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

                                  FORM 10-QSB


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

               For the quarterly period ended September 30, 2003
                                              ------------------
                        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:

                                                 NUMBER OF SHARES OUTSTANDING ON
              TITLE OF CLASS                          November 11, 2003
----------------------------------------         -------------------------------


Common Stock, $.0033 par value                            17,575,065
                                                     -------------------

<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

                          FORM 10-Q SEPTEMBER 30, 2003

                                     INDEX


PART I - FINANCIAL INFORMATION


      ITEM 1 - FINANCIAL STATEMENTS

      CONDENSED CONSOLIDATED BALANCE SHEETS
           September 30, 2003 (unaudited) and June 30, 2003 ..............1 - 2

      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
           For the three months ended September 30, 2003 (unaudited)
             and September 30, 2002 (unaudited) ..........................3 - 4

      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
           For the three months ended September 30, 2003 (unaudited)
             and September 30, 2002 (unaudited) ..........................5 - 6

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ...............7 - 11

      ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS ....................12 - 15

      ITEM 3 - CONTROLS AND PROCEDURES ..................................     15


PART II - OTHER INFORMATION

      ITEM 1 - LEGAL PROCEEDINGS ........................................     16

      ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS ................     16

      ITEM 3 - DEFAULTS UPON SENIOR SECURITIES ..........................     16

      ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ......     16
      ITEM 5 - OTHER INFORMATION ........................................     16

      ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K .........................     16

SIGNATURES  .............................................................     17


<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                   September 30,           June 30,
                                                                                      2003                  2003
                                                                                ------------------    ------------------
                                                                                   (Unaudited)
<S>                                                                             <C>                   <C>
ASSETS

Current assets
     Cash and cash equivalents                                                  $        5,332,194    $        1,336,191
     Restricted cash                                                                        25,371               297,701
     Accounts receivable, net                                                            2,661,491             2,254,790
     Inventories                                                                           117,290                89,598
     Prepaid expenses                                                                       92,549               172,002
     Other current assets                                                                   10,493                 8,241
                                                                                ------------------    ------------------
         Total current assets                                                            8,239,388             4,158,523

Property and equipment, net                                                                528,087               578,192

Internally developed software, net                                                          38,598                50,572

Identifiable intangible assets
Patent                                                                                      47,649                47,649
Licenses                                                                                   203,000               203,000
Contractual customer relationships, net                                                  1,837,477             1,959,277
Computer billing software, net                                                             709,043               756,043
                                                                                ------------------    ------------------
         Total identifiable intangible assets                                            2,797,169             2,965,969

Goodwill                                                                                 3,515,698             3,515,698

Other assets                                                                                59,963                59,383
                                                                                ------------------    ------------------
                                                                                $       15,178,903    $       11,328,337
                                                                                ==================    ==================


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,
                                                                                       2003                  2003
                                                                                ------------------    ------------------
                                                                                    (Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
    Accounts payable and accrued expenses                                       $        4,647,532    $        4,613,252
    Accrued losses of discontinued operations                                              108,987               108,639
    Deferred revenue                                                                       159,248               423,625
    Advances from related parties                                                             -                  150,000
    Note payable                                                                           120,000               120,000
                                                                                ------------------    ------------------
       Total current liabilities                                                         5,035,767             5,415,516

Deferred revenue                                                                            45,667                51,000

Accrued losses of discontinued operations                                                  101,827               128,886
                                                                                ------------------    ------------------
         Total liabilities                                                               5,183,261             5,595,402
                                                                                ------------------    ------------------
Minority interest                                                                          275,427               275,734
                                                                                ------------------    ------------------
Commitment and contingencies

Shareholders' equity
    Series A Preferred stock, $.0033 par value; $8,844,566 liquidation
      preference; 1,000,000 shares authorized on September 30, 2003 and
      June 30, 2003, respectively; 250,796 and 269,462 shares issued and
      outstanding on September 30, 2003 and June 30, 2003, respectively                  2,613,315             2,819,876
    Series B Preferred stock, $.0033 par value; $9,801,250 liquidation
      preference; 500,000 shares authorized on September 30, 2003 and June
      30, 2003; 290,963 shares issued and outstanding on September 30, 2003
      and June 30, 2003                                                                 3,055,770             3,055,770
    Series C Preferred stock, $.0033 par value; $4,703,982 liquidation
      preference; 100,000 shares authorized on September 30, 2003 and June
      30, 2003; 77,479 and 2,850 shares issued and outstanding on September
      30, 2003 and June 30, 2003, respectively                                          3,264,108               135,701
    Preferred stock, $.0033 par value; 400,000 shares authorized on
      September 30, 2003 and June 30, 2003; no shares issued and
      outstanding on September 30, 2003 and June 30, 2003                                    -                     -
    Common stock, $.0033 par value; 50,000,000 shares authorized on
      September 30, 2003 and June 30, 2003; 17,397,107 and 15,847,119
      shares issued and outstanding on September 30, 2003 and June 30,
      2003, respectively                                                                   57,411                52,296
     Additional paid-in capital                                                        73,219,584            69,520,368
     Unamortized value of equity compensation                                          (1,543,522)             (104,758)
     Accumulated deficit                                                              (70,946,451)          (70,022,052)
                                                                                ------------------    ------------------

       Total shareholders' equity                                                      9,720,215             5,457,201
                                                                                ------------------    ------------------
                                                                                $     15,178,903      $     11,328,337
                                                                                ==================    ==================
</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
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                 For the three months ended
                                                                      September  30,
                                                             ----------------------------------
                                                                   2003                2002
                                                             -----------------  ---------------
<S>                                                          <C>                <C>
 Revenue
    Technology                                               $         567,946  $       187,696
    Network Services                                                 5,433,600        4,637,054
                                                             -----------------  ---------------
                                                                     6,001,546        4,824,750
                                                             -----------------  ---------------
 Cost of revenue
    Technology                                                         361,394          109,897
    Network Services                                                 3,597,017        3,105,768
                                                             -----------------  ---------------
                                                                     3,958,411        3,215,665
                                                             -----------------  ---------------
 Gross profit                                                        2,043,135        1,609,085
                                                             -----------------  ---------------
Operating expenses
    General and administrative                                       1,769,263        1,704,271
    Engineering and development                                        253,399          448,974
    Sales and marketing                                                914,570          686,353
                                                             -----------------  ---------------
                                                                     2,937,232        2,839,598
                                                             -----------------  ---------------
 Loss before other income (expense)                                   (894,097)      (1,230,513)

 Other income (expense)
    Investment income                                                    1,391            1,546

    Realized loss on sale of marketable securities                        -            (115,201)
    Minority interest                                                      307              229
    Interest expense                                                      -             (61,768)
                                                             -----------------  ---------------
Loss before income taxes                                              (892,399)      (1,405,707)
Provision for income taxes
                                                                        32,000           -
                                                             -----------------  ---------------
Net loss from continuing operations                                   (924,399)      (1,405,707)

 Discontinued business
    Loss on disposal of discontinued operations
                                                                          -             117,097
                                                             -----------------  ---------------
 Net loss                                                    $        (924,399) $    (1,522,804)
                                                             =================  ===============

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

                                       3
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)
                                                                 For the three months ended
                                                                      September  30,
 (continued)                                                 ----------------------------------
                                                                   2003                2002
                                                             -----------------  ---------------
 Basic and diluted net loss per share

 Net loss                                                    $        (924,399) $    (1,522,804)

    Beneficial conversion on preferred stock                           (80,717)            -
    Dividends on preferred stock                                      (200,012)         (57,133)
                                                             -----------------   ---------------
Net loss available to common shareholders                    $      (1,205,128)  $   (1,579,937)
                                                             =================   ===============

Basic and diluted net loss per share

    Loss from continuing operations                          $            (.08)  $         (.12)
    Loss from discontinued operations                                       -              (.01)
                                                             -----------------  ---------------
                                                             $            (.08)  $         (.13)
                                                             -----------------  ---------------
 Weighted average common shares
    outstanding, basic and diluted                                  15,996,335       12,607,119
                                                             -----------------  ---------------
</TABLE>
The accompanying notes to the financial statements are an integral part of these
condensed consolidated statements.

                                       4
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                For the three months ended
                                                                                      September 30,
                                                                          -----------------------------------------
                                                                                   2003                  2002
                                                                          --------------------  -------------------
<S>                                                                       <C>                   <C>
Cash flows from operating activities
     Net loss                                                             $           (924,399) $       (1,522,804)
     Adjustments to reconcile net loss to net cash used in operating
     activities
            Depreciation                                                                56,285              57,198
           Amortization                                                                180,774             167,855
           Non-cash charge to operations with respect to
                stock and warrants issued for services and amortization
           of previously issued warrants                                               272,585                -
           Minority interest                                                              (307)               (229)
           Loss on sale of marketable securities                                          -                115,201
           Amortization of imputed interest                                               -                 61,768
           Loss on disposal of property and equipment                                     -                  2,634

     Changes in operating assets and liabilities
       Restricted cash                                                                 272,330              71,713
       Accounts receivable                                                            (406,701)         (1,164,799)
       Inventories                                                                     (27,692)              1,030
       Prepaid expenses                                                                 79,453              67,510
       Other current assets                                                             (2,252)             60,163
       Accounts payable and accrued expenses                                          (165,732)            695,257
       Accrued loss on disposal of discontinued operations                             (26,711)            (68,963)
       Deferred revenue                                                               (269,710)            177,148
       Due to Norstan, Inc.                                                               -              1,068,044
                                                                          --------------------  -------------------
         Net cash used in operating activities
                                                                                      (962,077)           (211,274)
                                                                          --------------------  -------------------
Cash flows from investing activities
     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 for security deposits                                                      (580)                 -
     Purchases of property and equipment
                                                                                       (6,180)              (20,397)
                                                                          --------------------  -------------------
       Net cash used in investing activities                                          $(6,760)          $(3,363,940)
                                                                          --------------------  -------------------

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

                                       5
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                                                                For the three months ended
(continued)                                                                            September 30,
                                                                          -----------------------------------------
                                                                                   2003                  2002
                                                                          --------------------  -------------------
Cash flows from financing activities

     Cash proceeds from private sale of preferred stock and warrants      $         4,477,600    $        3,936,972

     Cash proceeds from private sale of common stock and warrants                   1,200,000                  -
     Financing costs paid
                                                                                     (562,760)             (270,533)
     Advances from related parties
                                                                                         -                  600,000
     Repayment of advances from related parties                                      (150,000)             (100,000)
                                                                          --------------------  -------------------
       Net cash provided by financing activities
                                                                                    4,964,840             4,166,439
                                                                          --------------------  -------------------
Net increase in cash and cash equivalents
                                                                                    3,996,003               591,225

Cash and cash equivalents, beginning of period
                                                                                    1,336,191               656,880
                                                                          --------------------  -------------------
Cash and cash equivalents, end of period                                  $         5,332,194   $         1,248,105
                                                                          ====================  ===================

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

Purchase acquisition
     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)
                                                                                          -                (400,000)
                                                                          --------------------  -------------------
                                                                          $               -     $         3,350,000
                                                                          ====================  ===================

Dividends on preferred stock                                              $           200,012   $            57,133
                                                                          ====================  ===================
</TABLE>
The accompanying notes to the financial statements are an integral part of these
condensed consolidated statements.

                                       6
<PAGE>
                    NETWOLVES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
                 THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

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.  These financial statements,  including the
     condensed  consolidated  balance sheet as of June 30, 2003,  which has been
     derived from audited financial statements, are presented in accordance with
     the  requirements  of Form  10-QSB and  consequently  may not  include  all
     disclosures  normally required by generally accepted accounting  principles
     or those  normally  made in the Company's  Annual Report on Form 10-K.  The
     accompanying  condensed consolidated financial statements and related notes
     should be read in conjunction with the Company's Annual Report on Form 10-K
     for the fiscal year ended June 30, 2003.  The results of operations for the
     three months ended September 30, 2003 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")  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.

3    Significant accounting policies

     Basic and diluted net loss per share

     The diluted loss per share does not include the impact of potential  shares
     to be issued upon  exercise of  convertible  preferred  stock,  options and
     warrants  aggregating  approximately  29.5  million  and  12.4  million  at
     September  30, 2003 and 2002,  respectively,  because the Company had a net
     loss from operations and, therefore, the effect would be antidilutive.

     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.

     Stock-based compensation

     SFAS  123,   "Accounting   for  Stock-Based   Compensation"   ("SFAS  123")
     establishes  a fair  value-  based  method of  accounting  for stock  based
     compensation  plans.  The  Company  has  chosen  to  adopt  the  disclosure
     requirements  of  SFAS  123  and  SFAS  148,  "Accounting  for  Stock-Based
     Compensation Transition and Disclosure" ("SFAS 148") and continue to record
     stock  compensation  for its  employees  and  outside  directors  using the



                                       7
<PAGE>
                   NETWOLVES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
                 THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002



3    Significant accounting policies (continued)

     intrinsic value method  prescribed in Accounting  Principles  Board Opinion
     25,  "Accounting for Stock Issued to Employees"  ("APB 25").  Under APB 25,
     charges are made to operations in accounting  for stock options  granted to
     employees and outside  directors when the option  exercise prices are below
     the fair market value of the common stock at the measurement date.

     If the Company had elected to recognize compensation expense based upon the
     fair value at the date of grant consistent with the methodology  prescribed
     by SFAS No. 123 and No. SFAS 148, the effect on the  Company's net loss and
     net loss per share would be as follows:
<TABLE>
<CAPTION>
                                                                                    For the three months
                                                                                    ended September 30,
                                                                                    --------------------

                                                                                  2003                  2002
                                                                          -------------------   -----------------
<S>                                                                       <C>                   <C>
Net loss available to common shareholders, as reported                    $      (1,205,128)    $      (1,579,937)

Add: Total stock based employee compensation expense included in
  reported net loss, net of related tax effects                                        -                      -

Deduct:  Total stock-based employee compensation expense determined
  under fair value based method for all awards, net of related tax
  effects                                                                          (229,164)             (110,198)
                                                                          -----------------     -----------------
Pro forma net loss                                                        $      (1,434,292)    $      (1,690,135)
                                                                          ==================    ==================
Basic and diluted net loss per share
         As reported                                                      $           (.08)     $           (.13)
         Pro forma                                                        $           (.09)     $           (.13)

</TABLE>

     Equity  issuances to  non-employees in exchange for services are charged to
     operations  over the period the services are provided  using the fair value
     method on the  measurement  date.  The costs  associated  with issuances of
     fixed awards with pro rata vesting are revalued at the  respective  vesting
     dates and expensed in the respective  condensed  consolidated  statement of
     operations as the services are provided.

4    Related party transactions

     During  the three  months  ended  September  30,  2003,  the  Company  paid
     approximately  $34,000  for  legal  services  to  law  firms  in  which  an
     employee/stockholder is affiliated.

5    Shareholders' equity

     Preferred stock

     The Company amended its Certificate of Incorporation,  as authorized by its
     Board of Directors,  by designating  100,000 shares of its 2,000,000 shares
     of  preferred  stock as Series C  Convertible  Preferred  Stock,  par value
     $.0033 per share ("Series C Preferred Stock").

                                       8
<PAGE>
                   NETWOLVES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
                 THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

     Cumulative dividends on the Series C Preferred Stock accrue at a rate of 7%
     per annum from the date of issuance  through April 30, 2005 and  thereafter
     at a rate of 9% per annum and will be  payable  annually  at the  Company's
     option in cash or Series C  Preferred  Stock.  Each  share of the  Series C
     Preferred  Stock is  convertible  at the holders'  option into 60 shares of
     common  stock.  Each share of Series C  Preferred  Stock will have  fifteen
     votes and will vote as a single class with holders of the Company's  common
     stock.

     Through  September  30, 2003,  the Company has issued  77,479 shares of its
     Series C Preferred Stock for a total cash consideration of $4,648,600.  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 $1.50 per share. Six warrants were issued for each share of Series
     C  Preferred  Stock and are  exercisable  for five years from the  issuance
     date.

     Proceeds  from the  issuance  of the  preferred  stock  and  warrants  were
     allocated to preferred  stock and to additional  paid-in capital based upon
     their relative fair value. Additionally, after allocating the proceeds, the
     Company determined that there was a beneficial  conversion  feature,  which
     has been included in the condensed consolidated statements of operations.

     Common stock

     For the three  months  ended  September  30,  2003,  the Company has issued
     1,200,000  shares of its  common  stock for a total cash  consideration  of
     $1,200,000. 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 $1.25 per share.  Two hundred  warrants were issued
     for each 1,000  shares of Common Stock and are  exercisable  for five years
     from the issuance date.

     Unamortized value of equity compensation

     The Company  entered into  several  consulting  agreements  during the year
     ended June 30, 2003 for which  shares of common  stock were to be issued as
     consideration.  The  majority of those  shares  were not issued  until July
     2003.  As such,  the  aggregate  value of the issued,  but unearned  shares
     totaling  $1,543,522 at September  30, 2003 is included in the  unamortized
     value of equity  compensation in the  accompanying  condensed  consolidated
     balance sheets.


6    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"  (SFAS 131). To reflect management and
     business  changes,  the  Company  has  realigned  its  reporting  segments.
     Effective July 1, 2003,  the Management and Consulting  segment is included
     in the  Technology  segment.  As required by SFAS 131, prior year operating
     information  in the  following  table has been restated to conform with the
     current year presentation.

     The two  remaining  segments  are the  Technology  segment  and the Network
     Services segment.  The Technology  segment,  which operates  worldwide,  is
     primarily  engaged in the  design,  development,  marketing  and support of
     information  delivery hardware products and software.  The Network Services
     segment,  which operates  domestically,  provides  multiple source data and
     voice services and related consulting and professional services.

                                       9
<PAGE>
                   NETWOLVES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
                 THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


6    Segment information (continued)
<TABLE>
<CAPTION>

                                                                               For the three months ended
                                                                                        September 30,
                                                                         -----------------------------------
                                                                               2003                2002
                                                                         -----------------  ----------------
         <S>                                                             <C>                <C>
         Revenue
              Technology                                                 $         567,946  $        187,696
              Network Services                                                   5,433,600         4,637,054
                                                                         -----------------  ----------------
                  Total                                                  $       6,001,546  $      4,824,750
                                                                         =================  ================
         Operating income (loss)
              Technology                                                     $ (1,016,534)  $     (1,363,954)
              Network Services                                                     122,437            16,344
                                                                         -----------------  ----------------
                  Total                                                        $ (894,097)  $     (1,347,610)
                                                                         =================  ================

                                                                           September 30,          June 30,
                                                                                 2003               2003
                                                                         -----------------  ----------------
             Identifiable assets
                 Technology                                              $       1,193,396   $     1,263,838
                 Network Services                                                9,885,418        10,047,700
                 Other                                                           4,083,864               574
                                                                         -----------------  ----------------
                                                                                15,162,678        11,312,112
                 Net assets of discontinued operations                              16,225            16,225
                                                                         -----------------  ----------------
                     Total                                               $      15,178,903   $    11,328,337
                                                                         =================  ================

</TABLE>
     The Company had one major customer in the Network Services  segment,  which
     accounted  for 32% of  consolidated  revenue  for the  three  months  ended
     September 30, 2003 and two major  customers,  both in the Network  Services
     segment,  which accounted for 31% and 13%, of consolidated  revenue for the
     three months ended  September  30, 2002,  respectively.  Additionally,  the
     Company had two customers in the Network  Services  segment that  accounted
     for 38% and 17%,  respectively,  of  consolidated  accounts  receivable  at
     September 30, 2003 and two customers in the Network  Services segment which
     accounted  for  14%  and  11%,   respectively,   of  consolidated  accounts
     receivable  at June 30,  2003.  Additionally,  the  Technology  segment was
     dependent upon one customer, who accounted for 91% and 83% of the segment's
     revenues  for  the  three  months  ended   September  30,  2003  and  2002,
     respectively.

                                       10
<PAGE>
                   NETWOLVES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
                 THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002



7       Income taxes


The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
                                                     For the three months ended
                                                            September 30,
                                                    ----------------------------
                                                          2003            2002
                                                    -------------      ---------
              <S>                                   <C>                <C>
              Current - Federal and States          $      32,000      $    -
              Deferred - Federal                            -               -
              Deferred - States                             -               -
                                                    -------------      ---------
              Provision for income taxes            $      32,000      $       -
                                                    =============      =========
</TABLE>
     Due to the history of net  operating  losses for income tax  purposes,  the
     Company has provided for full  valuation  allowances  on the  Company's net
     deferred  tax asset due to it being more likely than not that the  deferred
     tax asset will not be utilized.

     A portion or all of the Company's net tax operating loss  carryforwards may
     be subject to Section 382 of the Internal  Revenue Code and  therefore  not
     available to offset future income tax liabilities.  The carryforward losses
     expire in the years 2013 through 2023 and have not been  recognized  in the
     accompanying  consolidated  financial statements as a result of a valuation
     allowance against the deferred tax asset.

                                       11
<PAGE>

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


     Forward-Looking Statements

     This 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  based on certain risks and
     uncertainties,  including  the risk  factors  referenced  in the  Company's
     filings with the Securities and Exchange Commission.  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

     We operate  primarily in two distinct  segments.  The  Technology  segment,
     which operates worldwide, is primarily engaged in the design,  development,
     marketing  and  support  of  information  delivery  hardware  products  and
     software.  The  Network  Services  segment,  which  operates  domestically,
     provides multiple source data and voice services and related consulting and
     professional services.

     We have achieved an offering of managed products and services that meet the
     necessary  requirements for  organizations to move off of expensive private
     data networks while  attaining the benefits and  flexibility of public data
     network.  Additionally, our proprietary technology provides a high level of
     security  through its  integrated  approach to  management,  monitoring and
     interoperability   for  small  and  medium  remote   enterprise   locations
     (locations  with  less  than 300  network  users).  We offer  products  and
     services that provide complete system  solutions to  organizations  needing
     cost  effective  network  security  features  (firewall,   virtual  private
     networking,  routing, intrusion detection,  content filtering, email, etc.)
     delivered on low cost  commodity  hardware  with  Internet-based  expansion
     capabilities. Our patent pending system technology enables organizations to
     achieve corporate  Information  technology (IT) and e-business  initiatives
     through the  deployment of easily  installable  perimeter  office  security
     platforms, coupled with secure remote monitoring and management ("SRM2 TM")
     system. SRM2 TM provides centralized  management  capabilities for hundreds
     or thousands of remote locations  without risking  networking  integrity by
     opening an administrative port on the remote device through which outsiders
     can  gain  access  to   information   on  the  system.   We  also   provide
     cost-effective,  value-added  expansion  technologies  such as  intelligent
     fail-over,   which  means  that  if  one  circuit  for  gaining  access  to
     information fails, the system would automatically  switch to an alternative
     circuit.

     NNSI,  acquired in July 2002,  manages  multiple source (any combination of
     network providers such as MCI Worldcom,  Sprint,  AT&T, Covad,  etc.) voice
     (long  distance  and local) and data  (Internet)  services  throughout  the
     United States.  Additionally,  NNSI has the required Federal Communications
     Commission (FCC) licensing  necessary to aggregate all services provided to
     a single  customer  on a single  bill.  For the year ended  June 30,  2003,
     NNSI's  net  sales  were  approximately  $20,350,000.  As a result  of this
     acquisition,  we expect to increase our managed security  services revenues
     by selling into NNSI's existing customer base.

                                       12
<PAGE>
     Results of Operations

     The Company  currently  operates in two business  segments,  the technology
     segment   ("Technology")   and  the  network  services  segment   ("Network
     Services").

     Three months ended September 30, 2003 and 2002

          Revenue

     Revenue from  continuing  operations  increased to $6,001,546 for the three
     months ended September 30, 2003, compared to $4,824,750 for the same period
     in the prior year.  The increase in revenue in the  Technology  segment was
     primarily the result of the sale to General  Electric  Consumer Finance for
     600 of the Company's  WolfPac  Security  Platform  totaling  $411,529.  The
     increase in revenue in the Network  Services  segment was  primarily due to
     increased  sales and the results from Norstan Network  Services,  which was
     acquired July 9, 2002 being  included for the entire  current period versus
     only being included for the partial period in the prior year.

          Cost of revenue and gross profit

     Cost of  revenue  increased  to  $3,958,411  for  the  three  months  ended
     September 30, 2003, compared to $3,215,665 for the same period in the prior
     year.  The  increase  in cost of revenue in the  Technology  segment of was
     primarily the result of the sale to General  Electric  Consumer Finance for
     600 of the Company's  WolfPac  Security  Platform  totaling  $202,700.  The
     increase in cost of revenue in the Network  Services  segment was primarily
     due to increased sales and the results from Norstan Network Services, which
     was acquired July 9, 2002,  being  included for the entire  current  period
     versus only being included for the partial period in the prior year.

     Overall  gross profit was at 34% for the three months ended  September  30,
     2003, compared to 33% for the same period in the prior year.

          General and administrative

     General and  administrative  expenses increased to $1,769,263 for the three
     months ended September 30, 2003, compared to $1,704,271 for the same period
     in the prior year.  The increase was primarily the result of a net increase
     in equity  compensation  of consultants  for the current period of $272,985
     and due to the results from Norstan  Network  Services,  which was acquired
     July 9, 2002 being included for the entire current period versus only being
     included  for the  partial  period  in the prior  year.  The  increase  was
     partially  offset by a staff  reduction  resulting in salary  expense being
     $42,452 less in the current period than the same period in the prior year.

          Engineering and development

     Engineering  and development  expenses  decreased to $253,399 for the three
     months ended  September 30, 2003,  compared to $448,974 for the same period
     in the prior year. The decrease in engineering  and  development  costs was
     primarily  the  result  of  a  reduction  of  engineering  and  development
     personnel,  which  resulted in reduced  salary of $145,723  for the current
     period.  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.

                                       13
<PAGE>

          Sales and marketing

     Sales and  marketing  expenses  increased  to $914,570 for the three months
     ended  September 30, 2003,  compared to $686,353 for the same period in the
     prior year. The increase in sales and marketing  expenses was primarily the
     result of hiring  additional  sales  personnel  causing  salary to increase
     $149,032 for the current period as well as the results from Norstan Network
     Services,  which was  acquired  July 9, 2002 being  included for the entire
     current  period  versus only being  included for the partial  period in the
     prior year.  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 for the three  months  ended  September  30,  2003 was $1,698
     compared to ($175,194) for the same period in the prior year. The variation
     was  primarily  due to a loss  on the  sale  of  marketable  securities  of
     $115,201 and interest  expense on the note payable to Norstan,  Inc. during
     the same  period in the  prior  year,  which  did not occur in the  current
     period.

     Liquidity and Capital Resources

     Our operating  activities  used cash of  approximately  $962,000 during the
     three months ended  September 30, 2003, as compared to using  approximately
     $211,000 for the same period in the prior year. Cash used in operations for
     the three months ended  September 30, 2003 was primarily  attributable to a
     net loss of approximately  $924,000 and an increase in accounts  receivable
     of  approximately  $407,000,  partially  offset  by  non-cash  charges  for
     depreciation  and  amortization  and equity  compensation of  approximately
     $237,000 and $273,000, respectively, and an increase in deferred revenue of
     approximately  $270,000. Cash used in operations for the three months ended
     September   30,  2002  was  primarily   attributable   to  a  net  loss  of
     approximately   $1,522,000  and  an  increase  in  accounts  receivable  of
     approximately  $1,165,000,  partially  offset by an  increase  in  accounts
     payable and accrued  expenses  and  collection  of amounts owed by Norstan,
     Inc. of approximately $695,000 and $1,068,000, respectively.

     Our investing activities used cash of approximately $7,000 during the three
     months ended  September 30, 2003, as compared to  approximately  $3,364,000
     for the same period in the prior year.  Cash used in  investing  activities
     for the three months ended September 30, 2003 was primarily attributable to
     purchases of  equipment.  Cash used in investing  activities  for the three
     months ended September 30, 2002 was primarily  attributable to a payment of
     $3,350,000,  exclusive  of  acquisition  costs paid of $72,000,  to acquire
     Norstan Network Services, Inc.

     Our financing  activities provided cash of approximately  $4,965,000 during
     the three months ended September 30, 2003, as compared to providing cash of
     approximately  $4,166,000  during the same period in the prior  year.  Cash
     provided by financing  activities for the three months ended  September 30,
     2003 was due to the  private  sale of the  Company's  preferred  stock  and
     warrants aggregating  approximately  $4,478,000 as well as the private sale
     of  the  Company's  common  stock  and  warrants  aggregating   $1,200,000,
     partially  offset  by  financing  costs  of  approximately  $563,000.  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 aggregating approximately  $3,937,000,  exclusive of approximately
     $271,000 of financing costs, and advances from certain individuals totaling
     $600,000.

     Summary

     Historically,  the  Company has  experienced  significant  reoccurring  net
     operating  losses as well as  negative  cash  flows  from  operations.  The
     Company's main source of liquidity has been equity  financing which is used

                                       14
<PAGE>

     to fund  losses  from  operating  activities.  For the three  months  ended
     September  30,  2003,  the Company has raised,  exclusive  of  commissions,
     approximately  $5,115,000  from the sale of its preferred and common stock.
     These proceeds will be utilized to fund ongoing  operations.  Additionally,
     the  Company  will  continue  to utilize  cash  generated  from its Network
     Services  segment to fund the operations of its other segment and currently
     has  sufficient  cash to meet its  funding  needs  for at least the next 12
     months.

     Following  is a listing  of the  Company's  contractual  obligations  as of
     September 30, 2003:

<TABLE>
<CAPTION>
   ----------------------------------------- -------------------------------------------------------------------------
                                                                      Payments Due by Period
   ----------------------------------------- -------------------------------------------------------------------------

   Contractual Obligations                       Total        Less than 1     1-3 years     4-5 years      After 5
                                                                 year                                       years
   ----------------------------------------- --------------- -------------- -------------- ------------- -------------
   <S>                                       <C>             <C>            <C>            <C>           <C>

   Note Payable                              $     120,000    $  120,000     $         -    $        -    $        -
   ========================================= =============== ============== ============== ============= =============

   Operating Leases                          $   1,459,198    $  686,263     $   769,017    $    3,918    $        -
   ========================================= =============== ============== ============== ============= =============
   Purchase Commitments -
       Telecommunication Minimums            $  16,900,000    $7,800,000     $ 9,100,000    $        -    $        -
   ----------------------------------------- --------------- -------------- -------------- ------------- -------------
   Total Contractual Cash Obligations        $  18,479,198    $8,606,263     $ 9,869,017    $      3,918  $        -
   ----------------------------------------- --------------- -------------- -------------- ------------- -------------
</TABLE>

ITEM 3 - CONTROLS AND PROCEDURES

     CEO and CFO Certifications
     --------------------------
     The  certifications  of the CEO and the CFO  required  by Rules  13a-14 and
     15d-14  of  the   Securities   Exchange  Act  of  1934,   as  amended  (the
     "Certifications") are filed as exhibits to this report. This section of the
     report contains the information  concerning the evaluation of the Company's
     disclosure  controls  and  procedures  (as  defined in  Exchange  Act Rules
     13a-15(e) and  15d-15(e))  ("Disclosure  Controls") and changes to internal
     control  over  financial  reporting  (as  defined  in  Exchange  Act  Rules
     13a-15(f)  and  15d-15(f))   ("Internal   Controls")  referred  to  in  the
     Certifications  and this information should be read in conjunction with the
     Certifications for a more complete understanding of the topics presented.

     Evaluation of Disclosure Controls
     ---------------------------------
     Based  on  our  management's  evaluation  (with  the  participation  of our
     principal executive officer and principal financial officer), as of the end
     of the period covered by this report,  our principal  executive officer and
     principal financial officer have concluded that our Disclosure Controls are
     designed to provide reasonable assurance of achieving their objectives and,
     at  the  "reasonable   assurance"  level,  are  effective  to  ensure  that
     information  required  to be  disclosed  by us in reports we file or submit
     under the  Exchange  Act is recorded,  processed,  summarized  and reported
     within the time periods specified in SEC rules and forms.

     Changes in Internal Controls
     ----------------------------
     There was no change in our Internal  Controls  during First Quarter  Fiscal
     2004 that has materially  affected,  or is reasonably  likely to materially
     affect, our Internal Controls.

                                       15
<PAGE>

PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

      None

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     For the three  months  ended  September  30,  2003,  the Company has issued
     74,629   shares  of  its  Series  C  Preferred   Stock  for  a  total  cash
     consideration of $4,477,600. Cumulative dividends on the Series C Preferred
     Stock  accrue at a rate of 7% per annum from the date of  issuance  through
     April 30, 2005 and thereafter at a rate of 9% per annum and will be payable
     annually at the Company's option in cash or Series C Preferred Stock.  Each
     share of the Series C Preferred Stock is convertible at the holders' option
     into 60 shares of common stock. Each share of Series C Preferred Stock will
     have  fifteen  votes and will vote as a single  class  with  holders of the
     Company's common stock. 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 $1.50 per share.  Six warrants were issued
     for each share of Series C Preferred Stock. The proceeds are to be used for
     working capital purposes.

     For the three  months  ended  September  30,  2003,  the Company has issued
     1,200,000  shares of its  common  stock for a total cash  consideration  of
     $1,200,000. 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 $1.25 per share.  Two hundred  warrants were issued
     for each 1,000  shares of common  stock.  The  proceeds  are to be 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

     (a) Exhibits

     31   CEO  and  CFO   Certifications   pursuant   to  Section   302  of  the
          Sarbanes-Oxley Act of 2002.

     32   CEO  and  CFO   Certifications   pursuant   to  Section   906  of  the
          Sarbanes-Oxley Act of 2002.

          (b) Reports on Form 8-K

          Current report on Form 8-K dated September 15, 2003.

                                       16
<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 14, 2003


                                       17