UNITED STATES BANKRUPTCY COURT

                      FOR THE EASTERN DISTRICT OF VIRGINIA

                               ALEXANDRIA DIVISION



In Re:   NxNetworks, Inc.                                     Chapter 11





         Debtor(s)                                    Case Number: 01-14233

                                                                  ----------



                            MONTHLY OPERATING REPORT

                 CALENDAR MONTH MAY 1, 2002 TO MAY 31, 2002

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



                        FINANCIAL BACKGROUND INFORMATION



1.   ACCOUNTING BASIS: Cash        Accrual  X

                            ------         ----



2.   PREPARER:  State the name,  address,  telephone  number and position of the

     person(s) who actually compiled the information contained in this report.

     Location:  NxNetworks,  Inc. 13595 Dulles  Technology  Drive,  Herndon,  VA

     20171;  Greg Washenko  (CFO)  703-793-2059  and Jennifer Bell  (Controller)

     703-793-2076



3.   NUMBER OF EMPLOYEES paid during this period: 2

                                                 ----



4.   Have there been any CHANGES IN THE NATURE OF YOUR  BUSINESS  since the last

     reporting period?

     Yes / / No /X/. If yes, explain below:



5.   Are all BUSINESS LICENSES current? Yes /X/ No / /  Not Applicable/ /



6.   PRE-PETITION ACCOUNTS RECEIVABLE:



     Beginning Balance                  $ 0

     Collected this Period              $

     Write-offs against allowance

     Sale of asset                      $ 0

     Ending Balance                     $ 0



7.   POST-PETITION ACCOUNTS RECEIVABLE:



     0-30 Days: $0     31-60 Days:  $0    Over 61-90: $0  Days over 90: $0

                --                  --                --                ---



If  there  are any  post-petition  Accounts  Receivable  over 60  days,  provide

schedule AR giving a listing of such accounts and explain the delinquencies.



8.   POST-PETITION ACCOUNTS PAYABLE:



     0-30 Days: $3,953   31-60 Days:  $236  Over 60 Days: $215,989

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



If there are any post-petition  Accounts Payable over 30 days,  provide Schedule

AP giving a listing of such accounts and explain the delinquencies.



9.   TAXES. Are all taxes being paid to the proper taxing authorities when due?

Yes /X/ No / /  Payroll tax is current but sales, property and business taxes

are overdue. On the attached IRS Form 6123 report all tax deposits made with any

financial institution for federal employment taxes. Be sure the form is complete

and signed by an authorized employee of the receiving institution or taxing

authority. Attach to this report a completed Form 6123 for each deposit made

during the reporting period. Also attach copies of the monthly sales tax report,

payroll tax report and unemployment tax report with evidence of payment of both

federal and state taxes.



10.  ESCROW  ACCOUNTS.  Are you utilizing your tax account only for deposits and

payment of payroll and sales taxes?

Yes /X/  No / /.  If no, explain:       .

                                 ------

<PAGE>



11.  Are all BOOKS AND RECORDS of the debtor(s) being maintained monthly and are

     all current? Yes /X/ No / / Explain:



12.  INSURANCE EXPIRATION STATEMENT. Policy expiration dates are:



         Auto & Truck  4/01/02                   Liability     4/01/02

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

         Fire                                    Workers Comp. 4/01/02

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



13.  ACTIONS OF DEBTOR. During the last month, did the debtor:



     (A) Fail to defend or not  oppose  any action  seeking  to  dispossess  the

     debtor from control or custody of any asset of the estate? Yes/ /  No/ /

     Explain:____________________________________.



     (B) Maintain such stock, inventory, raw materials, insurance, employees

     and other resources as are necessary to preserve and maintain the

     going- concern value of the assets of the debtor? Yes /X/ No / /

     Explain:____________________________________________________________.



14. TRANSFER OR SALE OF PROPERTY. Did the debtor or any person with control over

any of the debtor's assets transfer, convey or abandon any of the debtor's

assets to another party during the period of this report other than as set forth

herein (including sales by creditors)?



Yes /X/ No / /  Explain:  On March 6,  2002,  the US  Bankruptcy  Court  for the

Eastern  District of Virginia  issued an order in which it approved  the sale of

substantially all of Nx Networks' assets to NSGData.com  pursuant to section 363

of the US Bankruptcy code.



15.  PAYMENTS TO SECURED CREDITORS during reporting period:

(Attach additional sheets, if necessary.)

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