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 September 30, 2000 - Commission file Number 333-86873

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

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 November 8, 2000, was 19,348,059.

Transitional Small Business Disclosure Format (check one):

Yes [X]      No[_]

NETWORD, INC.
(A Development Stage Company)

INDEX TO FORM 10-QSB

September 30, 2000

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

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)

See accompanying notes.

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

See accompanying notes.

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

See accompanying notes.

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

See accompanying notes.

NETWORD, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 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 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 nine month period ended September 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 - Exercise of Warrants

     During the nine months ended September 30, 2000, certain outstanding warrants to purchase our common stock were exercised as follows:

     In addition, the owner of a Warrant representing 200,000 of our common shares elected not to exercise that warrant and, accordingly, that warrant was redeemed by us in accordance with its terms for $.05 per share, or $10,000.

Note 3 - Subsequent Event

     On October 30, 2000 we entered into an agreement with New Internet Computer Co. (“NIC”), a company co-founded by Larry Ellison of Oracle, Inc., to integrate the Netword System into the NIC computer, a new device that is a complete, low-cost, personal computer dedicated solely to Web access and e-mail. Under the agreement, the NIC version of the Netscape browser will incorporate our software and allow users to employ Networds in the browser line without first having to download and install the Netword Agent.

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

Third 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 were signed during the quarter with well-known Web sites including Amazon.com, Tech TV (formerly ZDTV), Mac Publishing (publishers of Macworld, the leading publication and Web site for the Apple Macintosh computer and related software), FogDog (a leading sports-related site) and GetMy (new Web “portal” site. These are primarily referral agreements providing for the creation of Commercial Networds that 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; however, some of those agreements also include traditional advertising and revenue sharing opportunities. During the quarter, we also completed new versions of our software agent for the Linux and Apple Macintosh computer operating systems, as well as an upgrade to our existing software in order to support the new Microsoft Windows 2000 operating system.

     During the three months ended September 30, 2000 we invested an additional $98,058 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 aggregate invested to date in the production of the Campaign is $726,807. The Campaign commenced during the third quarter and these costs are being amortized through March 31, 2001.

Results of Operations

The quarter ended September 30, 2000.

     Compensation costs were $223,841 due to hiring additional marketing, sales, business development and software engineering personnel to enhance the Netword System and implement the Campaign.

     Ongoing enhancement of the Netword System includes software development efforts to meet the needs of new affiliates as described herein and development of additional versions of the Netword Agent for new operating systems and browsers. New affiliations will create additional technology requirements for us.

     Marketing costs were $765,326 primarily because of the final $375,000 of amortization attributable to the Net2Phone warrant issued in the 4th quarter of 1999 and $242,269 of amortization of Campaign expenses. In subsequent quarters 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 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 next 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.

Nine months ended September 30, 2000.

     Compensation costs were $598,189 because we hired additional marketing, sales, business development and software engineering personnel to enhance the Netword System and implement the Campaign.

     Ongoing enhancement of the Netword System includes software development efforts to meet the needs of new affiliates as described herein and development of additional versions of the Netword Agent for new operating systems and browsers. New affiliations will create additional technology requirements for us.

     Marketing costs were $1,792,837 primarily because of $1,125,000 of amortization attributable to the Net2Phone warrant issued in the 4th quarter of 1999, $337,850 to marketing consultants and strategic partners, including InfoSpace which was initiated in the 1st quarter of 2000 and terminated in the 3rd quarter of 2000 (see Part II - Other Information, Item 1 - Legal Proceedings) and $242,269 of Campaign costs amortized in the 3rd quarter. In subsequent quarters 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.

Liquidity and Capital Resources

Our cash balance at September 30, 2000 was $3,012,173. 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 exercise of warrants

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 1. Legal Proceedings

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: November 9, 2000