UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q


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

               For the quarterly period ended September 30, 2002

                        Commission file number 000-25831

                             NetWolves Corporation
             (Exact name of registrant as specified in its charter)

           New York                                             11-2208052
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                              Identification No.)


                 4002 Eisenhower Blvd, Tampa, Florida 33634-7511
                    (Address of principal executive offices)

                                 (813) 286-8644
              (Registrant's telephone number, including area code)

                                      None
   (Former name, former address and former fiscal year, if changed since last
                                    report)

Indicate by checkmark  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 issuer's classes of common
stock as of the latest practicable date:
<TABLE>
<CAPTION>
                                                 NUMBER OF SHARES OUTSTANDING ON
        TITLE OF CLASS                                 October 23, 2002
------------------------------                   -------------------------------
<S>                                                      <C>
Common Stock, $.0033 par value                           12,607,119
</TABLE>
                                                         ----------
<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

                         FORM 10-Q - SEPTEMBER 30, 2002

                                     INDEX


PART I - FINANCIAL INFORMATION


    ITEM 1 - FINANCIAL STATEMENTS

    CONDENSED CONSOLIDATED BALANCE SHEETS
       September 30, 2002 (unaudited) and June 30, 2002                    1 - 2

    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
     COMPREHENSIVE LOSS
       For the three months ended September 30, 2002 (unaudited)
        and September 30, 2001 (unaudited)                                 3 - 4

    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
       For the three months ended September 30, 2002 (unaudited)
        and September 30, 2001 (unaudited)                                 5 - 6

    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                  7 - 13

    ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS                        14 - 19

    ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK        19

    ITEM 4 - CONTROLS AND PROCEDURES                                          19


PART II - OTHER INFORMATION

    ITEM 1 - LEGAL PROCEEDINGS                                                20

    ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS                        20

    ITEM 3 - DEFAULTS UPON SENIOR SECURITIES                                  20

    ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS              20

    ITEM 5 - OTHER INFORMATION                                                20

    ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K                                 20

SIGNATURES                                                                    21

CERTIFICATIONS                                                           22 - 24
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                    September 30,           June 30,
                                                                        2002                  2002
                                                                 ------------------    ------------------
                                                                      (Unaudited)
<S>                                                              <C>                   <C>
ASSETS

Current assets
     Cash and cash equivalents                                   $        1,248,105    $          656,880
     Restricted cash                                                        294,563               366,276
     Marketable securities, available for sale, at market value                 -                  82,250
     Accounts receivable, net                                             3,142,063               107,178
     Inventories                                                            135,900               136,930
     Prepaid expenses                                                        61,783               129,293
     Purchase deposits                                                          -                 841,000
     Other current assets                                                    18,847                13,491
                                                                 ------------------    ------------------
         Total current assets                                             4,901,261             2,333,298

Property and equipment, net                                                 699,260               682,395

Software, net                                                               988,342               104,874

Intangible assets, net                                                    2,574,568                45,394

Goodwill                                                                  3,515,698                   -

Other assets                                                                 58,493                58,493
                                                                 ------------------    ------------------
                                                                 $       12,737,622    $        3,224,454
                                                                 ==================    ==================

The accompanying notes to the financial statements are an integral part of these
condensed consolidated balance sheets.

                                       1
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS


(continued)                                                         September 30,           June 30,
                                                                        2002                  2002
                                                                 ------------------    ------------------
                                                                      (Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
    Accounts payable and accrued expenses                       $        3,203,982    $          675,321
    Accrued losses of discontinued operations                              103,043               137,958
    Deferred revenue                                                       637,884                46,780
    Due to Norstan, Inc.                                                   221,570                 -
    Advances from related parties                                          500,000                 -
    Current maturities of long-term debt                                 3,904,600               362,982
                                                                 ------------------    ------------------
       Total current liabilities                                         8,571,079             1,223,041
Accrued losses of discontinued operations                                  200,964               235,012
                                                                 ------------------    ------------------
         Total liabilities                                               8,772,043             1,458,053
                                                                 ------------------    ------------------
Minority interest                                                          272,304               272,533
                                                                 ------------------    ------------------
Commitment and contingencies

Shareholders' equity
    Preferred stock, $.0033 par value; 2,000,000 shares authorized
      on September 30, 2002 and June 30, 2002; 262,462 and no shares
      issued and outstanding on September 30, 2002 and June 30,
      2002, respectively                                                 2,906,851                  -

    Common stock, $.0033 par value; 50,000,000 shares authorized on
      September 30, 2002 and June 30, 2002; 12,607,119 shares issued
      and outstanding on September 30, 2002 and June 30, 2002               41,604                41,604
     Additional paid-in capital                                         65,879,102            65,176,647
     Accumulated deficit                                               (65,134,282)          (63,611,478)
     Accumulated other comprehensive loss                                      -                (112,905)
                                                                 ------------------    ------------------
       Total shareholders' equity                                        3,693,275             1,493,868
                                                                 ------------------    ------------------
                                                                 $       12,737,622    $        3,224,454
                                                                 ==================    ==================

</TABLE>
The accompanying notes to the financial statements are an integral part of these
condensed consolidated balance sheets.


                                       2
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                        AND COMPREHENSIVE INCOME (LOSS)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                            For the three months ended
                                                                    September 30,
                                                            --------------------------

                                                              2002                  2001
                                                      -------------------   -------------------
 <S>                                                  <C>                    <C>
 Revenue
    Products                                          $         4,682,744    $           56,872
    Services                                                      142,006               130,553
                                                      -------------------   -------------------
                                                                4,824,750               187,425
                                                      -------------------   -------------------
 Cost of revenue
    Products                                                    3,122,574                44,310
    Services                                                       93,091               113,708
                                                      -------------------   -------------------
                                                                3,215,665               158,018
                                                      -------------------   -------------------
 Gross profit                                                   1,609,085                29,407
                                                      -------------------   -------------------
 Operating expenses
    General and administrative                                  1,821,368             1,888,878
    Engineering and development                                   448,974               499,183
    Sales and marketing                                           686,353               767,881
                                                      -------------------   -------------------
                                                                2,956,695             3,155,942
                                                      -------------------   -------------------
 Loss before other income (expense)                            (1,347,610)           (3,126,535)

 Other income (expense)
    Investment income                                              1,546                 48,363
    Realized loss on sale of marketable securities              (115,201)                   -
    Minority interest                                                229                  2,413
    Interest expense                                             (61,768)                (5,880)
                                                      -------------------   -------------------
Net loss                                                      (1,522,804)            (3,081,639)

 Other comprehensive loss:
    Marketable securities valuation adjustment                       -                   (4,500)
                                                      -------------------   -------------------
 Comprehensive loss                                   $        (1,522,804)  $       (3,086,139)
                                                      ===================   ===================


The accompanying notes to the financial statements are an integral part of these
condensed consolidated statements.
</TABLE>

                                       3
<PAGE>


                     NETWOLVES CORPORATION AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                             AND COMPREHENSIVE LOSS
                                  (Unaudited)


(continued)

<TABLE>
<CAPTION>
                                              For the three months ended
                                                    September 30,
                                              --------------------------
                                                 2002              2001
                                                 ----              ----
<S>                                          <C>              <C>
Basic and diluted net loss per share:

Net loss                                     $ (1,522,804)    $ (3,081,639)
  Dividends on preferred stock                    (57,133)            -
                                             -------------    -------------

Net loss available to common shareholders    $ (1,579,937)    $ (3,081,639)
                                             =============    =============
Basic and diluted net loss per share         $       (.13)    $       (.30)
                                             =============    =============
Weighted average common shares
    outstanding, basic and diluted             12,607,119       10,439,135
                                             =============    =============


The accompanying notes to the financial statements are an integral part of these
condensed consolidated statements.

</TABLE>

                                        4
<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                            For the three months ended
                                                                   September 30,
                                                            --------------------------
                                                              2002              2001
                                                              ----              ----
<S>                                                     <C>               <C>
Cash flows from operating activities
  Net loss                                              $  (1,522,804)    $  (3,081,639)
  Adjustments to reconcile net loss to net
    cash used in operating activities
      Depreciation                                             57,198            64,906
      Amortization                                            167,855             7,691
      Noncash charge to operations with respect to
        stock and warrants issued for services and
        amortization of previously issued warrants                  -           776,500
      Minority interest                                          (229)           (2,413)
      Loss on sale of marketable securities                   115,201                 -
      Interest expense                                         61,768                 -
      Loss on disposal of property and equipment                2,634            12,571

  Changes in operating assets and liabilities
      Restricted cash                                          71,713                 -
      Accounts receivable                                  (1,164,799)              643
      Inventories                                               1,030            (2,003)
      Prepaid expenses                                         67,510            91,870
      Other current assets                                     60,163            50,215
      Accounts payable and accrued expenses                   695,257          (413,040)
      Accrued loss on disposal of discontinued operations     (68,963)         (197,777)
      Deferred revenue                                        177,148           (37,616)
      Due to Norstan, Inc.                                  1,068,044                 -
                                                          -----------       -----------
        Net cash used in operating activities                (211,274)       (2,730,092)
                                                          -----------       -----------
Cash flows from investing activities

      Capitalized software costs                                    -            (6,699)
      Proceeds from sale of marketable securities              79,954                 -
      Payment to purchase Norstan Network Services, Inc.   (3,350,000)                -
      Acquisition costs paid                                  (72,000)                -
      Patent costs paid                                        (1,497)                -
      Payments of security deposits                                 -            (6,840)
      Purchases of property and equipment                     (20,397)          (19,107)
                                                          -----------       -----------
        Net cash used in investing activities             $(3,363,940)      $   (32,646)
                                                          -----------       -----------


The accompanying notes to the financial statements are an integral part of these
condensed consolidated statements.

</TABLE>

                                       5
<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

                CONDENSED COMSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)



(continued)

<TABLE>
<CAPTION>
                                                                    For the three months ended
                                                                           September 30,
                                                                    --------------------------
                                                                      2002              2001
                                                                      ----              ----
<S>                                                             <C>               <C>
Cash flows from financing activities
  Cash proceeds from private sale of preferred stock and
    warrants                                                     $ 3,936,972       $        -
  Cash proceeds from private sale of common stock                          -        3,325,000
  Financing costs paid                                              (270,533)               -
  Advances                                                           600,000                -
  Repayment of advances                                             (100,000)               -
                                                                 -----------      -----------
     Net cash provided by financing activities                     4,166,439        3,325,000
                                                                 -----------      -----------
Net increase in cash and cash equivalents                            591,225          562,262

Cash and cash equivalents, beginning of period                       656,880        4,411,657
                                                                 -----------      -----------
Cash and cash equivalents, end of period                         $ 1,248,105      $ 4,973,919
                                                                 -----------      -----------

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES

Purchase acquisition (Note 4)
  Accounts receivable, net                                       $ 1,870,086      $         -
  Due from Norstan, Inc.                                             846,474                -
  Other receivable                                                    65,519                -
  Property and equipment                                              56,300                -
  Software                                                           940,000                -
  Intangibles                                                      2,639,000                -
  Goodwill                                                         3,515,698                -
  Accounts payable and accrued expenses                           (1,713,771)               -
  Deferred revenue                                                  (413,956)               -
  Note payable to Norstan, Inc.                                   (3,479,850)               -
  Acquisition costs                                                 (575,500)               -
  Purchase deposit                                                  (400,000)               -
                                                                 ------------     -----------

     Payment to purchase Norstan Network Services, Inc.          $ 3,350,000      $         -
                                                                 ===========      ===========
Dividends on preferred stock (Note 7)                            $    57,133      $         -
                                                                 ===========      ===========


The accompanying notes to the financial statements are in integral part of these
condensed consolidated statements
</TABLE>

                                       6

<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

                 THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001




1    Interim financial information

     The summary financial information  contained herein is unaudited;  however,
     in the opinion of management,  all adjustments  (consisting  only of normal
     recurring  accruals)  necessary for a fair  presentation  of such financial
     information  have been included.  The accompanying  condensed  consolidated
     financial  statements,  footnotes and discussions of NetWolves  Corporation
     ("NetWolves"  or the  "Company")  should  be read in  conjunction  with the
     Company's  consolidated  financial  statements,  and notes thereto, for the
     years ended June 30, 2002, 2001 and 2000. The results of operations for the
     three months ended September 30, 2002 are not necessarily indicative of the
     results to be expected for the full year.

2    The Company

     The condensed  consolidated  financial  statements  include the accounts of
     NetWolves   Corporation  and  its  subsidiaries,   NetWolves   Technologies
     Corporation ("NWT"),  Norstan Network Services, Inc. ("NNSI"),  ComputerCOP
     Corporation  ("ComputerCOP")  and its majority  owned TSG Global  Education
     Web, Inc. ("TSG") (collectively "NetWolves" or the "Company").

     NWT designs, develops, assembles and sells Internet infrastructure security
     platforms,  coupled with network  based  management  services,  designed to
     significantly  reduce the up-front and ongoing costs associated with small,
     medium and remote offices' global Internet access.  NNSI provides  multiple
     source data and voice  services  and related  consulting  and  professional
     services   throughout  the  United  States.  TSG  provides  management  and
     consulting services to the automotive industry.  Effective August 31, 2002,
     the Company ceased all operations of ComputerCOP,  terminated all remaining
     employees of ComputerCOP  and subleased a majority of the space  previously
     occupied by ComputerCOP.

3    Significant accounting policies

     Use of estimates

     In preparing condensed consolidated financial statements in conformity with
     accounting  principles generally accepted in the United States,  management
     makes estimates and assumptions  that affect the reported amounts of assets
     and liabilities and disclosures of contingent assets and liabilities at the
     date of the condensed  consolidated  financial  statements,  as well as the
     reported  amounts of revenue  and  expenses  during the  reporting  period.
     Actual results could differ from those estimates.

     Principles of consolidation

     The consolidated  financial  statements include the accounts of the Company
     and  its  subsidiaries.   All  significant  intercompany  transactions  and
     balances have been eliminated in consolidation.  The separate  ownership of
     one  of  the   Company's   subsidiaries   is  reflected  in  the  Company's
     consolidated  financial  statements  as  minority  interest.  The  minority
     interest includes common stock  representing 1.7% of the outstanding shares
     of the subsidiary.

                                       7
<PAGE>


                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

                 THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001




3    Significant accounting policies (continued)

     Inventories

     Inventories  consist of raw materials and finished  goods.  Inventories are
     valued at the lower of cost or net  realizable  value  using the  first-in,
     first-out  method.  Raw material and finished goods amounted to $99,523 and
     $36,377,  respectively,  at  September  30, 2002 and  $108,079 and $28,851,
     respectively, at June 30, 2002.

     Business combinations and goodwill

     In June 2001, the Financial  Accounting Standards Board (the "FASB") issued
     Statement of Financial  Standards  ("SFAS") No. 141, Business  Combinations
     ("SFAS No.  141") and SFAS No. 142,  Goodwill and Other  Intangible  Assets
     ("SFAS No. 142"). SFAS No. 141 addresses financial accounting and reporting
     for business combinations while SFAS No. 142 addresses financial accounting
     and reporting for acquired goodwill and other intangible  assets.  SFAS No.
     141 applies to all  business  combinations  initiated  after June 30, 2001,
     while SFAS No. 142 is  required  to be  applied in fiscal  years  beginning
     after  December 15, 2001.  Identifiable  intangible  assets with other than
     indefinite lives will continue to be amortized in the financial statements,
     however,  goodwill and identifiable intangible assets with indefinite lives
     will no longer be amortized.  In connection  with the  acquisition of NNSI,
     the  adoption  of SFAS No. 141 has had a material  impact on the  Company's
     financial statements.  Other than the impact on amortization,  the adoption
     of SFAS No.  142 has not had  material  impact on the  Company's  financial
     statements  although the Company will be required to review its intangibles
     and goodwill  annually for  indicators of impairment  and this review could
     result in recognition of impairment losses.

     Reclassifications

     Certain  reclassifications  have  been made to the  condensed  consolidated
     financial  statements  shown  for the prior  periods  in order to have them
     conform to the current period's classifications.

4    Business combination

     On  July 9,  2002,  the  Company,  through  its  wholly  owned  subsidiary,
     NetWolves Acquisitions, Inc., acquired all of the outstanding capital stock
     of NNSI  pursuant  to a Stock  Purchase  Agreement  dated as of January 30,
     2002, as amended,  among Norstan,  Inc. ("Seller") and NNSI, both Minnesota
     corporations,  the Company and  NetWolves  Acquisitions,  Inc.,  a Delaware
     corporation.  NNSI  provides  multiple  source data and voice  services and
     related consulting and professional services throughout the United States.

     The Company paid to the Seller $7,500,000,  $3,750,000 of which was paid in
     cash on or prior to closing and  $3,750,000  is payable under the term of a
     non-interest  bearing  promissory note due July 9, 2003. The purchase price
     was determined  through arms' length  negotiations.  The $3,750,000 in cash
     paid by the Company to the Seller was primarily obtained through equity and
     debt financing (Note 7) and to a lesser extent from working capital.


                                       8
<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

                 THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001




4    Business combination (continued)

     The total purchase  price,  including  acquisition  costs, is summarized as
     follows:

<TABLE>

<S>                                                             <C>
     Cash paid to Norstan, Inc., on or prior to closing         $  3,750,000
     Promissory note payable*                                      3,479,850
     Finders fee                                                     350,000
     Professional fees                                               225,500
                                                                ------------
                                                                $  7,805,350
                                                                ============
<FN>
*The non-interest bearing promissory note payable with a face value of
$3,750,000 was discounted using a rate of 7.5% and is due on July 9, 2003.
</FN>

</TABLE>

     As a result  of the  acquisition,  the  Company  expects  to  increase  its
     security  solution revenues by leveraging NNSI's existing customer base. In
     addition,  the Company expects the acquisition will enable it to expand the
     range of services  it can offer its  existing  customers  as well as future
     customers.  The  results of NNSI's  operations  have been  included  in our
     consolidated financial statements commencing July 9, 2002.

     The following table summarizes the preliminary estimated fair values of the
     assets  acquired and  liabilities  assumed at the July 9, 2002  acquisition
     date.  The fair  value  of  intangibles  was  obtained  from a third  party
     appraisal,  the  cost of which  is  included  in the  purchase  price.  The
     determination   of  the  fair  value  of  assets  and  liabilities  at  the
     acquisition date as well as the  identification  of other intangible assets
     is continuing and may be subject to change.

<TABLE>
<S>                                                               <C>
        Current assets                                            $   2,782,079
        Equipment                                                        56,300
        Intangible assets not subject to amortization - licenses        203,000
        Intangible assets subject to amortization (estimated 5
          year useful life)                                           3,376,000
        Goodwill                                                      3,515,698
                                                                  -------------
        Total assets acquired                                         9,933,077
                                                                  -------------
        Current liabilities                                          (2,127,727)
                                                                  -------------
        Total liabilities assumed                                    (2,127,727)
                                                                  -------------
        Net assets acquired                                       $   7,805,350
                                                                  =============

</TABLE>

                                       9
<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

                 THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001



4    Business combination (continued)

     As summary  of the fair  value of  acquired  intangible  assets  subject to
     amortization,  as determined by a third party  appraisal,  as well as their
     respective estimated useful lives, is as follows:

<TABLE>
<CAPTION>
                                         Estimated
                                         Useful Life       Fair Value
                                         -----------       ----------
<S>                                        <C>             <C>
Customer base                              5 Years         $2,436,000
Computer billing software                  5 Years            940,000
                                                           ----------
Total intangible assets                                    $3,376,000
                                                           ==========
</TABLE>

     All of the  goodwill  arising  from  this  acquisition  is  expected  to be
     deductible  for  income  tax  purposes  over a period  of 15  years  and is
     included in the Telecommunications segment.

     The following  unaudited pro forma financial  information has been prepared
     assuming that the  acquisition  of NNSI had taken place at the beginning of
     the  periods  presented.  The  pro  forma  information  is not  necessarily
     indicative  of the  combined  results  that  would  have  occurred  had the
     acquisition  taken  place  at  the  beginning  those  periods,  nor  is  it
     necessarily indicative of the results that may occur in the future.

<TABLE>
<CAPTION>
                                                For the three months ended
                                                      September 30,
                                                --------------------------
                                                  2002             2001
                                                  ----             ----
<S>                                             <C>            <C>
Revenue                                         $ 5,176,572    $ 5,525,780
Net loss                                        $(1,457,285)    (2,184,763)
Net loss available to common shareholders       $(1,593,144)   $(2,320,622)
Basic and diluted net loss per share            $      (.13)   $      (.22)

</TABLE>


5    Balance sheet components

<TABLE>
<CAPTION>
                                                September 30,        June 30,
                                                   2002                2002
                                                -------------        --------
<S>                                              <C>               <C>
Property and equipment, net
  Machinery and equipment                        $  825,134        $  755,045
  Furniture and fixtures                            218,497           218,497
  Leasehold improvements                            141,555           140,875
                                                 ----------        ----------
                                                  1,185,186         1,114,417
Less: accumulated depreciation and amortization    (485,926)         (432,022)
                                                 ----------        ----------
Property and equipment, net                      $  699,260        $  682,395
                                                 ==========        ==========

</TABLE>

                                       10
<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

                 THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001


5       Balance sheet components (continued)

<TABLE>
<CAPTION>
                                                September 30,        June 30,
                                                   2002                2002
                                                -------------        --------
<S>                                             <C>                <C>
Accounts payable and accrued expenses
  Trade accounts payable and other accrued
     operating expenses                         $ 2,260,814        $   490,311
  Sales, excise and universal services
     charges payable                                310,703                  -
  Compensated absences                              205,102            182,671
  Other liabilities                                 156,049              1,039
  Equity financing fees payable                     107,898                  -
  Bonuses and commissions payable                   106,283              1,300
  Dividend payable                                   57,133                  -
                                                -----------        -----------
                                                $ 3,203,982        $   675,321
                                                ===========        ===========
</TABLE>


6    Advances from related parties

     On July 10, 2002, the Company received  advances from certain  individuals,
     some of  whom  are  officers  and  directors  of the  Company,  aggregating
     $600,000,  of which,  $100,000 was  subsequently  repaid.  The advances are
     non-interest  bearing, due on demand and have no scheduled repayment terms.

7    Shareholders' equity

     Preferred stock

     On July 16, 2002 the Company amended its Certificate of  Incorporation,  as
     authorized by its Board of Directors,  by designating  1,000,000  shares of
     its 2,000,000  shares of preferred stock as Series A Convertible  Preferred
     Stock, par value $.0033 per share ("Series A Preferred Stock").

     Cumulative dividends on the Series A Preferred Stock accrue at a rate of 8%
     per annum from the date of issuance through June 30, 2004 and thereafter at
     a rate of 12% per annum and will be payable  annually in additional  shares
     of the Series A Preferred Stock. Each share of the Series A Preferred Stock
     is  convertible  at the holders'  option into 10 shares of the common stock
     (at an exercise  price of $1.50 per  share).  Holders of Series A Preferred
     Stock will have voting rights on an as if converted  basis and will vote as
     a single class with holders of the Company's common stock.

     Through  September 30, 2002,  the Company has issued  262,462 shares of its
     Series A Preferred Stock for a total cash consideration of $3,936,972.  The
     shares were issued in connection  with a private  offering of the Company's
     securities  pursuant  to  which  shareholders  also  received  warrants  to
     purchase shares of the Company's  common stock at an initial exercise price
     equal to $1.65 per  share.  Five  warrants  were  issued  for each share of
     Series A Preferred Stock  (one-half  warrant for each share of common stock
     issuable upon conversion of the Series A Preferred Stock). The warrants are
     exercisable  for five years from the issuance  date and are callable by the
     Company if the closing price of the  Company's  common stock is at or above
     three times the exercise price for 30 consecutive trading days.


                                       11
<PAGE>


                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

                 THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001



7    Shareholders' equity (continued)

     Preferred stock (continued)

     Approximately  $3,000,000  of the  proceeds  from the sale of the  Series A
     Preferred Stock was utilized to purchase the  outstanding  capital stock of
     NNSI (Note 4). The  Company  is  seeking to sell  additional  shares of its
     Series A Preferred Stock, the proceeds of which are intended to be used for
     working capital and to pay the NNSI note.

     Stock option plan

     In June 2002, the Company's  Board of Directors  authorized the creation of
     the 2002 stock option plan (the "2002 Plan") to grant  non-qualified  stock
     options to employees,  directors and  consultants to purchase up to a total
     of 3,000,000  shares of the Company's  common stock. If any award under the
     2002 Plan terminates,  expires unexercised,  or is canceled,  the shares of
     common stock that would otherwise have been issuable  pursuant thereto will
     be  available  for  issuance  pursuant  to the grant of new  awards.  As of
     September 30, 2002, no options had been issued under the 2002 Plan.

8    Segment information

     The  Company  reports  segments in  accordance  with  Financial  Accounting
     Standards  Board  Statement  No.  131  "Disclosures  about  Segments  of an
     Enterprise  and Related  Information".  The  Company  and its  subsidiaries
     operate in three separate business segments,  the Technology  segment,  the
     Telecommunications segment and the Management and consulting segment. These
     operating segments are representative of the Company's  management approach
     to its  evaluation  of  its  operations.  The  accounting  policies  of the
     reportable  operating  segments  are the  same as  those  described  in the
     summary of significant  accounting policies.  The Technology segment, which
     operates  worldwide,  is  primarily  engaged  in the  design,  development,
     marketing  and  support  of  information  delivery  hardware  products  and
     software.  The  Telecommunications  segment,  which operates  domestically,
     provides multiple source data and voice services and related consulting and
     professional   services.  The  Management  and  consulting  segment,  which
     operates   domestically,   provides   management  and  consulting  services
     primarily to the automotive industry throughout the United States.

<TABLE>
<CAPTION>
                                        For the three months ended
                                              September 30,
                                        --------------------------
                                          2002              2001
                                          ----              ----
<S>                                     <C>              <C>
Revenue
  Technology                            $   106,921      $   107,715
  Telecommunications                      4,637,054                -
  Management and consulting                  80,775           79,710
                                        -----------      -----------
       Total                            $ 4,824,750      $   187,425
                                        ===========      ===========
Operating income (loss)
  Technology                            $(1,797,198)     $(2,985,287)
  Telecommunications                        463,453                -
  Management and consulting                 (13,865)        (141,248)
                                        -----------      -----------
      Total                             $(1,347,610)     $(3,126,535)
                                        ===========      ===========
</TABLE>

                                       12
<PAGE>


                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

                 THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001


8    Segment information (continued)

<TABLE>
<CAPTION>
                                        September, 30            June 30,
                                            2002                   2002
                                        -------------            --------
<S>                                     <C>                    <C>
Identifiable assets
  Technology                            $  1,816,185           $  3,114,692
  Telecommunications                      10,889,136                      -
  Management and consulting                   32,301                 45,143
                                        ------------           ------------
                                          12,737,622              3,159,835
Net assets of discontinued operations              -                 64,619
                                        ------------           ------------
  Total                                 $ 12,737,622           $  3,224,454
                                        ============           ============
</TABLE>

     The  Company  had  two  major  customers,  both  in the  Telecommunications
     segment,  which  accounted for 31% and 13%,  respectively,  of consolidated
     revenue  for the  three  months  ended  September  30,  2002 and two  major
     customers,  both in the Technology segment, which accounted for 28% and 10%
     of  consolidated  revenue for the three  months ended  September  30, 2001,
     respectively.   Additionally,   the  Company   had  one   customer  in  the
     Telecommunications  segment that accounted for 17% of consolidated accounts
     receivable at September 30, 2002 and four customers,  one in the Technology
     segment and three in the Management  and consulting  segment that accounted
     for 29%, 10%, 13% and 21% of consolidated  accounts  receivable at June 30,
     2002.

9    Management's plan

     Historically,  the Company's  source of liquidity has been equity financing
     which is used to fund losses from operating activities.  NetWolves had cash
     and cash equivalents of approximately  $1,248,000 at September 30, 2002. In
     order for the  Company  to  execute  its  business  plan,  additional  cash
     outflows are necessary  for, among other things,  continued  development of
     technology, conducting customer pilot programs and increased sales efforts.
     To the extent  necessary,  the Company will seek to raise additional monies
     from the sale of its capital  stock and /or obtain debt  financing  to meet
     its funding needs over the next 12 to 24 months,  however,  there can be no
     assurance  that the  Company  will have  sufficient  capital to finance its
     operations.

     Management  has  instituted  cost  saving  measures  intended to reduce its
     overhead expenses and, if the Company is unable to raise sufficient funding
     to sustain  its  operations,  it will  curtail  the  operations  of certain
     business  segments.  However,  even if the  Company  does raise  sufficient
     operating capital, there can be no assurances that the net proceeds will be
     sufficient  to enable it to develop  its  business to a level where it will
     generate  profits  and cash  flows from  operations.  These  matters  raise
     substantial  doubt  about the  Company's  ability  to  continue  as a going
     concern.  The  accompanying  consolidated  financial  statements  have been
     prepared on a going concern basis,  which  contemplates  the realization of
     assets and  satisfaction  of  liabilities in the normal course of business.
     The  financial  statements do not include any  adjustments  relating to the
     recoverability  of  the  recorded  assets  or  the  classification  of  the
     liabilities  that  might be  necessary  should  the  Company  be  unable to
     continue as a going concern.

                                       13
<PAGE>


ITEM 2  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

     Forward-Looking Statements

     The Form 10-Q includes,  without limitation,  certain statements containing
     the words "believes." "anticipates", "estimates", "expects", and words of a
     similar nature, constitute "forward-looking  statements" within the meaning
     of the Private Securities  Litigation Reform Act of 1995. This Act provides
     a "safe harbor" for  forward-looking  statements to encourage  companies to
     provide  prospective  information about themselves so long as they identify
     these  statements  as forward  looking and provide  meaningful,  cautionary
     statements identifying important factors that could cause actual results to
     differ from the projected results.  All statements other than statements of
     historical fact made in this Form 10-Q are forward-looking.  In particular,
     the statements  herein regarding  industry  prospects and future results of
     operations  or  financial   position  are  forward-   looking   statements.
     Forward-looking  statements reflect  management's  current expectations and
     are  inherently   uncertain.   The  Company's  actual  results  may  differ
     significantly from management's expectations.  Readers are cautioned not to
     place undue reliance on these forward-looking  statements. The company does
     not  undertake any  obligation  to release  publicly any revisions to these
     forward-looking  statements to reflect future events or circumstances or to
     reflect the occurrence of unanticipated events.

     Overview

     NetWolves  Corporation  ("NetWolves" or the "Company")  designs,  develops,
     assembles and sells Internet  infrastructure  security  platforms,  coupled
     with network based management  services,  designed to significantly  reduce
     the up-front and ongoing  costs  associated  with small,  medium and remote
     offices'  global  Internet  access.  The  Company  was  founded in order to
     leverage the rapid  progression of technology,  removing  barriers of entry
     for organizations  desiring to attain the benefits and flexibility a public
     network  enterprise  offers.  NetWolves'  patent pending system  technology
     enables  organizations  to obtain their short,  middle and long term IT and
     e-business  initiatives  through  the  deployment  of  our  plug  'n'  play
     perimeter  office  security  platform,   coupled  with  our  secure  remote
     monitoring  and  management  ("SRM2 TM") system.  Additionally,  NetWolves'
     advanced,  centralized,  reporting  module offers the ability for corporate
     executives to view,  via the Internet,  both  statistical  and  performance
     based metrics for their global network.

     NetWolves   products  and  services  offer  complete  system  solutions  to
     organizations  needing cost effective network security (firewall,  routing,
     intrusion  detection,   content  filtering,  email,  intranet,  FTP,  etc.)
     complete with advanced integrated hardware, a user-friendly  interface, and
     Internet-  based  expansion  capabilities.  As  companies  migrate from the
     traditional  private leased lines to public network  connectivity to reduce
     costs,   NetWolves   provides    cost-effective,    value-added   expansion
     technologies such as virtual private networking  ("VPN"), a process used to
     allow  secure  data  transmissions  on a local  area  network,  a wide area
     network,  or to secure wireless network  connections.  This feature affords
     the user  virtually  all the  benefits of  lease-line  service  without the
     attendant recurring costs.

     NetWolves  differentiates itself from its competitors primarily through its
     proprietary patent pending  technology,  which provides  centralized remote
     monitoring and management  facilities.  While other,  more  labor-intensive
     management  systems  currently  exist,  such  systems  require  an  inbound
     administrative  port to provide  remote  monitoring  and  management.  Most
     Fortune  1000  companies  are  unwilling  to take the risk of opening up an
     inbound  administrative  port while  having their  entire  enterprise  on a
     public broadband medium.  "Hackers",  using simple port scanning tools, can
     easily locate these  administrative  inbound ports. SRM2 TM has the ability
     to  monitor  thousands  of  locations   concurrently   without  opening  an
     administrative  inbound port and allows the secure,  remote  management and

                                       14
<PAGE>


     monitoring of multiple  all-in-one gateway servers located worldwide.  This
     monitoring  can be  performed  in  real-time  from one or numerous  central
     sites.  This  technology  also allows a network  administrator  to create a
     configuration  template with all necessary  information changes required to
     manage  all-in-one  units.  This template can be applied to each unit via a
     secure  configuration  mechanism  from  the  central  monitoring  location,
     without compromising network security. It is this SRM2 TM system that forms
     the basis of the Company's agreement with the General Electric Company.

     NetWolves  "edge  of  the  network"  security   platforms  and  centralized
     management and monitoring  systems are designed for our customers'  present
     and future needs. The Company's initial target markets are the end users in
     small and  mid-size  businesses  and  large  organizations  with  satellite
     offices.  Larger end users, to whom the product is marketed,  are companies
     with multi-state or country locations,  government agencies, retail outlets
     and kiosks.  NetWolves  products are designed to service numerous  markets,
     including  financial,   medical,  legal,  travel,   entertainment,   hotel,
     education,   government,  auto  and  petroleum  industries.  The  Company's
     strategy  is  to  establish   SRM2  TM   technology  as  the  standard  for
     enterprise-wide  secure network connectivity and management  worldwide.  To
     achieve its objectives,  NetWolves seeks to form relationships with leading
     companies to deliver a secure connectivity  solution which is interoperable
     with their existing network  infrastructure,  thereby  lessening their need
     for  material  capital  improvements  while  migrating  to  public  network
     connectivity.

     Acquisition of Norstan Network Services, Inc.

     On  July 9,  2002,  the  Company,  through  its  wholly  owned  subsidiary,
     NetWolves Acquisitions, Inc., acquired all of the outstanding capital stock
     of Norstan Network  Services,  Inc.  ("NNSI")  pursuant to a Stock Purchase
     Agreement  dated as of January 30, 2002, as amended,  among  Norstan,  Inc.
     (the  "Seller")  and NNSI,  both  Minnesota  corporations,  the Company and
     NetWolves Acquisitions,  Inc., a Delaware corporation.  The Company paid to
     the Seller $7,500,000,  $3,750,000 of which was paid in cash on or prior to
     closing and $3,750,000 is payable under the term of a non-interest  bearing
     promissory note due July 9, 2003. The purchase price was determined through
     arms' length  negotiations.  The  $3,750,000 in cash paid by the Company to
     the Seller was primarily  obtained through equity and debt financing and to
     a lesser extent from working capital.

     NNSI  provides   multiple  source  data  and  voice  services  and  related
     consulting and  professional  services  throughout the United States.  As a
     result of the  acquisition,  we expect to increase  our  security  solution
     revenues by leveraging  NNSI's  existing  customer  base. In addition,  the
     Company  expects  the  acquisition  will  enable it to expand  the range of
     services it can offer its existing  customers as well as future  customers.
     The  results  of NNSI's  operations  have been  included  in the  Company's
     consolidated financial statements commencing July 9, 2002.

     NNSI's Mission/Methodology

     NNSI's  mission is to understand its business  partners'  complex needs and
     translate  them  into  solutions  utilizing  the  largest  carriers  in the
     country. With its flexibility NNSI provides a multi- carrier solution under
     one contract and support structure to meet customers requirements.

     NNSI's  methodology  includes  completing a thorough  needs  assessment  to
     understand  the  current  infrastructure  and  future  requirements  of the
     prospective  customer.  Upon completion of the  assessment,  NNSI designs a
     custom, unique and flexible solution utilizing  multi-carrier  alternatives
     under one contract,  one invoice and support structure.  Its account teams,
     strategic  industry  relationships  and  state of the art  information  and
     billing system allow NNSI to deliver a single source solution utilizing the
     best of what is available to solve the customer's communication and network
     needs.


                                       15
<PAGE>


     NNSI's Business Partners

     In addition to NNSI's own internal  business units,  its business  partners
     include:

     --   Sprint
     --   MCI WorldCom
     --   Broadwing Communications
     --   Bell South
     --   SBC Communications
     --   Qwest (subagent to Global Communications)
     --   Ameritech
     --   TelePlus Consulting

     NNSI's Primary Products and Services

     Voice services

     --   Switched and dedicated inbound/outbound long distance
     --   Travel cards
     --   Conference Calling
     --   Local services

     Data services

     --   IP Dedicated and Dial-up Services
     --   Broadband Services (including DSL, Cable and Satellite)
     --   Frame Relay
     --   Private Line

     Integrated Information and Billing Systems

     NNSI's consolidated billing platform offers maximum flexibility in managing
     networks by providing the  information  needed in a format most useful to a
     customer's  organization.  This results in  immediate  and  long-term  cost
     savings for the customer.  The end result is one easy-to-read  invoice that
     streamlines your telecommunication expenses.

     Customers

     NNSI currently  works with more than 400  customers,  ranging from start-up
     organizations  to large  well-established  corporations,  both domestic and
     global.

     Agreement with General Electric

     On September 26, 2002, the Company entered into a three year agreement with
     General  Electric  Consumer  Finance,  the  consumer  financing  arm of the
     General  Electric  Company.  The agreement  covers the use of the Company's
     technology  by General  Electric  Consumer  Finance  in all of its  offices
     worldwide,  encompassing  36  countries.  The first  rollouts of NetWolves'
     products are scheduled for Japan and Germany.

                                       16
<PAGE>

     Results of Operations

     The Company currently operates in three business  segments,  the Technology
     segment, the  Telecommunications  segment and the Management and consulting
     segment.  During  June  2001,  the  Company  formally  adopted  a  plan  to
     discontinue its ComputerCOP software  operations,  eliminating the Computer
     Software  segment.  Effective  August  31,  2002,  the  Company  ceased all
     operations  of   ComputerCOP,   terminated   all  remaining   employees  of
     ComputerCOP  and subleased a majority of the space  previously  occupied by
     ComputerCOP.


     Three months ended September 30, 2002 and 2001

          Revenue

     Revenue from  continuing  operations  increased to $4,824,750 for the three
     months ended  September 30, 2002,  compared to $187,425 for the same period
     in the prior year.  The increase in revenue was primarily the result of the
     inclusion of the results of Norstan Network Services, Inc., commencing July
     9, 2002. The Company intends to generate  continuing  revenue from the sale
     of its Internet  products and services in the coming year,  including sales
     under its September 2002 agreement with General Electric Consumer Finance.

          Cost of revenue and gross profit

     Cost of revenue for sale of the  Company's  Internet  products and services
     include manufacturing,  packaging and shipping costs and warranty expenses.
     Cost of revenue in connection with the Telecommunications  segment includes
     costs of multiple source data and voice service providers.  Cost of revenue
     in connection  with  management  and  consulting  services  include  direct
     expenses  of  employees  and  consultants  utilized  in the  generation  of
     management and consulting revenue.  Cost of revenue increased to $3,215,665
     for the three months ended September 30, 2002, compared to $158,018 for the
     same period in the prior year.

     Overall  gross profit was at 33% for the three months ended  September  30,
     2002,  compared to 16% for the same period in the prior year.  The increase
     in gross profit was primarily the result of the inclusion of the results of
     Norstan Network Services, Inc., commencing July 9, 2002

          General and administrative

     General and  administrative  expenses  consist  primarily  of salaries  and
     related  expenses for executive,  finance,  facilities and human  resources
     personnel,   recruiting   expenses  and  professional   fees.  General  and
     administrative  expenses decreased to $1,821,368 for the three months ended
     September 30, 2002, compared to $1,888,878 for the same period in the prior
     year.  The decrease was primarily due to significant  staff  reductions and
     reduced  consulting costs in the Company's  Technology  segment,  partially
     offset by the inclusion of the results of Norstan Network  Services,  Inc.,
     commencing  July 9, 2002.  We expect  general and  administrative  costs to
     increase in absolute dollars in the future.

          Engineering and development

     Engineering  and  development  expenses,  which are  expensed as  incurred,
     consist  primarily of salaries and related expenses for personnel  utilized
     in  designing,  maintaining  and enhancing our products as well as material
     costs for test units and prototypes.  Costs associated with the development
     of  software   products  are  generally   capitalized  once   technological
     feasibility is reached.  Engineering and development  expenses decreased to
     $448,974  for the three  months  ended  September  30,  2002,  compared  to

                                       17
<PAGE>

     $499,183 for the same period in the prior year. The decrease in engineering
     and  development  costs was primarily the result of a limited  reduction of
     engineering and development  personnel.  We expect to incur engineering and
     development  costs in the future as we continue to  maintain  our  existing
     product line as well as develop new products and features,  as evidenced by
     the  development of our intelligent  Failover and continued  development of
     our SRM2 TM technology.

          Sales and marketing

     Sales and marketing expenses consist primarily of salaries, commissions and
     related  expenses for personnel  engaged in  marketing,  sales and customer
     support   functions,   as  well  as  costs  associated  with  trade  shows,
     promotional  activities,   advertising  and  public  relations.  Sales  and
     marketing  expenses  decreased  to  $686,353  for the  three  months  ended
     September  30, 2002,  compared to $767,881 for the same period in the prior
     year. The decrease in sales and marketing expenses was primarily the result
     of a reduction in the number of sales personnel and a decrease in marketing
     efforts  to focus  primarily  on direct  sales to Fortune  1000  customers,
     partially  offset  by the  inclusion  of the  results  of  Norstan  Network
     Services, Inc., commencing July 9, 2002. The Company intends to continue to
     aggressively  promote  its  current  and future  products  and,  therefore,
     expects  sales and marketing  costs to increase in absolute  dollars in the
     future.

          Other income (expenses)

     Other income (expenses)  consists primarily of realized gains and losses on
     marketable  securities  and  investment  portfolio  income and decreased to
     $(175,194)  for the three months  ended  September  30,  2002,  compared to
     $44,896 for the same period in the prior year.  The decrease was  primarily
     due to an increase in interest expense on the note payable to Norstan, Inc.
     and a loss on the sale of marketable securities.

     Liquidity and Capital Resources

     Our operating  activities  used cash of $.2 million during the three months
     ended  September  30, 2002, as compared to $2.7 million for the same period
     in the prior year.  Cash used for the three months ended September 30, 2002
     was primarily attributable to a net loss of $1.5 million and an increase in
     accounts  receivable  of $1.2 million,  partially  offset by an increase in
     accounts  payable and accrued  expenses and  collection  of amounts owed by
     Norstan, Inc. of $.7 million and $1.1 million, respectively.  Cash used for
     the three months ended  September 30, 2001 was primarily  attributable to a
     net loss of $3.1  million and a decrease  in  accounts  payable and accrued
     expenses of $.4 million,  partially offset by non-cash equity  compensation
     totaling $.8 million.

     Our investing  activities used cash of $3.4 million during the three months
     ended  September  30, 2002, as compared to $.03 million for the same period
     in the prior year.  Cash used in investing  activities for the three months
     ended  September 30, 2002 was primarily  attributable  to a payment of $3.4
     million,  exclusive of acquisition  costs paid of $.07 million,  to acquire
     Norstan Network  Services,  Inc. Cash used in investing  activities for the
     three months ended  September  30, 2001 was primarily  attributable  to the
     Company's purchases of property and equipment totaling $.02 million.

     Our financing  activities  provided  cash of $4.2 million  during the three
     months  ended  September  30, 2002,  as compared to providing  cash of $3.3
     million  during  the same  period  in the  prior  year.  Cash  provided  by
     financing  activities for the three months ended September 30, 2002 was due
     to the private  sale of the  Company's  preferred  stock and  warrants  and
     advances  from  certain  individuals,  one of  whom  is an  officer  of the
     Company.  Cash provided by financing  activities for the three months ended
     September  30, 2001 was due to the  private  sale of the  Company's  common
     stock.

                                       18
<PAGE>

     Management's plan

     Historically,  the Company's  source of liquidity has been equity financing
     which is used to fund losses from operating activities.  NetWolves had cash
     and cash equivalents of approximately  $1,248,000 at September 30, 2002. In
     order for the  Company  to  execute  its  business  plan,  additional  cash
     outflows are necessary  for, among other things,  continued  development of
     technology, conducting customer pilot programs and increased sales efforts.
     To the extent  necessary,  the Company will seek to raise additional monies
     from the sale of its capital  stock and /or obtain debt  financing  to meet
     its funding needs over the next 12 to 24 months,  however,  there can be no
     assurance  that the  Company  will have  sufficient  capital to finance its
     operations.

     Management  has  instituted  cost  saving  measures  intended to reduce its
     overhead expenses and, if the Company is unable to raise sufficient funding
     to sustain  its  operations,  it will  curtail  the  operations  of certain
     business  segments.  However,  even if the  Company  does raise  sufficient
     operating capital, there can be no assurances that the net proceeds will be
     sufficient  to enable it to develop  its  business to a level where it will
     generate  profits  and cash  flows from  operations.  These  matters  raise
     substantial  doubt  about the  Company's  ability  to  continue  as a going
     concern.  The  accompanying  consolidated  financial  statements  have been
     prepared on a going concern basis,  which  contemplates  the realization of
     assets and  satisfaction  of  liabilities in the normal course of business.
     The  financial  statements do not include any  adjustments  relating to the
     recoverability  of  the  recorded  assets  or  the  classification  of  the
     liabilities  that  might be  necessary  should  the  Company  be  unable to
     continue as a going concern.


ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Not applicable.

ITEM 4 - CONTROLS AND PROCEDURES

     As of September 30, 2002, an evaluation was performed under the supervision
     and with the participation of the Company's  management,  including the CEO
     and CFO, of the  effectiveness of the design and operation of the Company's
     disclosure controls and procedures. Based on that evaluation, the Company's
     management,  including  the CEO  and  CFO,  concluded  that  the  Company's
     disclosure controls and procedures were effective as of September 30, 2002.
     There have been no significant  changes in the Company's  internal controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent to September 30, 2002.

                                       19
<PAGE>


PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

     None


ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     For the quarter ended  September 30, 2002,  the Company has issued  262,462
     shares of its Series A Preferred  Stock for a total cash  consideration  of
     $3,936,972. The shares were issued in connection with a private offering of
     the  Company's  securities  pursuant to which  shareholders  also  received
     warrants to purchase  shares of the  Company's  common  stock at an initial
     exercise price equal to $1.65 per share. Five warrants were issued for each
     share of Series A  Preferred  Stock  (one-half  warrant  for each  share of
     common stock issuable upon conversion of the Series A Preferred Stock). The
     warrants  are  exercisable  for five years from the  issuance  date and are
     callable by the Company if the closing price of the Company's  common stock
     is at or above three times the exercise  price for 30  consecutive  trading
     days.

     Approximately  $3,000,000  of the  proceeds  from the sale of the  Series A
     Preferred Stock was utilized to purchase the  outstanding  capital stock of
     Norstan  Network  Services,  Inc.  and the  remainder  was used for working
     capital purposes.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     Not applicable.


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

     Not applicable.


ITEM 5. OTHER INFORMATION

     Not applicable.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

          Current report on Form 8-K dated July 9, 2002.
          Current report on Form 8-K dated July 9, 2002.
          Current report on Form 8-K dated July 16, 2002.
          Current report on Form 8-K/A dated July 9, 2002.

                                       20
<PAGE>


                                   SIGNATURES

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


                                   BY:     NETWOLVES CORPORATION

                                      /s/  Walter M. Groteke
                                      ---------------------------
                                           Walter M. Groteke
                                           Chairman of the Board and President

                                     /s/   Peter C. Castle
                                     ----------------------------
                                           Peter C. Castle
                                           Secretary and Treasurer
                                           Principal Financial Officer and
                                           Principal Accounting Officer


Date: November 13, 2002

                                       21

<PAGE>
                               CERTIFICATIONS

Certificate Pursuant to

             18 U.S.C. Section 1350,
             as Adopted Pursuant to
        Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of NetWolves Corporation (the "Company")
on Form  10-Q for the  quarter  ending  September  30,  2002 as  filed  with the
Securities and Exchange Commission on the date hereof (the "Report"),  I, Walter
M.  Groteke,  President,  Chief  Executive  Officer  and  Chairman of the Board,
certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-
Oxley Act of 2002, that:

(1)  The Report fully complies with the  requirements  of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

(2)  The information  contained in the Report fairly  presents,  in all material
     respects, the financial condition and result of operations of the Company.

Date:  November 13, 2002


                                        /s/ Walter M. Groteke
                                        Walter M. Groteke
                                        Chairman of the Board, President
                                        and Chief Executive Officer



            Certificate Pursuant to

             18 U.S.C. Section 1350,
             as Adopted Pursuant to
        Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of NetWolves Corporation (the "Company")
on Form  10-Q for the  quarter  ending  September  30,  2002 as  filed  with the
Securities and Exchange  Commission on the date hereof (the "Report"),  I, Peter
C. Castle, Secretary and Treasurer, Chief Financial Officer and Chief Accounting
Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant
to 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  The Report fully complies with the  requirements  of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

(2)  The information  contained in the Report fairly  presents,  in all material
     respects, the financial condition and result of operations of the Company.

Date: November 13, 2002

                                        /s/ Peter C. Castle
                                            Peter C. Castle
                                            Secretary and Treasurer
                                            Chief Financial Officer and
                                            Chief Accounting Officer



[PARAGRAPHS  4, 5 AND 6 ARE OMITTED  PURSUANT TO THE  TRANSITION  PROVISIONS  OF
SECURITIES  EXCHANGE ACT OF 1934 RELEASE  34-46427 BECAUSE THIS ANNUAL REPORT ON
FORM 10-K COVERS A PERIOD ENDED PRIOR TO THE EFFECTIVE DATE OF RULE 13A-14.]

                                       22


<PAGE>

   CERTIFICATIONS

I, Walter M. Groteke, certify that:

     1.   I have  reviewed  this  quarterly  report  on Form  10-Q of  NetWolves
          Corporation;

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

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

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and we have:

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

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

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

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent function):

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

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

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


Date: November 13, 2002


                                        /s/ Walter M. Groteke
                                        -----------------------------
                                        Walter M. Groteke
                                        Chairman of the Board, President and
                                        Chief Executive Officer

                                       23

<PAGE>


                                 CERTIFICATIONS

I, Peter C. Castle, certify that:

     1.   I have  reviewed  this  quarterly  report  on Form  10-Q of  NetWolves
          Corporation;

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

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

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and we have:

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

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

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

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent function):

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

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

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


Date: November 13, 2002


                                     /s/ Peter C. Castle
                                     -------------------------------
                                     Peter C. Castle
                                     Secretary and Treasurer
                                     Principal Financial Officer and Principal
                                     Accounting Officer



                                       24