SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


                                  Form 10-QSB/A


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


For the quarter ended September 30, 1998           Commission file number 0-9964


                               BESICORP GROUP INC.
 ------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)



          New York                                          14-1588329
 ------------------------------------------------------------------------------
 (State or other jurisdiction of                      (Internal Revenue Service
  incorporation or organization)                    Employer Identification No.)



  1151 Flatbush Road, Kingston, New York                    12401
 ------------------------------------------------------------------------------

 (Address of principal executive office)                  (Zip Code)



 Issuer's Telephone Number, including area code:       (914) 336-7700


                                       N/A
  -----------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15 (d) of the  Exchange  Act 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____

Common stock outstanding as of October 30, 1998                     2,969,195

Transitional Small Business Disclosure Format        Yes______      No ___X___

<PAGE>

PART 1  -  FINANCIAL INFORMATION
Item 1 - FINANCIAL STATEMENTS

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

                      BESICORP GROUP INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                   (unaudited)
                                                                           September 30,1998           March 31,1998
                   ASSETS

Current Assets:
     Cash and cash equivalents                                           $        42,225,504      $          812,971
     Short-term investments                                                       10,994,537               1,056,778
     Investment in Niagara Mohawk Power Corporation common stock                  66,055,151                       0
     Trade accounts  receivable (less allowance for doubtful accounts 
          of $68,929 and $23,000 as of September 30, 1998
          and March 31, 1998, respectively)                                          596,973                 369,539
     Due from affiliates                                                              61,035                 870,295
     Current portion of long-term notes receivable:
        Others (includes interest of $12,298 and $8,316, respectively)               124,649                 102,053
     Inventories                                                                   1,241,658                 944,013
     Deferred income taxes                                                            93,600                  93,600
     Other current assets                                                            293,734                 485,052
                                                                                ------------            ------------     

        Total Current Assets                                                     121,686,841               4,734,301
                                                                                ------------            ------------           
Property, Plant and Equipment:
     Land and improvements                                                           237,159                 237,159
     Buildings and improvements                                                    1,914,029               1,906,953
     Machinery and equipment                                                       1,509,949               1,226,115
     Furniture and fixtures                                                          247,365                 246,701
                                                                                ------------            ------------
                                                                                   3,908,502               3,616,928

        Less accumulated depreciation and amortization                             1,906,366               1,769,212
                                                                                ------------            ------------          
        Net Property, Plant and Equipment                                          2,002,136               1,847,716
                                                                                ------------            ------------            
Other Assets:
     Patents and trademarks, less accumulated
        amortization of $1,973 and $1,691, respectively                                8,391                   7,823
     Long-term notes receivable:
        Affiliates - Net of allowance of $555,276                                          0                       0
        Others - Net of allowance of $1,944,624                                       92,181                 129,886
     Due from affiliates                                                                   0                 375,000
     Investment in partnerships                                                   17,152,393                       0
     Deferred costs                                                                        0               1,316,693
     Deferred income taxes                                                         1,634,200                 916,600
     Other assets                                                                     78,356                 116,977
                                                                                ------------             -----------

        Total Other Assets                                                        18,965,521               2,862,979
                                                                                ------------             -----------     
        TOTAL ASSETS                                                     $       142,654,498      $        9,444,996
                                                                                ============             ===========     
</TABLE>

See accompanying notes to consolidated financial statements.

                                        2



                                            BESICORP GROUP INC. AND SUBSIDIARIES

                                                   CONSOLIDATED BALANCE SHEET
                                                          (unaudited)
<TABLE>
<C>
                                                                           <S>                         <S>
                                                                           September 30,1998           March 31,1998


               LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
     Accounts payable and accrued expenses                               $         1,262,636      $        1,403,504
     Current portion of long-term debt                                               136,746                 111,367
     Current portion of accrued reserve and warranty expense                         144,769                 152,891
     Taxes other than income taxes                                                   127,630                 114,811
     Income taxes payable                                                         48,136,426                 172,246
                                                                                  ----------               ---------   
        Total Current Liabilities                                                 49,808,207               1,954,819

Investment in Partnerships                                                                 0                  33,870
Long-Term Accrued Reserve and Warranty Expenses                                      161,390                 152,402
Long-Term Debt                                                                       691,618               3,766,074
                                                                                  ----------              ----------
        Total Liabilities                                                         50,661,215               5,907,165
                                                                                  ----------              ----------              


Shareholders' Equity:
     Common stock, $.10 par value: authorized
        5,000,000 shares; issued 3,234,958 shares                                    323,495                 323,495
     Additional paid-in capital                                                    5,445,530               5,492,072
     Retained earnings (deficit)                                                  87,842,255                (615,259)
                                                                                  ----------               ----------   
                                                                                  93,611,280               5,200,308
     Less:  treasury stock at cost (265,763 shares and 278,234
        shares, respectively)                                                     (1,617,997)             (1,662,477)
                                                                                  ----------              -----------


        Total Shareholders' Equity                                                91,993,283               3,537,831
                                                                                 -----------              ------------


        TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                       $       142,654,498      $        9,444,996
                                                                                 ===========              ============

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>
<TABLE>
<C>
                                                     BESICORP GROUP INC. AND SUBSIDIARIES
                                                      CONSOLIDATED STATEMENT OF OPERATIONS
                                                                  (unaudited)


                                               <S>                         <S>            <S>                       <S>
                                                Three months ended September 30,          Six months ended September 30,
                                                 1998                      1997           1998                      1997
                                                 -----                    -----           -----                     -----
Revenues: 
Product sales                               $  1,097,897              $  878,047        $ 2,085,690            $    2,268,666
Development and management fees                        0                 180,479          2,043,334                   908,006
Other revenues                                    46,643                  86,924            233,355                   135,383
Income from partnerships                     133,161,691               2,242,994        136,704,931                 4,989,602
Interest and other investment income           2,780,122                  48,330          2,824,932                    94,914
                                             -----------               ---------       ------------                ----------
               Total Revenues                137,086,353               3,436,774        143,892,242                 8,396,571
                                             -----------               ---------       ------------                ----------

Costs and Expenses:
Cost of product sales                          1,026,294                 877,685          1,966,269                 2,073,899
Selling, general and administrative expenses   3,942,666               1,982,570          5,830,355                 4,084,795
Interest expense                                  25,715                  99,489            120,098                   196,515
Other expense                                      8,373                  10,506              8,807                     8,347
                                             -----------              ----------        -----------                ----------
               Total Costs and Expenses        5,003,048               2,970,250          7,925,529                 6,363,556
                                             -----------              ----------        -----------                ----------
Income Before Income Taxes                   132,083,305                 466,524        135,966,713                 2,033,015

Provisions for Income Taxes                   46,186,257                 161,413         47,509,199                   700,203
                                             -----------              ----------        -----------                ----------
Net Income                                 $  85,897,048          $      305,111     $   88,457,514            $    1,332,812
                                             ===========              ==========        ===========                ==========

Basic Earnings per Common Share            $       28.94          $          .10     $        29.81            $          .45
                                             ===========              ==========        ===========                ==========  

Basic Weighted Average Number of 
Shares Outstanding (in Thousands)                  2,969                   2,947              2,967                     2,941
                                              ==========               =========       ============                ==========     
Diluted Earnings per Common Share           $      28.30           $        0.10     $        29.16            $         0.44
                                              ==========               =========       ============                ==========    
Diluted Weighted Average Number of 
Shares Outstanding                                 3,036                   3,021              3,033                     3,013
                                              ==========               =========       ============                ==========    
Dividends per Common Share                   $      NONE            $       NONE      $        NONE            $         NONE
                                              ==========               =========       ============                ==========

</TABLE>

See accompanying notes to consolidated financial statements. 
                                            

<PAGE>

                      BESICORP GROUP INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (unaudited)
<TABLE>
<C>                                                                              <S>                      <S>
                                                                                   Six months ended September 30,
                                                                                  1998                       1997
                                                                                ____________             ___________
Operating Activities:
     Net income                                                          $        88,457,514       $      1,332,812
     Adjustments to reconcile net income to net
        cash provided by operating activities:
        Deferred taxes                                                              (717,600)                     0
        Amortization of discounts on notes                                            (1,098)                (1,098)
        Provision for uncollectibles                                                  45,929                      0
        Realized and unrealized (gains) losses                                    (2,253,028)                 8,881
        Depreciation and amortization                                                137,435                146,972
        Partnership income recognized                                           (136,704,931)            (4,989,602)
        Distributions from partnerships                                          119,518,668              3,791,430
        Changes in assets and liabilities:
           Short-term investments                                                 (9,565,148)               (20,549)
           Investment in Niagara Mohawk Power Corporation
              common stock                                                       (64,174,734)                     0
           Accounts and notes receivable                                             927,105              1,383,289
           Inventory                                                                (297,644)               118,172
           Accounts payable and accrued expenses                                    (140,868)              (122,361)
           Taxes payable/refundable                                               47,976,999                312,595
           Other assets and liabilities, net                                       1,546,646               (322,183)
                                                                                ____________              ___________
     Net cash provided by operating activities                                    44,755,245              1,638,358
                                                                                ____________              ___________
Financing Activities:
     Increase in borrowings                                                                0               122,000
     Repayment of borrowings                                                      (3,049,077)             (179,726)
     Purchase of common stock                                                        (53,187)             (140,077)
     Issuance of common stock                                                         51,125               128,100
                                                                                _____________            ____________
     Net cash used by financing activities                                        (3,051,139)              (69,703)
                                                                                _____________            ____________
Investing Activities:
     Acquisition of property, plant and equipment                                   (291,573)             (204,495)
                                                                                _____________            _____________
     Net cash used by investing activities                                          (291,573)             (204,495)
                                                                                _____________            _____________
Increase in Cash and Cash Equivalents                                             41,412,533             1,364,160
Cash and Cash Equivalents - Beginning                                                812,971               210,533
                                                                                ____________             _____________
Cash and Cash Equivalents - Ending                                       $        42,225,504       $     1,574,693
                                                                                ============             =============
Supplemental Cash Flow Information:
     Interest  paid                                                      $           161,955       $       188,871
     Income taxes paid                                                               268,742               386,023

     Additions to property, plant, and equipment
        which were financed and not included above                       $                 0       $        66,375

         See accompanying notes to consolidated financial statements. 

                                       5

</TABLE>

<PAGE>


                      BESICORP GROUP INC. AND SUBSIDIARIES

              UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A. The  accompanying  unaudited  financial  statements  have  been  prepared  in
accordance  with  the  generally  accepted  accounting  principles  for  interim
financial  information and with the  instructions  to Form 10-QSB.  Accordingly,
they do not include all the  information  and  footnotes  required by  generally
accepted accounting principles for complete financial statements. In the opinion
of management,  the accompanying  consolidated  financial statements contain all
adjustments (including normal recurring adjustments) necessary to present fairly
the financial  position of Besicorp Group Inc.  (together with its subsidiaries,
the  "Company")  as of September  30, 1998,  and March 31, 1998;  the results of
operations  for the three- and six-month  periods  ended  September 30, 1998 and
1997; and the statement of cash flows for the corresponding  six-month  periods.
MRA related income (as defined) has been included on the Statement of Operations
in income from  partnerships  pending a determination as to what portion of that
item should be reported as an extraordinary item.

The balance sheet at March 31, 1998 has been derived from the audited  financial
statements at that date, but does not include all the  information and footnotes
required by generally  accepted  accounting  principles  for complete  financial
statements. For further information, refer to the audited consolidated financial
statements  and  footnotes  thereto  included  in the Form  10-KSB  filed by the
Company for the year ended March 31, 1998.

B. Business and Proposed Merger
The  Company  specializes  in the  development  of  power  projects  and  energy
technologies.  Working with partners,  the Company  develops  independent  power
projects.  The  Company  also  provides  engineering,   system  design,  project
management and turnkey  installation  of photovoltaic  systems,  and fabricates,
manufactures,  markets and distributes photovoltaic products and systems through
a domestic and international network.

The Company,  BGI Acquisition LLC  ("Acquisition"),  a Wyoming limited liability
company,  and BGI Acquisition Corp. ("Merger Sub"), a New York corporation and a
wholly owned  subsidiary of  Acquisition,  entered into an Agreement and Plan of
Merger dated  November 23, 1998,  (the "Plan of  Merger"),  that  provides  that
Merger Sub will be merged with and into the Company,  with the Company being the
surviving  corporation and wholly owned by Acquisition  (the  "Merger").  If the
Merger is consummated,  the Company's  shareholders  will be entitled to receive
$34.50 (the "Merger  Consideration")  in cash for each share of Besicorp  Common
Stock,  subject,  in certain  circumstances,  to upward  adjustment  if the Base
Amount  (as  defined  in  the  Plan  of  Merger)  exceeds  $105,275,000.  It  is
anticipated  that if there is any upward  adjustment,  such  adjustment will not
exceed $4.00 per share.  There will not be a downward  adjustment  to the Merger
Consideration;  however, no assurance can be given that there will be any upward
adjustment to the Merger Consideration. Consummation of the Merger is subject to
the satisfaction of numerous  conditions,  including the adoption of the Plan of
Merger  by the  Company's  shareholders  and  the  Company's  distributing  (the
"Spin-Off") to its  shareholders on a pro rata basis all of the shares of common
stock (the "Newco  Common  Stock") of Besicorp Ltd.  ("Newco"),  a subsidiary of
Besicorp,  which at the time of the  Spin-Off  will,  among  other  things,  own
Besicorp's  photovoltaic and independent power plant development  businesses and
have assumed substantially all of the Company's liabilities. No assurance can be
given that such transactions will be consummated.

C. Basic/Diluted Earnings per Common Share
Diluted  Earnings per Share considers the effect of potential common shares such
as stock options and warrants.  The dilution in the three-and  six-month periods
ended  September 30, 1998 and  September 30, 1997 is due to the net  incremental
effect  of  incentive   stock   options  and  warrants  of  81,500  and  82,000,
respectively.

D. The  results  of  operations  for the  three-  and  six-month  periods  ended
September 30, 1998 is not indicative of the results to be expected for any other
interim period or for the full year.

<PAGE>


E.   Inventories
Inventories are carried at the lower of cost (first-in,  first-out  method),  or
market. Inventories at September 30, 1998 and March 31, 1998, consist of:

                         September 30, 1998                   March 31, 1998
                         ------------------                   --------------
Assembly parts                $397,331                           $298,239
Finished goods                 844,327                            645,774
                            ------------                        ----------
                            $1,241,658                           $944,013
                            ==========                          =========

F. Deferred Costs
Deferred costs and  reimbursable  costs at September 30, 1998 and March 31, 1998
were as follows:

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

                                               Internal Costs                Third
                                         Payroll         Expenses         Party Costs             Total

    Balance March 31, 1998               $483,550        $217,511         $615,632            $1,316,693
           Additions                       75,504          11,851           43,716               131,071
           Write-offs                    (513,375)       (229,362)        (659,348)           (1,402,085)
           Reimbursements                 (45,679)        ________        ________               (45,679)
                                         ---------                                             ---------
    Balance September 30, 1998                 $0              $0               $0                    $0
                                         =========        ========        ========             =========

</TABLE>

The Company decided to write off all deferred costs during the second quarter of
Fiscal 1999 due to the uncertain nature of the development of the projects,  due
to the uncertain  political and economic  conditions in the countries  where the
projects are located (principally in India and Brazil), and the current trend in
accounting principles regarding non-deferral of development expenses.

G.    Investments in Partnerships
At September 30, 1998,  the Company had  partnership  interests in six completed
gas-fired  cogeneration  plants located in New York State. At September 30, 1998
and March 31, 1998,  the balance of recorded  investments  was  comprised of the
following:

<TABLE>
<C>

                                                            <S>                        <S>
                                                            September 30, 1998         March 31, 1998
                                                            ------------------         --------------

     Capital contributions and investments                  $2,976,813                 $2,976,813
     Partnership distributions                            (147,669,881)               (28,151,213)
     Recognized share of income (losses)                   161,845,461                 25,140,530
                                                           ------------               ------------

                                                           $17,152,393                  $(33,870)
                                                           ===========                  ==========


</TABLE>

<PAGE>

The aggregate  financial position and results of operations for the partnerships
as reported in the financial statements issued by the respective partnerships as
at June 30, 1998  (unaudited)  and December 31, 1997  (audited)  and for the six
months and year then ended were as follows:

<TABLE>
<C>
                                                              <S>                              <S>
                                                              Six Months Ended                    Year Ended
                                                               June 30, 1998                   December 31, 1997
                                                               -------------                   -----------------

         Total Partnerships:
         Assets                                                  $97,037,549                      $520,329,768
         Plant and equipment                                      19,100,000                       391,492,464
         Secured debt                                                 72,386                       508,289,568
         Partners' equity (deficit)                               63,989,664                       (17,572,222)
         Revenues                                                 99,393,319                       149,469,661
         Income                                                  307,007,634                        20,238,179

         Company's Share:
         Partners' equity (deficit)                               29,896,779                        (7,354,035)
         Income                                                  144,125,634                        10,113,516

</TABLE>

The operating  assets of the  partnerships  in which the Company has investments
secured  the  projects'  debt,  and  the  significant  losses  incurred  by  the
partnerships  in the  early  years  of  operation  were  funded  by  that  debt.
Consequently,  the Company,  having no  obligation to fund the losses or pay the
partnerships'  debt,  did not  generally  record  the  losses  in the  financial
statements.  The  income  from  partnerships,  which  has been  recorded  on the
financial  statements  in the  amount of  $136,704,931  has been  recognized  on
partnerships where income has exceeded prior unrecognized  accumulated losses of
$3,110,466.  The recorded  income also reflects the write-down of impaired value
of the investments of $4,306,848 in two partnerships. Secured debt of $72,386 of
one  partnership  was paid on July 9,  1998.  The  reported  value of plant  and
equipment at September  30, 1998  reflects the  write-down  taken to reflect the
impaired value of the power plants owned by certain project  partnerships due to
the  termination  of the PPAs and,  with respect to the power  plants  leased by
certain project partnerships, the credits expected to be received at the time of
disposition of the facilities.

The amounts pertaining to one partnership,  which had been involved in extensive
litigation,  were excluded from the partnership's financial position and results
of operations presented above. See "Part II; Item 1. Legal Proceedings."

The following schedule contains summarized financial information for each of the
partnerships:

<PAGE>
<TABLE>
<C>

                                                         Besicorp Group Inc.
                                             Partnership Summary Financial Information
                                        As At June 30, 1998 and For the Six Months Then Ended
                           
                                   <S>                      <S>                      <S>                      <S>                 

                                   Kamine/Besicorp          Kamine/Besicorp          Kamine/Besicorp          Kamine/Besicorp     
                                   Carthage L.P.            So. Glens Falls L.P.     Natural Dam L.P.         Beaver Falls L.P.     
                                   ____________________________________________________________________________________________
Cash                               $ 7,769,430              $ 15,517,947             $ 9,081,752              $ 14,288,163        
Other Current Assets                 2,768,661                 3,004,560               1,851,232                 4,079,820         
Property, Plant & Equipment          2,880,000                   640,000               2,880,000                 6,700,000          
                                   ____________________________________________________________________________________________
Total Assets                       $13,418,091              $ 19,162,507            $ 13,812,984              $ 25,067,983       
                                   ============================================================================================
Current Liabilities                $ 7,171,939              $  7,610,044            $  9,075,658              $  5,217,349     
Long Term Liabilities                        -                         -                       -                         -       
                                   ____________________________________________________________________________________________
Total Liabilities                    7,171,939                 7,610,044               9,075,658                 5,217,349          
                                   ____________________________________________________________________________________________
Total Equity                         6,246,152                11,552,463               4,737,326                19,850,634         
                                   ____________________________________________________________________________________________
Total Liabilities and Equity      $ 13,418,091             $  19,162,507           $  13,812,984             $  25,067,983      
                                   ============================================================================================
Revenues                          $ 11,684,810             $  12,895,084           $  11,113,754             $  22,129,986      
Expenses                             9,313,843                10,479,447               8,267,921                14,783,802         
Other Income                        54,302,670                55,740,721              45,289,891                58,572,792         
                                   ____________________________________________________________________________________________
Net Income                        $ 56,673,637             $  58,156,358           $  48,135,724             $  65,918,976       
                                   ============================================================================================



                                Kamine/Besicorp            Kamine/Besicorp
                                Syracuse L.P.              GlenCarthage L.P.           Total
                                ________________________________________________________________
Cash                             $ 8,666,589               $ 6,311,619              $ 61,635,500
Other Current Assets               3,888,366                   709,410                16,302,049
Property, Plant & Equipment        6,000,000                         -                19,100,000
                                ________________________________________________________________
Total Assets                     $18,554,955              $  7,021,029              $ 97,037,549
                                ================================================================
Current Liabilities              $ 3,589,927              $    310,582              $ 32,975,499
Long Term Liabilities                      -                    72,386                    72,386
                                ________________________________________________________________
Total Liabilities                  3,589,927                   382,968                33,047,885
                                ________________________________________________________________
Total Equity                      14,965,028                 6,638,061                63,989,664
                                ________________________________________________________________
Total Liabilities and Equity     $18,554,955              $  7,021,029  $             97,037,549
                                ================================================================
Revenues                         $19,807,602              $ 21,762,083              $  99,393,319
Expenses                          14,918,180                10,212,617                 67,975,810
Other Income                      61,684,051                         -                275,590,125
                                _________________________________________________________________
Net Income                       $66,573,473              $ 11,549,466              $ 307,007,634
                                =================================================================

</TABLE>

<PAGE>

As  previously  disclosed,  the  Company  was a party to a Master  Restructuring
Agreement ("MRA") which was entered into on July 10, 1997 between Niagara Mohawk
Power Corporation  ("NIMO") and 16 independent power producers  ("IPPs") holding
29 Power Purchase Agreements ("PPAs") including the Company's five PPAs. On June
30,  1998,  the MRA was  consummated.  Pursuant  to the  terms of the  MRA,  the
Company's five PPAs, which had provided a total of 323 Megawatts of capacity and
energy  to  NIMO,  were  terminated.   As  a  result  of  the  MRA  and  related
transactions,  and the operations of the project  partnerships,  the Company has
received  through  September 30, 1998 (i) 4,615,770  shares of NIMO common stock
(the "NIMO  Shares") and (ii) net cash of  approximately  $59 million,  of which
approximately  $8 million  continues  to be  retained at the  partnership  level
primarily in regard to ongoing obligations of the projects. The closing price of
the  NIMO  Shares  on June  30,  1998  was  $14.94  for an  aggregate  value  of
approximately  $69 million.  In accordance  with SFAS No. 115,  "Accounting  for
Certain Investments in Debt and Equity Securities," this investment qualifies as
trading securities, which are reported at fair value, with changes in fair value
included in the operating statement.  The value of the investment in NIMO shares
of  $66,055,151  reflected on the balance  sheet at September  30, 1998 reflects
4,296,270  shares at a market price per share of $15.375.  Through  November 16,
1998,  the Company had sold 1,919,500  shares of the NIMO shares,  realizing net
proceeds of approximately $29.6 million for a gain of approximately $.9 million.
The remaining NIMO shares of 2,696,270,  based on the closing price on that date
of $15.25,  have an aggregate  value of  approximately  $41 million.  Unrealized
gains on the NIMO Shares were  $1,880,417  at  September  30, 1998 and  realized
gains for the three and six months ended  September 30, 1998 were $329,169.  The
net  proceeds  received  by the  Company as a result of the MRA reflect the fact
that a substantial  portion of the gross proceeds  received by the  partnerships
from NIMO was used to terminate most obligations  with third parties,  including
lenders,  lessors,  fuel suppliers and transporters,  thermal hosts, and others.
The Company's share of these termination payments was approximately $290.

With  the  exception  of  development  fees of $1.8  million  received  from the
Kamine/Besicorp  Beaver Falls L.P.  ("Beaver  Falls"),  which were recognized as
revenue during the first quarter of Fiscal 1999, development fees of $.9 million
received  from  the  Kamine/Besicorp  Syracuse  L.P.  ("Syracuse"),  which  were
recorded as a  receivable  from the  project in Fiscal  1998,  and certain  cost
reimbursements totaling $.8 million, the MRA and operating results proceeds were
accounted for as partnership distributions.

During the three- and six- month periods ended  September 30, 1998,  the Company
recorded  income,  which is  non-recurring,  of $133,161,691  and  $136,704,931,
respectively, predominantly as a result of the MRA and, to a minimal extent, the
operating  results of the project  partnerships.  These  amounts  give effect to
write-downs,  net to the  Company of  approximately  $85  million,  recorded  to
reflect the  impaired  value,  based upon  appraisals,  of the Beaver  Falls and
Syracuse power plants due to the  termination  of the PPAs.  With respect to the
Kamine/Besicorp  Carthage  L.P.("Carthage"),  Kamine/Besicorp  South Glens Falls
L.P. ("South Glens Falls"), and Kamine/Besicorp Natural Dam L.P. ("Natural Dam")
which hold leasehold interests in three power plants, the income amounts reflect
the expensing of all costs  associated with the  termination of those  long-term
leases reduced by the estimated  proceeds, based on appraisal  values,  expected
to be received upon the disposition of the facilities.  The  Company's  share of
the  cost of the  lease  terminations  was approximately  $77 million. Since the
power plant sales were consummated by the end of calendar 1998 (see  "Subsequen
Events"  below),  the Company  does not expect  that there  will be  further 
significant  adjustments  to the  recorded income.

Subsequent Events
On December 7, 1998, the Company  announced it had  consummated the sales of the
three leased power plants - Carthage Natural Dam and South Glens Falls. The 
Company holds partnership  interests  of 50 per cent in each of the  projects. 
The  Company's share of the net proceeds  from these sales,  which was received 
on December 29, 1998,  was  approximately  $1.4  million,   $1.9  million,   and
$1.9  million, respectively.

On December 14, 1998, the Company  announced it had  consummated the sale of the
Syracuse  power plant.  The Company holds a  partnership  interest of 35.715 per
cent in the project.  The  Company's  share of the net proceeds  from this sale,
which was received on December 29, 1998, was approximately $2.3 million.

On December 22, 1998, the Company  announced it had  consummated the sale of the
Beaver Falls power plant.  The Company holds a partnership  interest of 50.2 per
cent in the project.  The  Company's  share of the net proceeds  from this sale,
which was received on December 29, 1998, was approximately $3.2 million.

H.    Notes Receivable
The Company has settled litigation  involving a project  partnership.  See "Part
II; Item 1 - Legal  Proceedings."  As a result,  the  Company  will be unable to
recover  combined  loans of $2.5 million to the project and adjacent steam host.
The Company  had  established  reserves  during the year ended March 31, 1998 to
cover such losses.

I.    Revenue Recognition
Revenues on sales of products are  recognized  at the time of shipment of goods.
Development  and management fee revenue is recognized  when deemed payable under
the agreement. See Note B regarding the proposed merger.

J.    Segments of Business
The  Company  specializes  in the  development  of  power  projects  and  energy
technologies.  Working with partners,  the Company  develops  independent  power
projects (the "Project Segment"). The Company also provides engineering,  system
design,  project  management and turn-key  installation  of  photovoltaics,  and
fabricates,  manufacturers,  markets and distributes  photovoltaic  products and
systems through a domestic and international network (the "Product Segment").  A
summary of industry  segment  information for the six months ended September 30,
1998 and 1997 is as follows:

<TABLE>
<C>
                                         <S>                  <S>                  <S>                       <S>
                                         Project              Product
September 30, 1998                       Segment              Segment            Eliminations              Total
------------------                       --------            ---------           -------------             ------

Net revenues                         $141,602,329            $2,289,913                                    $143,892,242
Net income (loss)                      89,392,241              (934,727)                                     88,457,514
Identifiable assets                   293,413,279             2,509,803           $(153,268,584)            142,654,498
Capital expenditures                      146,569               145,004                                         291,573
Depreciation and amortization              92,805                44,630                                         137,435

September 30, 1997

Net revenues                           $6,019,664            $2,376,907                                      $8,396,571
Net income (loss)                       2,428,933            (1,096,121)                                      1,332,812
Identifiable assets                    42,445,663             3,769,387            $(34,130,688)             12,084,362
Capital expenditures                       50,958               153,537                                         204,495
Depreciation and amortization              91,538                55,434                                         146,972

</TABLE>

K. Legal Proceedings
See Part II, Item 1 which is incorporated herein by reference.


Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

RESULTS OF OPERATIONS
The Company's net income for the three months ended September 30, 1998 increased
by $85,591,937,  to $85,897,048 from the net income of $305,111 recorded for the
three  months  ended  September  30,  1997.  Net income for the six months ended
September 30, 1998 of $88,457,514 represents an increase of $87,124,702 from the
net income of  $1,332,812  for the six months  ended  September  30,  1997.  The
factors which contributed to these changes in net income are discussed below.

Second Quarter Developments and Subsequent Events
As  previously  disclosed,  the  Company  was a party to a Master  Restructuring
Agreement ("MRA") which was entered into on July 10, 1997 between Niagara Mohawk
Power Corporation  ("NIMO") and 16 independent power producers  ("IPPs") holding
29 Power Purchase Agreements ("PPAs") including the Company's five PPAs. On June
30,  1998,  the MRA was  consummated.  Pursuant  to the  terms of the  MRA,  the
Company's five PPAs, which had provided a total of 323 Megawatts of capacity and
energy  to  NIMO,  were  terminated.   As  a  result  of  the  MRA  and  related
transactions,  and the operations of the project  partnerships,  the Company has
received  through  September 30, 1998 (i) 4,615,770  shares of NIMO common stock
(the "NIMO  Shares") and (ii) net cash of  approximately  $59 million,  of which
approximately  $8 million  continues  to be  retained at the  partnership  level
primarily in regard to ongoing obligations of the projects. The closing price of
the  NIMO  Shares  on June  30,  1998  was  $14.94  for an  aggregate  value  of
approximately  $69 million.  In accordance  with SFAS No. 115,  "Accounting  for
Certain Investments in Debt and Equity Securities," this investment qualifies as
trading securities, which are reported at fair value, with changes in fair value
included in earnings.  The value of the investment in NIMO shares of $66,055,151
reflected on the balance sheet at September 30, 1998 reflects  4,296,270  shares
at a market price per share of $15.375.  Through  November 16, 1998, the Company
had sold  1,919,500  shares  of the  NIMO  shares,  realizing  net  proceeds  of
approximately  $29.6  million  for a gain  of  approximately  $.9  million.  The
remaining  NIMO shares of 2,696,270,  based on the closing price on that date of
$15.25,  have an aggregate value of approximately $41 million.  Unrealized gains
on the NIMO Shares were  $1,880,417 at September 30, 1998 and realized gains for
the three and six  months  ended  September  30,  1998  were  $329,169.  The net
proceeds  received by the Company as a result of the MRA reflect the fact that a
substantial portion of the gross proceeds received by the partnerships from NIMO
was used to terminate most  obligations with third parties,  including  lenders,
fuel suppliers and transporters,  thermal hosts, and others. The Company's share
of these termination  payments was approximately $290 million.

With  the  exception  of  development  fees of $1.8  million  received  from the
Kamine/Besicorp  Beaver Falls L.P.  ("Beaver  Falls"),  which were recognized as
revenue during the first quarter of Fiscal 1999, development fees of $.9 million
received  from  the  Kamine/Besicorp  Syracuse  L.P.  ("Syracuse"),  which  were
recorded as a  receivable  from the  project in Fiscal  1998,  and certain  cost
reimbursements totaling $.8 million, the MRA and operating results proceeds were
accounted for as partnership distributions.

During the three- and six- month periods ended  September 30, 1998,  the Company
recorded  income,  which is  non-recurring,  of $133,161,691  and  $136,704,931,
respectively, predominantly as a result of the MRA and, to a minimal extent, the
operating  results of the project  partnerships.  These  amounts  give effect to
write-downs,  net to the  Company of  approximately  $96  million,  recorded  to
reflect the  impaired  value , based upon  appraisals,  of the Beaver  Falls and
Syracuse power plants due to the  termination  of the PPAs.  With respect to the
Kamine/Besicorp  Carthage  L.P.,  Kamine/Besicorp  South Glens  Falls L.P.,  and
Kamine/Besicorp  Natural Dam L.P. which hold leasehold  interests in three power
plants,  the income amounts  reflect the expensing of all costs  associated with
the  termination of those  long-term  leases reduced by the estimated  proceeds,
based  on  appraisal  values,  to  be  received  upon  the  disposition  of  the
facilities..  The  Company's  share of the cost of the  lease  terminations  was
approximately  $77 million.  Since the power plant sales were consummated by the
end of calendar  1998,  the  Company  does not expect that there will be further
significant adjustments to the recorded income.

In  December  1998,  the   partnerships  in  which  the  Company  has  interests
consummated  contracts to sell the  Carthage,  South Glens  Falls,  Natural Dam,
Syracuse,  and Beaver  Falls  plants.  See  Footnote  G "Invest in  Partnership"
Subsequent  Events.  The Company's share of the net proceeds to be received from
these sales is estimated to be approximately  $10.7 million.  As a result of the
sale of the power plants and the assumption by the buyer of the ongoing  project
obligations,  approximately $6 million of the $8 million previously  reserved by
the Company with respect to its share of the MRA and operating proceeds retained
by the project partnerships will be released to the Company by the partnerships.

The Company,  BGI Acquisition LLC  ("Acquisition"),  a Wyoming limited liability
company,  and BGI Acquisition Corp. ("Merger Sub"), a New York corporation and a
wholly owned  subsidiary of  Acquisition,  entered into an Agreement and Plan of
Merger dated  November 23, 1998,  (the "Plan of  Merger"),  that  provides  that
Merger Sub will be merged with and into the Company,  with the Company being the
surviving  corporation and wholly owned by Acquisition  (the  "Merger").  If the
Merger is consummated,  the Company's  shareholders  will be entitled to receive
$34.50 (the "Merger  Consideration")  in cash for each share of Besicorp  Common
Stock,  subject,  in certain  circumstances,  to upward  adjustment  if the Base
Amount  (as  defined  in  the  Plan  of  Merger)  exceeds  $105,275,000.  It  is
anticipated  that if there is any upward  adjustment,  such  adjustment will not
exceed $4.00 per share.  There will not be a downward  adjustment  to the Merger
Consideration;  however, no assurance can be given that there will be any upward
adjustment to the Merger Consideration. Consummation of the Merger is subject to
the satisfaction of numerous  conditions,  including the adoption of the Plan of
Merger  by the  Company's  shareholders  and  the  Company's  distributing  (the
"Spin-Off") to its  shareholders on a pro rata basis all of the shares of common
stock (the "Newco  Common  Stock") of Besicorp Ltd.  ("Newco"),  a subsidiary of
Besicorp,  which at the time of the  Spin-Off  will,  among  other  things,  own
Besicorp's  photovoltaic and independent power plant development  businesses and
have assumed substantially all of the Company's liabilities. No assurance can be
given that such transactions will be consummated.

REVENUES
Consolidated 
Consolidated  revenues  increased by  $133,649,579,  to $137,086,353  during the
three months ended  September  30, 1998,  as compared to  $3,436,774  during the
three months ended September 30, 1997.  Consolidated revenues for the six months
ended September 30, 1998 increased by $135,495,671 to $143,892,242,  as compared
to $8,396,571 during the six months ended September 30, 1997.

Project Segment
Development  and  Management  Fees.  There  were  no  revenues  attributable  to
development  and management  fees for the Company's  independent  power projects
("Project  Segment")  during the three months  ended  September  30,  1998.  The
Company  earned  $180,479  in  management  fees  during the three  months  ended
September  30,  1997.  As a result  of the MRA  consummation  and the  resulting
termination of the PPAs,  the Company will no longer  receive  management fee or
development fee income from the related project partnerships.

Revenues  attributable  to  development  and  management  fees for the Company's
independent  power  projects  ("Project  Segment")  during the six months  ended
September 30, 1998 increased by $1,135,328 to $2,043,334 as compared to $908,006
for the six months ended  September 30, 1997. The increase  during the period is
due  primarily to a  development  fee of $1.8 million  received  from the Beaver
Falls project. The Company received development fees of $600,000 from the Beaver
Falls project  during the six months ended  September 30, 1997. The Company also
earned  $243,334 in  management  fees during the six months ended  September 30,
1998 in connection with its projects  compared to $308,006 during the six months
ended September 30, 1997.

Income from  Partnerships.  During the  three-month  period ended  September 30,
1998,  the  Company  recognized  $133,161,691  of income from  partnerships,  an
increase of $130,918,697  compared to $2,242,994 recognized for the three months
ended September 30, 1997.  During the six-month period ended September 30, 1998,
the Company recognized $136,704,931 of income from partnerships,  an increase of
$131,715,329  compared  to  $4,989,602  recognized  for  the  six  months  ended
September 30, 1997. The increases in both the three- and six-month  periods were
primarily due to the consummation of the MRA, in which five project partnerships
participated, and, to a minimal extent, the operations of the partnerships.

The partnerships  will generate no significant  future income as a result of the
MRA consummation  and the resulting  termination of the PPAs. If the sale of the
Company's  power plants is not  consummated  by December  31, 1998,  the Company
expects that there will be a  significant  downward  adjustment  to the recorded
income for the current fiscal year.

Interest  and Other  Investment  Income.  Interest and other  investment  income
during the three months ended  September  30, 1998  increased by  $2,731,792  to
$2,780,122  compared to $48,330 for the three months ended  September  30, 1997.
Interest and other  investment  income during the six months ended September 30,
1998  increased  by  $2,730,018  to  $2,824,932  compared to $94,914 for the six
months ended  September  30, 1997.  The increase in both current  periods is due
primarily  to  realized  and  unrealized   gains  on  the  NIMO  Shares  and  to
significantly higher invested principal balances.


<PAGE>



Product Segment
Product  Sales.  Revenues for the  Company's  energy  technology  products  (the
"Product   Segment")  sales  activities  during  the  three-month  period  ended
September 30, 1998 increased by $219,850 to $1,097,897,  as compared to $878,047
for the three months ended  September  30, 1997.  The increase for the period is
due to an  increase  of  $387,295  in  sales of solar  electric  products.  That
increase  was  partially  offset by a  decrease  of  $167,445  in sales of solar
thermal and heat transfer products.

During the  six-month  period ended  September 30, 1998,  revenues  decreased by
$182,976  to  $2,085,690  as  compared to  $2,268,666  for the six months  ended
September 30, 1997.  The decrease for the period is due primarily to lower sales
of solar  thermal  and heat  transfer  products  of  $765,134,  a result  of the
Company's  decision to  discontinue  those  product  lines.  That  decrease  was
partially offset by an increase of $582,158 in sales of solar electric products.

Other  Revenues.  Other revenues  derived from the Project and Product  Segments
decreased by $40,281 for the  three-month  period ended  September  30, 1998 and
increased by $97,972 for the  six-month  period ended  September 30, 1998 versus
the same periods last year.  Other revenues are primarily  comprised of contract
revenue  received  from  various  sources,  including  the New York State Energy
Research and Development Authority,  Northrup Grumman Corporation, and Motorola,
Inc. in accordance with funding  agreements with the Company.  Contract  revenue
may vary from  quarter to quarter  based  upon the degree of  completion  of the
various tasks outlined in the applicable agreements.

COSTS AND EXPENSES
Cost of Product Segment Sales
Cost of product sales for the  three-month  periods ended September 30, 1998 and
1997 was  $1,026,294  and  $877,685,  respectively,  or 93% and 100% of revenues
attributable to product sales.  During the six-month periods ended September 30,
1998  and  1997,   cost  of  product  sales  was  $1,966,269   and   $2,073,899,
respectively,  or 94% and 91% of revenues  attributable  to product  sales.  The
decrease  in  the  quarter  ended   September  30,  1998  is  due  primarily  to
efficiencies achieved in the photovoltaic product manufacturing process. For the
six months ended September 30, 1998, the increase in cost of sales percentage is
due  primarily  to the  discontinuance  of the solar  thermal and heat  transfer
product  lines which had lower costs of sales  historically.  This was partially
offset by the effect of the manufacturing efficiencies referenced above.

Costs of Project Segment Development and Management Fees
Other than the  settlement  of  deferred  costs in  conjunction  with  potential
project  closings,  there are no current specific costs and expenses  identified
with development and management fee revenue.  Costs and expenses associated with
this segment are the normal selling, general, and administrative expenses of the
Company.

Selling, General and Administrative Expenses
Consolidated.  Selling,  general, and administrative expenses ("SG&A") increased
by $1,960,096,  or 99%, to $3,942,666 for the three-month period ended September
30, 1998, as compared to $1,982,570 for the  three-month  period ended September
30, 1997.  During the six-month  period ended September 30, 1998, SG&A increased
by $1,745,560 to $5,830,355,  as compared to $4,084,795 for the six-month period
ended  September  30,  1997,  an  increase  of 43%. As  discussed  below,  small
decreases  in the Product  Segment  partially  offset  increases  in the Project
Segment.



<PAGE>



Project Segment. For the Project Segment, SG&A for the three-month periods ended
September  30,  1998 and  September  30,  1997 was  $3,324,058  and  $1,267,993,
respectively, representing 84% and 64% of the total SG&A. SG&A for the six-month
periods  ended  September 30, 1998 and  September  30, 1997 was  $4,592,975  and
$2,687,471,  respectively,  representing  79% and  66% of the  total  SG&A.  The
increases of $2,056,065  and  $1,905,504 in the  respective  current  three- and
six-month periods are primarily due to the write-off of project costs previously
deferred of $1,402,085 due to the uncertain political and economic conditions in
the countries where the projects are located  (principally in India and Brazil),
and the  current  trend  in  accounting  principles  regarding  non-deferral  of
development  expenses,   and  increased   compensation  expense  of  $1,286,386,
primarily the result of incentive  compensation  paid in connection with the MRA
consummation.   These   increases   were   partially   offset  by  certain  cost
reimbursements  of $613,113 received during the second quarter of Fiscal 1999 in
connection with the MRA consummation.

Product  Segment.  SG&A  expenses  for the  Company's  Product  Segment  for the
three-month  periods  ended  September  30,  1998 and  1997  were  $618,608  and
$714,577,  respectively,  representing  16%  and  36% of the  total  SG&A.  SG&A
expenses for the  Company's  Product  Segment for the  six-month  periods  ended
September  30,  1998 and 1997  were  $1,237,380  and  $1,397,324,  respectively,
representing  21% and 34% of the total  SG&A.  These  decreases  of $95,969  and
$159,944  for the  respective  current  three-  and  six-month  periods  are due
primarily to the discontinuance of the Company's heat transfer product lines and
to the reclassification of certain labor charges to Cost of Product Sales.

Interest Expense
Interest  expense for the three-month  period ended September 30, 1998 decreased
by $73,774 to $25,715,  as compared to $99,489 for the three-month  period ended
September 30, 1997.  Interest  expense for the six-month  period ended September
30, 1998 decreased by $76,417 to $120,098 compared to $196,515 for the six-month
period  ended  September  30,  1997.  The  decrease  in the both the  three- and
six-month  periods is due  primarily  to the  payment on July 10, 1998 of the $3
million Working Capital Loan from Stewart and Stevenson, Inc. ("S&S").

Provision for Income Taxes
The provision for income taxes increased during the three months ended September
30, 1998 by $46,024,844 to $46,186,257  compared to $161,413 for the same period
last year.  During the six-month  period ended September 30, 1998, the provision
for income taxes  increased by $46,808,996  to $47,509,199  compared to $700,203
for the same period last year.  The increase in the current three- and six-month
periods is due to the  increase in Income  Before  Income  Taxes which  resulted
primarily from the increase in income from  partnerships.  The Company  provides
federal and state income  taxes based on enacted  statutory  rates  adjusted for
projected benefits of tax operating loss carry forwards and other credits.

LIQUIDITY AND CAPITAL RESOURCES
The Company's  working capital increased by $69,099,152 from $2,779,482 at March
31, 1998,  to  $71,878,634  at September  30, 1998  primarily as a result of the
consummation of the MRA.

During the six months ended September 30, 1998, cash of $44,755,245 was provided
from  operations.  The net income of  $88,457,514,  when  adjusted  for non-cash
revenue/expense  items of $139,493,293,  including  income from  partnerships of
$136,704,931,  resulted  in  a  cash  decrease  of  $51,035,779.  Major  factors
offsetting this cash decrease included cash  distributions from the partnerships
of $50,570,604, proceeds of $5,092,744 from the sale of NIMO shares, the receipt
of a development  fee receivable at March 31, 1998 of $900,000,  and net changes
in assets and liabilities of $39,547,090.

During the current six-month period, the Company's financing activities resulted
in a  decrease  in  cash  of  $3,051,139,  primarily  due  to the  repayment  of
borrowings.

Investing  activities during the current six-month period resulted in a decrease
in cash of $291,573 due to the acquisition of property, plant and equipment.



<PAGE>



As previously  discussed,  the consummation of the MRA and related  transactions
and partnership  operating results for the quarter ended June 30, 1998, resulted
in the  receipt of  approximately  $52  million  and the NIMO  Shares  valued at
approximately  $69 million.  As previously  discussed,  the Company has, through
October 28, 1998,  sold  1,919,500  NIMO Shares  resulting  in cash  proceeds of
approximately  $29.6  million  and a  gain  of  approximately  $.9  million.  In
accordance  with its  established  investment  objectives  and  guidelines,  the
Company has invested  surplus cash in money market funds and  commercial  paper.
The  Company's  five  PPAs  with  NIMO  were  terminated  as  a  result  of  the
consummation of the MRA and,  consequently,  there will be no significant future
periodic  distributions  to the Company  from the  operations  of the  projects.
Pending the  consummation of the Merger  described  herein,  the Company expects
that capital requirements for its operations and for repayment of long-term debt
will be met by its current cash and short-term investment position.

Year 2000
Many existing computer systems and software  applications use two digits, rather
than four, to record years, i.e., "98" instead of "1998." Unless modified,  such
systems will not properly record or interpret years after 1999, which could lead
to business disruptions, including, among other things, a temporary inability to
process  transactions,  send  invoices,  determine  whether  payments  have been
received or engage in similar normal business  activities.  This is known as the
Year 2000 issue.

The  Company  relies on computer  hardware,  software,  and  related  technology
primarily in its internal  operations,  such as billing and  accounting.  During
Fiscal 1998, the Company formed a Year 2000 Management  Committee to address the
potential  financial and business  consequences of Year 2000 issues, such as the
disruptions  mentioned  above,  the failure to receive  essential  supplies  and
services or the loss of customers,  with respect to both the Company's hardware,
software,   applications  and  interfaces   (collectively,   "IT  Systems")  and
non-information  technology  systems  such as  telemetry,  security,  power  and
transportation  (collectively,  the "Non-IT Systems"). In general, the Year 2000
Management Committee is dividing its efforts with respect to both the IT Systems
and the Non-IT Systems into three phases:  (1) inventory and assessment  ("Phase
One"),  (2) strategy and  contingency  planning  ("Phase Two") and (3) upgrades,
conversions and other solutions ("Phase Three").

With respect to the IT Systems,  the Company has completed its evaluation of its
hardware,  software  and other IT Systems and  decided to migrate  from a 486 PC
environment to an Intel Pentium  environment.  Thus the efforts are now in Phase
Three.  To date all  workstations  and financial  software  have been  replaced.
Microsoft  Office Suite software and back-up  software has been upgraded,  virus
protection  software  is now Year 2000  compliant,  and New Year 2000  compliant
servers have been installed.  To complete Phase Three,  the Company will upgrade
accounting  software,  e-mail exchange servers,  internet proxy server,  and all
other  servers to NT 4.0,  upgrade all  workstations  to Windows 98, send second
notices to IT Systems  vendors that have not responded to the Company's  request
to receive  written  certification  and begin to seek  replacement  vendors,  if
necessary. The Company expects to complete Phase Three by July 1999.

With respect to the Non-IT  Systems,  the  Partnerships  are responsible for the
day-to-day management of the Power Plants, so the Year 2000 Management Committee
restricted its efforts to the photovoltaic business,  other operations unrelated
to the Power Plants, and administration. The Company relies on outside providers
for its basic needs such as electricity,  telephone service and other utilities.
As part of its  evaluation  of its  Non-IT  Systems,  the Year  2000  Management
Committee  contacted  the  utilities  and  other  suppliers.  Phase One has been
completed and the Year 2000 Management  Committee is studying the results in its
efforts to determine  what, if anything,  will be required to prepare the Non-IT
Systems for the Year 2000 and to assure itself that utility services will not be
interrupted. The Year 2000 Management Committee expects to complete Phase Two by
April 1999 and Phase Three by July 1999.

The Company is also communicating with its vendors,  suppliers, and customers to
both monitor and encourage their respective remedial efforts regarding Year 2000
issues.  The Company is in the process of  contacting  by letter or phone all of
its significant vendors and suppliers and its largest customers to determine the
extent to which the  Company's  systems might be vulnerable as a result of third
parties' failure to resolve their own Year 2000 issues. The Company is concerned
about  receiving  all necessary  utility  services;  in addition,  the Company's
photovoltaic business is dependent on components provided by photovoltaic module
suppliers.  Since failure by vendors and suppliers to successfully address their
Year 2000 issues could result in delays in their providing  various products and
services  to the  Company,  the  Company  will seek  replacement  vendors  as is
necessary to assure availability of products and services.  Failure by customers
could disrupt their ability to maximize their use of the Company's  products and
services and lead to a reduction in revenues; therefore, the Company will send a
newsletter to its product customers to help develop each customer's awareness of
Year 2000 issues and their implications.

So long as the  Company's  efforts to become  Year 2000  compliant  continue  on
schedule,  the  Year  2000  Management  Committee  believes  that  its  internal
operations will not be affected by Year 2000 problems. The Company does not rely
solely on its IT  Systems in order to  produce  products  it sells or to develop
project  opportunities.  In  fact,  in  July  1998,  the  Company's  IT  Systems
temporarily  ceased to function due to a lightning  strike that  destroyed  many
components  of the system,  and while  inconvenienced,  the  business  operated,
deadlines were met , and relationships  were cultivated.  The Company expects to
complete  its upgrade and  replacement  purchases  by the first half of calendar
1999. Testing is underway and will continue through January 2000.

There can be no assurance  that year 2000  problems of third  parties upon which
the  Company's  systems  and  operations  rely will not have a material  adverse
effect on the Company's operating results or financial  condition.  However, the
Company does not  anticipate any adverse impact on its business due to a lack of
availability of supplies or difficulties of customers.  Therefore,  short of any
third  party  disaster  that the  Company is unable to control and for which the
Company  cannot  develop  contingency  plans,  such as the  failure of a utility
providing power or telecommunications, the Company does not believe its business
will be detrimentally impacted by potential Year 2000 problems.

Except for capital  expenditures  associated with computer hardware and software
upgrades  which are  planned  for Fiscal  1999 and which may be  partially  Year
2000-related,  the Company does not  anticipate  that the  incremental  expenses
related  to the  Year  2000  issue  for  Fiscal  1999  will  be  material.  Such
incremental expenses incurred during Fiscal 1998 were not significant.

                           PART II - OTHER INFORMATION

Item 6. - EXHIBITS AND REPORTS ON FORM 8-K

(a.)               Exhibit 2.1 Agreement  and Plan of Merger dated  November 23,
                   1998 by and between  Besicorp Group Inc., BGI Acquisition LLC
                   and  BGI  Acquisition  Corp.   (excluding  the  exhibits  and
                   schedules  thereto).  The omitted  schedules and exhibits are
                   identified below.

                   Schedule or Exhibit        Description

                   Schedule     3.2.1         Lease Terms
                   Schedule     3.2.2         Schedule of Retained Assets and 
                                              Permitted Liabilities
                   Schedule     4.2.1         Subsidiaries
                   Schedule     4.2.4         Required Consents
                   Schedule     4.2.5         Stock
                   Schedule     4.2.6         Subsidiaries
                   Schedule     4.2.9         Liabilities
                   Schedule     4.2.14        Tax Returns
                   Schedule     4.2.15        Tax Liabilities
                   Schedule     4.2.16        Issues with Taxing Authorities
                   Schedule     4.2.17        Miscellaneous Tax Matters
                   Schedule     4.2.19        Contracts
                   Schedule     4.2.20        Partnership Contracts
                   Schedule     4.2.21        Plans
                   Schedule     4.2.23        Litigation
                   Schedule     4.2.25        Compliance with Laws
                   Schedule     4.2.27        Owned Real Estate
                   Schedule     4.2.28        Leased Premises
                   Exhibit      A             Form of Indemnification Agreement
                   Exhibit      B             Form of Escrow Agreement
                   Exhibit      C             Form of Legal Opinion of 
                                              Purchaser's Counsel
                   Exhibit      D             Form of Legal Opinion of Company'S
                                              Counsel

         Exhibit 27        Financial Data Schedule

(b)      Reports on Form 8-K

         On July 8, 1998, the Company filed a report on Form 8-K disclosing that
it was a party to the consummation of the Master Restructuring Agreement on June
30, 1998 between Niagara Mohawk Power Corporation and 14 developers/owners of 27
independent power plants.

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 thereunto duly authorized.


                                    Besicorp Group Inc., Registrant


Date: February 1, 1999              By:  /s/ Michael F. Zinn
                                             Michael F. Zinn
                                             President
                                             (principal executive officer)



Date: February 1, 1999              By:  /s/ Michael J. Daley
                                             Michael J. Daley
                                             Chief Financial Officer
                                             (principal financial officer)



Date: February 1, 1999              By:  /s/ James E. Curtin
                                             James E. Curtin
                                             Vice President and Controller
                                             (principal accounting officer)