UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

     |X|  QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 1998
                                                        OR

     |_|  TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ________ to ___________

                         Commission file number: 0-1460

                              ANDERSEN GROUP, INC.
             (Exact name of Registrant as specified in its charter)

     DELAWARE                                    06-0659863

     (State or other  jurisdiction of  incorporation  or  organization)  (I.R.S.
Employer Identification No.)

     515  Madison  Avenue,  New  York,  New York      10022 
(Address  of  principal executive offices)            (Zip Code)

     (212) 826-8942 
(Registrant's telephone number, including area code)

         Indicate by check mark 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 ____


  As of January 11, 1999, there were 1,842,811 shares of the Registrant's no par
value common stock outstanding.

Title                                                   Outstanding 
Common Stock, $0.01 par value per share           Authorized 6,000,000 shares;
                                                   Issued 1,958,478








                              ANDERSEN GROUP, INC.
                                    FORM 10-Q

                                TABLE OF CONTENTS

                                                                      Page No.

Part I - Financial Information

     Item 1 - Financial Statements:
              Consolidated Balance Sheets
                     November 30, 1998 and February 28, 1998                  3

              Consolidated Statements of Operations for the
                     Three and Nine Months Ended November 30, 1998 and 1997   4

               Consolidated Statements of Cash Flows for the
                     Nine Months Ended November 30, 1998 and 1997             5

               Notes to Consolidated Financial Statements                     6

      Item 2 - Management's Discussion and Analysis of
                           Financial Condition and Results of Operations      8

      Item 3 - Quantitative and Qualitative Disclosures About Market Risk    10


Part II - Other Information

         Item 1 - Legal Proceedings                                          11

         Item 4 - Submission of Matters to a Vote of Security Holders        12

         Item 6 - Exhibits and Reports on Form 8-K                           12


Signatures                                                                   13







<PAGE>


Part I.  Financial Information
Item 1.  Financial Statements

<TABLE>
<S>                                                                  <C>    <C>    <C>    <C>    <C>    <C>


                              ANDERSEN GROUP, INC.
                           Consolidated Balance Sheets
                                 (In thousands)

                                                                         November 30, 1998               February 28, 1998
                                                                         -----------------               -----------------
ASSETS                                                                      (Unaudited)
Current assets:
   Cash and cash equivalents                                                  $ 3,983                       $ 2,516
   Marketable securities                                                        6,122                         9,001
   Receivable from sale of subsidiary                                             532                         3,521
   Accounts and other receivables, less
     allowances of $149 and $130                                                3,658                         3,870
   Inventories                                                                  5,755                         8,076
   Income taxes receivable                                                        848                             -
   Prepaid expenses and other assets                                               56                           142
                                                                             --------                      --------        

     Total current assets                                                      20,954                        27,126
                                                                             --------                      --------

Property, plant and equipment                                                  22,285                        21,854
Accumulated depreciation                                                      (13,170)                      (12,411)
                                                                              -------                      --------

     Property, plant and equipment, net                                         9,115                         9,443
                                                                                -----                      --------

Prepaid pension expense                                                         5,023                         4,665
Investments                                                                       206                         1,815
Other assets                                                                    2,149                         1,722
                                                                              -------                      --------

                                                                              $37,447                       $44,771
                                                                              =======                       =======

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Current maturities of long-term debt                                       $   470                         $ 595
   Short-term borrowings                                                        1,187                         2,183
   Accounts payable                                                               641                           951
   Other current liabilities                                                    2,744                         3,352
   Deferred income taxes                                                          134                         1,286
                                                                             --------                       -------

     Total current liabilities                                                  5,176                         8,367

Long-term debt, less current maturities                                         3,992                         4,459
Subordinated note payable, net of unamortized discount                          7,322                         7,300
Other liabilities                                                               1,689                         1,888
Deferred income taxes                                                           2,036                         2,561
                                                                             --------                       -------

     Total liabilities                                                         20,215                        24,575
                                                                             --------                       -------

Stockholders' equity:
   Cumulative convertible preferred stock                                       4,776                         4,769
   Common stock                                                                    20                            20
   Additional paid-in capital                                                   5,340                         5,331
   Retained earnings                                                            7,176                        10,158
   Treasury stock                                                                 (80)                          (82)
                                                                             --------                        -------

     Total stockholders' equity                                                17,232                        20,196
                                                                             --------                       --------

                                                                              $37,447                       $44,771

See accompanying notes to consolidated financial statements.

</TABLE>
<PAGE>
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>


                              ANDERSEN GROUP, INC.
                      Consolidated Statements of Operations
                      (In thousands, except per share data)
                                   (unaudited)


                                                     Three months ended                          Nine months ended 
                                           November 30, 1998    November 30,1997          November 30, 1998    November 30, 1997
Revenues:
   Net sales                                   $ 6,545            $ 6,854                    $20,168             $18,520
   Investment and other income (loss)            1,297               (458)                    (3,379)              3,560
                                               -------            -------                    -------             -------

                                                 7,842              6,396                     16,789              22,080
                                               -------            -------                    -------             -------

Costs and expenses:
   Cost of sales                                 4,330              4,627                     13,352              12,283
   Selling, general and administrative           1,583              1,595                      5,029               4,608
   Research and development                         50                357                      1,454               1,037
   Interest expense                                 40                283                      1,392                 772
                                               -------            -------                    -------             -------

                                                 6,821              6,862                     21,227              18,700
                                               -------            -------                    -------             -------

Income (loss) from continuing
  operations before income taxes                 1,021               (466)                    (4,438)              3,380
Income tax expense (benefit)                       410              ( 183)                    (1,751)              1,358
                                               -------            -------                    -------              ------

Income (loss) from continuing
  operations                                       611               (283)                    (2,687)              2,022
Income from discontinued operations,
  net of income taxes                                0                100                          0                 173
                                               -------            -------                    -------              ------   

Net income (loss)                                  611               (183)                    (2,687)              2,195
Reversal of preferred dividends                      -                  -                          -                  37
Preferred dividends                                (96)              (122)                      (295)               (356)
                                               -------            -------                    -------              ------

Income (loss) applicable to common
  shares                                           $515             ($305)                   ($2,982)             $1,876
                                               ========           =======                    =======              ======

Earnings (loss) per common share:
   Basic
     Continuing operations                        $0.27            ($0.21)                    ($1.54)              $0.88
     Discontinued operations                          -              0.05                          -                0.09
                                               --------           -------                   --------             -------
     Net income (loss)                            $0.27            ($0.16)                    ($1.54)              $0.97
                                               ========           =======                   ========             =======

   Diluted
     Continuing operations                        $0.27            ($0.24)                    ($1.54)              $0.80
     Discontinued operations                          -              0.08                          -                0.08
                                               --------           -------                    -------              ------
     Net income (loss)                            $0.27            ($0.16)                    ($1.54)              $0.88
                                               ========           =======                    =======              ======


See accompanying notes to consolidated financial statements.

</TABLE>

<PAGE>


                              ANDERSEN GROUP, INC.
                      Consolidated Statements of Cash Flows
                                 (In thousands)
                                   (unaudited)

<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
        
                                                                                 Nine months ended
                                                                     November 30, 1998         November 30, 1997


Cash flows from operating activities:
Net (loss) income                                                        ($2,687)                    $2,195

Adjustments to  reconcile  net (loss)  income to net cash  provided by
 (used in) operating activities:
     Depreciation, amortization and accretion                              1,059                      1,099
     Gain on sale of property                                                (25)                         -
     Deferred income taxes                                                (1,677)                     1,015
     Pension income                                                         (358)                      (251)
     Net losses (gains) from marketable securities
       and investments                                                     4,437                     (2,945)
     Purchases of marketable securities                                   (1,732)                    (2,128)
     Proceeds from sales of marketable securities                          1,783                          -

Changes in operating assets and liabilities:
     Accounts and notes receivable                                           212                     (1,535)
     Income tax receivable                                                  (848)                         -
     Inventories                                                           2,321                       (514)
     Prepaid expenses and other assets                                        98                         91
     Accounts payable                                                       (310)                      (986)
     Accrued expenses and other long-term obligations                       (280)                       227
                                                                          ------                     ------

     Net cash provided by (used in) operating activities                   1,993                     (3,732)
                                                                          ------                     ------

Cash flows from investing activities:
     Purchases of property and equipment, net                             (1,268)                    (1,368)
     Proceeds from sale of property                                          223                          -
     Proceeds from sale of subsidiary                                      2,400                          -
     Proceeds from investment in Digital GraphiX                               -                      1,518
                                                                          ------                     ------

     Net cash provided by investing activities                             1,355                        150
                                                                          ------                     ------

Cash flows from financing activities:
     Principal payments on long-term debt                                   (592)                     (838)
     (Repayment) issuance of short term debt, net                           (996)                    3,000
     Redemption of preferred stock                                             -                      (160)
     Preferred dividends paid                                               (304)                        -
     Stock options exercised                                                  49                         -
     Purchase of treasury stock, net                                         (38)                        -
                                                                          ------                   -------        

     Net cash (used in)  provided by financing activities                 (1,881)                    2,002
                                                                          ------                   -------

     Net increase (decrease) in cash and cash equivalents                  1,467                    (1,580)

     Cash and cash equivalents - beginning of period                       2,516                     3,219
                                                                          ------                   -------

     Cash and cash equivalents - end of period                            $3,983                    $1,639
                                                                          ======                    ======


   See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>



ANDERSEN GROUP, INC.

Notes to Consolidated Financial Statements (Unaudited)

(1)      Accounting Policies

         The accompanying  interim financial statements and related notes should
be read in conjunction  with the Consolidated  Financial  Statements of Andersen
Group, Inc. and related notes as contained in the Annual Report on Form 10-K for
the fiscal  year ended  February  28,  1998.  The interim  financial  statements
include all adjustments  (consisting only of normal  recurring  adjustments) and
accruals necessary in the judgment of management for a fair presentation of such
statements.  In addition,  certain reclassifications have been made to the prior
period  financial  information  so  that  it  conforms  to  the  current  period
presentation.

(2)      Marketable Securities

Marketable securities consisted of the following (in thousands):
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>


                                                   November 30, 1998               February 28, 1998
                                                   -----------------               -----------------
Common stock of savings banks                           $5,263                           $5,611
Common stock of Centennial Cellular                          -                              430
C A Emerging Russia Fund                                   294                            2,422
Portfolio of Ukraine stocks                                190                              314
Common stock of Bank Handlowy (Poland)                     265                              348
Renaissance Russian Bond Fund                              201                                -
Valuation reserve - foreign investments                    (91)                            (617)
Municipal bonds                                              -                              493
                                                        ------                           - ----

                                                        $6,122                           $9,001
                                                        ======                           ======
</TABLE>

     At November 30, 1998, the valuation  reserve was  established  only for the
portfolio  of  Ukraine  stocks and the common  stock of Bank  Handlowy.  Russian
investments were written down to 10% of their cost bases to reflect  approximate
market value.

(3)      Inventories

Inventories consisted of the following (in thousands):
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                November 30, 1998                  February 28, 1998
                                                -----------------                  -----------------
Raw material                                         $ 1,853                            $ 2,989
Work in process                                        3,462                              6,509
Finished goods                                         2,888                                657
                                                     -------                            -------     
                                                       8,203                             10,155

LIFO Reserve                                           2,448                              2,079
                                                      ------                             ------
                                                     $ 5,755                            $ 8,076
                                                     =======                            =======
</TABLE>

 (4)      Discontinued Operations

     Effective  February  28,  1998,  the  Company  sold the net  assets  of Ney
Ultrasonics Inc., and recorded a net gain of $97,000 after income taxes.  During
the quarter ended May 31, 1998, the Company received  $2,400,000 of the purchase
price. An additional  $500,000 is being held by an escrow agent pending a review
of the year-end  financial  information and  finalization of the purchase price.
The process of finalizing  the purchase  price will be subject to the outcome of
counter  claims  between the  Company and the  purchaser  of the  business.  The
Company  expects to receive  less  consideration  from the sale than  originally
estimated.  However,  the  estimate  of the net  gain on  sale  has not  changed
because,  in the opinion of  management,  accruals made at the Company's  fiscal
year end will be  adequate  to cover the  anticipated  changes  in the  purchase
price.

(5)      Income Taxes

         Income tax expense  (benefit)  represents  an estimate of the effective
income tax rates.

(6)      Dividends

         During   February  1998,  the  Company   amended  its   certificate  of
incorporation  to modify the terms of the  Company's  Series A  Preferred  Stock
(Preferred  Stock) to provide  for an annual  fixed  dividend  rate of $1.50 per
share of Preferred  Stock and to eliminate the mandatory  redemption  feature of
the preferred stock for the quarter ended May 31, 1998.

(7)      Earnings Per Share

         Earnings per share are computed based on the weighted average number of
common and common  equivalent shares  outstanding.  Diluted net income per share
assumes full conversion of all  convertible  securities into common stock at the
later of the beginning of the year or date of issuance, unless antidilutive. For
the three and nine month  periods  ended  November 30, 1998,  the effect of such
conversions were antidilutive.

(8)      Stockholders' Equity

         On  June  23,  1998,  the  Company's  stockholders  approved  a plan of
reincorporation  in which the Company was merged  into a  wholly-owned  Delaware
subsidiary so to effect a change in the Company's state of  incorporation.  As a
result,  the  common  stock of the  Company  now has a par value of  $0.01,  and
appropriate  adjustments  have been made to common stock and additional  paid-in
capital on the accompanying Consolidated Balance Sheet.

(9)      Business Segments and Export Sales

         During the nine months ended November 30, 1998, the Company operated in
two continuing  segments,  Electronics,  which  comprises the operations of J.M.
Ney, and  Corporate,  which includes the Company's  investment,  real estate and
corporate  administrative  activities.  Operating  income consists of net sales,
investment  and  other  income,  less  cost of sales and  selling,  general  and
administrative  expenses directly allocated to the industry segments.  Corporate
revenues  consist of investment and other income not  attributable  to J.M. Ney.
Corporate  identifiable  assets  include  marketable  securities  and short-term
investments, and assets not directly attributable to J.M. Ney.

Summarized  financial  information  for  business  segments  is as  follows  (in
thousands):
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Nine months ended:                                    November 30, 1998           November 30, 1997
                                                      -----------------           -----------------

Revenues:
  Electronics                                              $ 20,161                    $18,541
  Corporate                                                  (3,372)                     3,539
                                                           --------                    -------
                                                           $ 16,789                    $22,080
                                                           --------                    -------
Operating income (loss):
  Electronics                                              $  2,041                    $ 2,237
  Corporate                                                  (5,087)                     1,915
                                                           --------                    -------
                                                          ($  3,046)                   $ 4,152
                                                           --------                    -------
Interest expense:
  Electronics                                              $  1,005                    $   259
  Corporate                                                     387                        513
                                                           --------                    -------
                                                           $  1,392                    $   772
                                                           --------                    -------
Depreciation, amortization and accretion:
  Electronics                                              $    940                    $   891
  Corporate                                                     119                        139
  Discontinued operations                                         -                         69
                                                           --------                    -------      
                                                           $  1,059                    $ 1,099
                                                           --------                    -------
Capital expenditures:
  Electronics                                              $ 1,246                     $ 1,314
  Corporate                                                     22                          33
  Discontinued operations                                        -                          21
                                                           -------                     -------
                                                           $ 1,268                     $ 1,368
                                                           -------                     -------

As of:                                                November 30, 1998           February 28, 1998
                                                      -----------------           -----------------
Identifiable assets:
  Electronics                                              $25,186                     $25,337
  Corporate                                                 12,261                      19,434
                                                           -------                     -------
                                                           $37,447                     $44,771
                                                           -------                     -------
</TABLE>


Export  sales  for the nine  months  ended  November  30,  1998  and  1997  were
$3,140,000  and  $3,178,000,  respectively.  Such sales were made  primarily  to
customers in Europe and the Pacific Rim.

During the nine months ended November 30, 1998, sales to two customers accounted
for 14.7% and 13.0% of net sales, respectively.


     Item 2.  Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations

For the  three  months  ended  November  30,  1998,  the  Company's  net  income
applicable to common  shareholders was $515,000,  or $0.27 per share,  basic and
diluted.  During the prior fiscal year's third quarter,  the Company  recorded a
net loss of $305,000,  or $0.16 per share,  basic and  diluted.  Such prior year
results included $100,000 of net income from discontinued operations.

For the nine months ended  November 30,  1998,  the Company  recorded a net loss
applicable to common  shareholders of $2,982,000,  or $1.54 per share, basic and
diluted.  This compares with the prior fiscal year-to-date net income applicable
to common  shareholders  of $1,876,000,  or $0.97 basic and $0.88 diluted.  Such
prior  fiscal year  results  included  $173,000 of net income from  discontinued
operations.

REVENUES
Revenues  for the three  months  ended  November  30, 1998  totaled  $7,842,000,
comprised of $6,545,000  of net sales from The J.M. Ney Company  (J.M.  Ney) and
$1,297,000 of investment  and other income.  For the nine months ended  November
30, 1998,  revenues totaled  $16,789,000,  which was comprised of $20,168,000 of
net sales and net investment losses from investments and other income sources of
$3,379,000.  During the prior fiscal year, such  year-to-date  revenues  totaled
$22,080,000,  of which  $18,520,000  was represented by net sales and $3,560,000
was from income from investments and other sources.

Sales during the quarter from J.M. Ney, the Company's wholly-owned  manufacturer
of electronic materials and components,  decreased by 4.5% from the prior fiscal
year's third quarter,  while  year-to-date  sales have increased by 8.9%. Higher
selling prices for palladium-based products contributed to sales growth for both
the quarter and nine months,  as the price of this precious metal in the current
year has been  approximately $75 per ounce higher than in the prior fiscal year.
International  sales  softened in the most recent  quarter,  while  year-to-date
sales were also negatively impacted by reduced demand from the automotive market
as a result of the labor strike against General Motors.

Investment and other income  produced  income of $1,297,000  during the quarter,
primarily  due to  increases in the value of the  Company's  portfolio of common
stocks of financial  institutions.  Year-to-date,  the net loss of $3,379,000 is
due to losses recorded relating to investments in Russian securities, as well as
the domestic financial  institution  portfolio.  Significant  components of this
nine month net loss and the comparable  amount  recognized during the first nine
months of the prior fiscal year are as follows (in thousands):



<PAGE>

<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>


                                                            November 30, 1998         November 30, 1997
Net (losses) gains from domestic investment portfolios          ($  724)                    $1,312
Net (losses) gains from Russian and Eastern European
portfolios and longer-term investments                           (3,417)                     1,438
Interest and dividends                                              150                        165
Rental income                                                       398                        314
Other, net                                                          214                        331
                                                                  -----                      ----- 

                                                                ($3,379)                    $3,560
                                                                -------                     ------
</TABLE>

          During the Company's second fiscal quarter, Russian equity investments
for which a market quote was not available  were written down to 10% of original
cost,  which  represents  management's  estimate of the net realizable  value of
those investments.  This writedown was also applied to the Company's longer-term
Russian  investments.  During the third fiscal  quarter,  the valuations did not
increase   appreciably,   and  accordingly,   the  valuation  of  these  Russian
investments  was  not  changed  during  the  quarter.   Other  Eastern  European
investments have valuation reserves equal to 20% of quoted market to provide for
volatility and liquidity concerns.

COST OF SALES
Cost of sales for the three months ended November 30, 1998 represented  66.2% of
sales,  versus  67.5% of sales for the third  quarter of the prior  fiscal year.
Improved  performance from refining  activities  helped to effectively lower the
cost of the  precious  metals  portion of the product  costs  during the current
quarter.  Year-to-date,  cost of  sales  totaled  66.2% of net  sales,  which is
relatively consistent with cost of sales, which were 66.3% of net sales, through
the first nine months of the prior fiscal year.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the three months ended November
30,  1998  totaled  $1,583,000,  which is  consistent  with prior  year  levels.
Year-to-date,  these  costs  total  $5,029,000,  which is 9.1%  higher  than the
expenses  incurred in the first nine months of the prior fiscal  year.  The nine
month  increase in these expenses  primarily  reflects costs incurred to convert
J.M. Ney's primary operating software to a version that is Year 2000 compliant.

RESEARCH AND DEVELOPMENT EXPENSES
Research and  development  expenses for the three months ended November 30, 1998
totaled $502,000,  or 7.7% of net sales,  versus $357,000,  or 5.2% of net sales
for the prior  fiscal  year's  third  quarter.  Year-to-date,  these  costs have
increased 40.2%,  and represent 7.2% of net sales,  versus 5.6% of net sales for
the first nine months of the prior  fiscal year.  Approximately  $180,000 of the
increase  represents lower allocations of these expenses to cost of sales, while
the remaining increase is due to increased research and engineering activities.

INTEREST EXPENSE
For the three months ended November 30, 1998, interest expense totaled $406,000,
which  is  a  43.5%  increase  over  the  prior  fiscal  year's  third  quarter.
Year-to-date,  interest  expense of $1,392,000 is 80.3% higher than was incurred
during the first nine months of the prior fiscal  year.  Most of the increase is
from  interest on $7.5 million of  subordinated  debt which J.M. Ney obtained in
December 1997. In addition,  high interest rate  palladium  leases have added to
the interest  carry.  Corporate  level interest  expense is lower in the current
year,  due to repayments  in February and October of term debt,  which have been
offset somewhat by interest on short-term borrowings.

INCOME TAX EXPENSE (BENEFIT)
Income taxes have been accrued based upon estimated effective income tax rates.

PREFERRED DIVIDENDS
For the three and nine months ended  November 30, 1998,  dividends  were accrued
based upon terms which were revised effective February 28, 1998, and provide for
quarterly payments of dividends at the annual rate of $1.50 per preferred share.
For the  comparable  three and nine  month  periods  in the prior  fiscal  year,
dividends were accrued at the rates of $0.4375 and $1.2515 per preferred  share,
respectively, in accordance with the prior terms of this security.



<PAGE>


LIQUIDITY AND CAPITAL RESOURCES
At November 30, 1998, the Company's  consolidated cash and marketable securities
was approximately $10.1 million,  which represents a decrease from $11.5 million
of such assets at February 28,  1998.  Of these  amounts,  $2.8 million and $1.1
million,  respectively,  were  held in the  accounts  of  J.M.  Ney,  while  the
Company's  cash and  short-term  investments  at November  30, 1998 totaled $7.3
million,  which is a decline of $3.1 million from February 28, 1998 levels. J.M.
Ney's cash and short-term  investments  increased primarily from lower inventory
levels,  while the decrease in the Company's  corporate  position  resulted from
declines in the values of its domestic and Russian trading portfolios.

At November 30, 1998, 31.0% of the Company's  consolidated  stockholders' equity
was  invested  in the  common  stock of  financial  institutions,  while 6.2% of
consolidated  stockholders' equity was invested in both short-term and long-term
investments in Russia,  the Ukraine and Poland,  including a J.M. Ney investment
in a Russia  income  fund  with a  reported  value of  $201,000.  Subsequent  to
November 30, 1998, J.M. Ney received a distribution of approximately $102,000 of
this investment.

As a result of covenants  contained  in its  borrowing  agreements,  J.M. Ney is
restricted from paying dividends or otherwise  transferring funds to the Company
outside the ordinary course of business, except as defined in certain covenants.
At  November  30,  1998,  J.M.  Ney's  working  capital  and net  worth  (net of
liabilities to the Company) totaled approximately $9.1 million and $7.1 million,
respectively.

The Company is required to make sinking fund payments on its 10 1/2%  debentures
and  has  interest,   preferred   dividend  and  operating   expense  cash  flow
requirements.  The  Company  anticipates  that these  working  capital  and debt
service requirements will be met from permitted payments from J.M. Ney, sales of
or additional leveraging of investments, or from other sources of income.

DISCLOSURE OF YEAR 2000 ISSUES

The "Year 2000 problem" arose because many existing  computer  programs use only
the last two digits to refer to a year. This does not allow programs to properly
recognize  a year that  begins with "20"  instead of "19",  and could  result in
program failures or erroneous results.

The Company and J.M. Ney have evaluated all known exposures to applications
with embedded chips,  including those that are  informational and operational in
nature,  which do not properly recognize all four digits of dates. To date, most
of the financial  and  operational  effort has been  expended in upgrading  J.M.
Ney's enterprise  resource  planning (ERP) system,  which is used to control its
operational  activities  from order entry  through  manufacturing  to  financial
reporting.  Prior to the current  fiscal year,  approximately  $128,000 had been
expended on this project,  while  identifiable costs expended during the current
fiscal year totals $479,000.  As of the date of this filing,  this major project
     is  substantially   complete.   Additional   applications,   which  require
modification or
replacement to ensure Year 2000 compliance have been identified, and are planned
to be  completed  by no  later  than  December  31,  1999.  The  costs  of these
additional upgrades are estimated to total approximately $200,000.

Based upon a comprehensive  review of exposure areas, which included among other
steps,  analyses of the  Company's  and J.M.  Ney's  interdependence  on outside
computer  applications  from  vendors and  customers,  the Company and J.M.  Ney
believe that manufacturing and other operational and  administrative  activities
will not be at significant  risk due to the Year 2000 problem as long as outside
sources of power and communications remain operational.

FORWARD LOOKING STATEMENTS
This  report  contains  forward-looking  statements,  estimates  or plans  which
involve known and unknown risks, uncertainties and other factors which may cause
the actual results,  performance or achievements of the Company to be materially
different  from results or plans  expressed  or implied by such  forward-looking
statements.  Among the risk and  uncertainty  is the  performance of the world's
equity  markets,  principally  the U.S.  stock  market,  precious  metal prices,
general economic conditions, including demand for automobiles, and the degree of
success of identifying all critical Year 2000 exposures.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         Not required.




<PAGE>


Part II.  Other Information

Item 1.  Legal Proceedings

     Morton  International,  Inc. v. A.E.  Staley Mfg.  Co. et al. and  Velsicol
Chemical  Corp. v. A.E.  Staley Mfg. Co. et al.  As  previously  reported in the
Company's  Form 10-K for the year ended  February  28, 1997,  in July 1996,  two
companion  lawsuits  were  filed in the  United  States  District  Court for the
District of New Jersey, by various owners and operators of the  Ventron-Velsicol
Superfund Site (Site). The lawsuits, which were subsequently consolidated,  were
filed under the Comprehensive  Environmental Resource Compensation and Liability
Act (CERCLA),  the Resource  Conservation and Recovery Act, the New Jersey Spill
Act and New Jersey common law, alleging that the defendants (over 100 companies,
including J.M. Ney) were generators of certain wastes allegedly processed at the
site.  The lawsuits seek recovery of costs  incurred and a declaration of future
liability  for costs to be incurred by the owners and  operators in studying and
remediating the Site.

Based on preliminary  disclosure of  information  relating to the claims made by
plaintiffs and defendants,  J.M. Ney, which produced and refined precious metals
used  in  dental  amalgams,  is one of the  smaller  parties  to  have  had  any
transactions  with one of the  plaintiff's  predecessors  in interest.  However,
under both CERCLA and the New Jersey Spill Act, a party is jointly and severally
liable,  unless  there  is a basis  for  divisibility.  At this  time,  there is
insufficient  information  to determine the  appropriate  allocation of costs as
between or among the defendant  group, if liability to the generator  defendants
is ultimately proven.  Moreover,  because of the incomplete status of discovery,
the Company is unable to predict the probable  outcome of the  lawsuit,  whether
favorable or unfavorable,  and has no basis to ascertain a range of loss, should
any  occur,   with  respect  to  an  outcome  that  might  be  characterized  as
unfavorable.

The Company continues to investigate whether any liability,  which may accrue at
some  future  date,  may be  subject to  reimbursement  in whole or in part from
insurance  proceeds.  The Company  intends to continue to vigorously  defend the
lawsuit.

     James S.  Cathers and Sylvia Jean  Cathers,  his wife v. Kerr  Corporation,
Whip-Mix Corporation, The J.M. Ney Company and Dentsply Corporation, Inc.

As previously  reported in the Company's  Form 10-Q for the Quarter ended August
31, 1997,  in August  1997,  J.M. Ney was included as a defendant in an asbestos
related civil action for negligence and product  liability filed in the Court of
Common Pleas of Allegheny  County,  Pennsylvania,  in which the Plaintiffs claim
damages in excess of $30,000 (the  jurisdictional  limit) from being  exposed to
asbestos and asbestos products alleged to have been manufactured and supplied by
the  defendants,  including  Ney's  former  Dental  Division,  while  one of the
Plaintiffs  worked in a dental lab from 1960 to 1986 at an unspecified  location
in  Pittsburgh,  Pennsylvania.  The  Plaintiffs  allege  that this  exposure  to
asbestos  and  asbestos  products  caused  the  wrongful  death  of  one  of the
Plaintiffs  from cancer  (mesothelioma).  The  Plaintiffs  have not provided any
specific  allegations of facts as to which  defendants may have  manufactured or
supplied  asbestos  and asbestos  products  which are alleged to have caused the
injury.

     The Company has determined that it has insurance that potentially  covers a
substantial  portion of this claim and has called upon the insurance carriers to
provide  reimbursement  of defense costs and liability,  should any arise. As of
this date,  the  Company  has no basis to conclude  that the  litigation  may be
material to the Company's financial  condition or business.  The Company intends
to vigorously defend the lawsuit.


CAE US Inc. 

     On October 28, 1998, CAE (U.S.) Inc. ("CAE"),  purchaser under that certain
Asset  Purchase  Agreement  dated February 28, 1998 (the  "Agreement")  with Ney
Technology,  Inc. f/k/a Ney Ultrasonics,  Inc.  ("Ultrasonics") (the "Company"),
instituted suit in the Connecticut Superior Court. Claiming to rely on the terms
of the  Agreement,  the suit seeks to compel  arbitration  of the purchase price
payable  by CAE to  Ultrasonics  thereunder.  While  the suit  does not seek the
recovery  of  monetary  damages,  it  is a  prelude  to  the  institution  of an
arbitration  by CAE in order to recover a claimed  overpayment  of the  purchase
price of approximately $770,000.

     The Company is vigorously defending CAE's efforts to compel arbitration and
has filed its own suit against CAE seeking an  adjustment  to the said  purchase
price in the amount of approximately $1,100,000. Moreover, should arbitration be
ordered  by the court,  the  Company  will  oppose  CAE's  efforts to adjust the
purchase price under the terms of the Agreement and will,  instead,  assert that
its own methodology for adjustment of the purchase price is proper.

     At this point in time, it is impossible to assess the  likelihood  that the
Company  will be  successful  in its  defense of this  action and any  resulting
arbitration.


<PAGE>


Item 4.  Submission of Maters to a Vote of Security Holders.

There were no votes submitted to security  holders during the three months ended
November 30, 1998.

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits required by Item 601 of Regulation S-K:

     Exhibit               Description

     Exhibit 11            Statement Re:  Computation of Per Share Earnings

     Exhibit 27            Financial Data Schedule.

     Exhibit 27.1          Restated  Financial  Data  Schedule for the Nine
                           Months Ended November 30, 1997.

No reports on Form 8-K were filed during the quarter ended November 30, 1998.


<PAGE>


         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.


ANDERSEN GROUP, INC.

By:      /s/ Oliver R. Grace, Jr.
         Oliver R. Grace, Jr.
         President and Chief Executive Officer

Date:    January 11, 1999



By:      /s/ Andrew M. O'Shea
         Andrew M. O'Shea
         Chief Financial Officer
         The J.M. Ney Company
         (Principal Financial Officer of the Company)

Date:    January 11, 1999