SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

(Mark One)
(X)          Quarterly report pursuant to section 13 or 15 (d) of the Securities
             Exchange  Act of 1934,  for the  quarterly  period  ended March 31,
             1999.

( )          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

                                         THE HARMAT ORGANIZATION, INC.
                         (Exact name of registrant as specified in its charter)

Delaware                                                      11-2780723
(State of Incorporation)                               (I.R.S. Employer ID No.)

     P.O. Box 549 Speonk,  New York 11972 (516)  653-3303 
 (Address of Principal Executive  Offices and Principal Place of
   Business and Telephone Number) (Former name, former address and former fiscal
   year, if changed since last report)

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        

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  Issuer's  classes of
common stock, as of the latest practicable date.

            Class                    Outstanding at March 31, 1999

Common Stock, $.001 par value                          2,612,500 shares


<PAGE>
                          The Harmat Organization, Inc.



                                                     Index to Form 10-Q

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                                                                                                     Page
                   Item                                                                                              Number


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements:

             Consolidated Balance Sheets -
             March 31, 1999 and March 31, 1998                                                                            3

             Consolidated Statements of Operations -
             Six months ended March 31, 1999
               and March 31, 1998                                                                                         4

             Consolidated Statements of Stockholders Equity
             for March 31, 1998 and March 31, 1999                                                                               5


             Consolidated Statements of Cash Flows -                                                                     6-7
             Six months ended March 31, 1999
               and March 31, 1998

             Notes to Consolidated Financial Statements                                                                 8-15

             Management's Discussion and Analysis of Financial
              Condition and Results of Operations                                                                      16-17

PART II.     OTHER INFORMATION

             Item 1.  Legal Proceedings                                                                                  18
             Item 6.  Exhibits and Reports on Form 8-K                                                                   19

Signatures                                                                                                               20


                                                          - 2 -

<PAGE>


                          THE HARMAT ORGANIZATION, INC. AND SUBSIDIARIES                     Page 1
                           CONSOLIDATED BALANCE SHEET
                                 March 31, 1999

                                     Assets
Current Assets
     Cash and Cash Equivalents                                $    182,155
     Marketable Securities                                       2,721,250
 .    Accounts Receivable                                            89,830
     Loan Receivable - Stockholder                                 235,828
     Loans Receivable - Other                                      139,250
     Other Receivables - Related Parties                           246,039                                        Land and
Construction Costs                                               1,271,333
     Prepaid Expenses                                               29,433
                                                                  ---------
         Total Current Assets                                                     $ 4,915,118
Property and Equipment - Net                                                          441,373
----------------------------

Other Assets
     Investment in Partnership                                       76,449
     Land Deposits                                                   85,000
                                                                   ---------
         Total Other Assets                                                          161,449
                                                                                   ---------
                  Total Assets                                                    $5,517,940
                                                                                   =========
                      Liabilities and Stockholders' Equity
Current Liabilities
     Accounts Payable and Accrued Expenses                           $ 112,121
     Accrued Interest                                                   11,728
     Customer and Security Deposits                                    487,199
     Current Portion of Mortgages Payable                               12,416
                                                                     ---------
         Total Current Liabilities                                                $ 623,464
Other Liabilities
     Notes and Mortgages Payable -
       Net of Current Maturities                                                    775,864

Commitments & Contingencies

Stockholders' Equity
     Preferred Stock - $.001 Par Value, 5,000,000 Shares
     Authorized, No Shares Issued and Outstanding
     Common Stock - $.001 par value, 25,000,000 Shares
     Authorized, 2,612,500 Shares Issued and Outstanding              2,612

     Additional Paid-in Capital - Common Stock                    4,253,604

     Retained Earnings                                             (137,604)
                                                                   ---------
         Total Stockholders' Equity                                                4,118,612
                                                                                   ---------

                  Total Liabilities and Stockholders' Equity                     $ 5,517,940
                                                                                   =========


<PAGE>



                             THE HARMAT ORGANIZATION, INC. AND SUBSIDIARIES                   Page 2
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                    March 31,



                                                                  Six Months       Six Months
                                                                   Ended             Ended
                                                                  March 31,        March 31,
                                                                    1999             1998


Revenues
     Sale of Developed and Undeveloped Real Estate              $         -       $ 4,063,641
     Rental Income                                                   18,951            90,712
                                                                   ---------        ---------

Total Revenues                                                       18,951        4,154,353

Cost of Sales and Direct Operating Expenses                               0        3,191,710
                                                                  ---------         --------

Gross Profit                                                         18,951          962,643

Selling, General and Administrative Expenses                        423,284          611,073
                                                                   ---------        ---------
Income (Loss) From Operations                                      (404,333)          351,570
                                                                   ---------        ---------
Other Income (Expense)
     Gain on Sale of Real Estate                                      4,429                -
     Miscellaneous Income                                            21,725                -
     Gain (Loss) on Sale of Marketable Securities                    (1,539)          37,227
     Interest and Dividend Income                                    41,914           35,814
     Interest Expense                                               (22,931)         (84,853)
                                                                   ---------        ---------

Total Other Income (Expense)                                         43,598         (11,812)
                                                                   ---------        ---------

Income (Loss) Before Income Taxes                                  (360,735)          339,758

Income Taxes                                                            -                -
                                                                   ---------        ---------

Net Income (Loss)                                               $ (360,735)        $  339,758
                                                                 =========          =========

Earnings (Loss) per Share                                  $          (.14)     $        0.13
                                                                  =========        =========

Weighted Average Number of Shares                                 2,612,500         2,575,596
                                                                  =========        =========



<PAGE>



                   THE HARMAT ORGANIZATION, INC. AND SUBSIDIARIES                     Page 3
                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


                                                                    Common Stock

                                                                    Additional                     Other               Total
                                             Number      Amount     Paid - In    Accumulated     Comprehensive       Stockholders'
                                             of Shares  (at par)    Capital       (Deficit)        Income               Equity  

Balance - September 30, 1997                2,612,500    $2,612   $4,253,604      $(1,527,319)    $      -           $2,728,897

Net Income For Period                              -         -            -           339,759                           339,759

Balance - March 31, 1998                    2,612,500    $2,612   $4,253,604      $(1,187,560)    $      -           $3,068,656
                                           ==========  ==========  =========       =========         =========       =========


                                                                    Common Stock

                                                                     Additional                      Other              Total
                                            Number         Amount    Paid - In    Accumulated       Comprehensive   Stockholders'
                                            of Shares     (at par)   Capital       (Deficit)          Income           Equity 

Balance - September 30, 1998                2,612,500      $2,612    $4,253,604   $(1,666,869)      $     -          $2,589,347

Net Loss For Period                           -                 -            -       (360,735)                         (360,735)

Other Comprehensive Income

Unrealized Gain on Marketable Securities      -                 -            -              -         1,890,000        1,890,000
                                           ----------     ----------   ---------      ---------      ----------        ----------

Balance - March 31, 1999                    2,612,500      $2,612    $4,253,604    $ (2,027,604)       $ 1,890,000       $4,118,612
                                           ==========     ========    =========       =========          =========       =========



<PAGE>



                             THE HARMAT ORGANIZATION, INC. AND SUBSIDARIES                     Page 4
                                CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                   Six Months       Six Months
                                                                                     Ended            Ended
                                                                                   March 31,         March 31,
                                                                                    1999               1998 
                                                                                 -------------    -------------



Operating Activities:
     Net Income   (Loss)                                                          $ (360,735)        $ 339,758
                                                                                   ---------        ---------
     Adjustments to Reconcile Net Income to Net Cash
      Provided (Used) by Operating Activities:
     Depreciation and Amortization                                                     15,143           10,968
     Loss on Sale of Marketable Securities                                              1,539                -


Changes in Assets and Liabilities:
     Marketable Securities                                                                  -                -
     Accounts Receivable                                                             (27,918)                -
     Land and Construction Costs                                                    (241,512)                - 
     Prepaid Expenses                                                                   (884)              752
     Accounts Payable and Accrued Expenses                                           (54,177)         (301,187)
     Refundable Deposits                                                                   -            45,749
     Customer Deposits                                                                 81,328          273,624
     Contracts Receivable                                                                              (25,507)
                                                                                    ----------        ---------

         Total Adjustments                                                           (226,481)          4,399
                                                                                   ---------          ---------

     Net Cash Provided (Used) by Operating Activities                                (587,216)        344,157
                                                                                   ---------       ----------

Investing Activities:
     Advances from/to Affiliates and Related Parties                                  (9,321)         (21,867)
     Loans Receivable - Other                                                          25,000              -
     Sale of Land, Property and Equipment                                             278,224        1,771,694
     Investment in Partnership                                                              -         (50,000)
     Land Deposits                                                                          -          25,000
     Stock Warrants                                                                    43,750             -
     Purchase of Marketable Securities                                               (831,250)            -
     Sale of  Marketable Securities                                                     5,894             -
                                                                                  ----------        ---------

Net Cash Used by Investing Activities                                               (487,703)       1,724,827
                                                                                 ----------        ---------



<PAGE>



                            THE HARMAT ORGANIZATION, INC. AND SUBSIDIARIES                    Page 5
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                 Three Months     Three Months
                                                                                    Ended           Ended
                                                                                  March 31,         March 31,
                                                                                    1999             1998 
                                                                                --------------    -------------


Financing Activities:
     Repayments of Notes and Mortgages Payable                                      (132,490)        (951,013)
     Repayments of Other Notes Payable & Loans Payable                                  -            (143,000)
                                                                                   ---------        ---------

Net Cash Used By Financing Activities                                              (132,490)       (1,094,013)
                                                                                   ---------        ---------

Net Increase (Decrease) in Cash and Cash Equivalents                             (1,207,409)          974,971

Cash and Cash Equivalents - Beginning of Period                                   1,389,564           193,996
                                                                                   ---------       ----------

Cash and Cash Equivalents - End of Period                                        $  182,155       $ 1,168,967
                                                                                   =========        =========
Supplemental Disclosures of Cash Flow Information:
     Cash Paid During the Periods for:
     Interest                                                                    $   22,931       $    84,853
                                                                                   =========        =========
     Income Taxes                                                                $      -         $     2,280
                                                                                   =========        =========





<PAGE>



      THE HARMAT ORGANIZATION, INC. AND SUBSIDIARIES                   Page 6
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A   PRINCIPLES OF CONSOLIDATION AND BUSINESS

In November 1995, The Harmat  Organization,  Inc. (Delaware) (the "Company") was
formed  for the  purpose  of  offering  securities  to the  general  public  and
1,750,000  shares of common stock were issued to the  individual  stockholder of
the Harmat Companies. On March 1, 1996, the individual stockholder of the Harmat
Companies   transferred  his  stock  in  the  Harmat  Companies  to  The  Harmat
Organization   (Delaware)   for  a  100%   Ownership   interest  in  The  Harmat
Organization, Inc. (Delaware).

The March 31, 1999 and 1998 financial  statements reflect the financial position
and  results  of  operations  of the  The  Harmat  Organization,  Inc.  and  its
subsidiaries  on a  consolidated  basis,  which  reflects the Company's  current
organizational  structure.  The Company's  policy is to consolidate all majority
owned   subsidiaries.   All  inter-company   amounts  have  been  eliminated  in
consolidation.

Parent Company and It's Nature of Business:

The Harmat Organization, Inc. - Delaware
Holding Company

Subsidiaries and Their Nature of Business:

Harmat Homes, Inc. ("Harmat Homes")
Construction of custom homes and residential and commercial  rental  properties,
in the eastern portion of Long Island, New York.

Harmat Holding Corp. ("Harmat Holding")
Subdivision and  development of undeveloped  land in the eastern portion of Long
Island, New York.

Northside Woods, Inc. ("Northside")
Rental of residential property in the eastern portion of Long Island, New York.

Harmat Capital Corp. ("Harmat Capital")
Rental of residential property in the eastern portion of Long Island, New York.

Harmat Management, Inc.
Limited  partner  in real  estate  partnership  in the  eastern  portion of Long
Island, New York.

Quick Storage, Inc.
Short-term  rental of storage  facilities in the eastern portion of Long Island,
New York. Asset sold in July 1998.

Harmat Hospitality, Inc.
Purchase and operate resort properties.

Interest In Limited Partnership
The principal  stockholder of the Company is a general  partner in a partnership
in which the Company has limited partnership interests.





<PAGE>



   THE HARMAT ORGANIZATION, INC. AND SUBSIDIARIES                    Page 7
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE B   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity of
three  months  or  less  to  be  cash  equivalents.   Cash  equivalents  totaled
approximately  $182,155 at March 31, 1999.  Cash  includes  $59,482 set aside to
satisfy a Suffolk County bonding requirement.

Concentration of Credit Risk
Financial instruments which potentially subject the Company to concentrations of
credit risk are cash and cash equivalents.  The Company places its cash and cash
equivalents  with high  credit  quality  financial  institutions.  The amount of
deposit in any one institution that exceeds  federally insured limits is subject
to credit risk.  Such amount was  approximately  $86,946 at March 31, 1999.  The
Company believes no significant concentration of credit risk exists with respect
to these cash equivalents.

Marketable Securities
The Company  accounts  for its  investments  pursuant to  Statement of Financial
Accounting  Standards ("SFAS") No. 115,  "Accounting for Certain  Investments in
Debt and Equity Securities". SFAS No. 115 addresses the accounting and reporting
for investments in equity securities that have readily  determinable fair values
and  for  all  investments  in  debt  securities.  Those  investments  are to be
classified  into  the  following   three   categories:   held-to-maturity   debt
securities; trade securities; and available-for-sale securities.

Management determines the appropriate  classification of its investments in debt
and equity securities at the time of purchase and reevaluates such determination
at each balance  sheet date. At March 31, 1999,  all of the Company  investments
were  classified  as  available  for sale  securities.  Trading  securities  are
securities  bought and held  principally  for the purpose of selling them in the
near term and are  reported  at fair  value,  with  unrealized  gains and losses
included in operations for the current year.  Available-for-sale  securities are
investments not classified as Trading  Securities.  Thus,  unrealized  gains and
losses for available-for-sale securities are excluded from earnings and reported
as a net amount in a separate  component of shareholders  equity until realized.
The Company  primarily  uses the  specific  identification  method for gains and
losses on the sales of marketable securities (see Note C).

Property and Equipment and Depreciation
Property and  equipment  are stated at cost.  Depreciation  is computed over the
estimated  useful  lives of the  assets,  using  the  straight-line  method  for
buildings and building  improvements  and accelerated  methods for furniture and
equipment, as follows:

                  Building and Building Improvements         10 to 40 Years
                  Furniture and Equipment                      5 to 7 Years

Earnings (Loss) Per Share
Earnings (loss) per share are computed by dividing the net income (loss) for the
year by the weighted average number of common shares outstanding.  Stock options
and warrants are assumed converted to stock, when dilutive.

Use of Estimates
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.


<PAGE>



                             THE HARMAT ORGANIZATION, INC. AND SUBSIDIARIES                   Page 8
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE B   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


Land Development Costs
Costs that clearly relate to land development  projects are  capitalized.  Costs
are  allocated  to project  components  by the  specific  identification  method
whenever  possible.  Otherwise,  acquisition  costs are allocated based on their
relative  fair value before  development,  and  development  costs are allocated
based on their  relative  sales  value.  Interest  costs are  capitalized  while
development is in progress.

Revenue Recognition
The Company  recognizes  revenue from the  acquisition,  development and sale of
land, and construction and sale of houses on such land. Pursuant to the terms of
such contracts and Statement of Financial  Accounting Standards ("SFAS") No. 66,
"Accounting  for Sales of Real Estate",  the Company uses the deposit  method of
accounting.  This method  provides  that all  construction  costs be recorded as
incurred and monies  received from the  purchases be recorded as deposits  until
the  purchase  contracts  close at which time all revenue  costs and profits are
recognized.

The Company  classifies all land and construction  costs that are expected to be
completed  within one year as  current  asset.  At March 31,  1999 such land and
construction  costs  totaled  $1,271,333.  Customer  deposits on such  contracts
totaled $487,199 at March 31, 1999.

Rental income is  recognized as it is earned  pursuant to the term of each lease
on a straight-line  basis. Leases generally have an initial or remaining term of
one year or less.


Income Taxes
Under  ("SFAS")  No. 109,  "Accounting  for Income Tax",  deferred  income taxes
reflect the net tax effects of (a)  temporary  differences  between the carrying
amounts of assets and  liabilities  for  financial  reporting  purposes  and the
amounts used for income tax purposes, and (b) operating loss carryforwards.  The
tax effects of significant  items comprising the Company's  deferred taxes as of
March 31, 1999 are as follows:

                  Deferred Tax Assets:
                    Federal and State Net Operating Loss Carryforwards             $  589,000
                    Less:  Valuation Allowance                                       (589,000)
                                                                                                   ---------
                  Net Deferred Tax Liability                                       $        0
                                                                                     =========

The  Company  will  have  net  operating  loss  carryforwards  of  approximately
$1,472,000  avaliable to reduce future taxes. These  carryforward  losses expire
through  the year 2013.  Pursuant to Section 382 of the  Internal  Revenue  Code
regarding substantial changes in Company ownership,  utilization of these losses
may be limited.

Stock  Options and Similar  Equity  Instruments  Issued to Employees The Company
currently  accounts for its stock-based  compensation plans using the accounting
prescribed by Accounting  Principles Board Opinion No. 25,  Accounting for Stock
Issued to Employees (see Note H). Since the Company is not required to adopt the
fair value based recognition  provisions prescribed under Statement of Financial
Accounting  Standards No. 123, Accounting for Stock-Based  Compensation,  it has
elected  only to  comply  with  the  disclosure  requirements  set  forth in the
Statement,  which includes  disclosing pro forma net income as if the fair value
based method of accounting had been applied (See Note H).


<PAGE>



                             THE HARMAT ORGANIZATION, INC. AND SUBSIDIARIES                   Page 9
                                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE C   MARKETABLE SECURITIES

Marketable  securities  consist of investments in equity and debt  securities at
discounted market value, since they are unregistered, restricted securities. The
cost of such  securities is $831,250.  The change in the unrealized  gain (loss)
account for the year ended March 31, 1999 was $1,890,000.


NOTE D   PROPERTY AND EQUIPMENT

Property and equipment consist of the following at March 31, 1999:


                  Building and Building Improvements              $ 559,581
                  Furniture and Office Equipment                     70,478
                                                                   ---------

                  Total                                             630,059
                  Less:  Accumulated Depreciation                  (188,686)
                                                                  ---------
                  Property and Equipment - Net                    $ 441,373
                                                                  =========

Depreciation  expense for the six months  ended March 31, 1999 and 1998  totaled
$15,143 and $17,210 respectively.

NOTE E   LOANS RECEIVABLE

Stockholder
The  loan  to  Mr.  Schilowitz,  its  primary  stockholder,  is  evidenced  by a
Promissory  Note  with  simple  interest  at the  Prime  Rate  charged  by Chase
Manhattan Bank, NA. Mr. Schilowitz pledged 500,000 shares of Common Stock of the
Company  as  collateral.  The  balance  of this  loan as of March  31,  1999 was
$235,828.

Other
The Company loaned $175,000 to Axxess,  Inc., an unaffiliated  third party.  The
loan is evidenced by a $175,000  Promissory Note dated August 15, 1997. The note
bears interest at 2% above prime rate and unpaid interest and principal were due
August 15, 1998. The note was granted a one year extension. Axxess, Inc. pledged
600,000  shares of its common stock as  collateral  and  authorized  warrants to
purchase its common  stock for a price of $.25 per share (as  amended)  expiring
August 14, 2000. As of December 15, 1998 the Company notified Axxess,  Inc. that
it was exercising its warrants to purchase 175,000 shares of Axxess, Inc. for an
aggregate  subscription  price  of  $43,750;  with a  current  market  price  of
approximately $18 per a share or an aggregate of $3,150,000.  On March 31, 1999,
the market price was $17 per share.  A total of $43,750 was applied  against the
loan in exchange for the exercise of stock warrants.

The Company made a $28,000  non-interest  bearing loan to an unaffiliated  third
party in October  1997.  The  balance due as of March 31, 1999 was $8,000 and is
due on demand.



<PAGE>



                            THE HARMAT ORGANIZATION, INC. AND SUBSIDIARIES                  Page 10
                             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE F   NOTES AND MORTGAGES PAYABLE

At March 31, 1999, the notes and mortgages payable consisted of the following:

         Two mortgages payable, dated August 19, 1996, in the original amount of
         $250,000 each, payable in monthly  installments of $1,971 each, bearing
         interest at 8.25% and maturing on September 1, 2021. The mortgages are
         secured by rental properties.                                                               $ 483,936

         Construction  loan  dated  February  1998,  in the  original  amount of
         $465,000  payable  monthly with  interest only at 9.75% until June 1999
         when the principal and unpaid interest is due. The loan is secured by a
         building lot on

         Beach Lane, West Hampton.                                                                    304,344
                                                                                                   ----------
         Total Notes and Mortgages Payable                                                            788,280
         Less:  Current Portion                                                                       (12,416)
                                                                                                    ---------

         Total Long Term Notes and Mortgages Payable                                                $ 775,864
                                                                                                    =========

Annual maturities of notes and mortgages payable are as follows:

         For the Period Ended
              September 30,
         -----------------

                  1999                                                                               $ 316,760
                  2000                                                                                  21,146
                  2001                                                                                  23,221
                  2002                                                                                  25,507
                  2003                                                                                  28,017
             Thereafter                                                                                373,629
                                                                                                    ---------

     Total Notes and Mortgages Payable                                                              $ 788,280
                                                                                                    =========

During the period ended March 31,  1999,  interest of $20,252 was  incurred,  of
which $7,540 has been capitalized.



<PAGE>



                           THE HARMAT ORGANIZATION, INC. AND SUBSIDIARIES                   Page 11
                            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE G   FAIR VALUE OF FINANCIAL INSTRUMENTS

Effective December 31, 1995, the Company adopted SFAS No. 107, "Disclosure about
Fair Value Financial  Instruments",  fair value of financial  investments  which
requires   disclosing  fair  value  to  the  extent  practicable  for  financial
instruments  which are recognized or unrecognized in the balance sheet. The fair
value  of  the  financial   instruments  disclosed  herein  is  not  necessarily
representative  of the amount that could be  realized  or settled,  nor does the
fair value amount consider the tax consequences of realization or settlement.

For certain financial  instruments,  including cash and cash equivalents,  trade
receivables  and payables,  short term loans,  customer  deposits and short-term
debt, it is estimated that the carrying amount  approximated  fair value because
of the near term  maturities  of such  obligations.  The fair value of long-term
debt is based on current  rates at which the  Company  could  borrow  funds with
similar remaining maturities. The carrying amount of long-term debt approximates
fair  value.  The fair  value of other  receivables  -  related  parties  is not
practicable to determine due to the nature of the transactions.

NOTE H   COMMITMENTS AND CONTINGENCIES

Legal Proceedings
The Company is involved in legal  proceedings  which are considered  routine and
incidental to its  business.  The Company  believes  that the legal  proceedings
which are  presently  pending  have no potential  liability  which would have an
adverse material effect on the financial condition,  operations or cash flows of
the Company. Due to the inherent uncertainty of the legal process, however, this
assessment may be subject to change in the near term.

Commitments and Stock Option Plans

     The Company has two  stock-based  compensation  plans,  which are described
below.  The Company  applies APB Opinion No. 25 and related  interpretations  in
accounting for its plans. Accordingly, no compensation cost has been recognized.

a)   The Plan for Incentive  Compensation of Matthew Schilowitz (the "Schilowitz
     Incentive  Plan"),  who is the  principal  stockholder,  was adopted by the
     Board of Directors and approved by the Company's sole  stockholder on March
     1, 1996 and amended August 3, 1996.  Pursuant to such plan,  Mr.  Schilowtz
     has been granted an option to purchase up to an aggregate of 500,000 shares
     of common stock at an exercise price of $5.75 per share ($.35, as amended).
     In the event the Company's earnings before taxes first equals or exceeds an
     amount  listed  below  for any  fiscal  year  ending  after the date of the
     Company's  initial  public  offering,  the shares shall be released to such
     stockholder as follows:

                           Earnings Before Taxes          Shares to Be Issued
                               $ 750,000                            250,000
                               1,500,000                            250,000

     If the above  earnings  levels are  achieved,  the Company  will  recognize
compensation  expense equal to the difference  between the fair market value and
the exercise price at the time the performance conditions are achieved. Issuance
of the shares may result in substantial  compensation  expense to the Company in
future years.




<PAGE>



                            THE HARMAT ORGANIZATION, INC. AND SUBSIDIARIES                  Page 12
                              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE H   COMMITMENTS AND CONTINGENCIES (Continued)

b)   In February 1996, the Board of Directors  adopted the 1996 Joint  Incentive
     and Non-Qualified Stock Option Plan (the "Plan") providing for the granting
     of up to 400,000 shares of the Company's common stock. In January 1997, the
     Company  granted  five year  options  under the Plan  providing  for 10,000
     shares at a price of $2.125 per share ($.35 as  amended) to four  directors
     and two key employees of the Company.  During 1998, 10,000 of these options
     were  forfeited with the  termination  of employment of a key employee.  In
     March 1998, the Company's chief executive officer and principal shareholder
     was granted  300,000 shares at an exercise price of $2.337 per share ($.35,
     as amended).

The fair value of each option grant is  estimated  on the grant date,  using the
Black-Scholes   option-pricing   model  with  the   following   weighted-average
assumptions used for grants in 1997:  dividend yield of 0%,  risk-free  interest
rate of 6.3%, expected volatility of 109%, and expected lives of 5 years for the
options.

If the  Company  had used the fair  value  based  method of  accounting  for its
employee  stock option plan, as prescribed by Statement of Financial  Accounting
No. 123, compensation cost included in the net loss for the year ended September
30, 1997 would have increased by approximately $614,000, resulting in a net loss
of $(1,576,000), net of tax, and loss per share of $(.60).

A summary of the status of the Company's stock option plan as of March 31, 1999,
and the changes during the period ending March 31, 1999 is presented below:
                                                                                        Weighted-Averaged
         Fixed Options                                    Shares                           Exercise Price 
         -------------                                    ------                          ----------------
         October 1, 1998                                  360,000                           $    .35
         Granted                                                0                                  -
         Exercised                                              0                                  -
         Forfeited                                        (10,000)                                 -
                                                          ---------                          ---------
         March 31, 1999                                   350,000                           $    .35
                                                          =========                           ========
         Exercisable at March 31, 1999                    350,000
         Weighted-average fair value of
         options granted during the year              $         -

The following table summarizes information about fixed stock options outstanding
at March 31, 1999.
                                        Outstanding Options
                               -------------------------------------------

                            Number        Weighted Average                 Weighted -
Outstanding             Outstanding          Remaining                      Average
Exercise Price             03/31/99        Contractual Life               Exercise Price

$  .35                    350,000              3.5 Years                    $  .35

                                        Exercisable Options
                                  -----------------------------
                                  Number
                                  Exercisable                         Weighted Average
                                  03/31/99                            Exercise Price

                                     350,000                          $ .35



<PAGE>



                             THE HARMAT ORGANIZATION, INC. AND SUBSIDIARIES                 Page 13
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE H   COMMITMENTS AND CONTINGENCIES (Continued)


Employment Agreement
On April 1, 1996, the Company entered into a five year employment agreement with
the president and chief executive officer,  who is also the Company's  principal
stockholder,  effective  September  1996,  for a base  salary of  $105,000  with
increments  of $50,000  each year  thereafter.  In  addition,  the officer  will
receive a bonus of 5% of pre tax  annual  earnings  and is  granted  options  to
purchase up to an aggregate of 500,000 shares of the Company's  common stock for
ten years, exercisable at $1.125 ($.35 as amended) per share with rights vesting
upon attainment of certain earnings levels (see above). During 1998, Mr.
Schilowitz received $24,512 as additional compensation.

Consulting Agreement
In February 1998, the Company entered into a one year consulting  agreement with
Spencer Trask to advise the Company on financial  matters in connection with the
operation  of the business  including  acquisitions,  mergers and other  similar
business  combinations.  The  Company  paid  Spencer  Trask an  initial  $10,000
retainer fee and is required to pay an additional $3,500 per month. In addition,
Spencer Trask is to receive a transaction fee for any  transactions  consummated
by the Company  during the term of the  agreement  or within two years after the
end of the term. In  connection  with this  agreement  Spencer Trask was granted
five year warrants to purchase  200,000 shares of the Company's  common stock at
$.35 per share.

Subsequent Event
The  Company is in  contract  to sell 15 acres of land know as the  Agricultural
Reserve to an unaffiliated third party for $350,000.  The Company will recognize
income of approximately $275,000 of this transaction.

The Company sold its  headquarters in Quogue,  New York in February,  1999 for a
gross sale of $165,000.  The Company is paying rent based on a short term lease.
The Company is  negotiating  a new lease and will relocate its  headquarters  to
Hauppauge, New York.

On  April  12,  1999  the  Company  extended  its'  Note  Receivable  to  Axxess
Communications  in the amount of $131,250 plus accrued  interest  until December
15, 1999,  or upon Axxess  raising  $5,000,000 in gross  proceeds,  whichever is
sooner.


<PAGE>

                                               The Harmat Organization, Inc.
                                           MANAGEMENT'S DISCUSSION AND ANALYSIS
                                      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                 FOR THE SIX MONTHS ENDED MARCH 31, 1999 COMPARED WITH THE
                                                  SIX MONTHS ENDED MARCH 31, 1998



Total revenues for the six months ended March 31, 1999 were $18,951  compared to
revenues of  $4,154,353  for the six months  ended March 31, 1998, a decrease of
approximately $4,135,402 due to a prior year sale of Jagger Woods Development in
1997 and a change in business direction.
(See "Liquidity and Capital Resources")

Construction Sales

Deliveries  of three homes and the sale of the  remaining  parcels in the Jagger
Woods  Development  resulted in revenues of $4,063,641  for the six months ended
March 31,  1998.  For the six months ended March 31, 1999 there were no sales of
developed or undeveloped real estate.

Rental Income

Rental based properties  resulted in rental income of $18,951 for the six months
ended  March 31,  1999.  For the six months  ended in March 31, 1998 the Company
generated rental income of $90,712. Rental income is decreased by $71,761. Quick
Storage of Quogue and Self Storage Facility, generated rental income for the six
months  ended March 31, 1998 of $55,342;  the asset was sold in July 1998,  thus
eliminating that source of rental income.

Gross Profit Margin

The  Company's  gross  profit  margin on homes  and  development  delivered  was
approximately  twenty-four (24%) percent during the three months ended March 31,
1998,  compared to no percent in the three months ended March 31, 1999,  because
there were no sales reported.

Selling and general  administration  expenses  were  $423,284 for the six months
ended March 31, 1999 as compared to $611,073  for the six months ended March 31,
1998. The decrease is due to reduced  professional fees, reduced  administrative
payroll due to the change in Company  focus.  The Company  believes that current
administrative expenses more accurately reflects ongoing costs.

                                                          - 4 -

<PAGE>




Gross Interest Costs

Gross  interest  costs were  $22,931  for the six months  ended  March 31,  1999
compared to $84,853 for the six months  ended March 31, 1998.  The  reduction in
interest is due to the  Company  being able to satisfy  various of its  existing
debts and obligations as a result of the sale of Jagger Woods  Development,  and
its office building in Quogue, New York.

                                                          - 5 -
</TABLE>

<PAGE>



                          The Harmat Organization, Inc.
                       MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                         LIQUIDITY AND CAPITAL RESOURCES


The Company's primary sources of liquidity have been the proceeds of its initial
public offering, cash generated from sales, and borrowings from its officers and
related parties.

During the six months ended March 31, 1999,  the Company had negative cash flows
from  operating  activities of $587,216  versus a positive cash flow of $344,157
for the six months  ended  March 31,  1998.  Investing  activities  used cash of
$487,703  for  the six  months  ended  March  31,  1999  and  increased  cash by
$1,724,827 for the six months ended March 31, 1998.

The Company has determined  that it is in the best interest of  shareholders  if
the Company  changes its direction away from the real estate  business since the
real estate market in the area in which the Company concentrated on changed to a
market where management felt no significant profit opportunities were meaningful
to the Company's future.

The Company commenced its transition from a real estate development company into
a more  diversified  technologically  oriented  company.  The  Company  made  an
internet-related investment in FinancialWeb.com, Inc. (formerly "Axxess, Inc."),
a publicly traded company (FWEB).  The Company currently has a $131,250 (reduced
from $175,000) loan to  FinancialWeb.com,  Inc. and 175,000 warrants to purchase
its common  shares at $0.25 per  share.  As of  December  15,  1998 the  Company
notified  FinancialWeb.com,  Inc.  that it was  exercising  the  warrants for an
aggregate subscription price of $43,750.

FinancialWeb.com,  Inc.  produces  and  manages  a family of  branded  financial
content  Internet Web sites  collectively  under the trademark  "Financial Web."
Financial Web distributes  financial  editorial content,  stock quotes,  charts,
securities  data and news to investors  via the internet free of charge with the
objective  of  earning  its  principal  revenues  from the sale of  advertising.
Beginning with the

                                                          - 6 -

<PAGE>



acquisitions of The SmallCap Investor in 1997,  Financial Web has grown from one
web site and less than 200,000 monthly  impressions to twelve separately branded
web sites with over 5 million monthly impressions, including Quote Central Rapid
Research, Stock Detective, Wall Street Guru, The SmallCap Investor, Stock Tools,
The  Bear  Tracker,   NewsVest,  Mr.  EDGAR,  Strike  Price,  YourFunds.com  and
InvesToons.  Plans for up to 8 additional  branded  sites in the  Financial  Web
family are in various stages of development.

             The Company on  November  16,  1998  completed a private  placement
investment   of   $750,000  in   newly-issued   equity   securities   of  Socket
Communications, Inc., a publicly traded company (BB.SCKT). The Socket securities
include 750,000 shares of Series D Convertible Preferred Stock, convertible into
common shares (1,307,759) at $0.5735 per share, with dividends accruing at eight
percent per annum.  In addition,  the Company was issued three year  warrants to
purchase an  additional  250,000  shares of Socket  common  stock at an exercise
price of $0.5735 per share.  Spencer Trask  Securities,  Inc. was the investment
banker for the transaction.

             Socket Communications, Inc. develops and sells connection solutions
for Windows CE-based handheld computers and other mobile computers,  including a
family of low power Battery  FriendlyTM and PC Card plug-in adapters for Windows
CE operating system from Microsoft.  Socket's products utilize the company's low
power chip technology,  making them ideal for battery-operated mobile computers.
Socket has  developed a family of handheld bar code scanner  systems that can be
attached to mobile Windows CE - based computers.  These products  integrate with
Laser Scanners from Symbol Technologies.

             On February 3, 1998 the Company entered into a corporate  financial
consulting  agreement with Spencer Trask Securities,  Inc. pursuant to which the
Company  paid to Spencer  Trask an initial  retainer  of $10,000 and a five year
warrant to purchase  200,000 shares of the Company's common stock at an exercise
price at $.35 per share.  In  addition,  the  Company  pays to  Spencer  Trask a
monthly  retainer of $3,500 as well as a cash  transaction  fee on  transactions
brought to the Company by Spencer  Trask  equal to the sum of: (a) five  percent
(5%) of the  first two  million  dollars  of the  aggregate  consideration  of a
Transaction (the "Aggregate Consideration"), (b) four percent (4%) of the second
two million dollars or portion thereof,  (c) three percent (3%) of the third two
million dollars or portion thereof,  and (d) two and one and one-half percent (2
1/2%) of the balance of the aggregate consideration;  provided, however, that if
the Transaction involves a party not introduced by Spencer Trask, the applicable
cash fee will be

                                                          - 7 -

<PAGE>



90% of the aggregate amount as calculated using the foregoing percentages.

             The Company will continue to liquidate its real estate  holdings to
raise enough cash and capital to invest in Internet/Technology related companies
and to hire employees experienced in those fileds. The Company believes it is in
the best  interest of  shareholder  value to continue  as a  technology  related
investment company.

Competition

             The business in which the Company engages and the investments  that
it makes in companies engaged in the internet and computer related businesses is
subject to intense  competition  for  investment  opportunities  as well as with
respect to the product lines offered by the companies in which  investments  are
made. In addition, the technologies relates to the product line of the companies
in which the Company  invests are subject to rapid  technological  changes which
could affect the product  lines and  therefore  the  Company's  investment.  The
Company  is not a  significant  factor  in  these  areas  and  competes  for the
investment with many other companies,  many of whom have greater  resources than
the Company.

Employees

             As of March 31, 1999, the Company has two full-time  employees.
Mr. Schilowitz and an administrative assistant.


Item 2.               Properties

             At March 31, 1999,  the Company's  wholly-owned  subsidiaries  hold
title to certain real property. Such properties include (i) One six bedroom home
in Westhampton Beach, New York; an 8 bedroom house in Southampton, New York both
rented on an annual  basis;  (ii) one building lot and an  agricultural  reserve
with large barn from which the Company  receives rental income;  (iii) Pond Side
Development in Westhampton,  NY which consists of 16 acres of undeveloped  land;
(iv) single family home on Beach Lane,  Westhampton Beach, New York.  Subsequent
to March 31, 1999, all but Pondside (which is being actively  marketed for sale)
have been sold and closed.


                                                          - 8 -

<PAGE>



                          The Harmat Organization, Inc.

PART II      OTHER INFORMATION



ITEM 6.      Exhibits and Reports on Form 8-K

                      a.  Exhibits - None

                      b.  Reports on Form 8-K - None

                                                          - 9 -

<PAGE>





                                                         SIGNATURES


             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 hereunto duly authorized.

                          The Harmat Organization, Inc.
                                                        (Registrant)



             By: /s/ Matthew C. Schilowitz
                      Chief Executive Officer




             By: /s/ David M. Hasson    
                      Chief Financial Officer



Date:  May 20, 1999