The development and use of web and network based systems have increased significantly during the last decade. An example of this is the change from a platform based to a network based defence, and the development of Internet technologies. The M&S area is no exception for these changes. In the spring of 2004, commissioned by the Swedish Armed Forces, a project was initiated with the aim to study the area of Network Based Modeling and Simulation (NBMS), and also identify what possibilities this area could offer the defence. To experiment with developed products and techniques, and to demonstrate the advantages, a prototype environment for NBMS is being developed that supports the activities of the M&S process. The project, called NetSim, concerns many subareas such as: Computer-based cooperation, Distributed execution, Distributed file systems, and Security issues within NBMS. The project´s first year has been focused on designing a stable architecture for NBMS, and resulted in a layered architecture with a modular structure. Apart from this, the subareas have been handled, for example an infrastructure for security has been designed, a foundation for distributed execution and management of simulation components has been constructed, implementation of an infrastructure for computer-based cooperation has been initiated, and a library Astructure including search processes and resource management has been formed. The project also has connections to FOI projects and universities etc. to receive feedback and input. This report presents the project, the project activities so far, and future directions and important research questions at issue that will be considered.