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, 2000

                        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.)


                 200 Broadhollow Road, Melville, New York 11747
                    (Address of principal executive offices)

                                 (631) 393-5016
              (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:

                                        NUMBER OF SHARES OUTSTANDING ON
        TITLE OF CLASS                          October 27, 2000
        --------------                  --------------------------------

Common Stock, $.0033 par value                   8,742,613
                                                 ---------
<PAGE>


                     NETWOLVES CORPORATION AND SUBSIDIARIES
                         FORM 10-Q - SEPTEMBER 30, 2000

                                     INDEX




PART I - FINANCIAL INFORMATION


   ITEM 1 - FINANCIAL STATEMENTS

   CONSOLIDATED BALANCE SHEETS
     September 30, 2000 (unaudited) and June 30, 2000                         1

   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
    COMPREHENSIVE INCOME (LOSS)
     For the three months ended September 30, 2000 (unaudited)
     and September 30, 1999 (unaudited)                                       2

   CONDENSED  CONSOLIDATED  STATEMENTS  OF CASH FLOWS
     For the three  months ended September 30, 2000 (unaudited)
     and September 30, 1999 (unaudited)                                       3

   NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                   4 - 8

   ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS                          9 - 13

   ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK        13


PART II - OTHER INFORMATION

   ITEM 1 - LEGAL PROCEEDINGS                                                14

   ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS                        14

   ITEM 3 - DEFAULTS UPON SENIOR SECURITIES                                  14

   ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS              14

   ITEM 5 - OTHER INFORMATION                                                14

   ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K                                 14

SIGNATURES                                                                   15

<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                                                        September 30,        June 30,
                                                           2000               2000
                                                       -------------        --------
                                                       (Unaudited)
<S>                                                    <C>                <C>
ASSETS

Current assets
  Cash and cash equivalents                            $ 15,267,845       $ 20,204,309
  Marketable securities, available for sale,
    at market value                                          98,000             99,500
  Accounts receivable, net                                  359,460            248,861
  Inventories                                               729,781            633,453
  Prepaid expenses and other current assets                 278,005            284,614
                                                       ------------       ------------
     Total current assets                                16,733,091         21,470,737

Property and equipment, net                                 752,465            590,906
Software, net                                             2,952,222          3,427,688
Intangible assets, net                                         -                  -
Other assets                                                 86,222             53,799
                                                       ------------       ------------
                                                       $ 20,524,000       $ 25,543,130
                                                       ============       ============

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
  Accounts payable and accrued expenses                $    670,919       $  1,792,030
  Deferred revenue                                           26,201             11,173
  Settlement obligation                                   1,150,000               -
  Current maturities of long-term debt                       49,779            208,435
                                                       ------------       ------------
     Total current liabilities                            1,896,899          2,011,638

Long term debt, net of current maturities                   325,142            418,102
                                                       ------------       ------------
     Total liabilities                                    2,222,041          2,429,740
                                                       ------------       ------------
Minority interest                                           297,617            305,761

Commitment and contingencies

Shareholders' equity

  Common stock, $.0033 par value, shares authorized;
    50,000,000 on September 30, 2000 and 10,000,000
    on June 30, 2000; issued and outstanding;
    8,742,613 on September 30, 2000
    and 8,592,613 on June 30, 2000                           28,851             28,356
  Additional paid-in capital                             56,076,702         56,076,197
  Unamortized value of equity warrants                   (1,702,518)        (1,851,893)
  Accumulated deficit                                   (36,301,538)       (31,349,376)
  Accumulated other comprehensive loss                      (97,155)           (95,655)
                                                       ------------       ------------
    Total shareholders' equity                           18,004,342         22,807,629
                                                       ------------       ------------
                                                       $ 20,524,000       $ 25,543,130
                                                       ============       ============

            See notes to condensed consolidated financial statements
</TABLE>
                                       1
<PAGE>

                             NETWOLVES CORPORATION

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                        AND COMPREHENSIVE INCOME (LOSS)
                                  (Unaudited)

<TABLE>
<CAPTION>

                                                       For the three months ended
                                                              September 30,
                                                       --------------------------
                                                          2000           1999
                                                          ----           ----
<S>                                                 <C>             <C>
Revenue
  Products                                          $    44,736     $    13,200
  Services                                              421,048         124,751
                                                    -----------     -----------
                                                        465,784         137,951
                                                    -----------     -----------
Cost of revenue
  Products                                               12,315           8,844
  Services                                              302,030          87,325
                                                    -----------     -----------
                                                        314,345          96,169
                                                    -----------     -----------
Gross profit                                            151,439          41,782
                                                    -----------     -----------

Operating expenses
  General and administrative                          2,941,532       2,868,808
  Engineering and development                           468,313         184,718
  Sales and marketing                                 1,966,476         606,007
                                                    -----------     -----------
                                                      5,376,321       3,659,533
                                                    -----------     -----------
Loss before other income (expense)                   (5,224,882)     (3,617,751)

Other income (expense)
  Investment income                                    271,800           45,730
  Minority interest                                      8,144            7,428
  Interest expense                                      (7,224)         (10,491)
                                                    -----------     -----------
Net loss                                            (4,952,162)      (3,575,084)

Other comprehensive income (loss):
  Marketable securities valuation adjustment            (1,500)          78,500
                                                   -----------      -----------

Comprehensive income (loss)                        $(4,953,662)     $(3,496,584)
                                                   ===========      ===========

Basic and diluted net loss per share               $      (.57)     $      (.59)
                                                   ===========      ===========

Weighted average common
  shares outstanding                                 8,667,613        6,068,218
                                                   ===========      ===========

           See notes to condensed consolidated finiancial statements
</TABLE>

                                       2
<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                       For the three months ended
                                                              September 30,
                                                       --------------------------
                                                          2000           1999
                                                          ----           ----
<S>                                                 <C>             <C>
Cash flows from operating activities
   Net loss                                          $ (4,952,162)  $ (3,575,084)
   Adjustments to reconcile net loss to net cash
     used in operating activities
       Depreciation                                        42,635         14,709
       Amortization                                       534,836        502,010
       Noncash charge to operations with respect to
         stock and warrants issued for services and
         amortization of previously issued warrants       855,375      1,553,583
       Minority interest                                   (8,144)       (12,428)
       Settlement obligation                              445,000           -
   Changes in operating assets and liabilities
       Accounts receivable                               (110,599)       (10,522)
       Inventories                                        (96,328)        53,564
       Prepaid expenses and other current assets            6,609        (73,661)
       Deferred revenue                                    15,028           -
       Accounts payable and accrued expenses           (1,121,111)        77,651
                                                     ------------   ------------
         Net cash used in operating activities         (4,388,861)    (1,470,178)
                                                     ------------   ------------

Cash flows from investing activities
   Capitalized software costs                             (59,370)          -
   Issuance of note receivable                               -           (50,000)
   Purchases of property and equipment                   (204,194)       (68,578)
   Payments of security deposits                          (32,423)        (3,400)
                                                     ------------   ------------
         Net cash used in investing activities           (295,987)      (121,978)
                                                     ------------   ------------
Cash flows from financing activities
   Repayment of advances from TSG officer                    -          (107,145)
   Repayment of long term debt                           (251,616)       (10,411)
   Cash proceeds from private sale of common stock           -         1,500,000
                                                     ------------   ------------
        Net cash (used in) provided by financing
          activities                                     (251,616)     1,382,444
                                                     ------------   ------------
Net decrease in cash and cash equivalents              (4,936,464)      (209,712)
Cash and cash equivalents, beginning of period         20,204,309      5,585,981
                                                     ------------   ------------
Cash and cash equivalents, end of period             $ 15,267,845   $  5,376,269
                                                     ============   ============
Taxes paid                                           $    (25,000)  $       -
                                                     ============   ============

Supplemental disclosures of non cash activity

Subsequent to the balance sheet date, the Company paid  $1,150,000 in connection
with a litigation settlement.  Of this settlement,  $445,000 has been charged to
operations  and  $705,000  has been  ascribed  as a financing  activity  for the
purchase  of  outstanding  warrants.  This  obligation  has been  accrued  as of
September 30, 2000.

            See notes to condensed consolidated financial statements
</TABLE>

                                       3
<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
                 THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999


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, 2000 and 1999 and the period  from  February  13, 1998
     (inception)  to June 30,  1998.  The  results of  operations  for the three
     months  ended  September  30, 2000 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 three subsidiaries,  NetWolves  Technologies
     Corporation,  ComputerCOP  Corporation  and its  majority  owned TSG Global
     Education Web, Inc. ("TSG") (collectively "NetWolves" or the "Company").

     NetWolves, LLC was an Ohio limited liability company formed on February 13,
     1998, which was merged into Watchdog Patrols, Inc. ("Watchdog") on June 17,
     1998.  Watchdog,  the legal surviving entity of the merger was incorporated
     under the laws of the State of New York on January 5, 1970.  As a result of
     the merger and subsequent sale of Watchdog's business, Watchdog changed its
     name to NetWolves.

     NetWolves is an Internet systems  developer that has designed and developed
     a multi-functional product that is a secure,  integrated,  modular Internet
     gateway.  The primary  product,  the FoxBox,  supports secure access to the
     Internet for multiple  users through a single  connection  and, among other
     things,  provides  electronic mail,  firewall security and web site hosting
     and also contains a network file server.  Since inception,  the Company has
     been developing its business plan and building its  infrastructure in order
     to effectively  market its products and shipped its first significant order
     in March 1999.

     TSG  currently  provides  consulting,  educational  and  training  services
     primarily  to the  oil and gas and  automotive  industries  throughout  the
     United States.  ComputerCOP  Corporation sells software designed to provide
     non  computer  literate  owners the ability to identify  threats as well as
     objectionable  material  that may be viewed by users of the computer on the
     Internet.

3    Significant accounting policies

     Use of estimates

     In preparing condensed consolidated financial statements in conformity with
     generally accepted  accounting  principles,  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 condensed consolidated financial statements include the accounts of the
     Company and its subsidiaries. All significant intercompany transactions and
     balances  have  been  eliminated  in  3  Significant   accounting  policies
     (continued)  Principles of  consolidation  (continued)  consolidation.  The

                                       4


<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
                 THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999


     separate ownership of one of the Company's subsidiaries is reflected in the
     Company's condensed consolidated financial statements as minority interest.
     The  minority  interest  includes  common  stock  representing  1.7% of the
     outstanding  shares of TSG and preferred stock,  until January 24, 2000, at
     which time the preferred stockholder elected to convert the preferred stock
     into shares of NetWolves common stock.

     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.

     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       Balance sheet components

<TABLE>
<CAPTION>

                                                        September 30,        June 30,
                                                            2000               2000
                                                        -------------     -------------
<S>                                                     <C>               <C>
Property and equipment, net
  Machinery and equipment                               $    695,411      $    510,849
  Furniture and fixtures                                     163,903           145,839
  Leasehold improvements                                      45,846            44,278
                                                        ------------      ------------
                                                             905,160           700,966
  Less: accumulated depreciation and amortization           (152,695)         (110,060)
                                                        ------------      ------------
  Property and equipment, net                           $    752,465      $    590,906
                                                        ============      ============
Software, net
  ComputerCOP technology                                $  4,217,520      $  4,217,520
  Other capitalized software costs                           230,283           170,913
                                                        ------------      ------------
                                                           4,447,803         4,388,433
Less: accumulated amortization                            (1,495,581)         (960,745)
                                                        ------------      ------------
Software, net                                           $  2,952,222      $  3,427,688
                                                        ============      ============
Accounts payable and accrued expenses
  Trade accounts payable                                $    321,118      $  1,083,526
  Finders fee payable                                           -              300,000
  Other accrued operating expenses                           183,749           153,794
  Accrued advertising                                         59,089           106,172
  Compensated absences                                       101,252            95,793
  Commissions payable                                            806            32,410
  Payroll/sales taxes payable                                  4,905            20,335
                                                        ------------      ------------
                                                        $    670,919      $  1,792,030
                                                        ============      ============
</TABLE>

                                       5
<PAGE>

                    NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
                 THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999



5    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
     Training and Consulting  segment and the Computer Software  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  principally  domestically,  is  primarily  engaged in the design,
     development,   marketing  and  support  of  information  delivery  hardware
     products and software.  The Training and Consulting segment, which operates
     domestically,   provides  consulting,  educational  and  training  services
     primarily  to the  oil and gas and  automotive  industries  throughout  the
     United  States.   The  Software   segment,   which   operates   principally
     domestically,  is primarily engaged in the design,  development,  marketing
     and support of software products which are designed to provide non computer
     literate  owners the ability to identify  threats as well as  objectionable
     material which may be viewed by users of the computer on the Internet.


<TABLE>
<CAPTION>
                                                        Three months ended
                                                          September 30,
                                                      ----------------------

                                                       2000            1999
                                                       ----            ----
     <S>                                            <C>            <C>
     Revenue
        Technology                                  $    32,483    $    13,200
        Training and consulting                         421,048        124,751
        Software                                         12,253           -
                                                    -----------    -----------
          Total                                     $   465,784    $   137,951
                                                    ===========    ===========
     Operating loss
        Technology                                  $(3,877,353)   $(2,692,352)
        Training and consulting                        (493,631)      (925,399)
        Software                                       (853,898)          -
                                                    -----------    -----------
          Total                                     $(5,224,882)   $(3,617,751)
                                                    ===========    ===========

</TABLE>

<TABLE>
<CAPTION>
                                                     September, 30    June 30,
                                                        2000           2000
                                                    -------------  ------------
<S>                                                 <C>            <C>
Identifiable assets
  Technology                                        $16,431,123    $21,231,907
  Training and consulting                               781,297        708,678
  Computer software                                   3,311,580      3,602,545
                                                    -----------    -----------
          Total                                     $20,524,000    $25,543,130
                                                    ===========    ===========
</TABLE>

     The Company had two customers, both included in the Training and Consulting
     segment,  which accounted for 60% and 11% of  consolidated  revenue for the
     three months ended  September 30, 2000 and 57% and 24% for the three months
     ended September 30, 1999, respectively.  Additionally,  the Company had two
     customers  that  accounted  for  48%  and  11%  of  consolidated   accounts
     receivable at September 30, 2000 and one customer that accounted for 40% of
     consolidated accounts receivable at June 30, 2000.

                                       6
<PAGE>

                    NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
                 THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999


6    Commitments and contingencies

     Anicom, Inc.

     On April 19, 2000, Anicom, Inc. had commenced an action against the Company
     in the U.S.  District  Court for the  Northern  District of  Illinois.  The
     action was based upon NetWolves'  alleged failure to deliver  approximately
     74,842 shares of its common stock to Anicom, upon exercise by Anicom of the
     Company's warrants.  The action sought specific  performance as well as any
     damages  that may have  resulted  from a  diminution  in value of NetWolves
     common stock.

     On November 16, 2000, and in connection  with the  litigation,  the Company
     and Anicom reached a settlement  (the  "Settlement  Agreement").  Under the
     Settlement  Agreement  the  allegations  for  the  breach  of  the  warrant
     agreement  by the  Company  and  unasserted  claims  for the  breach of the
     distribution  agreement by Anicom and the Company were settled. The Company
     paid  $1,150,000  to Anicom  pursuant to the  Settlement  Agreement,  which
     included $950,000 for the repurchase of all unvested warrants.

     As of  September  30,  2000,  the Company has  reduced  additional  paid in
     capital  in the  amount of  $705,000,  representing  the fair  value of the
     warrants,  calculated using the Black-Scholes option pricing model with the
     following assumptions:  dividend yield of none, expected volatility of 65%,
     risk free  interest  rate of 5.85% and an expected term of 3.17 years - the
     remaining  life  to  the  maturity  date.  The  remaining  portion  of  the
     settlement,  in the amount of  $445,000,  has been  charged to  operations.

     Employment agreements

     In August 2000 the Company  entered in to employment  agreements  with four
     employees.  One of the agreements is for a period of three years and grants
     the  employee  warrants to purchase  250,000  shares of common stock of the
     Company  at a  purchase  price of $5.25  per  share,  subject  to a vesting
     schedule  as  specified  in  such  agreement.  Another  agreement  is for a
     thirty-month  period and  provides  for a monthly  salary of $12,000,  plus
     reimbursement  of certain  expenses of $3,000 per month.  In addition,  the
     agreement also grants the employee  warrants to purchase  350,000 shares of
     common stock of the Company at a purchase price of $5.00 per share, subject
     to a vesting  schedule as  specified  in such  agreement.  In July 2000 and
     before  commencement of employment,  this individual  received  $250,000 in
     consulting fees relating to the Company's  agreement with General  Electric
     Company.  Another  agreement  is for a period of three years and grants the
     employee/stockholder,  who is affiliated with a law firm who provided legal
     services to the  Company,  warrants to  purchase  275,000  shares of common
     stock of the Company at a purchase price of $5.125 per share,  subject to a
     vesting schedule as specified in such agreement;  and the last agreement is
     for a period of three years and  provides  for a monthly  salary of $5,000,
     and the  agreement  also grants the employee  warrants to purchase  200,000
     shares of common  stock of the  Company  at a  purchase  price of $5.25 per
     share, subject to a vesting schedule as specified in such agreement.

                                       7
<PAGE>

                    NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
                 THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999



6    Commitments and contingencies (continued)

     Lease agreement

     In September  2000, the Company entered into a five-year lease agreement in
     Tampa,  Florida covering  approximately 20,000 sq. ft. of space with annual
     lease payments approximating  $390,000, to which it intends to relocate its
     corporate  headquarters and research and development facilities in Tampa in
     or about  December  2000.  The Company  believes  that  combining its Tampa
     operations  into one facility will increase  efficiency of operations.  The
     Company intends to sublease its other facilities in Tampa, Florida.

7    Related party transaction

     On August 16, 2000,  150,000 shares were issued to a consulting firm who is
     also a shareholder  of the Company for services  rendered  during the three
     months ending  September 30, 2000, which resulted in a charge to operations
     of $807,000. Management determined the fair value of the common stock based
     on its quoted market price at the time of the issuance.


                                       8

<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", 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.

          Overview

          NetWolves   Corporation   ("NetWolves"  or  the  "Company")   designs,
          develops,  manufactures  and sells  Internet  infrastructure  security
          products designed to provide secure,  manageable  Internet access. The
          Company was founded to introduce a new  innovative  Internet  security
          and access device called the  "FoxBox?".  NetWolves'  state-of-the-art
          enabling  technology  for the  Internet  connects  people and computer
          networks   securely  to  the  Internet.   NetWolves  designs  Internet
          solutions  that provide the services  that  companies  desire  without
          confusion, complication, limitation and the exorbitant cost associated
          with traditional offerings.

          NetWolves' multi-services internet communications gateway products are
          designed  to meet  all  business  needs  packaged  together,  (e-mail,
          firewall security, router, Web hosting, Intranet, FTP, etc.), complete
          with  advanced  integrated  hardware  and  software,  a simple  to use
          interface,  and room for  expansion.  As  companies  combine  data and
          communications  to  reduce  costs,  NetWolves'  value-added  expansion
          technologies such as Virtual Private Networking ("VPN"), a process for
          encrypting data for secure  transmission  over public  networks,  will
          provide   significant   cost-efficient   services  in  an  all-in-one,
          enterprise-wide gateway solution.

          NetWolves  differentiates  itself  from its  competitors  through  its
          proprietary patent pending  technology,  which provides a centralized,
          remote network monitoring,  managing and security software ("Mother").
          Mother allows the secure, remote management and monitoring of multiple
          all-in-one gateway servers located  worldwide.  This monitoring can be
          performed in real-time,  and from one or numerous central sites.  This
          advanced new technology also allows a network  administrator to create
          a configuration  template with all the  configuration  information and
          changes required for all-in-one units. This template can be applied to
          each unit, all via a secure  configuration  mechanism from the central
          monitoring location, without compromising network security. It is this
          Mother system which forms the basis of the Company's  recent agreement
          with the General Electric Company.

          NetWolves  products are designed for our partners'  present and future
          needs.  The Company's  initial target markets are the end users in the
          small and mid-sized  businesses and large organizations with satellite
          offices.  Larger  end  users to whom the  product  is  intended  to be
          marketed are companies with multi-state locations, government agencies
          and educational  markets.  NetWolves  products are designed to service
          numerous markets,  including the financial,  medical,  legal,  travel,
          hospitality, entertainment, hotel and auto and petroleum industries.


                                       9
<PAGE>



          The Company's  strategy is to establish the FoxBox as the standard for
          enterprise-wide   network  connectivity   worldwide.  To  achieve  its
          objectives  worldwide,  NetWolves  seeks  to form  relationships  with
          leading    companies   in   their    respective   areas   to   deliver
          application-specific Internet solutions to organizations worldwide.

          In January 1999,  the Company  entered into an agreement  with Sales &
          Management  Consulting,  Inc.  (d/b/a The Sullivan  Group),  a leading
          consulting   organization   serving   the  needs  of  the   automobile
          aftermarket,  convenience  stores and oil  industry.  It  maintains an
          extensive  library of training modules available to its client base of
          Amoco Oil, British Petroleum,  ExxonMobil,  Tosco and Unocal. Pursuant
          to its  agreement,  The  Sullivan  Group  appointed  NetWolves  as its
          exclusive  provider in the United States of a delivery  system whereby
          The Sullivan Group intends to sell its proprietary  training  programs
          that enhance  profitability to retail locations  throughout the United
          States.  NetWolves is customizing an Internet solution specifically to
          deliver  distance  learning to these  locations  utilizing  its FoxBox
          technology.  In July 1999, the Company acquired The Sullivan Group and
          the five  principal  officers and employees of The Sullivan Group were
          retained under long-term employment contracts.

          In February 2000, and in exchange for 1,775,000  restricted  shares of
          the   Company's   common   stock,   NetWolves   acquired   ComputerCOP
          Corporation,  whose assets included ComputerCOP technology,  inventory
          and $20.5 million in cash intended to fund future  growth.  The shares
          issued by the Company in connection  with the  acquisition are subject
          to a Voting Trust  Agreement,  wherein the Company's  chief  executive
          officer has been  granted  the right to vote all Trust  Shares for two
          years,  subject to earlier termination on the sale of the shares based
          on certain parameters.

          On June 29,  2000,  NetWolves  and  General  Electric  Company  ("GE")
          entered into a six year agreement for the master purchase, license and
          support  services  of  NetWolves'  security,   remote  monitoring  and
          configuration  management system. GE, after extensive due diligence in
          looking  for  the  all-in-one   small  office   solution  for  network
          management,  interconnectivity  and  security  management,  chose  the
          FoxBox for  deployment  throughout  their  enterprise.  In addition to
          agreeing  to sell the  FoxBox  to GE,  NetWolves  will  receive  (a) a
          one-time  installation  fee for each FoxBox unit  installed  and (b) a
          monthly  service and  maintenance fee for which GE pays NetWolves upon
          installation for the first twelve months.  GE will be using the FoxBox
          for  interconnectivity  of worldwide  offices.  The FoxBox will enable
          GE's offices to interact with each other, utilizing NetWolves advanced
          firewall  security.  NetWolves  believes that this  agreement  further
          validates the Company's technology and innovations within the firewall
          and  network  security  markets.  Network  security is one of the most
          formidable  challenges facing Fortune 500 companies,  and with its new
          "Mother System," NetWolves can offer the appropriate solutions.

          The  Company  has a  limited  operating  history  in  which to base an
          evaluation of the business and prospects. The Company's prospects must
          be  considered  in  light  of  the  risks  frequently  encountered  by
          companies in their early  stages,  particularly  for  companies in the
          rapidly evolving  technology  industry.  Certain risks for the Company
          include,  but are not limited to an unproven  business model,  capital
          requirements and growth management.  To counter this risk, the Company
          must,  among other  things,  increase its customer  base,  continue to
          develop its distribution  network and product offerings,  successfully
          execute its  business and  marketing  plan,  and expand the  operating
          infrastructure.  There can be no  assurance  that the Company  will be
          successful  in addressing  such risks,  and the failure to do so could
          have a material  adverse effect on the Company's  financial  condition
          and results of operations.  Since inception,  the Company has incurred
          significant  losses and as of  September  30, 2000 had an  accumulated
          deficit of approximately $36.3 million.  The Company believes that its
          success  depends  in  large  part  on its  ability  to  create  market
          awareness and acceptance for the FoxBox,  raise  additional  operating
          capital  to  grow  operations,  build  technology  and  non-technology
          infrastructures,  expand the sales force and distribution network, and
          continue new product R&D.

                                       10

<PAGE>


          Results of Operations


          The  Company  currently  operates  in  three  business  segments,  the
          Technology  segment,  the  Training  and  Consulting  segment  and the
          Computer software segment.

          Three months ended September 30, 2000 and 1999

              Revenue

          Revenue  increased to $465,784 for the three months September 30, 2000
          as  compared to  $137,951  for the same period in the prior year.  The
          increase in revenue was primarily the result of an increase in revenue
          from the Company's  training and consulting  segment.  The increase in
          consulting  revenue is primarily  attributable to the Company entering
          into an agreement to provide  management  and  consulting  services to
          certain  franchisees  of BP Amoco which  commenced  in December  1999.
          While the Company expects to generate  revenue from its management and
          consulting  services  in  the  future,  it  expects  to  significantly
          increase its revenue  derived from the sale of its core  product,  the
          FoxBox.  Through  September 30, 2000 the Company has not generated any
          significant revenue from its ComputerCOP technology.

              Cost of revenue and gross profit

          Cost  of  revenue   for  sale  of  the   Company's   FoxBox   includes
          manufacturing costs, which we have outsourced,  packaging and shipping
          costs and  warranty  expenses.  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 $314,345  for the
          three months ended  September  30, 2000 as compared to $96,169 for the
          same period in the prior year.

          Overall gross profit increased to 32.5% for the three months September
          30,  2000 as  compared to 30.2% for the same period in the prior year.
          This was  primarily  attributable  to revenue  from the  training  and
          consulting segment.

              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 increased to $468,313 for the three months September 30, 2000
          as  compared to  $184,718  for the same  period in the prior year.  In
          addition,  the company capitalized  approximately  $59,000 in software
          development  costs  for the  three  months  September  30,  2000.  The
          increase in engineering and development costs was primarily the result
          of the employment of additional engineering and development personnel.
          We expect to incur  significant  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 Mother.


                                       11

<PAGE>

              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  increased to  $1,966,476  for the three
          months  September 30, 2000 as compared to $606,007 for the same period
          in the prior year.  The increase in sales and  marketing  expenses was
          primarily the result of the employment of additional  sales personnel,
          common  stock  issuances  and cash  payments  to sales  and  marketing
          consultants,  and an increase in marketing efforts to effectuate brand
          awareness designed for future growth.  Included in sales and marketing
          expenses for the three months ended  September 30, 2000 is $706,000 of
          non-cash compensation for services in the form of the Company's common
          stock,  options and warrants as compared to none in the prior  period.
          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.

              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  increased to $2,941,532 for the
          three months ended  September 30, 2000 as compared to  $2,868,808  for
          the same period in the prior year.  The  increase  was  primarily  the
          result of the addition of the Company's  computer software segment,  a
          settlement with Anicom,  Inc., as well as the employment of additional
          administrative personnel and payment of professional fees for services
          rendered, partially offset by no executive and consulting compensation
          in the  form of the  Company's  common  stock,  options  and  warrants
          (excluding the amortization of previously  issued warrants) during for
          the three months September 30, 2000. On November 16, 2000, the Company
          and Anicom,  Inc. reached a settlement (the  "Settlement  Agreement").
          Under the Settlement  Agreement the  allegations for the breach of the
          warrant  agreement by the Company and unasserted claims for the breach
          of the distribution  agreement by Anicom and the Company were settled.
          The  Settlement  Agreement  resulted  in a  charge  to  operations  of
          $445,000 for the three months ended  September  30, 2000.  The Company
          expects  general  and  administrative  costs to  increase  in absolute
          dollars in the future.

              Other income (expenses)

          Other income  (expenses)  consists  primarily of portfolio  income and
          increased  to  $272,720  for the three  months  September  30, 2000 as
          compared  to  $42,667  for the same  period  in the  prior  year.  The
          increase was primarily due to an increase in interest income the three
          months  September  30, 2000 due to the  increase  average cash balance
          from the ComputerCOP Corporation transaction.

          Liquidity and Capital Resources

          On June 17, 1998 the Company  executed a reverse  merger with Watchdog
          Patrols,  Inc. a publicly traded non-reporting  company engaged in the
          activity of providing  armed and unarmed  security  guard services for
          the New  York/Metropolitan  Area.  This merger made  available  to the
          Company,  approximately  $2.3 million of cash,  cash  equivalents  and
          marketable securities to be used as operating capital. On November 22,
          1998 the Company  sold  substantially  all the assets of the  security
          guard business,  consisting primarily of uniforms,  vehicles, computer
          systems and furniture to a third party.  This  generated an additional
          $600,000  of cash  flow to the  Company.  On June 29,  1999  NetWolves
          concluded a private  offering of 800,000  shares of common  stock that
          generated $5.4 million (net of $.6 million of expenses).

                                       12
<PAGE>



          From  September  29, 1999  through  November 4, 1999,  an aggregate of
          287,500  shares  of the  Company's  common  stock  were  issued  to 17
          accredited  investors at a price of $15 per share for an aggregate sum
          of approximately  $4.2 million.  In February 2000,  NetWolves acquired
          ComputerCOP Corporation, whose assets included ComputerCOP technology,
          inventory and $20.5 million in cash.

          NetWolves  had cash and cash  equivalents  of $15.2  million and $20.2
          million  at  September  30,  2000  and June  30,  2000,  respectively.
          Management believes that the Company has adequate capital resources to
          meet its working  capital  needs for at least the next  twelve  months
          based upon its current operating level. To the extent  necessary,  the
          Company  intends  to  raise  additional  monies  from  the sale of its
          capital  stock to fund  its  growth  over  the  next 24 to 36  months,
          however,  there  can  be no  assurance  that  the  Company  will  have
          sufficient capital to finance its planned growth.


ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Not applicable.


                                       13
<PAGE>


                          PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

          On April 19, 2000,  Anicom,  Inc. had commenced an action  against the
          Company  in the U.S.  District  Court  for the  Northern  District  of
          Illinois.  The  action was based upon  NetWolves'  alleged  failure to
          deliver  approximately  74,842  shares of its common  stock to Anicom,
          upon exercise by Anicom of the Company's  warrants.  The action sought
          specific  performance  as well as any damages  that may have  resulted
          from a diminution in value of NetWolves common stock.

          On November 16,  2000,  and in  connection  with the  litigation,  the
          Company and Anicom reached a settlement (the "Settlement  Agreement").
          Under the Settlement  Agreement the  allegations for the breach of the
          warrant  agreement by the Company and unasserted claims for the breach
          of the distribution  agreement by Anicom and the Company were settled.
          The Company  paid  $1,150,000  to Anicom  pursuant  to the  Settlement
          Agreement,  which included $950,000 for the repurchase of all unvested
          warrants.

          As of September 30, 2000, the Company has reduced  additional  paid in
          capital in the amount of $705,000,  representing the fair value of the
          warrants, calculated using the Black-Scholes option pricing model with
          the following assumptions: dividend yield of none, expected volatility
          of 65%,  risk free interest rate of 5.85% and an expected term of 3.17
          years - the remaining life to the maturity date. The remaining portion
          of the  settlement,  in the amount of  $445,000,  has been  charged to
          operations.


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         None.


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

(a)      Exhibits: Exhibit 27 - Financial Data Schedule (for electronic
         submission only).

                                       14

<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 17, 2000

                                       15