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 March 31, 2000

                        Commission file number 000-25831

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

        New York                               11-3439392
  (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                            May 1, 2000
        --------------                  --------------------------------

Common Stock, $.0033 par value                   8,299,904
                                                 ---------

Registrant became subject to the filing  requirements of the Securities Exchange
Act of 1934 on April 20, 1999,  when it filed a  Registration  Statement on Form
10.

<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

                           FORM 10-Q - MARCH 31, 2000


                                     INDEX

PART I - FINANCIAL INFORMATION
------------------------------

ITEM 1 - FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS
     December 31, 1999 and March 31, 2000                                 1

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
 COMPREHENSIVE INCOME (LOSS)
    For the three and nine months ended March 31, 2000 and 1999           2

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the nine months ended March 31, 2000 and 1999                     3

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                 4 - 11

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
 CONDITION AND RESULTS OF OPERATIONS                                12 - 14

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK       14


PART II - OTHER INFORMATION
---------------------------

ITEM 1 - LEGAL PROCEEDINGS                                               15

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS                       15

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES                                 15

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS             15

ITEM 5 - OTHER INFORMATION                                               15

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K                                15

SIGNATURES                                                               16

<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                       March 31,        June 30,
                                                         2000             1999
                                                       --------         --------
                                                      (unaudited)
ASSETS

<S>                                                   <C>              <C>
Current assets
 Cash and cash equivalents                            $23,377,626      $ 5,585,981
 Marketable securities, available for sale,
   at market value                                        161,750          606,000
 Accounts receivable, net of allowance of $40,000         262,067           76,907
 Inventories                                              410,110          118,354
 Prepaid expenses and other current assets                217,278          153,099
                                                      -----------      -----------
   Total current assets                                24,428,831        6,540,341
                                                      -----------      -----------
Property and equipment, net                               492,744          224,691

Software costs, net                                    12,779,630             -

Intangible assets, net                                  4,518,091        6,024,121

Other assets                                               30,849           22,781
                                                      -----------      -----------
                                                      $42,250,145      $12,811,934
                                                      ===========      ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
  Accounts payable and accrued expenses              $  1,220,584      $   453,336
  Deferred compensation                                      -             100,000
  Loans and advances from TSG officer                        -             144,348
  Current maturities of long-term debt                    183,793           43,411
                                                      -----------      -----------
    Total current liabilities                           1,404,377          741,095
Long term debt, net of current maturities                 454,046          266,537
                                                      -----------      -----------
    Total liabilities                                   1,858,423        1,007,632
                                                      -----------      -----------
Minority interest                                         394,848          704,500

Commitment and contingencies

Shareholders' equity
  Common stock, $.0033 par value; 10,000,000 shares
    authorized; issued and outstanding;
    8,299,904 - on March 31, 2000
    and 6,063,870 - on June 30, 1999                       27,390           20,011
  Additional paid-in capital                           62,068,062       17,726,374
  Unamortized value of warrant grants                  (1,991,668)            -
  Accumulated deficit                                 (20,038,505)      (7,022,428)
  Accumulated other comprehensive (loss) income           (68,405)         375,845
                                                      -----------      -----------
    Total shareholders' equity                         39,996,874       11,099,802
                                                      -----------      -----------
                                                      $42,250,145      $12,811,934
                                                      ===========      ===========

See notes to consolidated financial statements
</TABLE>

                                       1
<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

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


<TABLE>
<CAPTION>

                                             Three months ended          Nine months ended
                                                   March 31,                 March 31,
                                            --------------------         ------------------
                                            2000          1999           2000         1999
                                            ----          ----           ----         ----
<S>                                     <C>           <C>            <C>           <C>
Sales                                 $   463,405    $  1,518,045     $   935,554   $1,598,759
Cost of sales                             361,441         499,001         570,305      530,479
                                      -----------    ------------     -----------  -----------
Gross profit                              101,964       1,019,044         365,249    1,068,280
                                      -----------    ------------     -----------  -----------
Operating expenses
  General and administrative            3,005,843       2,472,528      11,306,540    4,308,999
  Research and development                491,010         158,527         880,780      250,143
  Sales and marketing                     733,183         260,703       1,508,550    2,240,290
                                      -----------    ------------     -----------  -----------
                                        4,230,036       2,891,758      13,695,870    6,799,432
                                      -----------    ------------     -----------  -----------

Loss before other income (expense)     (4,128,072)     (1,872,714)    (13,330,621)  (5,731,152)

Other income (expense)
   Investment income                      191,242           4,217         292,813       41,600
   Loss on sale of marketable securities     -               -               -          (8,047)
   Minority interest                       25,114            -             48,333         -
   Interest expense                        (7,972)           -            (26,602)        -
                                      -----------    ------------     ------------  -----------
Net loss                               (3,919,688)     (1,868,497)     (13,016,077)  (5,697,599)

Other comprehensive income (loss):
   Marketable securities valuation
    adjustment                             12,250         237,500         (444,250)     434,823
                                      -----------    ------------     ------------  -----------
Comprehensive income (loss)           $(3,907,438)   $ (1,630,997)    $(13,460,327) $(5,262,776)
                                      ===========    ============     ============  ===========
Basic and diluted net loss per share  $      (.53)   $       (.37)    $      (1.97) $     (1.25)
                                      ===========    ============     ============  ===========
Weighted average common
 shares outstanding                     7,460,777       4,999,870        6,606,386    4,540,475
                                      ===========    ============     ============  ===========

See notes to condensed consolidated financial statements

</TABLE>

                                       2
<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

<TABLE>
<CAPTION>

                                                                Nine months ended
                                                                    March 31,
                                                             ------------  ------------
                                                                 2000          1999
                                                                 ----          ----
<S>                                                          <C>            <C>
INCREASE (DECREASE) IN CASH AND
        CASH EQUIVALENTS

Cash flows from operating activities
   Net loss                                                  $(13,016,077)  $(5,697,599)
   Adjustments to reconcile net loss to net cash used in
    operating activities
    Depreciation and amortization                               2,187,229         6,496
    Realized loss on sale of marketable securities                     -          8,047
    Noncash charge to operations with respect to common
     stock and warrants issued for services                     5,435,724     4,337,750
    Provision for doubtful accounts                                    -         15,000
    Minority interest                                             (59,652)           -
   Changes in operating assets and liabilities
    Accounts receivable                                          (185,160)   (1,384,866)
    Inventories                                                  (291,756)     (178,266)
    Prepaid expenses and other current assets                      (8,179)      (63,038)
    Accounts payable and accrued expenses                         467,248       703,817
    Deferred compensation                                        (100,000)           -
                                                             ------------   -----------
     Net cash used in operating activities                     (5,570,623)   (2,252,659)
                                                             ------------   -----------
Cash flows from investing activities
   Proceeds from sale of marketable securities                         -        789,604
   Proceeds from assets held for sale, net                             -        553,330
   Finder fees paid                                             (550,000)           -
   Cash acquired - ComputerCOP Corp.                           20,500,000            -
   Issuance of note receivable                                    (56,000)           -
   Purchases of property and equipment                           (328,882)      (64,805)
   Payments of security deposits                                   (8,068)       (4,848)
                                                             ------------   -----------
     Net cash provided by investing activities                 19,557,050     1,273,281
                                                             ------------   -----------
Cash flows from financing activities
   Repayment of advances from TSG officer                        (144,348)           -
   Repayment of long term debt                                    (32,109)           -
   Financing costs paid                                          (330,825)      (25,000)
   Cash proceeds from sale of warrants                                 -        300,000
   Cash proceeds from private sale of common stock              4,312,500            -
                                                             ------------   -----------
     Net cash provided by financing activities                  3,805,218       275,000
                                                             ------------   -----------
Net increase (decrease) in cash and cash equivalents           17,791,645      (704,378)

Cash and cash equivalents, beginning of period                  5,585,981     1,118,416
                                                             ------------   -----------
Cash and cash equivalents, end of period                     $ 23,377,626   $   414,038
                                                             ============   ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
   FINANCING ACTIVITIES
     Software acquired through issuance of equity
      instruments                                            $ 12,190,000   $        -
                                                             ============   ===========

See notes to condensed consolidated financial statements

</TABLE>
                                       3


<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

          FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 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
     year ended June 30, 1999 and the period from February 13, 1998  (inception)
     to June 30, 1998. The results of operations for the nine months ended March
     31, 2000 are not  necessarily  indicative of the results to be expected for
     the full year.

2    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 Corporation.

     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.

     Additionally,  in conjunction  with the acquisition of Sales and Management
     Consulting,  Inc.  (d/b/a The  Sullivan  Group,  see Note 4),  the  Company
     provides consulting, educational and training services primarily to the oil
     and gas and automotive industries throughout the United States.

     Pursuant to an agreement dated February 10, 2000, the Company  acquired all
     of  the  outstanding  capital  stock  of  ComputerCOP  Corp.,  a  New  York
     corporation  and  a  subsidiary  of  Computer  Concepts  Corp.   ("Computer
     Concepts"),  in exchange for 1,775,000  restricted  shares of the Company's
     common stock.  ComputerCOP Corp.'s assets included ComputerCOP  technology,
     inventory and $20.5 million in cash.  In connection  with the  transaction,
     the Company  incurred  finders fees of  approximately  $960,000 million and
     issued  125,000  restricted  shares of the Company's  common stock and five
     year  warrants to purchase an aggregate of 900,000  shares of the Company's
     common  stock,  600,000 of the 900,000  warrants did not vest in accordance
     with  their  terms  and  were   cancelled  on  March  31,  2000  (Note  5).
     Additionally,  Computer Concepts  purchased 225,000 shares of the Company's
     common stock from three officers of the Company for $4.5 million.

     All of the shares issued by the Company in connection  with the ComputerCOP
     Corp.  acquisition  as well as all shares sold by the three  officers  (the
     "Trust  Shares")  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.

                                       4

<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

          FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2000 AND 1999



 2   The  Company  (continued)

     The Trust  Shares  are  subject  to  piggyback  registration  rights  and a
     one-time demand registration right effective after August 15, 2000.


 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.

     Software costs

     Costs  associated with the  development of software  products are generally
     capitalized  once  technological  feasibility  is  established.   Purchased
     software  technologies  are  recorded  at cost  and  software  technologies
     acquired in purchase business  transactions are recorded at their estimated
     fair value.  Software costs  associated  with  technology  development  and
     purchased  software  technologies  are  amortized  using the greater of the
     ratio of current  revenue to total  projected  revenue for a product or the
     straight-line  method  over its  estimated  useful  life.  Amortization  of
     software costs begins when products become  available for general  customer
     release. Costs incurred prior to establishment of technological feasibility
     are expensed as incurred and reflected as research and development costs in
     the accompanying consolidated statements of operations.

4    Purchase acquisition

     On July 7, 1999, NetWolves and Sales and Management Consulting, Inc. (d/b/a
     The Sullivan  Group)  ("SMCI")  executed a merger  agreement (the "Merger")
     pursuant to which NetWolves acquired the outstanding capital stock of SMCI.
     Under the terms of the Merger,  TSG Global  Education Web, Inc.  ("TSG") (a
     subsidiary  of   NetWolves),   with   4,150,000   shares  of  common  stock
     outstanding, purchased all of the outstanding shares of SMCI's common stock
     in exchange for 180,000 shares of NetWolves'  restricted  common stock. The
     shareholders  are restricted  from selling,  transferring  or pledging such
     shares for an eighteen-month  period. Upon consummation of the Merger, SMCI
     merged into TSG and TSG was the surviving entity.

     Concurrent  with the Merger,  the  shareholders  of SMCI  purchased  70,000
     shares of TSG common stock at $.35 per share for aggregate cash proceeds of
     $24,500.  This  represents  1.7% of the  outstanding  common  stock of TSG.
     Additionally,  TSG issued  250,000  shares of TSG Series A Cumulative  (8%)
     Convertible  Preferred  Stock to one of the SMCI  shareholders,  which  was
     issued  in  partial  settlement  of  outstanding  liabilities  owed  to the
     shareholder.  This TSG common and  preferred  stock has been  reflected  as
     minority interest in the accompanying consolidated financial statements.

                                       5
<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

          FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2000 AND 1999



4    Purchase acquisition (continued)

     The purchase price approximated  $4,095,000 (exclusive of acquisition costs
     of  $82,875),  which  consisted of 180,000  shares of NetWolves  restricted
     common stock valued at $22.75 per share (fair value of the common stock was
     based on its quoted market price on the effective date of the acquisition).
     The  acquisition  has been accounted for with an effective date of June 30,
     1999  using the  purchase  method of  accounting.  Accordingly,  assets and
     liabilities  were  recorded at their fair values as of June 30,  1999,  and
     operations  of  SMCI  have  been   included  in  the  Company's   condensed
     consolidated statements of operations commencing July 1, 1999.

     An  allocation  of the fair value of the assets  acquired  and  liabilities
     assumed at June 30, 1999 is as follows:

<TABLE>

       <S>                                                       <C>
       Purchase price
         NetWolves common stock issued                           $ 4,095,000
         Acquisition costs                                            82,875
                                                                 -----------
                                                                 $ 4,177,875
                                                                 ===========
        Allocation of purchase price
        Fair value of tangible assets and liabilities
           Current assets                                        $    70,221
           Non-current assets                                         35,255
           Current liabilities                                      (443,909)
           Non-current liabilities                                  (266,537)
           Advances to TSG, net of cash acquired of $412,224        (536,776)
                                                                 -----------
                                                                  (1,141,746)
                                                                 -----------
        Minority interest
           Common stock and additional paid-in capital              (454,500)
           Preferred stock                                          (250,000)
                                                                 -----------
                                                                    (704,500)
                                                                 -----------
        Intangible assets acquired                                 6,024,121
                                                                 -----------
                                                                 $ 4,177,875
                                                                 ===========
</TABLE>

     At the time of the Merger and in  accordance  with TSG's newly formed stock
     option plan, the SMCI  shareholders (who are all employees of TSG) received
     605,000 five-year options to purchase TSG common stock at an exercise price
     of $.35 per  share.  The  options  were  issued in  proportion  to the SMCI
     shareholders'  ownership  interest.  The  intrinsic  value of these options
     (plus the 70,000 shares of the TSG common stock) totalled  $430,000,  which
     has been reflected in the allocation of the purchase  price.  Additionally,
     the SMCI  shareholders  are entitled to an  additional  175,000  options to
     purchase TSG common stock (with an exercise price at fair value at the time
     of grant),  subject to TSG meeting specific earnings targets over the three
     years ending June 30, 2000, 2001 and 2002.  These options will be accounted
     for as compensation expense in accordance with Accounting  Principles Board
     Opinion No. 25,  "Accounting  for Stock Issued to Employees" in such future
     periods.  All of the  shareholders  of SMCI entered into 3-year  employment
     agreements with TSG.

                                       6
<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

          FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2000 AND 1999


4    Purchase acquisition (continued)

     In accordance  with the Merger,  NetWolves made  $4,750,000 of non-interest
     bearing open account working capital advances to TSG.

     The following  unaudited pro forma financial  information for the three and
     nine  months  ended  March 31,  1999 has been  prepared  assuming  that the
     acquisition  of SMCI had  taken  place  at the  beginning  of such  periods
     presented.  The pro forma information is not necessarily  indicative of the
     combined  results that would have occurred had the acquisition  taken place
     at the beginning of the periods,  nor is it  necessarily  indicative of the
     results that may occur in the future.  Pro forma  information for the three
     and nine months ended March 31, 2000 are not  presented,  since the results
     of TSG are reflected in the Company's  consolidated  results for the entire
     periods.

<TABLE>
<CAPTION>
                                               Three months           Nine months
                                                  ended                   ended
                                                 March 31,              March 31,
                                                   1999                   1999
                                              --------------         ------------
                                                (unaudited)           (unaudited)

        <S>                                    <C>                   <C>
        Revenue                                 $  1,712,000          $  2,566,000
        Net loss                                $ (2,665,000)         $ (7,688,000)
        Basic and diluted net loss per share    $       (.51)         $      (1.63)
</TABLE>


5       Shareholders' equity
        Common stock issuances

     --   On September 29, 1999, the Company sold 100,000 shares of unregistered
          common  stock to an  accredited  investor at $15 per share (a total of
          $1,500,000) exclusive of commissions totaling $105,000.

     --   During  November 1999, the Company sold 187,500 shares of unregistered
          common  stock to a group of  accredited  investors at $15 per share (a
          total  of   $2,812,500)   exclusive   of   commissions   and  fees  of
          approximately 7%.

     --   On  November  20,  1999,  12,500  shares  were  issued to a  financial
          consultant  for  services  rendered  during  the three  months  ending
          December  31,  1999,  which  resulted  in a charge  to  operations  of
          $275,000.  Management  determined  the fair value of the common  stock
          based on its quoted market price at the time of the issuance.

                                       7
<PAGE>

                  NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

          FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2000 AND 1999


5      Shareholders' equity (continued)
       Common stock issuances (continued)

     --   Pursuant to an agreement dated February 10, 2000, the Company acquired
          all of the outstanding  capital stock of ComputerCOP Corp., a New York
          corporation  and a subsidiary of Computer  Concepts  Corp.  ("Computer
          Concepts"),  in  exchange  for  1,775,000  restricted  shares  of  the
          Company's   common  stock.   ComputerCOP   Corp.'s   assets   included
          ComputerCOP  technology,  inventory  and  $20.5  million  in cash.  In
          connection with the transaction,  the Company incurred finders fees of
          approximately $960,000 million and issued 125,000 restricted shares of
          the  Company's  common  stock and five year  warrants  to  purchase an
          aggregate of 900,000 shares of the Company's common stock,  600,000 of
          the 900,000  warrants did not vest in accordance  with their terms and
          were  cancelled  on March 31,  2000 (Note 5).  Additionally,  Computer
          Concepts  purchased  225,000 shares of the Company's common stock from
          three officers of the Company for $4.5 million.

     --   During January 2000, the preferred  stockholder elected to convert the
          preferred stock into 13,888 shares of NetWolves  common stock (at fair
          market value at the time of conversion).

       Warrants

     --   On July 26, 1999 and in connection  with the Company  entering into an
          agreement with  Comdisco,  Inc.  ("Comdisco"),  Comdisco was granted a
          five-year   warrant  to  purchase  125,000  shares  of  the  Company's
          unregistered  common stock, at an exercise price of $10 per share. The
          warrants  are  immediately  exercisable.  The value of the warrants of
          $2,390,000 are being  amortized over the initial term of the agreement
          (four  years)  and  has  been  calculated   using  the   Black-Scholes
          option-pricing  model  with the  following  assumptions:  no  dividend
          yield,  expected  volatility of 65%, risk-free interest rate of 5.84%,
          and an expected term of five years.

     --   On July 31, 1999, a financial  consultant of the Company was granted a
          five-year  warrant to purchase  100,000 shares of common stock,  at an
          exercise  price  of  $12  per  share.  The  warrants  are  immediately
          exercisable  and the shares  issuable  pursuant to the  warrants  have
          piggyback registration rights. The value of the warrants of $1,704,000
          are  being  amortized  over a  period  of  three  months  and has been
          calculated  using the  Black-  Scholes  option-pricing  model with the
          following assumptions:  no dividend yield, expected volatility of 65%,
          risk-free interest rate of 5.84%, and an expected term of five years.

     --   On  November 1, 1999,  the  Company's  granted a five-year  warrant to
          purchase  24,000 shares of common stock,  at an exercise  price of $18
          per share to a public  relations  firm. The warrants vest ratably over
          twelve months and resulted in a charge to operations of  approximately
          $88,000 for the three months ended March 31, 2000.  The total value of
          the warrants of  approximately  $351,000 has been calculated using the
          Black-Scholes option- pricing model with the following assumptions: no
          dividend yield, expected volatility of 65%, risk-free interest rate of
          5.97%, and an expected term of five years.

     --   In November  1999,  a  consultant  was granted a five-year  warrant to
          purchase  60,000 shares of common stock,  at an exercise  price of $18
          per share.

                                       8
<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

          FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2000 AND 1999



5       Shareholders' equity (continued)
        Warrants (continued)

     --   In December 1999, the Company granted 65,000 ten-year  warrants to the
          Company's  Vice  President of Finance at an exercise  price of $12 per
          share.  The warrants vest  immediately and  accordingly  resulted in a
          charge to  operations of $422,500,  based upon the intrinsic  value of
          the warrants on the date of grant.

     --   In December  1999,  a  consultant  was  granted a ten-year  warrant to
          purchase  100,000 shares of common stock,  at an exercise price of $12
          per share. The warrants are immediately exercisable.  The value of the
          warrants   resulted  in  a  charge  to  operations  of   approximately
          $1,536,000  during the three  months  ended  December 31, 1999 and has
          been calculated using the Black-Scholes  option-pricing model with the
          following assumptions:  no dividend yield, expected volatility of 65%,
          risk-free interest rate of 5.97%, and an expected term of ten years.

     --   In connection  with the February 10, 2000  acquisition  of ComputerCOP
          Corp.,  the  Company  issued a warrant to  purchase  an  aggregate  of
          300,000 shares of the Company's  stock that are initially  exercisable
          at $25 per share if exercised on or before  September 30, 2002 and $30
          thereafter  until they expire on February 10, 2005.  The fair value of
          this  warrant  has been  included  in the  value of the  software.  In
          addition,  the Company issued another warrant to purchase an aggregate
          of 600,000 shares of the Company's common stock.  This warrant did not
          vest in accordance with its terms and was cancelled on March 31, 2000.

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".  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  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.

                                       9
<PAGE>
                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

          FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2000 AND 1999



6       Segment information (continued)

<TABLE>
<CAPTION>
                                        Three Months Ended              Nine Months Ended
                                             March 31,                       March 31,
                                        ------------------              -----------------
                                        2000           1999             2000          1999
                                        -----          ----             ----          ----
        <S>                         <C>            <C>            <C>             <C>
        Revenue
           Technology               $    27,921    $ 1,518,045    $     67,050    $ 1,598,759
           Training and consulting      435,484            -           868,504            -
           Computer software                -              -               -              -
                                    -----------    -----------    ------------    -----------
              Total                 $   463,405    $ 1,518,045    $    935,554    $ 1,598,759
                                    ===========    ===========    ============    ===========
        Operating income (loss)
           Technology               $(1,888,071)   $(1,872,714)   $ (9,087,464)   $(5,731,152)
           Training and consulting   (1,617,608)           -        (3,620,764)           -
           Computer software           (622,393)           -          (622,393)           -
                                    -----------    -----------    ------------    -----------
              Total                 $(4,128,072)   $(1,872,714)   $(13,330,621)   $(5,731,152)
                                    ===========    ===========    ============    ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                    March 31,       June 30,
                                                                      2000           1999
                                                                  ------------    -----------
        <S>                                                       <C>             <C>
        Identifiable assets
           Technology                                             $ 22,672,490    $ 6,270,113
           Training and consulting                                   6,666,378      6,541,821
           Computer software                                        12,911,277            -
                                                                  ------------    -----------
              Total                                               $ 42,250,145    $12,811,934
                                                                  ============    ===========
</TABLE>


     The Company had two major  customers,  both  included in the  Training  and
     consulting  segment,  which accounted for 47% and 33% of consolidated sales
     for the nine months ended March 31, 2000.

7    Commitments and contingencies
     Legal matters

     Certain  claims,  suits and  complaints  arising in the normal  course with
     respect to the Company's  uniformed security guard services operations have
     been filed or are pending against the Company. Generally, these matters are
     all  covered by a general  liability  insurance  policy.  In the opinion of
     management,  all such  matters  are without  merit or are of such kind,  or
     involve  such  matters,  as would  not  have a  significant  effect  on the
     financial position or results of operations of the Company,  if disposed of
     unfavorably.

                                       10
<PAGE>

                     NETWOLVES CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

          FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2000 AND 1999


7    Commitments and contingencies (continued)
     Comdisco, Inc. agreement

     On July 26,  1999 the  Company  entered  into an  agreement  with  Comdisco
     whereby  Comdisco  will provide  management,  installation  and  technology
     services to the Company's  proprietary  Internet  distribution  system.  In
     addition,  the agreement  provides for the creation of a credit facility to
     be utilized in connection  with the sale and  installation of the FoxBox in
     up to 40,000 locations over a four-year  period.  However,  there can be no
     assurances  that the Company  will  actually  require the use of the credit
     facility.

     Under  the  agreement,  the  Company  intends  to lease  the  FoxBox to its
     customers for 48 months at a monthly fee  estimated  under the agreement at
     $200.  Comdisco will then acquire all of the rights,  title and interest in
     the equipment with the exception of intellectual rights,  software upgrades
     and software  application  and content and take an  assignment of the lease
     from the Company,  without  recourse.  At the time of assignment,  Comdisco
     will pay the Company 95% of the present value of the rental stream using an
     interest  rate   commensurate   with  each  customer's  credit  rating  and
     prevailing market rates.

     In connection with the agreement,  Comdisco was granted a five-year warrant
     to purchase 125,000 shares of the Company's  unregistered  common stock, at
     an exercise price of $10 per share (Note 5).

8    Subsequent Events

     Gateway, Inc. Agreement

     In April,  2000, the Company  entered into an agreement with Gateway,  Inc.
     ("Gateway")  whereby Gateway agreed to install the ComputerCOP  software on
     every new  Gateway  consumer  computer.  The  Company is to  receive  fifty
     percent (50%) of all gross margins  generated from sales of upgrades to the
     existing software contained within the Gateway consumer computer.

     Anicom Inc.

     On April  10,  2000,  the  Company  exercised  its right to  terminate  its
     exclusive  distributorship  agreement  with  Anicom,  Inc.  pursuant to its
     terms.  On April 19, 2000, an action was  commenced  against the Company in
     the U.S.  District  Court for the Northern  District of Illinois by Anicom,
     Inc.  The  action is 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 seeks specific performance as
     well as any damages that may result from a diminution in value of NetWolves
     common stock. NetWolves intends to submit an answer denying the allegations
     of the complaint and further intends to vigorously defend this action.

                                       11
<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

The  Company  is a  corporation  with a  limited  operating  history,  formed in
February  1998,  when it commenced  field trial and limited sales of its primary
product,  "The  FoxBox".  Additionally,  efforts  were made to obtain  operating
capital  and  convert  the  Company to a public  entity.  This was  accomplished
through a reverse merger with Watchdog Patrols, Inc., a publicly traded (OTCBB),
non-reporting corporation.  In April, 2000, the Company commenced trading on the
NASDAQ Small Cap market under the symbol WOLV. Operating expenses have increased
significantly since the Company's inception.  This reflects the costs associated
with the  formation of the Company,  costs  associated  with  acquisitions,  and
increased  efforts to  promote  sales of the FoxBox  (Multi-  services  Internet
communications gateway),  recruit personnel,  build operating infrastructure and
continued product  development.  The FoxBox is a multi- functional  product that
connects  business  networks  [Local Area Networks (LANs) and Wide Area Networks
(WANs)] to the Internet.  It supports secure access to the Internet for 3 to 400
users through a single connection,  provides advanced  electronic mail functions
for unlimited users and delivers firewall security. The Company's initial target
markets  are  the  end  users  in  small  and  mid-size   businesses  and  large
organizations with satellite offices. In January,  1999 the Company entered into
an agreement with TSG ("Sullivan") whereby Sullivan appointed the Company as the
exclusive  provider for Sullivan's  proprietary  interactive  distance  learning
training  programs.  In July 1999,  the  Company  acquired  TSG and in July 1999
secured a credit facility with Comdisco,  Inc. to finance the anticipated  sales
to be generated from the  application  of the FoxBox  technology to TSG's client
base.  Comdisco also agreed to provide  management,  installation and technology
services for FoxBoxes  sold to this client base. In January,  1999,  the Company
also entered into an agreement with Anicom, Inc. ("Anicom") appointing Anicom as
its  exclusive  distributor  in North  America.  In  April,  2000,  the  Company
exercised  its right to  terminate  this  agreement  pursuant  to its terms.  In
February, 2000, the Company acquired ComputerCOP Corp. This transaction provided
cash, inventory and software which is primarily designed to provide non computer
literate owners (e.g.  parants or guardians) the ability to identify  threats as
well as objectionable  material which may be viewed by the users of the computer
on the internet (e.g. children).

                                       12

<PAGE>


Overview (continued)

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
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 March 31, 2000 had an accumulated  deficit of approximately $20 million.  The
Company believes that its success depends in large part on its ability to create
market  awareness  and  acceptance  for the FoxBox,  build  technology  and non-
technology infrastructures, expand the sales force and distribution network, and
continue new product research and development.

Results of Operations

As a  result  of the  July  1999  and  February  2000  acquisition  of  TSG  and
ComputerCOP  respectively,  NetWolves  and its  subsidiaries  operate  in  three
business segments,  the technology segment,  the training and consulting segment
and the computer  software  segment.  Total revenue for the three and nine-month
periods  ended  March 31, 2000 when  compared  to the same time  periods for the
prior year,  decreased  $1,054,640  from  $1,518,045  to $463,405 and  decreased
$663,205  from  $1,598,759  to  $935,554,  respectively.  Revenue  derived  from
technology  decreased from  $1,518,045 to $27,921 and from $1,598,759 to $67,050
for the three months and nine months ended March 31,  2000,  respectively,  when
compared to the three  months and nine ended March 31,  1999.  This  decrease is
primarily  attributable  to an initial order in March 1999 by Anicom as compared
to no revenue from Anicom for the nine months ended March 31, 2000.  The Company
recently  terminated  the  Anicom  agreement  and  has  been  pursuing  multiple
distributors to deliver products into the reseller channel.  The addition of the
training and  consulting  segment in July 1999 provided  revenue of $435,484 and
$868,504 for the three and nine months  ended March 31, 2000,  as compared to no
revenue for the  comparable  prior  period.  Although  training  and  consulting
revenue is currently derived from traditional leader-lead training and benchmark
studies,  the segment's strategic focus is on distance learning.  The Company is
currently  "beta testing"  products  utilizing the FoxBox  technology to deliver
distance  learning  to  existing  clients in the  petroleum  industry.  Although
computer software does not account for any revenue to date, The Company believes
that certain revenue will be derived by delivering  ComputerCOP  under the terms
of the Gateway agreement (Note 8) . and by pursuing additional contracts for the
current version of ComputerCOP . $191,242 and $292,813 of investment  income was
generated  for the three and nine month periods ended March 31, 2000 as compared
to $4,217 and $41,600 for the three and nine month periods ended March 31, 1999.
The  increase is  primarily  attributable  to  interest  earned on cash from the
ComputerCOP Corp. acquisition.

                                       13

<PAGE>

NetWolves  had gross  profit of 39% for the nine month period ended March 31,
2000 as compared to 67% for the nine month  period  ended  March 31,  1999.  To
date,  the Company has not had consistent  levels of  significant  production in
order to have a basis of comparison. Future results will depend, in part, on the
effects of economies-of-scale, the use of third-party assemblers and the ability
to  competitively  purchase  rapidly  evolving  commodity  hardware,  which is a
significant  component  of  "cost  of goods  sold."  The use of  non-Proprietary
hardware is one of many inherent design features of the FoxBox which facilitates
an efficient and cost effective production cycle. Additionally,  this allows the
Company  to focus  its core  research  and  development  efforts  on  developing
software.

Operating  expenses  increased from $2,891,758 to $4,230,036 and from $6,799,432
to  $13,695,870  for the three and nine month  periods  ended March 31, 1999 and
March 31, 2000, respectively. The increase in operating expense is primarily due
to the  continued  growth of the Company and the  addition of the  training  and
consulting and computer software business  segment.  The operating  expenses for
the nine months ended March 31, 2000 and March 31, 1999  consisted  primarily of
$11,306,540 and $4,308,999 of general and  administrative  costs relating to the
establishment  of  the  infrastructure  and  the  continued  operations  of  the
business.  $880,780 and $250,143 of costs were incurred relating to research and
development,  and $1,508,550  and  $2,240,290  related to selling and marketing.
Included  in  the  general  and  administrative   expenses  are  $5,435,724  and
$4,337,750  of non-cash  compensation  for services in the form of the Company's
common stock, options and warrants.

                                       14
<PAGE>

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 which  generated
$5.4 million (net of $.6 million of expenses). On September 29, 1999 the Company
completed  a  private  placement  of  100,000  shares  of  common  stock  to one
accredited investor for $1.4 million (net of $100,000 of expenses) to be used in
operations.  In  November  1999,  the  Company  completed  a private  sale of an
additional  182,500  shares of common  stock to  accredited  investors  for $2.6
million (net of expenses of approximately  7%).  Additionally,  in February 2000
the Company  acquired 100% of the outstanding  common stock of ComputerCOP  Corp
for  approximately   1,775,000  shares  of  the  Companies  common  stock.  This
transaction provided certain software,  inventory and cash of $19.3 million (net
of $1.2 million of expenses).

NetWolves had cash and cash  equivalents of  approximately  $23 million at March
31, 2000. 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. However, there can be no assurance that the Company
will have sufficient capital to finance its planned growth. The Company may seek
to raise additional monies from the sale of its capital stock to fund its growth
over the next 24 to 36 months.

                                       15

<PAGE>

                          PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

     On April 19, 2000, an action was commenced  against the Company in the U.S.
District Court for the Northern District of Illinois by Anicom,  Inc. The action
is 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  seeks  specific  performance  as well as any damages that may result
from a  diminution  in value of NetWolves  common  stock.  NetWolves  intends to
submit an answer denying the allegations of the complaint and further intends to
vigorously defend this action.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

     (c) In February 2000, the Company sold 1,775,000 shares of its common stock
to Computer  Concepts Corp. in connection with the purchase of Computercop Corp.
Concurrently  the Company  issued an aggregate  of 125,000  shares of its common
stock to two finders as well as warrants  to  purchase an  aggregate  of 900,000
shares of its  common  stock at an initial  exercise  price of $25.00 per share.
600,000 of these  warrants  have since been  cancelled  pursuant to their terms.
This was a transaction  by the Company not involving any public  offering  which
was exempt from the registration  requirements under the Securities Act pursuant
to Section 4(2) thereof.

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

          27   Financial Data Schedule (for electronic submission only)

     (b)       Reports on Form 8-K

          (i)  Current Report on Form 8-K dated January 13, 2000 covering Item 4
               - Changes  in  Registrant's  Certifying  Accountant  and Item 7 -
               Financial   Statements,   Pro  Forma  Financial  Information  and
               Exhibits.

          (ii) Current  Report on Form 8-K dated February 10, 2000 covering Item
               2 - Acquisition  or  Disposition of Assets and Item 7 - Financial
               Statements, Pro Forma Financial Information and Exhibits.

<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.

                                        NETWOLVES CORPORATION

                                        /s/   Walter M. Groteke
                                              Walter M. Groteke
                                              Chief Executive Officer

                                        /s/   Peter C. Castle
                                              Peter C. Castle
                                              VP Finance, Secretary, Treasurer

Date: May 22, 2000