---

|SECURITIES
AND
EXCHANGE COMMISSIONWashington,
D.C. 20549



FORM 10-QSB



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



For Quarter Ended June
30, 2000 - 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. Employer  Identification No.)
|----------------------------------------------------- | -------------------------------------------------

|702 Russell Avenue,
Third Floor, Gaitherburg, 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 August 10, 2000, was 19,348,083.


Transitional Small Business
Disclosure Format (check one):


Yes [X]    No [_]
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|NETWORD, INC. (A
Development Stage Company)


INDEX TO FORM 10-QSB


June 30, 2000
|----------------------------------------------------------------------------------

|PART I - FINANCIAL INFORMATION                                        | PAGE
|--------------------------------------------------------------------- | ----
|Item -1. -  Balance Sheets as of June 30, 2000 and December 31, 1999  |     
|                                                                      |     
|Statements of Operations for the Three                                |     
|Months Ended June 30, 2000 and 1999                                   |     
|                                                                      |     
|Statements of Operations for the Six                                  |     
|Months Ended June 30, 2000 and 1999                                   |     
|                                                                      |     
|Statements of Cash Flows for the Six                                  |     
|Months Ended June 30, 2000 and 1999                                   |     
|                                                                      |     
|Notes to Financial Statements                                         |     
|                                                                      |     
|Item - 2. - Managements Discussion and Analysis or Plan of Operation |     
|                                                                      |     
|PART II - OTHER INFORMATION                                           |     
|                                                                      |     
|SIGNATURE                                                             |     

|NETWORD, INC.
                                            (A Development Stage Company)
                                                  Balance Sheets
|--------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                  | June 30,2000(Unaudited) | December 31,1999(Note)
|------------------------------------------------- | ----------------------- | ----------------------
|ASSETS                                            |                         |                       
|Current assets:                                   |                        
|Cash                                              |                         | $ 3,604,529           
|Prepaid expenses                                  |                         | 1,033,110             
|                                                 
|Total current assets                              |                         | 4,637,639             
|Property and equipment, net                       |                         | 55,236                
|Intangible assets:                                |                        
|Trademark, net                                    |                         | 24,532                
|Intellectual property, net                        |                         | 7,500                 
|Deferred offering costs                           |                         |                      
|                                                 
|Total intangible assets                           |                         | 32,032                
|                                                 
|                                                  |                         | $ 4,724,907           
|                                                 
|LIABILITIES AND STOCKHOLDERS EQUITY              |                        
|Current liabilities:                              |                        
|Current portion of long-term liability            |                         | $        4,800        
|Accounts payable                                  |                         | 437,299               
|Loans payable                                     |                         | 33,027                
|                                                 
|Total current liabilities                         |                         | 475,126               
|Long-term liability, net of current portion       |                         | 14,400                
|Convertible note payable                          |                         | 21,503                
|Redeemable common stock and common stock warrants |                         | 977,500               
|Stockholders equity:                             |                        
|Common stock, $.01 par value;                     |                        
|Authorized - 40,000,000 shares                    |                        
|Issued and outstanding - 18,566,083 shares at     |                        
|6/30/00 and 16,923,924 shares at 12/31/99         |                         | 185,661               
|Additional paid-in capital                        |                         | 9,240,946             
|Deficit accumulated in the development stage      |                         | (6,178,930            
|Subscriptions receivable                          |                         | (11,299               
|                                                 
|Total stockholders equity                        |                         | 3,236,378             
|                                                 
|                                                  |                         | $ 4,724,907           
|                                                 

|Note: The balance sheet at
December 31, 1999 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.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|NETWORD, INC.(A
Development Stage Company)Statements of Operations(Unaudited)
|-----------------------------------------------------------------------------

|                                        | Three MonthsEnded June 30,
|--------------------------------------- | --------------------------
|
|Revenue                                 |                           
|General and administrative expenses     |                           
|                                       
|Operating loss                          |                           
|Other income (expense):                 |                           
|Interest income                         |                           
|Loss on disposition of property and     |                           
|equipment                               |                           
|Loss on impairment of assets            |                           
|                                       
|Net other income (expense)              |                           
|                                       
|Net loss                                |                           
|                                       
|Basic and diluted loss per common share |                           
|                                       
|Weighted average number of shares       |                           
|outstanding                             |                           
|                                       

|See accompanying notes.
|-----------------------

|NETWORD, INC. (A
Development Stage Company) Statements of Operations (Unaudited)
|--------------------------------------------------------------------------------

|                                        | Six MonthsEnded June 30, | Period FromDecember2, 1996(Inception) toJune 30,
|--------------------------------------- | ------------------------ | ------------------------------------------------
|
|Revenue                                 |                          | $          5,975                                
|General and administrative expenses     |                          | 1,700,786                                       
|                                       
|Operating loss                          |                          | (1,694,811                                      
|Other income (expense):                 |                         
|Interest income                         |                          | 74,438                                          
|Loss on disposition of property and     |                         
|equipment                               |                          |                                                
|Loss on impairment of assets            |                          |                                                
|                                       
|Net other income (expense)              |                          | 74,438                                          
|                                       
|Net loss                                |                          | $(1,620,373                                     
|                                       
|Basic and diluted loss per common share |                          | $           (.09                                
|                                       
|Weighted average number of shares       |                         
|outstanding                             |                          | 18,169,149                                      
|                                       

|See accompanying notes.
|-----------------------

|NETWORD, INC. (A
Development Stage Company) Statements of Cash Flows (Unaudited)
|--------------------------------------------------------------------------------

|                                          | Six MonthsEnded June 30, | Period FromDecember2, 1996(Inception) toJune 30,
|----------------------------------------- | ------------------------ | ------------------------------------------------
|
|Net loss                                  |                          | $(1,620,371                                     
|Adjustments to reconcile net loss to cash |                         
|used in operating activities:             |                         
|Issuance of stock options and warrants    |                         
|for consulting and legal services         |                          |                                                
|Depreciation and amortization             |                          | 27,184                                          
|Amortization of prepaid expense           |                          | 750,000                                         
|Issuance of convertible note payable for  |                         
|legal services                            |                          |                                                
|Loss on disposition of property and       |                         
|equipment                                 |                          |                                                
|Loss on impairment of assets              |                          |                                                
|Change in assets and liabilities:         |                         
|Prepaid expenses                          |                          | (421,110                                        
|Other current assets                      |                          |                                                
|Accounts payable                          |                          | 79,495                                          
|                                         
|Net cash used in operating                |                         
|activities                                |                          | (1,184,802                                      
|                                         
|Cash flows from investing activities:     |                         
|Proceeds from sale of property and        |                         
|equipment                                 |                          |                                                
|Acquisition of property and equipment     |                          | (5,408                                          
|Acquisition of trademark                  |                          |                                                
|                                         
|Net cash used in                          |                         
|investing activities                      |                          | (5,408                                          
|                                         
|Cash flows from financing activities:     |                         
|Proceeds from long-term liability         |                          |                                                
|Principal payments of long-term liability |                          |                                                
|Proceeds from loans                       |                          |                                                
|Redeemable common stock and common        |                         
|stock warrants                            |                          |                                                
|Offering costs                            |                          |                                                
|Exercise of warrants                      |                          | 2,052,698                                       
|Issuance of common stock and units, net   |                         
|of offering and registration costs        |                          |                                                
|                                         
|Net cash provided by financing            |                         
|activities                                |                          | 2,052,698                                       
|                                         
|Net increase in cash (carried forward)    |                          | $    862,488                                    
|                                         

|See accompanying notes.
|-----------------------

|NETWORD, INC. (A
Development Stage Company) Statements of Cash Flows (Concluded) (Unaudited)
|--------------------------------------------------------------------------------------------

|                                                                     | Six MonthsEnded December 31, | Period FromDecember2, 1996(Inception) toMarch 31,
|-------------------------------------------------------------------- | ---------------------------- | -------------------------------------------------
|
|Net increase in cash (brought forward)                               |                              | $   862,488                                      
|Cash, beginning of period                                            |                              | 2,742,041                                        
|                                                                    
|Cash, end of period                                                  |                              | $3,604,529                                       
|                                                                    
|Supplemental Schedule of Non-Cash Investing and Financing Activities |                             
|                                                                    
|Subscriptions receivable                                             |                              | $                                               
|                                                                    
|Issuance of Class A Units and Class C                                |                             
|Units in exchange for:                                               |                             
|Intellectual property                                                |                              | $                                               
|Net assets acquired                                                  |                              |                                                 
|                                                                    
|Issuance Class A Units for Birdshell Assets                          |                              | $                                               
|                                                                    
|Conversion of loans to Class A Units                                 |                              | $                                               
|                                                                    
|Conversion of accounts payable to                                    |                             
|warrants                                                             |                              | $                                               
|                                                                    
|Issuance of stock options and warrants                               |                             
|for consulting, legal and marketing services                         |                              | $  237,000                                       
|                                                                    
|Issuance of warrants for contract services                           |                              | $                                               
|                                                                    
|Issuance of convertible note payable for                             |                             
|legal services                                                       |                              | $                                               
|                                                                    

|See accompanying notes.
|-----------------------

|NETWORD, INC. (A
Development Stage Company) NOTES TO FINANCIAL STATEMENTS June 30, 2000 (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 URLs 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 six month
period ended June 30, 2000 are not necessarily indicative of the results that
may be expected for the full year ended December 31, 2000, 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, 1999.



Note 2 
Prepaid Expenses


The
major components of prepaid expenses are:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 1. |  | $375,000
- Unamortized portion of Net2Phone warrants.
| | -- |  | -----------------------------------------------------

| | 2. |  | $628,749
- Expenses related to a national marketing campaign which commenced during the third
quarter. These costs will be charged to operations over the three quarters ending March
31, 2001.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Note 3 
Exercise of Warrants


During
the six months ended June 30, 2000, certain outstanding warrants to purchase our
common stock were exercised as follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------

|Number of Shares | Exercise Price | Proceedof Exercise
|---------------- | -------------- | ------------------
|1,642,159        |                | $1.25/share       

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



Second Quarter
2000 Overview


We
are a development stage Internet company and have not derived significant
revenues from operations. Revenues recorded by us to date are incidental and not
the result of proactive marketing. Our revenues have stemmed from persons who
recognize the utility of the Netword System and wish to protect their products,
brands and other marks.


During
the quarter, we continued to enter into and pursue various agreements with other
Internet businesses. Affiliate agreements with CNET, CarParts.com,
BabyCenter.com, NetRadio, Gamesville, OfficeMax.com, PETsMART.com, VideoFlicks
and Proflowers.com were signed during the quarter. These are primarily referral
agreements providing for the creation of Commercial Networds which point to
various pages on the Web sites of our affiliates which entitles us to revenues
based on use of Commercial Networds directing Internet traffic to those sites.
During the quarter, we also completed a new version of our software agent for
the Apple Macintosh and Linux operating systems and entered into an affiliate
agreement with Mac Publishing LLC, publisher of the MacWorld magazine and owner
of the macworld.zdnet.com Web site, the leading information sources for
Macintosh users.


During
the six months ended June 30, 2000 we invested $628,749 in the production of an
advertising campaign (the Campaign) featuring Leonard Nimoy, a
well-known movie and television actor and director, as our spokesperson. The
Campaign is scheduled to commence during the third quarter.



Results of
Operations


The
quarter ended June 30, 2000 compared to the quarter ended June 30, 1999.


Compensation
costs increased to $202,300 due to hiring additional marketing, sales, business
development and software engineering personnel to enhance the Netword System and
implement the Campaign.


Enhancement
of the Netword System includes software development efforts to meet the needs of
new affiliates, including Net2Phone and InfoSpace.com, and additional versions
of the Netword Agent for the Apple Macintosh and Linux operating systems. Other
pending affiliations will create additional technology requirements for us.



Marketing
costs increased to $530,000 primarily because of $375,000 of amortization
attributable to the Net2Phone warrant initiated in the 4th quarter of
1999 and payments to InfoSpace initiated in the 1st quarter of 2000.
In subsequent quarters we expect to increase our marketing and sales
expenditures to support the Campaign. In addition to direct advertising costs
associated with the Campaign, we expect to incur additional administrative costs
to manage the Campaign and anticipate that we will require additional sales and
customer support personnel to manage our anticipated growth.


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


Equipment
costs are not expected to increase significantly until later in the current
fiscal year, when we expect to establish additional clusters of computers in
North America and/or abroad to meet the expected growth in usage of the Netword
System following implementation of the Campaign.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Six
months ended June 30, 2000 compared to the six months ended June 30, 1999.


Compensation
costs increased to $374,350 because we hired additional marketing, sales,
business development and software engineering personnel to enhance the Netword
System and implement the Campaign.


Enhancement
of the Netword System includes software development efforts to meet the needs of
new affiliates, including Net2Phone and InfoSpace.com, and additional versions
of our software agent for the Apple Macintosh and Linux operating systems. Other
pending affiliations will create additional technology requirements for us.


Marketing
costs increased to $1,027,511 primarily because of $750,000 of amortization
attributable to the Net2Phone warrant initiated in the 4th quarter of
1999 and payments to InfoSpace initiated in the 1st quarter of 2000.
In subsequent quarters, we expect to increase our marketing and sales
expenditures to manage the Campaign, In addition to direct advertising costs
associated with the Campaign, we expect to incur additional administrative costs
for the management of the Campaign and anticipate that we will require
additional sales and customer support personnel to manage our anticipated
growth.



Liquidity and
Capital Resources


Our cash balance at June
30, 2000 was $3,604,529. Based upon our current operations it is unlikely that
additional funds will be required during the next twelve months. Our ability to
increase expenditures for the Campaign will be dependent upon additional funding
from revenues and/or external sources, including a sale of equity.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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.



PART II - OTHER
INFORMATION



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

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

| | 27
Financial Data Schedule
| | --------------------------

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

| | None
| | ----

|S I G N A T U R E



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: August 10, 2000
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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