (0.06) $       (3.18)
                                                       =============  =============   =============  =============

  Weighted average number of shares
    outstanding - (basic and diluted)                     52,323,701     52,462,631      52,323,701     52,189,118
                                                       =============  =============   =============  =============

</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,
                                                            ----------------------------
                                                                2002          2001
                                                            -------------  -------------
                                                                    (unaudited)

                                                         <c>            <c>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                  $  (2,915,047) $(163,469,834)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
    Depreciation and amortization                               1,337,033     19,479,700
    Other non-cash charges and credits:
     Stock-based compensation                                     366,521        700,500
     Bad debt expense                                           2,460,000      1,575,284
     Equity in loss of investments                              1,429,127      7,292,626
     Loss on sale of fixed assets                                  63,680      1,436,221
     Impairment loss                                              121,932    111,862,461
     Write off of prepaids and other intangibles                        -        121,826
     Write off of VAT receivable                                1,405,929              -
     Intrinsic value of stock options                                   -        877,952
     Gain on net assets to be liquidated                      (14,067,282)             -
    Change in operating assets and liabilities:
     Accounts receivable                                         (316,929)    (5,766,382)
     Prepaid expenses and other receivables                       196,720       (192,147)
     VAT receivable                                                     -        715,371
     Restricted cash                                               18,830        (94,180)
     Accounts payable                                           7,061,854       (339,320)
     Accrued other                                               (755,955)     5,806,067
     Accrued interest payable                                     115,688        121,148
     Customer deposits and deferred revenue                      (257,693)       458,223
                                                            -------------  -------------
Net cash used in operating activities                          (3,735,592)   (19,414,484)
                                                            -------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Deposits (made) received                                         23,080       (546,143)
  Purchase of property and equipment                                    -     (2,828,114)
  Sale of property and equipment                                  183,326         87,782
  Net cash resulting from dispositions                                  -       (262,703)
  (Investments in) Distributions from investments                 391,479     (1,055,112)
                                                            -------------  -------------
Net cash provided by (used in) investing activities               597,885     (4,604,290)
                                                            -------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Shareholder repayment of note receivable                              -         96,984
  Payments on capital leases                                   (1,119,486)    (2,107,544)
  Repayments on notes payable                                           -        335,000
  Issuance of notes receivable - affiliate, net                         -        (84,096)
  Issuance of common and preferred stock                                -      6,524,000
                                                            -------------  -------------
Net cash provided by (used in) financing activities            (1,119,486)     4,764,344
                                                            -------------  -------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                        (4,257,193)   (19,254,430)
CASH HELD BY SUBSIDIARIES IN BANKRUPTCY TO BE LIQUIDATED           72,716              -
CASH AND CASH EQUIVALENTS, beginning of period                 16,696,537     40,764,246
                                                            -------------  -------------
CASH AND CASH EQUIVALENTS, end of period                    $  12,512,060  $  21,509,816
                                                            =============  =============

----------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

  Cash paid for:
    Interest                                                $     496,839  $   1,025,687
                                                            =============  =============
     Taxes                                                  $           -  $           -
                                                            =============  =============

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

  Purchases of equipment under capital leases               $           -  $   2,311,153
                                                            =============  =============

</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
  international telecommunications services over a facilities-
  based network. References to "Novo Networks," "we," "us" or
  "our" refer to Novo Networks, Inc., the ultimate parent of
  these operating subsidiaries and the registrant under the
  Securities Exchange Act of 1934. We will refer to the
  subsidiaries that have gone through bankruptcy proceedings
  under Chapter 11 of the Bankruptcy Code as our "debtor
  subsidiaries" throughout this Quarterly Report.

  Due to the ongoing liquidation of substantially all of our
  debtor subsidiaries' assets, pursuant to a liquidation plan
  confirmed by the Bankruptcy Court, we currently have no
  operations. We are not providing any products or services of
  any kind (including telecommunications services) to any
  customers. As discussed further below, in the accompanying
  consolidated financial statements, we have applied (i)
  liquidation accounting to our debtor subsidiaries and (ii)
  going concern accounting to Novo Networks.

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

  (b) Bankruptcy Proceedings

  On April 2, 2001, one of our subsidiaries, Internet Global
  Services, Inc., or iGlobal, filed a voluntary petition under
  Chapter 7 of the Bankruptcy Code in the United States
  Bankruptcy Court for the Northern District of Texas, due to
  iGlobal's inability to service its debt obligations,
  contingent liabilities and Novo Network's inability to raise
  sufficient capital to continue to fund operating losses at
  iGlobal. As a result of the Chapter 7 filing, during the year
  ended June 30, 2001, we recorded an impairment loss of $62.4
  million, the majority of which related to non-cash goodwill
  recorded in connection with the acquisition of iGlobal (see
  note 8).

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

                               -6-

  <PAGE>

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

  <TABLE>
  <CAPTION>


                                                                   Status as of     Subject to
                                                                     May 13,     Bankruptcy Plan
              Wholly Owned Subsidiary              Date Acquired      2002*      or Proceedings?
    ------------------------------------------    --------------   -----------   ----------------
   
                                               <c>             <c>             <c>
   Novo Networks Operating Corp.                       2/8/00**       Active     Yes, Chapter 11
   AxisTel Communications, Inc.                       9/23/99        Inactive    Yes, Chapter 11
   Novo Networks International Services, Inc.         9/23/99        Inactive    Yes, Chapter 11
   Novo Networks Global Services, Inc.                9/23/99        Inactive    Yes, Chapter 11
   Web2Dial Communications, Inc.                      9/23/99        Inactive           No
   Novo Networks Metro Services, Inc.                 9/23/99        Inactive    Yes, Chapter 11
   Novo Networks Metro Services (Virginia), Inc.      9/23/99        Inactive           No
   Novo Networks Media Services, Inc.                 9/23/99        Inactive           No
   Novo Networks (UK) Ltd.                            9/23/99        Inactive           No
   e.Volve Technology Group, Inc.                    10/20/99        Inactive    Yes, Chapter 11
   e.Volve Technology Group de Mexico, S.A. de       10/20/99          Sold             No
   C.V.
   Internet Global Services, Inc.                     3/10/00        Inactive     Yes, Chapter 7
   eVentures Holdings, LLC                             9/7/99**       Active            No

  </TABLE>

  -----------------------
  *   "Active" status indicates current operations within the
       respective entity; "Inactive" status indicates no current
       operations, but may include certain activities associated
       with the administration of its estate pursuant to a
       bankruptcy filing or plan.
  **   Indicates date of incorporation.

  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
  creditors of our debtor subsidiaries. However, subsequent to
  that date, and based largely on the fact that our debtor
  subsidiaries ceased receiving traffic from their sole
  remaining customer, a determination was made that the
  continued viability of the debtor subsidiaries was not
  realistic and a decision was made to amend the plan. The
  amended plan and amended disclosure statement were filed with
  the Bankruptcy Court on December 31, 2001. This amended plan
  contemplates a liquidation of substantially all of the assets
  of our debtor subsidiaries under Chapter 11 of the Bankruptcy
  Code, instead of a reorganization as previously planned.

  On January 14, 2002, the Bankruptcy Court approved the amended
  disclosure statement with certain minor modifications. No
  assurance can be given that our debtor subsidiaries will be
  successful in liquidating substantially all of their assets
  pursuant to the amended plan. Also, it is not possible to
  predict the outcome of the prosecution of causes of action
  against third parties, including without limitation,
  principally Qwest Communications Corporation and its
  affiliates, ("Qwest") as disclosed in the amended plan and
  amended disclosure statement.



                               -7-

  <PAGE>

  On March 1, 2002, the Bankruptcy Court confirmed the amended
  plan of the debtor subsidiaries. On April 3, 2002, the amended
  plan became effective and a liquidating trust was formed, with
  funding provided by Novo Networks in the amount of $0.2
  million. Assets to be liquidated of $0.7 million have been
  transferred to the liquidating trust subsequent to the quarter
  end.  The purpose of the trust is to collect, liquidate and
  distribute the remaining assets of the debtor subsidiaries and
  prosecute certain causes of action against various third
  parties including, without limitation, Qwest. It is not
  possible to predict the outcome or success of any bankruptcy
  proceeding or plan or the effects of such efforts on the
  business of Novo Networks or on the interests of our creditors
  or stockholders.

  As of March 31, 2002, and pursuant to the amended bankruptcy
  filings, we effectively have no operations, no sources of
  revenue and no profits unless and until we promulgate and
  implement a new business plan. We cannot predict when or if
  this new business plan will be put into place, what it may
  entail or whether we will be successful in such a new business
  venture.

2.Liquidity and Capital Resources

  As of March 31, 2002, Novo Networks had consolidated current
  assets of $13.9 million, including cash and cash equivalents
  of $12.5 million and $10.6 million of net working capital.
  Assets to be liquidated at March 31, 2002 were $0.7 million.
  Novo Networks and its non-debtor subsidiaries currently have a
  monthly cash requirement of approximately $0.2 million to fund
  recurring corporate general and administrative expenses,
  excluding costs associated with the debtor subsidiaries'
  bankruptcy proceedings. Historically, we have funded our
  subsidiary operations primarily through the proceeds of
  private placements of our common and preferred stock and
  borrowings under loan and capital lease agreements. We do not
  currently believe that either of these funding sources will be
  available in the near term. Principal uses of cash have been
  to fund (i) operating losses; (ii) acquisitions and strategic
  investments; (iii) working capital requirements and (iv)
  capital expenditures, primarily related to network equipment
  and capacity. Due to our financial performance, the lack of
  stability in the capital markets and the economy's recent
  downturn, our only source of funding, in the near term, is
  expected to be cash on hand. As discussed in Note 1, our
  debtor subsidiaries have gone through bankruptcy proceedings
  under Chapter 11 of the Bankruptcy Code. As the ultimate
  parent, we agreed to provide our debtor subsidiaries with up
  to $1.6 million in secured debtors-in-possession financing.
  Immediately prior to the confirmation hearing, we agreed to
  increase the credit facility to approximately $1.9 million,
  which had been advanced as of March 31, 2002. The credit
  facility made funds available to permit the debtor
  subsidiaries to pay employees, vendors, suppliers, customers
  and professionals consistent with the requirements of the
  Bankruptcy Code. This credit facility provided for interest at
  the rate of prime plus 3.0% per annum and has been provided
  "superpriority" lien status, meaning that we have a valid
  first lien pursuant to the Bankruptcy Code on substantially
  all of the debtor subsidiaries' assets. The facility
  maintained a default interest rate of prime plus 5.0% per
  annum.

  In connection with the amended plan being confirmed by the
  Bankruptcy Court and becoming effective on April 3, 2002, the
  credit facility was converted into a new secured note in the
  principal amount of approximately $2.5 million, representing
  the principal amount of the debtors-in-possession financing,
  accrued interest and applicable attorneys fees. 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 quarter ended March 31, 2002, no consolidated
  revenues were generated. As of December 31, 2001, e.Volve was
  no longer terminating traffic for any customers. During the
  current fiscal year, e.Volve's only customer had been Qwest,
  which accounted for approximately 70% of consolidated
  revenues. e.Volve is no longer providing services to Qwest and
  as part of our debtor subsidiaries' plan of liquidation,
  certain causes of action are expected to be brought against
  Qwest.

  We currently anticipate that we will have no revenue in the
  near term based on (i) the termination of the operations of
  our debtor subsidiaries which have historically provided all
  significant revenues for Novo Networks on a consolidated
  basis and (ii) uncertainties surrounding our plan to explore
  opportunities available in the financial services industry,
  specifically, the specialty property and casualty insurance
  markets, asset management services and other related
  businesses. Accordingly, we may be required to obtain
  additional outside funding which could be difficult to obtain
  on acceptable terms, if at all. Failure to obtain adequate
  funding will jeopardize Novo Networks' ability to continue as
  a going concern. Due to the uncertainty surrounding Novo
  Networks, management is unable to determine whether current
  available financing will be sufficient to meet the funding
  requirements of (i) our debtor subsidiaries through the
  liquidation process, (ii) ongoing general and administrative
  expenses of Novo Networks and (iii) the undetermined capital
  requirements relating to our plan to explore other
  opportunities including, without limitation, those in the
  financial services industry, specifically, the specialty
  property and casualty insurance markets, asset management
  services and other related businesses.



                               -8-

<PAGE>

3.Basis of Presentation

  The accompanying consolidated financial statements as of and
  for the three and nine month periods ended March 31, 2002 and
  2001, have been prepared by Novo Networks, without audit,
  pursuant to the interim financial statements rules and
  regulations of the United States Securities and Exchange
  Commission, or SEC. In the opinion of management, the
  accompanying consolidated financial statements include all
  adjustments necessary to present fairly the results of Novo
  Networks' 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 consolidated financial statements as of and prior to June
  30, 2001, contained in this Quarterly Report, were prepared in
  accordance with generally accepted accounting principles
  applicable to a going concern and did not purport to reflect
  or to provide for all of the possible consequences of the
  Chapter 11 bankruptcy proceedings. Specifically, the
  consolidated financial statements did not present the amounts
  that would ultimately be paid to settle liabilities and
  contingencies in the Chapter 11 bankruptcy proceedings or the
  effect of any changes made in connection with our debtor
  subsidiaries' capitalization or operations resulting from the
  amended plan. The accompanying consolidated financial
  statements should be read in conjunction with our audited
  consolidated financial statements included in our Annual
  Report on Form 10-K, as amended, for the fiscal year ended
  June 30, 2001, as filed with the SEC.

  The preparation of financial statements in conformity with
  accounting principles generally accepted in the United States
  requires management to make estimates and assumptions that
  affect the reported amounts of assets and liabilities and
  disclosure of contingent assets and liabilities at the date of
  the financial statements and the reported amounts of revenues
  and expenses during the reporting period. Actual results could
  differ from those estimates. The consolidated financial
  statements include the accounts of Novo Networks and all of
  our wholly owned subsidiaries.

  The consolidated financial statements as of and for the period
  ended March 31, 2002 contained in this Quarterly Report, are
  reflective of two separate accounting methodologies. For Novo
  Networks and our subsidiaries, which are not involved in
  bankruptcy proceedings, the financial statements, consisting
  primarily of cash, investments and office equipment, have been
  prepared in accordance with generally accepted accounting
  principles applicable to a going concern. The consolidated
  financial statements of Novo Networks presented as of March
  31, 2002 do not include the accounts of iGlobal due to our
  management's decision to abandon iGlobal operations during the
  quarter ended March 31, 2001 (see footnote 8). For our debtor
  subsidiaries, the financial statements have been prepared in
  accordance with generally accepted accounting principles
  applicable to a liquidating entity. All such assets have been
  stated at estimated realizable values. Similarly, liabilities
  have been reflected at estimated settlement amounts, subject
  to the approval of the Bankruptcy Court, with those secured by
  specific assets being offset against such assets, as allowed.
  We have recorded an accrual estimate of $1.0 million in the
  accompanying financial statements for the costs of liquidating
  substantially all of the assets of these entities. The
  estimated realizable values and settlement amounts may be
  different from the proceeds ultimately received or payments
  made.

  (a) 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, 2001, contained in our
  most recent Annual Report on Form 10-K, as amended, that
  states that our financial statements were prepared assuming
  that we will continue as a going concern, but that substantial
  doubt exists as to our ability to do so.



                               -9-

  <PAGE>

  (b) Accounting Under Bankruptcy

  As previously discussed, the March 31, 2002 financial
  statements have been prepared using the liquidation basis
  accounting for our debtor subsidiaries.

  The estimated realizable values of assets and settlement
  amounts of liabilities may be different from the proceeds
  ultimately received or payments made. As a result of
  reflecting the liquidation values of assets and liabilities,
  we have recorded a gain on net assets to be liquidated of
  $14.0 million in the accompanying consolidated statement of
  operations for the nine months ended March 31, 2002.

  The estimated realizable values of assets were based upon: (i)
  the purchase price from a sealed bid auction process for a
  contract for an indefeasible right to use, or IRU, as approved
  by the Bankruptcy Court and (ii) sale of our debtor
  subsidiaries' network assets.

  We have not provided for an income tax provision in the
  accompanying consolidated statements of operations, as
  significant net operating losses have been created in prior
  periods. Such net operating losses would eliminate any current
  or deferred tax provisions in the three and nine-month periods
  ended March 31, 2002.

  Certain fiscal 2001 balances have been reclassified for
  comparative purposes to be consistent with the fiscal 2002
  presentation. Such reclassifications have no impact on
  reported net loss. All significant inter-company accounts
  have been eliminated.

4.Long-lived Assets

  Our long-lived assets consist of property and equipment. In
  accordance with the Financial Accounting Standards Board
  Statement of Financial Accounting Standards No. 121,
  "Accounting for the Impairment of Long-lived Assets and for
  Long-lived Assets to be Disposed of," we have assessed the
  recoverability of long-lived assets by determining whether the
  net book value of the assets can be recovered through
  projected undiscounted future cash flows. The amount of
  impairment, if any, is measured based on fair value and is
  charged to operations in the period in which impairment is
  determined by management.

  During the nine months ended March 31, 2002, we recorded a
  write down of long-lived assets of $7.5 million. The amount of
  the write-down is included in gain (loss) on net assets to be
  liquidated. During fiscal 2001, we recorded an impairment loss
  related to goodwill and certain property and equipment
  totaling $120.5 million. As previously discussed, the March
  31, 2002 financial statements have been prepared on a
  liquidation basis for our debtor subsidiaries. As such, assets
  and liabilities of the debtor subsidiaries are recorded at the
  estimated realizable values of assets and estimated settlement
  amounts of liabilities.

5.Net Loss Per Share

  We calculated loss per share in accordance with SFAS No. 128,
  "Earnings Per Share". SFAS No. 128 requires dual presentation
  of basic earnings per share and diluted earnings per share on
  the face of all income statements for entities with complex
  capital structures. Basic earnings per share is computed as
  net income less preferred dividends of approximately $0.5
  million, divided by the weighted average number of common
  shares outstanding for the period. Diluted earnings per share
  reflects the potential dilution that could occur from common
  shares issuable through stock options, warrants, convertible
  preferred stock and convertible debentures. Diluted earnings
  per share has not been presented for the effects of stock
  options, warrants, convertible preferred stock and convertible
  debentures, as the effect would be antidilutive. Accordingly,
  basic and diluted earnings per share did not differ for any
  period presented.


                              -10-

<PAGE>

6.Property and Equipment

  Property and equipment at March 31, 2002 consists of leasehold
  improvements, computer equipment and furniture and fixtures.
  IRU fiber optic   circuits and network equipment at
  March 31, 2002 have been classified as assets to be liquidated.
  Each class of assets is   depreciated over its estimated useful
  life using the straight-line method. For those network assets,
  including the IRU,   depreciation has been recorded through
  December 31, 2001. On a   going forward basis and as a result
  of the plan of liquidation of substantially all of the assets
  of our debtor subsidiaries,   such assets will no longer be
  depreciated prior to liquidation.

7.Equity Investments

  We have minority equity investments in development stage
  Internet and communications companies. We account for the
  majority of our investments using the equity method. For the
  nine months ended March 31, 2002, we continued to record our
  proportionate share of equity losses, which totaled $1.4
  million. Due to declining market conditions, negative
  operating results of the investee companies, lack of investee
  liquidity and other uncertainties surrounding the
  recoverability of these investments, an impairment loss of
  $10.8 million was recorded during fiscal 2001. For those
  equity investments, which have been impaired completely, we
  ceased recording our share of losses incurred by the investee.

8.Disposal of iGlobal

  In March 2001, we made the decision to dispose of our
  investment in iGlobal. On April 2, 2001, iGlobal filed a
  voluntary petition for bankruptcy under Chapter 7 of the
  Bankruptcy Code. All of iGlobal's product offerings have been
  discontinued or abandoned. As a result of the disposition, we
  recorded an impairment loss of $62.4 million during fiscal
  2001, principally related to non-cash goodwill recorded in
  connection with the initial acquisition of iGlobal. A court
  appointed trustee controls the operations of iGlobal and,
  accordingly, we have not included the accounts of iGlobal in
  our consolidated balance sheet. The iGlobal results of
  operations have been included from March 10, 2000, the date of
  acquisition, through April 2, 2001. As a result of the
  disposition, we eliminated $3.7 million in assets excluding
  goodwill and $9.1 million in liabilities from our consolidated
  balance sheet. We believe we have no further liabilities or
  contingencies resulting from the iGlobal disposition.

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


                                         For the Nine Months
                                         Ended March 31, 2001
                                         --------------------

      Revenues                              $   57,617,039
      Loss from operations, before
        other income                        $ (144,783,079)
      Net loss available to
        common shareholders                 $ (153,888,800)
      Net loss per share -
        (basic and diluted)                 $        (2.93)
                                         ====================



9.Restructuring Charge

 In October 2000, we began the execution of a plan to
 consolidate the assets, network and management of our wholly
 owned operating subsidiaries into a single broadband network
 and communication services company. The plan had a focus on
 providing broadband and voice services to other service
 providers, which resulted in the discontinuation of retail
 Internet access services offered, principally, digital
 subscriber line access and dial-up access. We recorded
 reorganization and restructuring expense totaling approximately
 $4.3 million during the quarter ended December 31, 2000.
 Amounts not utilized for their intended purpose of $0.4 million
 were reversed to operating expense as of September 30, 2001.

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

                              -11-

 <PAGE>

 A summary of the completed reorganization and restructuring
 activities follows:

 <TABLE>
 <CAPTION>
                                         Balance at       Fiscal       Balance at
                                          June 30,         2002        March 31,
                                           2001        Utilization        2002
                                        ------------   ------------   ------------
    <c>                                 <c>            <c>            <c>
    Abandonment of leased facilities         426,297       (426,297)             -

                                        ------------   ------------   ------------
                                        $    426,297   $   (426,297)  $          -
                                        ============   ============   ============

</TABLE>

10.Subsequent Events

On May 15, 2002, we announced that Daniel J. Wilson has
resigned from the Company.  Mr. Wilson was previously
the Executive Vice President and Chief Financial Officer
of Novo Networks.  Additionally, Clark K. Hunt and Olaf
Guerrand-Hermes have resigned from the Board of Directors
of the Company.

On April 3, 2002 the amended plan became effective and a
liquidating trust was formed and funded by Novo Networks, to
collect, liquidate and distribute the trust assets and prosecute
certain causes of action against various third parties,
including, without limitation, Qwest. No assurances can be given
that claims brought against such third parties or Qwest will
be successful or that those parties will not file one or more
counterclaims.

In a stock purchase agreement dated February 28, 2002, Novo
Networks' non-debtor subsidiary, e.Volve Technology Group de
Mexico, S.A. de C.V. was sold to a related party organization
owned by former employees of the subsidiary. The transaction
closed on April 12, 2002. The buyer acquired telephony assets and
assumed certain liabilities of e.Volve Technology Group de
Mexico, S.A. de C.V. The Company expects to record a gain of
approximately $0.3 million in the fourth quarter as a result of
this transaction.


















                              -12-


<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. These
statements include without limitation, the following:

     *    statements regarding our future capital requirements
          and our ability to satisfy our capital needs;
     *    statements regarding our ability to continue as a going
          concern;
     *    statements regarding the ability of our debtor
          subsidiaries to successfully liquidate and distribute
          substantially all of their assets, pursuant to the
          amended plan, without causing a material adverse impact
          on Novo Networks;
     *    statements regarding our ability to collect amounts
          owed by Qwest and other third parties and successfully
          pursue causes of action against Qwest and other third
          parties;
     *    statements regarding the estimated liquidation value of
          assets and settlement amounts of liabilities;
     *    statements regarding our ability to successfully
          redeploy our remaining cash assets, if any, in
          diversifying our business by entering sectors or
          industries including, without limitation, the financial
          services markets; and
     *    statements regarding our ability to successfully enter
          sectors or industries including, without limitation,
          the financial services market.

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

     *    the implementation of the amended plan to liquidate
          substantially all of the remaining assets of our debtor
          subsidiaries;
     *    risks associated with our intended pursuit of other
          opportunities, including, without limitation, those in
          the financial service industry;
     *    the risks that our resources after the completion of the
          amended plan of liquidation will limit our ability to
          pursue other opportunities to a single investment;
     *    risks associated with operating losses at our operating
          subsidiaries;
     *    risks associated with increasing competition in the
          communications, financial services and other industries;
          and
     *    changes in laws and regulation that govern the
          communications and other industries.

This list is only an example of some of the risks that may affect
the forward-looking statements. If any of these risks or
uncertainties materialize (or if they fail to materialize), or if
the underlying assumptions are incorrect, then actual results may
differ materially from those projected in the forward-looking
statements.

Additional factors that could cause actual results to differ
materially from those reflected in the forward-looking statements
include those discussed in this section, elsewhere in this report
and the risks discussed in the "Risk Factors Related to Our
Company" section included in our Annual Report on Form 10-K for
our fiscal year ended June 30, 2001, as amended, filed with the
United States Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis, judgment, belief
or expectation only as of the date of this Quarterly Report. We
undertake no obligation to publicly revise these forward-looking
statements to reflect events or circumstances that arise after
the date of this report.

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

The accompanying consolidated financial statements include the
accounts of Novo Networks and our wholly owned subsidiaries for
all periods presented. On April 2, 2001, iGlobal, one of our
subsidiaries, filed a voluntary petition for protection under
Chapter 7 of the Bankruptcy Code. The financial results of
iGlobal are included in the financial statements from its
acquisition on March 10, 2000 through commencement of Chapter 7
bankruptcy proceedings on April 2, 2001. The consolidated balance
sheets of Novo Networks as of June 30, 2001 and March 31, 2002 do
not include the accounts of iGlobal due to the decision to
dispose of iGlobal during the quarter ended March 31, 2001. On
July 30, 2001, our principal operating subsidiaries, including
AxisTel and e.Volve and certain of their


                              -13-

<PAGE>


subsidiaries, filed voluntary petitions for protection under
Chapter 11 of the Bankruptcy Code. During the nine months ended
March 31, 2002, all of the revenues and direct costs reflected in
the consolidated financial statements of Novo Networks resulted
from the operations of e.Volve and AxisTel.

The consolidated financial statements as of and for the period
ended March 31, 2002, contained in this Quarterly Report, are
reflective of two separate accounting methodologies. For Novo
Networks and our subsidiaries which are not involved in
bankruptcy proceedings, the financial statements, consisting
primarily of cash, investments and office equipment, have been
prepared in accordance with generally accepted accounting
principles applicable to a going concern. For our debtor
subsidiaries, which are involved in Chapter 11 bankruptcy
proceedings, the financial statements have been prepared in
accordance with generally accepted accounting principles
applicable to a liquidating entity. All such assets have been
stated at estimated realizable values. Similarly, liabilities
have been reflected at estimated settlement amounts, subject to
the approval of the Bankruptcy Court, with those secured by
specific assets being offset against such assets, as allowed.
We have recorded an accrual estimate of $1.0 million in the
accompanying financial statements for the costs of liquidating
the assets of these entities. The estimated realizable values
and settlement amounts may be different from the proceeds
ultimately received or payments made.

Overview
--------

Due to the lack of stability in the capital markets, and sharp
downturns in both the telecommunications industry and the United
States economy as a whole, we did not raise the additional
capital required to complete the build-out of our operating
subsidiaries' global broadband network. As a result, during the
third quarter ended March 31, 2001, we:

     *    delayed capital expenditures relating to the expansion
          of the global broadband network;

     *    downsized the workforce by approximately 30%; and

     *    discontinued the operations of iGlobal.

These measures were taken in an attempt to reduce costs and
streamline operations.

Following the March 2001 restructuring, we undertook a strategic
review of our businesses. Our board of directors determined after
such a review that it was appropriate to examine the possible
sale or merger of our voice business subsidiaries in order to
maximize the potential value therein to our shareholders. We
retained JP Morgan to assist in this regard. However, JP Morgan
was unable to locate a buyer.

Faced with a continuing deterioration of their businesses and a
calamitous downturn in the telecommunications markets generally,
our operating subsidiaries took the following actions during June
of 2001:

     *    further reduced their workforce by 23, a 24% reduction;
          and

     *    evaluated their strategic options.

  During this same period, our chief executive officer, chief
  operating officer and certain directors tendered their
  resignations in order to pursue other interests. None of
  these officers or directors resigned, to the knowledge of
  current management, because of a disagreement with Novo
  Networks relating to our operations, policies or practices.

  At this same time, we announced that we were exploring the
  option of diversifying our business by entering into the
  financial services market.

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



                              -14-

  <PAGE>

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

  <TABLE>
  <CAPTION>


                                                                   Status as of     Subject to
                                                                     May 13,     Bankruptcy Plan
              Wholly Owned Subsidiary              Date Acquired      2002*      or Proceedings?
    ------------------------------------------    --------------   -----------   ----------------
   
                                                  <c>            <c>             <c>
   Novo Networks Operating Corp.                       2/8/00**       Active     Yes, Chapter 11
   AxisTel Communications, Inc.                       9/23/99        Inactive    Yes, Chapter 11
   Novo Networks International Services, Inc.         9/23/99        Inactive    Yes, Chapter 11
   Novo Networks Global Services, Inc.                9/23/99        Inactive    Yes, Chapter 11
   Web2Dial Communications, Inc.                      9/23/99        Inactive           No
   Novo Networks Metro Services, Inc.                 9/23/99        Inactive    Yes, Chapter 11
   Novo Networks Metro Services (Virginia), Inc.      9/23/99        Inactive           No
   Novo Networks Media Services, Inc.                 9/23/99        Inactive           No
   Novo Networks (UK) Ltd.                            9/23/99        Inactive           No
   e.Volve Technology Group, Inc.                    10/20/99        Inactive    Yes, Chapter 11
   e.Volve Technology Group de Mexico, S.A. de       10/20/99          Sold             No
   C.V.
   Internet Global Services, Inc.                     3/10/00        Inactive     Yes, Chapter 7
   eVentures Holdings, LLC                             9/7/99**       Active            No

  </TABLE>
  ----------------------
  *   "Active" status indicates current operations within the
       respective entity; "Inactive" status indicates no current
       operations, but may include certain activities associated
       with the administration of its estate pursuant to a
       bankruptcy filing or plan.
  **   Indicates date of incorporation.

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
creditors of our debtor subsidiaries. However, subsequent to that
date, and based largely on the fact that our debtor subsidiaries
ceased receiving traffic from their sole remaining customer, a
determination was made that the continued viability of the debtor
subsidiaries was not realistic and a decision was made to amend
the plan. The amended plan and amended disclosure statement were
filed with the Bankruptcy Court on December 31, 2001. This
amended plan contemplates a liquidation of substantially all of
the assets of our debtor subsidiaries under Chapter 11 of the
Bankruptcy Code, instead of a reorganization as previously
planned.

On January 14, 2002, the Bankruptcy Court approved the amended
disclosure statement with certain minor modifications. No
assurance can be given that our debtor subsidiaries will be
successful in liquidating substantially all of their assets
pursuant to the amended plan. Also, it is not possible to predict
the outcome of the prosecution of causes of action against third
parties, including Qwest, without limitation as disclosed in the
amended plan and amended disclosure statement and this Quarterly
Report.



                              -15-

<PAGE>

On March 1, 2002, the Bankruptcy Court confirmed the amended plan
of the debtor subsidiaries. On April 3, 2002, the amended plan
became effective and a liquidating trust was formed, with funding
provided by Novo Networks in the amount of $0.2 million. Assets to
be liquidated of $0.7 million have been transferred to the
liquidating trust subsequent to the quarter end.  The purpose of
the trust is to collect, liquidate and distribute the remaining
assets of the debtor subsidiaries and prosecute certain causes of
action against various third parties including, without limitation,
Qwest. It is not possible to predict the outcome or success of any
bankruptcy proceeding or plan or the effects of such efforts on the
business of Novo Networks or on the interests of our creditors or
stockholders.

As of March 31, 2002, and pursuant to the amended bankruptcy
filings, we effectively have no operations, no sources of revenue
and no profits unless and until we promulgate and implement a new
business plan. We cannot predict when or if this new business
plan will be put into place, what it may entail or whether we
will be successful in such a new business venture.

During the quarter ended March 31, 2002, no revenue was generated
based on (i) the termination of operations of our debtor
subsidiaries, which have historically provided all significant
revenues for Novo Networks and (ii) uncertainty surrounding our
plans to explore opportunities available in the financial
services industry, including, specifically, the specialty
property and casualty insurance markets, asset management
services and other related businesses. As of December 31, 2001,
e.Volve was no longer terminating traffic for any customers.
During the current fiscal year, e.Volve's only customer had been
Qwest, which accounted for approximately 70% of consolidated
revenues for the nine months ended March 31, 2002. e.Volve is no
longer providing services to Qwest, and as part of our debtor
subsidiaries' amended plan of liquidation, substantially all of
the assets associated with such services are being liquidated and
certain causes of action are expected to be brought against
Qwest. In addition and in connection with the debtor
subsidiaries' bankruptcy proceedings, AxisTel ceased all
broadband services and as part of our debtor subsidiaries'
amended plan of liquidation substantially all of the assets
associated with such services are being liquidated and certain
causes of action have been and others are expected to be brought
against third parties.

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 plan of liquidation, substantially
all of the telecommunications network assets of the debtor
subsidiaries are being sold, and Novo Networks will be unable to
provide such services in the future.

REVENUES.  For the quarter ended March 31, 2002, there were no
revenues generated. Historically, we derived substantially all of
our consolidated revenues from the sale of voice and broadband
services of e.Volve and AxisTel. Agreements with wholesale
customers for the provisions of these services were typically
short term in duration and rates were subject to change from time
to time. Qwest accounted for 70% of the consolidated revenues for
the nine months ended March 31, 2002. Since December of 2001,
e.Volve has not terminated voice traffic for Qwest or any other
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 in the near term.

DIRECT COSTS.  Direct costs include per minute termination
charges, lease payments and fees for fiber optic cable.
Historically, the call termination expense component of
these direct costs has declined as measured on a cost per
minute basis. Additionally, while direct costs incurred for
leasing communications network capacity have declined,
existing lease agreements are generally at fixed rates for
periods of one year or longer.

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

                              -16-

<PAGE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  These expenses
include general corporate expenses, management and operations
salaries and expenses, professional fees, sales and marketing
expenses, travel expenses, benefits, facilities costs and
administrative expenses. Currently we maintain our corporate
headquarters in Dallas, Texas. On July 29, 2001, we entered into
an Administrative Services Agreement with our debtor subsidiaries
pursuant to which we agreed to provide our debtor subsidiaries
with accounting, billing and collections, human resources,
payroll, information systems, operational and network support,
limited non-bankruptcy legal and regulatory services and various
related secretarial and administrative services. In return for
these services, our debtor subsidiaries paid a weekly fee of
$30,000. As of March 31, 2002, our debtor subsidiaries had an
outstanding payable to Novo Networks relating to this agreement
of $0.4 million, which is eliminated in consolidation. The
administrative services agreement terminated on the effective
date of the amended plan. In order to administer the amended
plan, we expect to enter into another administrative service
agreement with our debtor subsidiaries.

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

EQUITY IN LOSS OF INVESTMENTS.  Equity in loss of investments
results from our minority ownership in certain non-impaired
investments that are accounted for under the equity method of
accounting. Under the equity method, our proportionate share of
each of our affiliate's operating losses and amortization of our
net excess investment over our equity in each of our investment's
net assets is included in equity in loss of affiliates. We
anticipate that our strategic investments will continue to incur
operating losses and we expect to record future charges to
earnings as we record our proportionate share of such losses
incurred by the investee. For those equity investments, which
have been impaired completely, we ceased recording our share of
losses incurred by the investee.

(GAIN) LOSS ON NET ASSETS TO BE LIQUIDATED.  (Gain) loss on net
assets to be liquidated results from liquidation accounting for
our debtor subsidiaries, which are involved in Chapter 11
bankruptcy proceedings. All debtor subsidiary assets have been
stated at estimated realizable values. Similarly, liabilities
have been reflected at estimated settlement amounts, subject to
the approval of the Bankruptcy Court, with those secured by
specific assets being offset against such assets, as allowed. The
estimated realizable values and settlement amounts may be
different from the proceeds ultimately received or payments made.


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

The table below summarizes our operating results.


<TABLE>
<CAPTION>

                                              Three Months Ended March 31,              Nine Months Ended March 31,
                                        -----------------------------------------  -----------------------------------------
                                            2002        %        2001         %        2002        %         2001        %
                                        -------------------  --------------------  -------------------   -------------------
                                                      (unaudited)                            (unaudited)

                                     <c>             <c>  <c>            <c>    <c>           <c>     <c>            <c>
Revenues                                $         -     0.0% $  19,749,715  100.0% $ 10,486,982  100.0%  $  58,940,396  100.0%

Operating expenses:
  Direct costs                               94,031     0.0%    19,244,797   97.4%   14,614,766  139.4%     57,278,922   97.2%
  Selling, general and administrative
    expenses                              1,776,626     0.0%     7,256,348   36.7%    9,816,721   93.6%     22,260,358   37.8%
  Stock-based compensation                   36,431     0.0%             -    0.0%      366,521    3.5%              -    0.0%
  Reorganization and restructuring
     charge                                       -     0.0%       (19,499)  (0.1%)           -    0.0%      4,305,952    7.3%
  Impairment loss                                 -     0.0%   111,862,461  566.4%      121,932    0.0%    111,862,461  189.8%
  Depreciation and amortization              51,749     0.0%     6,539,092   33.1%    1,337,033   12.7%     19,479,700   33.0%
                                        -------------------  --------------------  -------------------   --------------------
                                          1,958,837     0.0%   144,883,199  733.6%   26,256,973  250.4%    215,187,393  365.1%
                                        -------------------  --------------------  -------------------   --------------------
Loss from operations, before
  other (income) expense                 (1,958,837)    0.0%  (125,133,484)(633.6%) (15,769,991)(150.4%)  (156,246,997)(265.1)%)

Other (income) expenses:
  Interest expense (income), net            (60,036)    0.0%        40,513    0.2%       62,209    0.6%       (413,812)  (0.7%)
  Equity in loss of investments             366,478     0.0%     1,880,052    9.5%    1,429,127   13.6%      7,292,626   12.4%
  Foreign currency loss                       3,007     0.0%        40,521    0.2%       98,135    0.9%         62,702    0.1%
  (Gain) loss on net assets to
    be liquidated                         1,634,054     0.0%             -    0.0%  (14,067,282)(134.1%)             -    0.0%
  Other                                      73,114     0.0%       186,301    0.9%     (377,133)  (3.6%)       281,321    0.5%
                                        -------------------  --------------------  -------------------   --------------------
                                          2,016,617     0.0%     2,147,387   10.9%  (12,854,944)(122.6%)     7,222,837   12.3%
                                        -------------------  --------------------  -------------------   --------------------

Net loss                                $(3,975,454)         $(127,280,871)        $ (2,915,047)          (163,469,834)
                                        -----------          -------------        -------------          -------------
Imputed preferred dividend                        -                      -                    -             (2,299,750)
Series D dividends for the period           152,548                      -              455,116                      -
                                        -----------          -------------        -------------          -------------
Net loss available to common
  shareholders                          $(4,128,002)         $(127,280,871)        $ (3,370,163)         $(165,769,584)
                                        ===========          =============        =============          =============


  Net loss per share -
    (basic and diluted)                 $      (0.08)        $       (2.43)       $       (0.06)         $       (3.18)
                                        ============         =============        =============          =============

  Weighted average number of
    shares outstanding - (basic
    and diluted)                          52,323,701            52,462,631           52,323,701             52,189,118
                                        ============         =============        =============          =============

</TABLE>





                              -17-

<PAGE>




Three months ended March 31, 2002 Compared to Three months ended
March 31, 2001
---------------------------------------------------------------

REVENUES.  There were no revenues during the three months ended
March 31, 2002 as compared to $19.7 million during the three
months ended March 31, 2001. No revenue was generated for the
three months ended March 31, 2002 based on (i) the termination of
operations of our debtor subsidiaries, which have historically
provided all significant revenues for Novo Networks and (ii)
uncertainty surrounding our plans to explore other opportunities,
including without limitation, those available in the financial
services industry, specifically, the specialty property and
casualty insurance markets, asset management services and other
related businesses. Revenues for the three months ended March 31,
2001 were generated through the sale of (i) 96% voice services
and (ii) 2% broadband services and (iii) 2% Internet services.

No minutes were transmitted during the three months ended March
31, 2002 versus 210.2 million minutes during the three months
ended March 31, 2001. No revenues during the three months ended
March 31, 2002 resulted from the termination of operations of the
data, wholesale and prepaid card businesses for AxisTel, as well
as no minutes to Mexico for e.Volve. As a result of the iGlobal
bankruptcy filing, there were no Internet service revenues during
the current reporting period.

DIRECT COSTS.  Direct costs decreased to $94,000 during the three
months ended March 31, 2002 from $19.2 million during the three
months ended March 31, 2001. Direct costs during the current
quarter period resulted from the completion of network cost
accruals as a result of actual invoices received, which differed
from original estimates.

SELLING, GENERAL AND ADMINISTRATIVE.  Selling, general and
administrative expenses decreased to $1.8 million during the
three months ended March 31, 2002 from $7.3 million in the prior
year period, a decrease of 75%. Selling, general and
administrative expenses during the three months ended March 31,
2002 decreased primarily due to (i) downsizing of the workforce,
(ii) closing facilities and (iii) termination of operations as a
result of the various bankruptcy proceedings and professional
fees related to such proceedings. We anticipate that selling,
general and administrative expenses will continue to decrease
significantly as a result of the recent measures implemented to
reduce costs and the conclusion of the various bankruptcy
proceedings.

IMPAIRMENT LOSS.  During the quarter ended March 31, 2001, we
recorded an impairment loss totaling $111.9 million related to
(i) our investment in iGlobal, (ii) goodwill relating to the
prior acquisitions, (iii) investments in affiliates and (iv)
property and equipment. As previously discussed, as of March 31,
2001, we had made the decision to discontinue all iGlobal product
offerings, services and operations which resulted in recording an
impairment loss of $64.5 million, comprised primarily of the
write-off of non-cash goodwill. Further, in assessing the
recoverability of the remaining goodwill related to prior
acquisitions, we recorded an impairment loss of $24.2 million. We
recorded an impairment loss of $11.2 million related to our
investments in affiliates as a result of the declining market
conditions and the uncertainties surrounding the recoverability
of our investments. Additionally, in assessing the recoverability
of the Company's IRU fiber optic circuit, which had an estimated
useful life of 20 years, we recorded an impairment charge of
$11.9 million, which included the write-off of $1.6 million in
prepaid IRU maintenance fees.

DEPRECIATION AND AMORTIZATION.  As a result of the reorganization
transactions in September 1999 and October 1999 and the
acquisition of iGlobal in March 2000, we recorded approximately
$116.0 million in goodwill. During fiscal 2001 all of the
goodwill was written-off; therefore, no amortization of goodwill
was recorded during the three months ended March 31, 2002.
Amortization of goodwill during the three months ended March 31,
2001 was $5.1 million. To the extent there are no future
acquisitions, we do not anticipate incurring any additional
amortization expense due to the goodwill impairment charges
recorded during the March 2001 period. Depreciation recorded on
fixed assets during the current period totaled $52,000 compared
to $1.4 million for the prior period. Reduced depreciation
expense during the current quarter is the result of asset
impairment charges taken during the fiscal year ended June 30,
2001 and liquidation accounting for our debtor subsidiaries for
the three months ended March 31, 2002.



                              -18-

<PAGE>

INTEREST EXPENSE (INCOME), NET.  We recorded interest income, net
of interest expense from cash investments, of $60,000 for the
three months ended March 31, 2002 compared to interest expense,
net of interest income from cash investments of $41,000 for the
three months ended March 31, 2001. The increase in interest
income during the March 31, 2002 quarter resulted from reduced
interest expense as a result of no capital lease obligations
during the current quarter, net of decreases in interest income
resulting from lower cash balances.

EQUITY IN LOSS OF INVESTMENTS.  Equity in loss of investments
resulted from our minority ownership in certain investments that
are accounted for under the equity method of accounting. Under
the equity method, our proportionate share of each of our
investment's operating losses and amortization of our net excess
investment over equity in each of our investment's net assets is
included in equity in loss of affiliates. Equity in loss of
investments was $0.4 million during the three months ended March
31, 2002 compared to $1.9 million in the prior year period. This
loss primarily resulted from our 22% equity interest in Gemini
Voice Solutions (formerly PhoneFree.com). We anticipate that our
strategic investments accounted for under the equity method will
continue to recognize operating losses, which will result in
future charges to earnings as we record our proportionate share
of such losses. For those investments that were impaired
completely in fiscal 2001, we have ceased recording our share of
losses incurred by the investee.

FOREIGN CURRENCY LOSS.  Foreign currency loss during the three
months ended March 31, 2002 was $3,000 compared to a loss of
$41,000 during the prior year period. This variance was the
result of substantially reduced operations in Mexico during the
current quarter.

(GAIN) LOSS ON NET ASSETS TO BE LIQUIDATED.  During the three
months ended March 31, 2002 we recorded a loss on net assets to
be liquidated of $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.


Nine months ended March 31, 2002 Compared to Nine months ended
March 31, 2001
--------------------------------------------------------------

REVENUES.  Revenues decreased to $10.5 million during the nine
months ended March 31, 2002 from $58.9 million during the nine
months ended March 31, 2001, a decrease of 82%. Revenues for the
nine months ended March 31, 2002 were generated through the sale
of (i) 97% voice services and (ii) 3% broadband services.
Revenues for the nine months ended March 31, 2001 were generated
through the sale of (i) 95% voice services, (ii) 3% broadband
services and (iii) 2% Internet services. We anticipate that no
revenue will be generated in the near future based on (i) the
termination of operations of our debtor subsidiaries, which have
historically provided all significant revenues for Novo Networks,
and (ii) uncertainties surrounding our plans to explore
opportunities available in the financial services industry,
including, specifically, the specialty property and casualty
insurance markets, asset management services and other related
businesses.

During the nine months ended March 31, 2002, we transmitted 134.1
million minutes versus 594.4 million minutes during the nine
months ended March 31, 2001, a decrease of 77%. The decrease in
revenues during the nine months ended March 31, 2002 resulted
from the significant decrease and eventual termination of
operations for AxisTel and e.Volve. The decrease can also be
attributed to lower rates per minute earned on all voice traffic
during the current period. As a result of the iGlobal bankruptcy
filing there were no Internet service revenues during the current
reporting period.

DIRECT COSTS.  Direct costs decreased to $14.6 million during the
nine months ended March 31, 2002 from $57.3 million during the
nine months ended March 31, 2001, a decrease of 75%. Direct costs
decreased approximately $42.7 million during the current year
period as a result of the decreased volume of minutes transmitted
over our network.

SELLING, GENERAL AND ADMINISTRATIVE.  Selling, general and
administrative expenses decreased to $9.8 million during the nine
months ended March 31, 2002 from $22.3 million in the prior year
period, a decrease of 56%. Selling, general and administrative
expenses during the nine months ended March 31, 2002 decreased
primarily due to (i) downsizing of the workforce, (ii) closing
facilities and (iii) termination of operations as a result of the
various bankruptcy proceedings, offset by nonrecurring increases
in bad debt expenses and professional fees related to such
proceedings. We anticipate that selling, general and
administrative expenses will continue to decrease significantly
as a result of the recent measures implemented to reduce costs
and the conclusion of the various bankruptcy proceedings.




                              -19-

<PAGE>

REORGANIZATION AND RESTRUCTURING CHARGE.   In October 2000, we
began execution of a plan to consolidate the assets, network and
management of our wholly owned operating subsidiaries into a
single broadband  network and communication services company.
Additionally, the plan had a renewed focus on providing broadband
and voice services to other service providers, which resulted in
the discontinuation of retail Internet access services offered,
principally, digital subscriber line access and dial-up access.
We recorded reorganization and restructuring expense totaling
$4.3 million during the nine months ended March 31, 2001.  The
reorganization and restructuring resulted in the elimination of
19 positions, which occurred over approximately a  three-month
period. The reorganization and restructuring charge of $4.3
million includes cash expenditures totaling $2.0 million  related
to (i) personnel severance of $0.6 million, (ii) lease abandonment
of $1.0 million, and (iii) other costs of $0.4 million and $2.4
million of non-cash charges, primarily for the write-down of
impaired assets and the expense associated with intrinsic value
of stock options issued to a former employee.

IMPAIRMENT LOSS.  During the nine months ended March 31, 2001, we
recorded an impairment loss totaling $111.9 million related to
(i) our investment in iGlobal, (ii) goodwill relating to prior
acquisitions, (iii) investments in affiliates and (iv) property
and equipment. As previously discussed, as of March 31, 2001, we
had made the decision to discontinue all iGlobal product
offerings, services and operations which resulted in recording an
impairment loss of $64.5 million, comprised primarily of the
write-off of non-cash goodwill. Further, in assessing the
recoverability of the remaining goodwill related to prior
acquisitions, we recorded an impairment loss of $24.2 million. We
recorded an impairment loss of $11.2 million related to our
investments in affiliates as a result of the declining market
conditions and the uncertainties surrounding the recoverability
of our investments. Additionally, in assessing the recoverability
of the Company's IRU fiber optic circuit, which had an estimated
useful life of 20 years, we recorded an impairment charge of
$11.9 million, which included the write-off of $1.6 million in
prepaid IRU maintenance fees.

DEPRECIATION AND AMORTIZATION.  As a result of the reorganization
transactions in September 1999 and October 1999 and the
acquisition of iGlobal in March 2000, we recorded approximately
$116.0 million in goodwill. During fiscal 2001 all of the
goodwill was written-off, therefore no amortization of goodwill
was recorded during the nine months ended March 31, 2002.
Amortization of goodwill during the nine months ended March 31,
2001 totaled $15.4 million. To the extent there are no future
acquisitions, we do not anticipate incurring any additional
amortization expense due to the goodwill impairment charges
recorded during the March 2001 period. Depreciation recorded on
fixed assets during the current period totaled $1.3 million
compared to $4.1 million for the prior period. Reduced
depreciation expense for the nine months ended March 31, 2002 is
the result of asset impairment charges taken during the previous
fiscal year ended June 30, 2001 and liquidation accounting for
our debtor subsidiaries during the current fiscal year.

INTEREST EXPENSE (INCOME), NET.  We recorded interest expense,
net of interest income from cash investments, of $62,000 for the
nine months ended March 31, 2002 compared to interest income, net
of interest expense, of $0.4 million for the nine months ended
March 31, 2001. The decrease in interest income during the March
31, 2002 quarter resulted from lower cash balances generating
interest.

EQUITY IN LOSS OF INVESTMENTS.  Equity in loss of investments
resulted from our minority ownership in certain investments that
are accounted for under the equity method of accounting. Under
the equity method, our proportionate share of each of our
investment's operating losses and amortization of our net excess
investment over equity in each of our investment's net assets is
included in equity in loss of investments. Equity in loss of
investments was $1.4 million during the nine months ended March
31, 2002 compared to $7.3 million in the prior year period. This
loss primarily resulted from our 22% equity interest in Gemini
Voice Solutions (formerly PhoneFree.com). We anticipate that our
strategic investments accounted for under the equity method will
continue to recognize operating losses, which will result in
future charges to earnings as we record its proportionate share
of such losses. For those investments that were impaired
completely in fiscal 2001, we have ceased recording our share of
losses by the investee.

FOREIGN CURRENCY LOSS.  Foreign currency loss during the nine
months ended March 31, 2002 was $98,000 compared to a loss of
$63,000 during the prior year period. This variance was the
result of the unfavorable exchange rate fluctuations in the
Mexican peso compared to the United States dollar.



                              -20-

<PAGE>

(GAIN) LOSS ON NET ASSETS TO BE LIQUIDATED.  During the nine
months ended March 31, 2002 we recorded a gain on net assets to
be liquidated of $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, (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.


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

As of March 31, 2002, Novo Networks had consolidated current
assets of $13.9 million, including cash and cash equivalents of
$12.5 million and $10.6 million of net working capital. Assets to
be liquidated at March 31, 2002 were $0.7 million. Novo Networks
and its non-debtor subsidiaries currently have a monthly cash
requirement of approximately $0.2 million to fund recurring
corporate general and administrative expenses, excluding costs
associated with the debtor subsidiaries' bankruptcy proceedings.
Historically, we have funded our subsidiary operations primarily
through the proceeds of private placements of our common and
preferred stock and borrowings under loan and capital lease
agreements. We do not currently believe that either of these
funding sources will be available to us in the near term.
Principal uses of cash have been to fund (i) operating losses;
(ii) acquisitions and strategic investments; (iii) working
capital requirements and (iv) capital expenditures, primarily
related to network equipment and capacity. Due to our financial
performance, the lack of stability in the capital markets and the
economy's recent downturn, our only source of funding, in the
near term, is expected to be cash on hand. As discussed in Note
1, our debtor subsidiaries have gone through bankruptcy
proceedings under Chapter 11 of the Bankruptcy Code. As the
ultimate parent, we agreed to provide our debtor subsidiaries
with up to $1.6 million in secured debtors-in-possession
financing. Immediately prior to the confirmation hearing, we
agreed to increase the credit facility to approximately $1.9
million, which had been advanced as of March 31, 2002. The credit
facility made funds available to permit the debtor subsidiaries
to pay employees, vendors, suppliers, customers and professionals
consistent with the requirements of the Bankruptcy Code. This
credit facility provided for interest at the rate of prime plus
3.0% per annum and has been provided "superpriority" lien status,
meaning that we have a valid first lien pursuant to the
Bankruptcy Code on substantially all of the debtor subsidiaries'
assets. The facility maintained a default interest rate of prime
plus 5.0% per annum.

In connection with the amended plan being confirmed by the
Bankruptcy Court and becoming effective on April 3, 2002, the
credit facility was converted into a new secured note in the
principal amount of approximately $2.5 million, representing
the principal amount of the debtors-in-possession financing,
accrued interest and applicable attorneys fees. 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 quarter ended March 31, 2002, no consolidated revenues
were generated. As of December 31, 2001, e.Volve was no longer
terminating traffic for any customers. During the current fiscal
year, e.Volve's only customer had been Qwest, which accounted for
approximately 70% of consolidated revenues. e.Volve is no longer
providing services to Qwest and as part of our debtor
subsidiaries' plan of liquidation, certain causes of action are
expected to be brought against Qwest.

We currently anticipate that we will have no revenue in the near
term based on (i) the termination of the operations of our debtor
subsidiaries which have historically provided all or significant
revenues for Novo Networks on a consolidated basis and (ii)
uncertainties surrounding our plan to explore opportunities
available in the financial services industry, specifically, the
specialty property and casualty insurance markets, asset
management services and other related businesses. Accordingly, we
may be required to obtain additional outside funding which could
be difficult to obtain on acceptable terms, if at all. Failure to
obtain adequate funding will jeopardize Novo Networks' ability to
continue as a going concern. Due to the uncertainty surrounding
Novo Networks, management is unable to determine whether current
available financing will be sufficient to meet the funding
requirements of (i) our debtor subsidiaries through the
liquidation process, (ii) ongoing general and administrative
expenses of Novo Networks and (iii) the undetermined capital
requirements relating to our plan to explore other opportunities
including, without limitation, those in the financial services
industry, specifically, the specialty property and casualty
insurance markets, asset management services and other related
businesses.

CASH FLOWS FROM OPERATING ACTIVITIES.  Cash used in operating
activities for the nine months ended March 31, 2002 totaled $3.7
million compared to $19.4 million for the nine months ended March
31, 2001. The decreased use of cash in our operating activities
is primarily attributable to the downturn of operations resulting
from the bankruptcy proceedings. 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. During the nine months
ended March 31, 2001 cash flow used by operating activities
primarily resulted from operating losses, net of non-cash
charges, totaling $19.4 million and an increase in accounts
receivable of $5.8 million, partially offset by a net increase in
accounts payable and accrued liabilities of $5.5 million.


                              -21-

<PAGE>

CASH FLOWS FROM INVESTING ACTIVITIES.  Net cash provided by
investing activities was $0.6 million for the nine months ended
March 31, 2002 compared to net cash used of $4.6 million for the
same period in the prior year. Net cash provided by investing
activities in the current period consisted primarily of cash
received from one of our investees of $0.4 million. Investing
activities in the prior year period consisted primarily of
purchases of network equipment of $2.7 million and equity
investments of $1.1 million.

CASH FLOWS FROM FINANCING ACTIVITIES.  Cash flows provided by
financing activities during the nine months ended March 31, 2002
totaled $1.1 million for capital lease payments. Cash flows used
in financing activities during the prior year period totaled $4.8
million and consisted principally of (i) net proceeds from the
issuance of 7,000 shares of Series D Preferred Stock and 450,001
shares of our common stock totaling $6.5 million, and (ii)
borrowings under a credit agreement for equipment purchases of
$0.4 million, offset partially by capital lease payments of $2.1
million.

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, 2001 contained in our most recent
Annual Report on Form 10-K, as amended, that states that our
financial statements have been prepared assuming that we will
continue as a going concern, but that substantial doubt exists as
to our ability to do so.

Recent Developments
-------------------

On May 15, 2002, we announced that Daniel J. Wilson has
resigned from the Company.  Mr. Wilson was previously
the Executive Vice President and Chief Financial Officer
of Novo Networks.  Additionally, Clark K. Hunt and Olaf
Guerrand-Hermes have resigned from the Board of Directors
of the Company.

On April 3, 2002 the amended plan became effective and a
liquidating trust was formed and funded by Novo Networks, to
collect, liquidate and distribute the trust assets and prosecute
certain causes of action against various third parties,
including, without limitation, Qwest. No assurances can be given
that claims brought against such third parties or Qwest will
be successful or that those parties will not file one or more
counterclaims.

In a stock purchase agreement dated February 28, 2002, Novo
Networks' non-debtor subsidiary, e.Volve Technology Group de
Mexico, S.A. de C.V. was sold to a related party organization
owned by former employees of the subsidiary. The transaction
closed on April 12, 2002. The buyer acquired telephony assets and
assumed certain liabilities of e.Volve Technology Group de
Mexico, S.A. de C.V. The Company expects to record a gain of
approximately $0.3 million in the fourth quarter as a result of
this transaction.

Plan of Operation
-----------------

On August 21, 2001, we announced that we were attempting to
diversify our business into financial services. We are continuing
to explore the opportunities available in the financial services
industry, specifically, the specialty property and casualty
insurance markets, asset management services and other related
businesses.

Management of Novo Networks is also examining the investment
opportunities available to it in other industries, outside of the
financial services industry. Accordingly, our directors and
executive officers have, in essence, unlimited flexibility in the
investments they are permitted to examine. As such, we expect
that management will consider, among others, the following
factors when deciding upon an appropriate investment for Novo
Networks' 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;



                              -22-

<PAGE>

     * the education, experience and abilities of management and
       key personnel of the business or opportunity;

     * the regulatory environment within the business industry
       or opportunity; and

     * the market performance of equity securities of similarly
       situated companies in the business' industry or
       opportunity.

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

     * meetings with industry participants;

     * meetings with management and/or "promoters;"

     * inspection of properties, facilities, material contracts,
       etc., if any;

     * analysis of historical financial statements and
       projections; and

     * any other matters or things we believe are relevant under
       the circumstances.

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

As of March 31, 2002, we maintained cash and cash equivalents of
$12.5 million. We currently anticipate that as of June 30, 2002,
after paying certain bankruptcy obligations related to the debtor
subsidiaries, we will have approximately $10.0 million of
remaining cash available to redeploy into one or more investment
opportunities and to support the monthly cash requirements of
Novo Networks. We do not currently believe that additional
funding sources will be available to us in the near term.
Accordingly, the cash assets potentially available for
redeployment will be limited. Consequently, we will probably not
be in a position to make a large number of investments and broad
diversification is unlikely. Our probable lack of diversification
may subject us to a variety of economic, competitive and
regulatory risks, any or all of which may have a substantial
adverse impact on our continued viability.

We do not intend to provide information to our stockholders
regarding potential business opportunities being considered by
management. Our officers and directors will have the executive
and voting power to unilaterally approve all corporate actions
related to the redeployment of our cash assets. As a result,
stockholders in Novo Networks will have no effective voice in
decisions made by management and will be entirely dependent on
management's judgment in the selection of an appropriate
investment opportunity and the negotiation of the specific terms
thereof.


                              -23-

<PAGE>

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

     *    continuing the liquidation of substantially all of the
          assets of our debtor subsidiaries in accordance with
          the amended plan and Bankruptcy Code;

     *    minimizing, to the extent possible, the expenses
          incurred by Novo Networks as the ultimate parent of the
          debtor subsidiaries;

     *    determining, as quickly as reasonably possible, the
          viability of our plan to redeploy the assets of Novo
          Networks; and

     *    identifying, negotiating and consummating one or more
          appropriate investment opportunities.

As previously indicated, we may not re-enter the communications
industry (although we reserve the right to invest in any suitable
opportunity). Consequently, we do not have any history on which
to base an evaluation of our business and prospects going
forward. Our prospects must be considered in light of the many
risks, uncertainties, expenses, delays and difficulties
encountered by companies adopting a new or dramatically changed
business model after the failure (for whatever reason) of a prior
business model. Some of the risks and difficulties we expect to
encounter include our ability to:

     *    create and successfully execute a revised business plan;

     *    locate, invest in and otherwise manage, a commercially
          viable base of suitable opportunities;

     *    manage and adapt to changing operations;

     *    respond effectively to competitive developments;

     *    attract, retain and motivate qualified personnel,
          including those with appropriate industry experience; and

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

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

Competition for Suitable Investment Opportunities
-------------------------------------------------

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

Novo Networks does not have any current agreements or
understandings with respect to any investment opportunity. We can
provide no assurance that any future investment will be completed
or that, if completed, any such investment will prove profitable
or otherwise successful. Investments of the type proposed involve
a number of risks, including the following:

     * the potential distraction of company management;

     * the need for additional working capital;

     * management's ability to manage potentially distinct
       business opportunities, particularly in light of current
       management's possible lack of industry experience;

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

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

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



                              -24-

<PAGE>

Item 3.   Quantitative and Qualitative Disclosures About Market
          Risk

Novo Networks is exposed to the impact of interest rate and other
risks. We have investments in money market funds of approximately
$12.5 million at March 31, 2002. Due to the short-term nature of
our investments, we believe that the effects of changes in
interest rates are limited and would not materially affect
profitability.

























                              -25-

<PAGE>



PART II:  OTHER INFORMATION

Item 1. Legal Proceedings
-------------------------

On March 1, 2002, the Bankruptcy Court confirmed the amended plan
of the debtor subsidiaries. On April 3, 2002, the amended plan
became effective and a liquidating trust was formed, with funding
provided by Novo Networks in the amount of $0.2 million. Assets to
be liquidated of $0.7 million have been transferred to the
liquidating trust subsequent to the quarter end.  The purpose of
the trust is to collect, liquidate and distribute the remaining
assets of the debtor subsidiaries and prosecute certain causes of
action against various third parties including, without limitation,
Qwest.  No assurances can be given that the claims brought against
such third parties or Qwest will be successful or that those parties
will not file one or more counterclaims.



It is not possible to predict the outcome of either iGlobal's
bankruptcy proceedings or the administration of the debtor
subsidiaries' amended plan or the effects of such efforts on the
business of Novo Networks or its non-debtor subsidiaries or the
interests of creditors or stockholders.

Avantel, SA filed a lawsuit against Novo Networks in the United
States District Court for the District of Delaware on February
15, 2002. Avantel claimed that Novo Networks issued shares to
Avantel in connection with the resolution of a dispute between
e.Volve and Avantel on October 15, 1999. As part of that
settlement, Avantel asserted that Novo Networks agreed to
repurchase a portion of the shares at a predetermined valuation
and at Avantel's election. That option was to be exercised within
a certain period of time after e.Volve or Novo Networks notified
Avantel of the receipt of a value added tax refund. Avantel
claimed that the option expired because e.Volve and Novo Networks
failed to give it proper notice. Novo Networks and e.Volve
vehemently denied that the notice was insufficient. Nevertheless,
Avantel asserted that it was entitled to the benefit of the
option. Avantel valued its claim against Novo Networks in excess
of $1.2 million. Separately, Avantel filed prepetition and
administrative claims in e.Volve's bankruptcy proceeding on
October 18, 2001, and February 15, 2002, respectively. Avantel
valued the prepetition claim, which purportedly involved certain
telecommunications  services rendered to e.Volve before July 30,
2001, in excess of $1.6 million and Avantel valued the
administrative claim, which purportedly involved similar services
rendered to e.Volve after July 30, 2001, in excess of $1.5
million. e.Volve objected to all of Avantel's claims in its
bankruptcy proceeding. However, on February 28, 2002, e.Volve and
Novo Networks settled with Avantel so that the confirmation
hearing on the amended plan could proceed as scheduled on March
1, 2002. As part of the settlement, Avantel agreed to reduce its
administrative claim to $0.6 million, e.Volve agreed to give
Avantel an allowed unsecured claim of approximately $1.6 million
in its bankruptcy proceeding and Avantel agreed to dismiss its
claim against Novo Networks with prejudice. As the debtor-in-
possession lender, Novo Networks provided funding for e.Volve to
pay $0.6 million to Avantel on March 25, 2002. Avantel dismissed
the lawsuit against Novo Networks with prejudice on April 3,
2002. Avantel's unsecured claim was allowed by the Bankruptcy
Court and will be treated in accordance with the amended plan,
which estimates that such creditors of e.Volve will recover 28%
of their respective claims.

We have previously disclosed in other reports filed with the
SEC certain other legal proceedings pending against our
subsidiaries and us.  Consistent with the rules promulgated by
the SEC, descriptions of these matters have not been included
because they have not been terminated and there have not been
any material developments during the quarter ended
December 31, 2001. Readers are encouraged to refer to our prior
reports filed with the SEC for further information concerning
other legal proceedings affecting our subsidiaries and us.

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

Item 2.Changes in Securities and Use of Proceeds

None.


                              -26-

<PAGE>

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

None.













                              -27-

<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, 2002           By:  /s/ Barrett N. Wissman
                                 ------------------------------
                                   Barrett N. Wissman
                                 (Principal Executive Officer)



Date:  May 15, 2002           By:  /s/ Susan C. Holliday
                                 ------------------------------
                                   Susan C. Holliday
                                 (Principal Accounting Officer)














                              -28-