SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

                                  FORM 10-Q/A

                         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 December 31, 1998.

( )      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.)

                                                    22 Old Country Road
                                                  Quogue, New York 11959
                                                      (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 December 31, 1998

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


<PAGE>

                                               The Harmat Organization, Inc.



                                                    Index to Form 10-Q





                                                                  Page
                   Item                                           Number


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements:

         Consolidated Balance Sheets -
         December 31, 1998 and December 31, 1997                 1

         Consolidated Statements of Operations -
         Three months ended December 31, 1998
           and December 31, 1997                                 2

         Consolidated Statements of Stockholders Equity
      for September 30, 1997 and December 31, 1997               3


         Consolidated Statements of Cash Flows -                              
         Three months ended December 31, 1998
           and December 31, 1997                                 4-5       

         Notes to Consolidated Financial Statements              6-13

         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








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                                                 THE HARMAT ORGANIZATION, INC. AND SUBSIDIARIES Page 1
                                                  CONSOLIDATED BALANCE SHEET
                                                       December 31, 1998

                                                            Assets
Current Assets
     Cash and Cash Equivalents                                  $   295,717
     Marketable Securities                                        2,052,969
 .    Accounts Receivable                                             73,948
     Loan Receivable - Stockholder                                  220,333
     Loans Receivable - Other                                       139,250
     Other Receivables - Related Parties                            246,039                                       
      Land and Construction Costs                                 1,101,931
     Prepaid Expenses                                                21,390
                                                                   ---------
         Total Current Assets                                                                      $ 4,151,577
Property and Equipment - Net                                                                           731,161

Other Assets
     Investment in Partnership                                       76,449
     Land Deposits                                                   85,000
                                                                     --------
         Total Other Assets                                                                            161,449
---------
                  Total Assets                                                                      $5,044,187
                                                                                                     =========
                                             Liabilities and Stockholders' Equity
Current Liabilities
     Current Portion of Notes and Mortgages Payable               $ 328,532
     Accounts Payable and Accrued Expenses                          110,838
     Accrued Interest                                                 9,262
     Customer and Security Deposits                                 405,071
                                                                    --------
         Total Current Liabilities                                                                   $ 853,703
Other Liabilities
     Notes and Mortgages Payable -
       Net of Current Maturities                                                                       588,009

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

     Accumulated Deficit                                        (1,875,460)
     Other Comprehensive Income                                  1,221,719
                                                                 ---------
         Total Stockholders' Equity                                                                  3,602,475
                                                                                                    ---------
                  Total Liabilities and Stockholders' Equity                                       $ 5,044,187
                                                                                                    =========


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                             THE HARMAT ORGANIZATION, INC. AND SUBSIDIARIES                   Page 2
                               CONSOLIDATED STATEMENTS OF OPERATIONS
                           Three Months Ended December 31, 1998 and 1997

                                                 

                                                                      1998           1997

Revenues
     Sale of Developed and Undeveloped Real Estate              $         -       $ 3,449,505
     Rental Income                                                   10,830            46,099
                                                                  ---------        ---------

Total Revenues                                                       10,830        3,495,604

Cost of Sales and Direct Operating Expenses                             -          2,764,723
                                                                 ---------         --------

Gross Profit                                                        10,830           730,881

Selling, General and Administrative Expenses                       220,693          317,798
                                                                 ---------        ---------
Income (Loss) From Operations                                     (209,863)          413,083
                                                                  ---------        ---------
Other Income (Expense)
     Miscellaneous Income                                             568                -
     Loss on Sale of Marketable Securities                         (1,537)               -
     Interest and Dividend Income                                  22,493            9,168
     Interest Expense                                             (20,252)         (35,383)
                                                                 ---------        ---------

Total Other Income (Expense)                                        1,272         (26,215)
                                                                 ---------        ---------

Income (Loss) Before Income Taxes                                (208,591)        386,868

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

Net Income (Loss)                                               $ (208,591)      $  386,868
                                                                 =========         =========

Earnings (Loss) per Share                                       $    (.08)       $     0.15
                                                                 =========        =========

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



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                        THE HARMAT ORGANIZATION, INC. AND SUBSIDIARIES                     Page 3
                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
                        EQUITY Three Months Ended  December 31, 1998 and 1997

                                                                    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                             -           -                -          386,868          -               386,868
                                            ----------   ----------      ---------     ----------       ----------        ---------

Balance - December 31, 1997                 2,612,500      $2,612       $4,253,604    $(1,140,451)     $   -            $3,115,765
                                           ==========   ==========     =========       =======         =========       =========


                                                                    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                           -          -                -           (208,591)            -              (208,591)

Other Comprehensive Income

Unrealized Gain on Marketable Securities      -          -                -                -          1,221,719          1,221,719
                                          ---------  ----------       ----------        ----------    ----------        ----------

Balance - December 31, 1998              2,612,500    $2,612       $4,253,604     $ (1,875,460)     $ 1,221,719         $3,602,475
                                         =========    =======      =========         =========        =========         =========



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                             THE HARMAT ORGANIZATION, INC. AND SUBSIDARIES                     Page 4
                                 CONSOLIDATED   STATEMENTS  OF  CASH
                         FLOWS Three Months  Ended  December 31, 1998 and 1997

                                                                                      1998            1997

Operating Activities:
     Net Income   (Loss)                                                          $ (208,591)        $ 386,868
                                                                                   ---------        ---------
     Adjustments to Reconcile Net Income to Net Cash
      Provided (Used) by Operating Activities:
     Depreciation and Amortization                                                      7,929            8,864
     Loss on Sale of Marketable Securities                                              1,537                -


Changes in Assets and Liabilities:
     Marketable Securities                                                                                 (2)
     Accounts Receivable                                                             (12,036)          (6,310)
     Land and Construction Costs                                                     (72,110)       2,089,664
     Prepaid Expenses                                                                   7,159          22,480
     Accounts Payable and Accrued Expenses                                           (57,926)        (321,628)
     Refundable Deposits                                                                  -            45,749
     Customer Deposits                                                                 (800)          430,563
                                                                                  ----------        ---------

         Total Adjustments                                                         (126,247)         2,269,380
                                                                                   ---------        ---------

Net Cash Provided (Used) by Operating Activities                                    (334,838)        2,656,248
                                                                                   ---------       ----------

Investing Activities:
     Advances from/to Affiliates and Related Parties                                    8,257           10,971
     Loans Receivable - Other                                                          25,000        (393,000)
     Acquisition of Land, Property and Equipment                                      (4,348)                -
     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                                               (752,697)         (407,029)
                                                                                 ----------        ---------

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                            THE HARMAT ORGANIZATION, INC. AND SUBSIDIARIES                    Page 5
                            CONSOLIDATED   STATEMENTS  OF  CASH FLOWS
                             Three Months  Ended  December 31, 1998 and 1997

                                                                                         1998              1997

Financing Activities:
     Repayments of Notes Payable - Related Party                                            -                -
     Repayments of Notes and Mortgages Payable                                        (4,229)      (1,499,940)
     Proceeds of Mortgage Payable                                                           -                -
     Repayments of Other Notes Payable & Loans Payable                                      -                -
     Loan to Stockholder                                                              (2,083)                -
                                                                                   ---------        ---------
Net Cash Used By Financing Activities                                                 (6,312)      (1,499,940)
                                                                                   ---------        ---------

Net Increase (Decrease) in Cash and Cash Equivalents                               (1,093,847)         749,279

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

Cash and Cash Equivalents - End of Period                                           $ 295,717         $943,275
                                                                                   =========        =========
Supplemental Disclosures of Cash Flow Information:
     Cash Paid During the Periods for:
     Interest                                                                        $ 24,193         $ 35,383
                                                                                   =========        =========
     Income Taxes                                                                $         -         $   5,070
                                                                                   =========        =========
<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  December  31, 1998 and 1997  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.



                            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  $295,717 at December 31, 1998. Cash includes $58,816 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 $295,717 at December 31, 1998. 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 December 31, 1998, 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 December 31, 1998 such land and
construction  costs  totaled  $1,101,931.  Customer  deposits on such  contracts
totaled $404,271 at December 31, 1998.

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
December 31, 1998 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 three months ended December 31, 1998 and 1997 was $1,221,719 and
$(3,206) respectively.


NOTE D   PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31, 1998:


                  Land                                             $176,736
                  Building and Building Improvements698,887
                  Furniture and Office Equipment                     70,478
                                                                 ---------

                  Total                                             946,101
                  Less:  Accumulated Depreciation                 (214,940)
                                                                 ---------
                  Property and Equipment - Net                    $ 731,161
                                                                 =========

Depreciation  expense  for the year ended  December  31,  1998 and 1997  totaled
$7,929 and $8,864 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 December 31, 1998 was $220,333.

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 is in default as of December 31, 1998, but was granted
a one year extension (see Note H). 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 share or an aggregate of $3,150,000.  On December 31, 1998, the market price
was  $11.125  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 December 31, 1998 was $8,000 and is
due on January 15, 1999.
<PAGE>

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





NOTE F   NOTES AND MORTGAGES PAYABLE

At  December  31,  1998,  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.                                                               $ 485,047

         Mortgage  payable  dated  January 17, 1991 and amended June 14, 1994 in
         the  original  amount of $180,000  payable in monthly  installments  of
         $1,934 including interest through February 1, 2006. Interest is payable
         at an adjustable interest rate (10.125% at September 30, 1998) which is
         determined  annually.  The  mortgage  is secured  by land and  building
         having an original cost of
         approximately $200,000.                                                                       117,006

         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. 311,884

         Other Notes and Mortgages                                                                       2,604
                                                                                                   ----------
         Total Notes and Mortgages Payable                                                             916,541
         Less:  Current Portion                                                                      (328,532)
                                                                                                    ---------

         Total Long Term Notes and Mortgages Payable                                               $  588,009
                                                                                                    =========

Annual maturities of notes and mortgages payable are as follows:

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

                  1999                                                                               $ 328,532
                  2000                                                                                  21,146
                  2001                                                                                  23,221
                  2002                                                                                  25,507
                  2003                                                                                  28,017
             Thereafter                                                                                490,118
                                                                                                    ---------

            Total Notes and Mortgages Payable                                                        $ 916,541
                                                                                                    =========

During the period ended December 31, 1998, 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 December 31,
1998,  and the changes  during the period ending  December 31, 1998 is presented
below:
                                                                                Weighted-Averaged
         Fixed Options                                    Shares                 Exercise Price 
         October 1, 1998                                 360,000                           $    .35
         Granted                                               0                                  -
         Exercised                                             0                                  -
         Forfeited                                       (10,000)                                 -
                                                         ---------                          ---------
         December 31, 1998                               350,000                           $    .35
                                                         =========                           ========
         Exercisable at December 31, 1998                350,000
         Weighted-average fair value of
         options granted during the year               $         -

The following table summarizes information about fixed stock options outstanding
at December 31, 1998.
                                        Outstanding Options
                               -------------------------------------------

                            Number        Weighted Average                 Weighted -
Outstanding                 Outstanding    Remaining                        Average
Exercise Price             12/31/98        Contractual Life             Exercise Price

     $  .35                350,000          3.5 Years                     $  .35

                                                      Exercisable Options
                                                 -----------------------------
                                  Number
                                  Exercisable                         Weighted Average
                                  12/31/98                                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,  Inc.
in the amount of $131,250 plus accrued interest until December 15, 1999, or upon
Axxess, Inc. 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 THREE MONTHS ENDED DECEMBER 31, 1998 COMPARED WITH THE

                                            THREE MONTHS ENDED DECEMBER 31, 1997



Total  revenues  for the three  months  ended  December  31,  1998 were  $10,830
compared to revenues of $3,495,604 for the three months ended December 31, 1997,
an decrease of approximately $3,484,774 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 one home and the sale of the remaining parcels in the Jagger Woods
Development  resulted in  revenues  of  $3,449,505  for the three  months  ended
December  31, 1997.  For the three months ended  December 31, 1998 there were no
sales of developed or undeveloped real estate.

Rental Income

Rental  based  properties  resulted  in rental  income of $10,830  for the three
months ended  December 31, 1998. For the three months ended in December 31, 1997
the Company  generated  rental income of $32,533.  Rental income is decreased by
$35,269.  Quick Storage of Quogue and Self Storage  Facility,  generated  rental
income for the three months ended December 31, 1997 $26,859,  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 (20%) percent  during the three months ended  December 31,
1997,  compared  to no percent in the three  months  ended  December  31,  1998,
because  there were no sales  reported.  The gross profit margin of December 31,
1999 resulted from the sale of one home and Jagger Woods Development.

Cost of sale for the three months  ended  December 31, 1998 was $779 as compared
to $27,747 for the three months ended  December 31, 1997.  The high cost of sale
at December 31, 1997 was due primarily to the sale of Jagger Woods Development.


                                                         - 4 -

<PAGE>



Selling and general  administration  expenses were $220,693 for the three months
ended  December  31, 1998 as compared to  $317,798  for the three  months  ended
December 31, 1997.  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.


Gross Interest Costs

Gross  interest  costs were $20,252 for the three months ended December 31, 1998
compared to $35,383 for the three months ended  December 31, 1997. The reduction
in interest is due to the Company being able to satisfy  various of its existing
debts and  obligations  in December 1997 as a result of the sale of Jagger Woods
Development.

                                                         - 5 -

<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 three months ended  December 31, 1998,  the Company had negative cash
flows from  operating  activities  of  $334,838  versus a positive  cash flow of
$2,656,248  for the three months ended December 31, 1997.  Investing  activities
used cash of $752,697 for the three months ended  December 31, 1998 and $407,029
for the three months ended December 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 $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 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 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 December 31, 1998, the Company has two full-time
employees.  Mr. Schilowitz and an administrative assistant.


Item 2.           Properties

         At December 31, 1998,  the  Company's  wholly-owned  subsidiaries  hold
title to certain real property.  Such  properties  include (i) The Polo Grounds,
one six bedroom home in Westhampton  Beach,  New York and the other an 8 bedroom
house  in  Southampton,   New  York  both  rented  on  an  annual  basis;  (iii)
agricultural  reserve  with large barn from which the  Company  receives  rental
income; (iv) the 4,000 square foot premises in Quogue, NY, housing the Company's
executive offices and corporate sales office (the front of the building has been
rented to an unaffiliated  company and the property is under contract for sale);
(v) Pond Side  Development  in  Westhampton,  NY which  consists  of 30 acres of
undeveloped land; (vi) single family home on Beach Lane,  Westhampton Beach, New
York. All properties are for sale.


                                                         - 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 -
</TABLE>

<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