|SECURITIES AND EXCHANGE
COMMISSION


Washington, D.C. 20549


FORM 10-QSB


QUARTERLY REPORT UNDER
SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934



For Quarter Ended March
31, 2001 - Commission file Number 333-86873



Netword, Inc.(Exact name of registrant as specified in its charter)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Delaware(State or other Jurisdictionof Incorporation) | 52-2143430(I.R.S. EmployerIdentification No.)
|----------------------------------------------------- | ---------------------------------------------

|702 Russell Avenue,
Third Floor, Gaithersburg, MD 20877(Address of principal executive offices) (Zip code)



240/631-1100(Registrants telephone number, including area code)




Check whether the issuer
(1) 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 ___


The number of outstanding
shares of the issuers common stock, par value $.01 per share, as of May 9,
2001, was 19,348,083.


Transitional Small Business
Disclosure Format (check one):


Yes _X_   No ___
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|NETWORD, INC.



INDEX TO FORM 10-QSB


March 31, 2001
|------------------------------------------------------

|PART I - FINANCIAL INFORMATION                                        |  | PAGE | 
|--------------------------------------------------------------------- |  | ---- | 
|Item - 1. - Balance Sheets as of March 31, 2001 and December 31, 2000 |  | 1    | 
|                                                                     
|Statements of Operations for the Three                                | 
|Months Ended March 31, 2001 and 2000                                  |  | 2    | 
|                                                                     
|Statements of Cash Flows for the Three                                | 
|Months Ended March 31, 2001 and 2000                                  |  | 3    | 
|                                                                     
|Notes to Financial Statements                                         |  | 4    | 
|                                                                     
|Item - 2. - Managements Discussion and Analysis or Plan of Operation |  | 5    | 
|                                                                     
|PART II - OTHER INFORMATION                                           |  | 6    | 
|                                                                     
|SIGNATURE                                                             |  | 8    | 

|NETWORD, INC.Balance
Sheets
|---------------------------

|                            | March 31,2001(Unaudited) | December 31,2000(Note)
|--------------------------- | ------------------------ | ----------------------
|ASSETS                     
|Current assets:             |                          |                       
|Cash                        |                          | $2,280,718            
|Prepaid expenses            |                          | 7,410                 
|                           
|Total current assets        |                          | 2,288,128             
|Property and equipment, net |                          | 36,667                
|Intangible assets:          |                         
|Trademark, net              |                          | 21,665                
|Intellectual property, net  |                          | 3,750                 
|                           
|Total intangible assets     |                          | 25,415                
|                           
|                            |                          | $2,350,210            
|                           

|                                              |  |                  |   |                  |  
|--------------------------------------------- |  | ---------------- | - | ---------------- | -
|LIABILITIES AND STOCKHOLDERS EQUITY         
|Current liabilities:                          | 
|Current portion of long-term liability        |  | $          4,800 |   | $          4,800 |  
|Accounts payable                              |  | 233,174          |   | 351,851          |  
|Loans payable                                 |  | 33,027           |   | 33,027           |  
|                                             
|Total current liabilities                     |  | 271,001          |   | 389,678          |  
|Long-term liability, net of current portion   |  | 9,600            |   | 9,600            |  
|Note payable                                  |  | 30,148           |   |                 |  
|Convertible note payable                      |  | 22,403           |   | 22,103           |  
|Stockholders equity:                         | 
|Common stock, $.01 par value;                 | 
|Authorized - 40,000,000 shares                | 
|Issued and outstanding - 19,348,083 shares at | 
|3/31/01 and 12/31/00                          |  | 193,481          |   | 193,481          |  
|Additional paid-in capital                    |  | 10,218,022       |   | 10,218,022       |  
|Accumulated deficit                           |  | (8,383,146       | ) | (7,757,122       | )
|Subscriptions receivable                      |  | (11,299          | ) | (11,299          | )
|                                             
|Total stockholders equity                    |  | 2,017,058        |   | 2,643,082        |  
|                                             
|                                              |  | $   2,350,210    |   | $   3,064,463    |  
|                                             

|Note: The balance sheet at
December 31, 2000 has been derived from the audited financial statements at that
date but does not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.



See accompanying notes.



1
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|NETWORD, INC.Statements of Operations(Unaudited)
|------------------------------------------------

|                                             | Three MonthsEnded March 31, |                  
|-------------------------------------------- | --------------------------- | -----------------
|
|Sales                                        |                             | $          1,702 
|Selling, general and administrative expenses |                             | 657,814          
|                                            
|Operating loss                               |                             | (656,112         
|Interest income                              |                             | 30,088           
|                                            
|Net loss                                     |                             | $    (626,024    
|                                            
|Basic and diluted loss per common share      |                             | $            (.03
|                                            
|Weighted average number of shares            |                            
|outstanding                                  |                             | 19,348,083       
|                                            

|See accompanying notes.


2
|---------------------------

|NETWORD, INC.Statements of Cash Flows(Unaudited)
|------------------------------------------------

|                                                                     | Three MonthsEnded March 31, |              
|-------------------------------------------------------------------- | --------------------------- | -------------
|
|Net loss                                                             |                             | $  (626,024  
|Adjustments to reconcile net loss to cash                            |                            
|used in operating activities:                                        |                            
|Depreciation and amortization                                        |                             | 8,453        
|Interest on notes payable                                            |                             | 448          
|Amortization of prepaid expense                                      |                             |             
|Change in assets and liabilities:                                    |                            
|Prepaid expenses                                                     |                             | 249,414      
|Accounts payable                                                     |                             | (88,677      
|                                                                    
|Net cash used in operating activities                                |                             | (456,386     
|                                                                    
|Cash flows from investing activities:                                |                            
|Deposit                                                              |                             |             
|                                                                    
|Net cash used in investing activities                                |                             |             
|                                                                    
|Cash flows from financing activities:                                |                            
|Exercise of warrants                                                 |                             |             
|                                                                    
|Net cash provided by financing activities                            |                             |             
|                                                                    
|Net decrease in cash                                                 |                             | (456,386     
|Cash, beginning of period                                            |                             | 2,737,104    
|                                                                    
|Cash, end of period                                                  |                             | $ 2,280,718  
|                                                                    
|                                                                    
|Supplemental Schedule of Non-Cash Investing and Financing Activities |                            
|                                                                    
|Exchange of note payable for                                         |                            
|accounts payable                                                     |                             | $      30,000
|                                                                    

|See accompanying notes.


3
|---------------------------

|NETWORD, INC.NOTES TO
FINANCIAL STATEMENTSMarch 31, 2001(Unaudited)


Note 1 - Basis of Presentation


Netword,
Inc. (the Company, us, we, or
our) owns and operates an Internet utility known as the Netword
System, which we believe offers a comprehensive solution to problems created by
a lack of consumer-friendly addresses or URLs for Internet resources.


The
accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with instructions to Form 10-QSB. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of our management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three
month period ended March 31, 2001 are not necessarily indicative of the results
that may be expected for the full year ended December 31, 2001, These unaudited
financial statements should be read in conjunction with the financial statements
and footnotes thereto included in our Annual Report on Form 10-KSB for the year
ended December 31, 2000.



4
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ITEM 2. Managements Discussion and
Analysis or Plan of Operation


First Quarter
2001 Overview


During the quarter, we continued
to pursue various affiliations with other Internet businesses; however no
significant agreements were executed.


Results of Operations for Q-1 2001


Compensation costs
increased to $235,988 versus $176,500 for the same period last year since we
hired additional personnel to enhance and market the Netword System and for
Research and Development. Enhancements of the Netword System includes new
versions of our software that feature better browser integration and support for
wireless and PDA platforms and software development for new applications of the
Netword technology.


Marketing costs decreased
to $320,076 versus $497,850 for the same period last year primarily because (i)
the 1st quarter of last year included $375,000 of amortization
attributable to the Net2Phone warrant while the 1st quarter of this
year did not include that amortzation since the Net2Phone warrant was fully
amortized in the 4th quarter of 2000 and (ii) the 1st
quarter of this year includes $254,768 of advertising costs related to an
advertising campaign while the 1st quarter of last year includes no
such expense.


We have incurred and will
continue to incur additional expenses related to our public status, including
accounting and audit fees, SEC filing fees, transfer agent costs, legal fees and
investor relations.


Liquidity and
Capital Resources


Our cash balance at March
31, 2001 was $2,280,718. Our net cash used in operations during the
1st quarter was $456,386. Based upon our current operations it is
unlikely that additional funds will be required during the next twelve months.


Forward
Looking Statements


Some of the statements in
this 10-QSB that are not historical facts are forward-looking statements.
Forward-looking statements can be identified by the use of words such as
estimates, projects, anticipates, expects, intends, believes or the negative
thereof or other variations thereon or by discussions of strategy that involve
risks and uncertainties. We caution you that all the forward-looking statements
contained in this 10-QSB are only estimates and predictions. Our actual results
could differ materially from those anticipated in the forward-looking statements
due to risks, uncertainties or actual events differing from the assumptions
underlying these statements. The risks, uncertainties and assumptions include,
but are not limited to, those discussed in this 10-QSB.


5
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|PART II
 OTHER INFORMATION


Item 1. Legal Proceedings
|-------------------------------------------------------

| | In
July 1998, we filed a patent infringement suit against Centraal Corporation, now known as
RealNames Corporation, in the U.S. District Court for the Eastern District of Virginia.
We sought an injunction and damages in an amount to be determined by the court.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
January 8, 1999, the court granted RealNames motion for summary judgement, holding that
the RealNames system did not infringe our patent, without ruling on the validity of our
patent. We appealed the decision. On March 15, 2001, the United States Court of Appeals
for the Federal Circuit upheld the decision of the District Court.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 2. Changes in Securities
|-----------------------------

| | None
| | ----

|Item 3. Defaults upon Senior
Securities
|---------------------------------------

| | None
| | ----

|Item 4. Submission of Matters to a
Vote of Security Holders
|-----------------------------------------------------------

| | None
| | ----

|Item 5. Other Information
|-------------------------

| | None
| | ----

|Item 6. Exhibits and Reports on Form
8-K
|----------------------------------------

| |  | a) |  | Exhibits:
| |  | -- |  | ---------

| |  |  |  | 3.1(1) |  | Certificate
of Incorporation of Netword, Inc.
| |  |  |  | ------ |  | ---------------------------------------------

| |  |  |  | 3.2(1) |  | Bylaws
of Netword, Inc.
| |  |  |  | ------ |  | -----------------------

| |  |  |  | 4.1(1) |  | Stock
option plan of Netword, Inc.
| |  |  |  | ------ |  | ----------------------------------

| |  |  |  | 4.2(1) |  | Form
of award letter for optionees
| |  |  |  | ------ |  | ----------------------------------

| |  |  |  | 10.1(1) |  | Contract
regarding assignment of trademarks and trade names Netword  and Netword, Inc.
| |  |  |  | ------- |  | ------------------------------------------------------------------------------------------

| |  |  |  | 10.2(1) |  | Internet
Data Center Services Agreement between Netword, Inc. and Exodus Communications, Inc.
| |  |  |  | ------- |  | ---------------------------------------------------------------------------------------------

|6
|-

|
|

| |  |  |  | 10.3(1) |  | Agreement
dated September 29, 1999 between Netword, Inc. and Net2Phone, Inc.
| |  |  |  | ------- |  | ----------------------------------------------------------------------------

|(1) |  | Filed
as an Exhibit to Networds registration statement on Form SB-1 (Commission File No.
333-86873) and incorporated herein by reference.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------

| |  | b) |  | Reports
on Form 8-K:
| |  | -- |  | --------------------

| | None
| | ----

|7
|-

|SIGNATURE



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.


Dated: May 9, 2001
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Netword, Inc.(Registrant)By: /s/ Murray M. Rubin       
Name: Murray M. Rubin            Title: Treasurer and Chief Financial Officer(Principal
Financial Officer and Officer DulyAuthorized to Sign on behalf of Registrant)
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8