UNITED STATES
                   SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, D.C.   20549

                               FORM 10-QSB

(Mark One)

(x)  QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15(D) OF THE  SECURITIES
     EXCHANGE ACT OF 1934.

     For the quarterly period ended July 31, 1999

( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
     EXCHANGE ACT OF 1934.

     For the Transition period from __________ to __________.

                        Commission File Number: 0 -17072

                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
        (Exact name of small business issuer as specified in its charter)

                Delaware                                  11-2844247
               (State of other jurisdiction of            (IRS Employer
               incorporation or organization)             Identification Number)

                100 Sweeneydale Avenue, Bay Shore, New York 11706
                    (Address of principle executive offices)

                                 (516) 434-1300
                           (Issuer's telephone number)

Indicate by check mark  whether the issuer (1) 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 [ ]

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

Common Stock, Par Value $.0001                        15,816,857
(Title of Each Class)                       (Outstanding at September 9, 1999)

Transitional Small Business Disclosure Format (check one): Yes [ ]      No [X]


<PAGE>
PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements

                      WINDSWEPT ENVIRONMENTAL GROUP, INC.
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                               July 31,
                                                                1999            April 30,
                                                              (Unaudited)         1999
                                                              -----------       ---------
                                     ASSETS
CURRENT ASSETS
<S>                                                           <C>                 <C>
Cash                                                          $     23,552        $   46,336
Accounts receivable, net of allowance for doubtful
  accounts of $100,000 and $100,000, respectively                2,335,066         2,249,198
Due from officer                                                   100,000           100,000
Inventories                                                        134,335           129,620
Costs and estimated earnings in excess of billings
 on uncompleted contracts                                          220,748           157,000
Prepaid and other current assets                                   305,996           379,970
                                                              ------------        -----------
     Total current assets                                        3,119,697         3,062,124

PROPERTY AND EQUIPMENT, net of accumulated depreciation
 of $3,015,984 and $2,798,662, respectively                      2,123,176         2,333,530

OTHER ASSETS
 Goodwill, net of accumulated amortization of $48,286
  and $45,994, respectively                                         73,740            76,032
 Notes receivable, net of current portion of $106,636
  and $105,764, respectively                                       100,547           110,912
 Other assets                                                      154,275           162,524
                                                              ------------        -----------

 TOTAL ASSETS                                                  $ 5,571,435      $  5,745,122
                                                              ============        ===========

                 LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
 Accounts payable and accrued expenses                         $ 3,286,400      $  3,558,041
 Revolving credit note payable                                   1,299,032         1,200,596
 Billings in excess of costs and estimated earnings on
  uncompleted contracts                                             69,226           226,000
    Payroll taxes payable                                          159,231           107,570
 Sales taxes payable                                               552,633           481,826
 Current portion of long-term debt                                 818,868         1,033,502
 Obligations of unconsolidated subsidiary, net                     196,112           196,112
                                                              ------------        -----------
     Total current liabilities                                   6,381,502         6,803,647

OTHER LIABILITIES
 Convertible notes                                                 790,000           790,000
 Long-term debt, net of current portion                            190,622           198,732
                                                              ------------        -----------
     Total liabilities                                           7,362,124         7,792,379

COMMITMENTS AND CONTINGENCIES

SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK
 par value $.01; 1,300,000 shares issued and outstanding         1,300,000         1,300,000
                                                              ------------        -----------

STOCKHOLDERS' EQUITY (DEFICIT)
 Preferred stock, $.01 par value,
  10,000,000 shares authorized                                           -                 -
 Common stock, $.0001 par value,
  50,000,000 shares authorized; issued and outstanding,
  15,776,857 and 14,135,073 shares,  respectively                    1,578             1,414
 Additional paid-in capital                                     29,244,400        28,948,201
 Accumulated deficit                                           (32,336,667)      (32,296,872)
                                                              ------------        -----------
     Total stockholders' equity (deficit)                       (3,090,689)       (3,347,257)
                                                              ------------        -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                   $  5,571,435        $5,745,122
                                                              ============        ===========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>

                                        1

<PAGE>


                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                           FOR THE THREE MONTHS ENDED
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                              July 31,             July 31,
                                                                1999                 1998
                                                              --------             --------


<S>                                                         <C>                 <C>
Revenues                                                    $ 2,781,532         $ 3,443,463

Cost of revenues                                              1,987,713           2,321,157
                                                            ------------        -----------

     Gross profit                                               793,819           1,122,306

Selling, general and administrative expenses                    651,341             838,595

     Income from operations                                     142,478             283,711

Other income (expense):
   Interest expense                                            (182,454)           (276,306)
   Other, net                                                       181              15,332
                                                            ------------        -----------
     Total other income (expense)                              (181,273)           (260,974)

     Net (loss) income                                          (39,795)             22,737

Dividends on Series A Convertible Preferred Stock                19,500              19,500
                                                            ------------        -----------
     Net (loss) income attributable to common shareholders  $    59,295         $     3,237
                                                            ============        ===========
Basic net (loss) income per common share                    $       .00         $       .00
                                                            ============        ===========
Diluted net income per common share                                             $       .00
                                                                                ===========
Weighted average number of common shares outstanding:

     Basic                                                   14,663,804          12,185,528
                                                            ============        ===========
     Diluted                                                                     14,414,428
                                                                                ===========



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

                                        2
<PAGE>

                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    FOR THE THREE MONTHS ENDED JULY 31, 1999
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                  Common Stock       Additional
                                             Number of      Par        Paid-in     Accumulated
                                              Shares       Value       Capital        Deficit            Total
                                             ---------     -----       -------     -----------           -----

<S>                                          <C>           <C>       <C>           <C>                <C>
Balance at April 30, 1999                    14,135,073    $ 1,414   $ 28,948,201  $(32,296,872)      $(3,347,257)

Proceeds from private placements of
 common stock                                   842,334         83        136,267          -              136,350

Exercise of stock option                          7,000          1          2,624          -                2,625

Issuance of common stock for services           767,450         77        171,733          -              171,810

Issuance of common stock for
 director compensation                           25,000          3          5,075          -                5,078

Dividends - preferred stock                          -           -        (19,500)         -              (19,500)

Net loss                                             -           -           -          (39,795)          (39,795)
                                             ----------    -------   ------------- -------------      -------------
Balance at July 31, 1999                     15,776,857    $ 1,578   $ 29,244,400  $(32,336,667)      $ (3,090,689)
                                             ==========    =======   ============= =============      =============







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

                                        3

<PAGE>

                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                           FOR THE THREE MONTHS ENDED
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                     July 31,        July 31,
                                                                      1999             1998
                                                                     --------        --------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                 <C>              <C>
  Net (loss) income                                                 $  (39,795)      $   22,737
  Adjustments to reconcile net (loss) income to net cash
  used by operating activities:
    Depreciation and amortization                                      227,863          255,077
    Issuance of common stock for director compensation                   5,078           11,400
    Issuance of common stock for services                              171,810             -
    Gain on disposal of equipment                                         -             (15,332)
  Changes in operating assets and liabilities:
    Accounts receivable                                                (85,868)         (42,737)
    Inventories                                                         (4,715)          12,040
    Costs and estimated earnings in excess of billings
     on uncompleted contracts                                          157,000          (82,648)
    Prepaid and other current assets                                  (146,775)          78,822
    Accounts payable and accrued expenses                             (291,141)         (30,979)
    Payroll and sales taxes payable                                    122,469         (395,482)
    Billings in excess of costs and estimated earnings
     on uncompleted contracts                                         (156,774)         (71,000)
                                                                    -----------      -----------

NET CASH USED BY OPERATING ACTIVITIES                                  (40,848)        (258,102)
                                                                    -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Collection of notes receivable                                        10,365           13,926
  Proceeds from insurance settlement                                      -              20,332
  Purchases of property and equipment                                   (6,968)         (56,810)
                                                                    -----------      -----------

NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES                         3,397          (22,552)
                                                                    -----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Principal payments of long-term debt and factor advances            (222,744)      (1,914,491)
  Proceeds from revolving bank line, net                                98,436        1,583,462
  Proceeds from equipment term loan                                                     595,000
  Dividends paid on redeemable preferred stock                                          (19,500)
  Proceeds from issuance of common stock                               138,975           68,000
                                                                    -----------      -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES                               14,667          312,471
                                                                    -----------      -----------

NET (DECREASE) INCREASE IN CASH                                        (22,784)          31,817

CASH -BEGINNING                                                         46,336           33,915
                                                                    -----------      -----------

CASH - ENDING                                                       $   23,552       $   65,732
                                                                    ===========      ===========

Cash paid during the period for:

Interest                                                            $  174,577       $  299,386
                                                                    ===========      ===========
Taxes                                                               $        -       $    1,500
                                                                    ===========      ===========

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



                                        4
<PAGE>

                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE QUARTER ENDED JULY 31, 1999
                                   (Unaudited)

1. BASIS OF PRESENTATION

   The  accompanying  unaudited  condensed  consolidated financial statements of
   the Company have been prepared by management  in  accordance  with  generally
   accepted accounting principles for interim financial information and with the
   instructions to Form 10-QSB and Item 310 of Regulation S-B. Accordingly, they
   do not include all of the  information  and  footnotes  required by generally
   accepted  accounting  principles for complete  financial  statements.  In the
   opinion  of  management,  all  adjustments  (consisting  of normal  recurring
   accruals)  considered  necessary for a fair  presentation have been included.
   The results of operations for interim periods are not necessarily  indicative
   of the results to be expected for the full year. These  consolidated  interim
   financial  statements  should  be  read in  conjunction  with  the  financial
   statements  and notes thereto  included in the Company's  Form 10-KSB for the
   fiscal year ended April 30, 1999.


2. LIQUIDITY AND BUSINESS RISKS

   The  Company's  financial  statements  have  been prepared  assuming that the
   Company will continue as a going concern. As of July 31, 1999 the Company has
   a  stockholders'   deficit  of  $3,090,689  and  an  accumulated  deficit  of
   $32,336,667.  The Company  has  financed  its  operations  to date  primarily
   through  issuances  of debt and  equity  securities.  At July 31,  1999,  the
   Company had $23,552 in cash, and a working capital deficit of $3,261,805.  In
   addition,  as of July 31,  1999,  the Company was in arrears  with respect to
   certain  payroll  and sales tax  obligations  of  approximately  $100,000 and
   $530,000,  respectively,  and as of July 31, 1998 was in arrears with respect
   to  preferred  stock  dividends  of  $48,750. In addition,  the Company is in
   arrears with many  of  its vendors.  These  factors raise  substantial  doubt
   about the Company's ability to continue as a going  concern.  These financial
   statements do not  include  any  adjustments   that  might  result  from  the
   outcome  of  this uncertainty.

   Although  management  believes,  based  on  the  development of the Company's
   business  operations and its preliminary  discussions with various  potential
   investors  and  other  sources  of  financing,  that it may be able to  raise
   additional capital sufficient to meet its working capital needs over the next
   twelve  months,  no assurance can be given that it will be successful in this
   respect.  The Company is currently seeking  strategic  alliances or strategic
   transactions,  such  as  the  proposed  transaction  with  Spotless  Plastics
   (USA), Inc.,  to improve its  financial  condition  (see Note 7). The Company
   requires  substantial  working  capital to support  its  ongoing  operations.
   Revenue  growth  is  expected  in new  service  areas,  as the  result of the
   Company's  ability to provide a broad range of services.  As is common in the
   environmental services industry, payments for services rendered are generally
   received  pursuant to specific draw  schedules  after  services are rendered.
   Thus, pending the receipt of payments for services rendered, the Company must
   typically fund substantial  project costs,  including  significant  labor and
   bonding costs, from financing sources within and outside the Company. Certain
   contracts,  in particular those with state or federal  agencies,  may provide
   for  payment  terms of up to 90 days or more and may  require  the posting of
   substantial   performance  bonds  which  are  generally  not  released  until
   completion of the project.  As of July 31, 1999, the Company has no available
   debt  capacity  under  its  line  with  BACC  and is in  default  thereunder.
   Accordingly, BACC  currently  has the  right to  foreclose  on the  Company's
   assets,  which  could  force the  Company  out of  business.  The  Company is
   striving to improve its gross  margin and control its selling,  general,  and
   administrative expenses. There can be no assurance,  however, that changes in
   the Company's plans or other events  affecting the Company's  operations will
   not result in accelerated or unexpected cash requirements, or that it will be
   successful in obtaining the additional  financing to meet its  obligations as
   they become due.  The  Company's  future cash  requirements  are  expected to
   depend on numerous factors, including, but not limited to: (i) the ability to
   successfully bid on environmental or related

                                        5

<PAGE>
                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE QUARTER ENDED JULY 31, 1999
                                   (Unaudited)


   construction  contracts, (ii) the  ability  to  generate  positive  cash flow
   from  operations,  and  the  extent  thereof,  (iii)  the  ability  to  raise
   additional  capital  or  obtain  additional  financing,  and  (iv)   economic
   conditions.


3. INCOME TAXES

   No provision (benefit) for income tax was recorded for the period ended July,
   31, 1999 due to a net loss being incurred.

4.   EQUITY TRANSACTIONS

     Stock Options

     On  June  28,  1999  the Company's  Board of Directors  granted  options to
     purchase 750,000  shares  of  common stock to the directors of the Company,
     which included 250,000  options  to the  Chief  Executive  Officer.  All of
     these options are exercisable immediately at an  exercise  price of $.1875,
     and expire June 27, 2004.

     On  July  20,  1999  the  Company   granted   options to  purchase  171,407
     shares of common stock to employees.  All of these options are  exercisable
     two years  after date of grant at an exercise  price of $.3438,  and expire
     July 19, 2004.

     On  August  18,  1999  and  August 27, 1999 the Company  granted options to
     purchase  10,000 and 50,000  shares of common  stock at exercise  prices of
     $.3906  and  $.3125,   respectively,   to  employees.   These  options  are
     exercisable two years and one year after date of grant,  respectively,  and
     expire five years after date of grant.

     Issuances of Warrants

     During  the  quarter  ended  July  31,  1999  the  Company  issued  842,334
     shares of common stock and warrants to purchase 200,000  additional  shares
     of  the  Company's  common  stock exercisable  at $.20 per share in private
     placement transactions for proceeds of $136,350.  The  warrants  expire  on
     July 22, 2004.


5.   STATEMENTS OF CASH FLOWS

     During   the  quarter  ended  July   31,   1999,   the  Company's  non-cash
     operating  activities  included  the payment of $171,810  for  services and
     $5,078 in director compensation utilizing its common stock.


                                        6

<PAGE>
                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE QUARTER ENDED JULY 31, 1999
                                   (Unaudited)

6.   COMMITMENTS AND CONTINGENCIES

     Litigation

     In  October  1996,  the  United  States  Attorney for the Eastern  District
     of New York obtained a federal grand jury indictment against, among others,
     the  Company's  former  Chief  Operating  Officer,  Leo Mangan,  and former
     Special  Securities   Counsel,   James  Nearen,  on  charges  that  include
     violations of federal  securities law,  including  fraudulent  issuances of
     700,000  shares of the Company's  common  stock.  Mr. Mangan and Mr. Nearen
     both subsequently  pleaded guilty to the charges in the Federal indictment.
     In addition,  the Securities  and Exchange  Commission  also  instituted an
     investigation  of the Company.  To date, no charges have been filed against
     the Company or any other  current  member of  management as a result of the
     Eastern  District  investigation.  On June 9, 1999, the Company's  Board of
     Directors  approved  making a  settlement  offer  with the  Securities  and
     Exchange  Commission  pursuant to which the Company will neither  admit nor
     deny any allegations.  If the Securities and Exchange  Commission  approves
     the  settlement  offer,  the  Company  will not incur any  monetary  fines.
     Additionally, the Company's special defense counsel has advised the Company
     that an Assistant United States Attorney confirmed that the Government,  at
     this time, does not intend to proceed further with its investigation of the
     Company.

     The  Company  is  a  defendant  in a litigation  matter whereby one or more
     plaintiffs  claim to be entitled to  additional  wages while  working for a
     subcontractor  of the  Company.  The  amount  of the  claim  has  not  been
     specified.  Management believes that the case is without merit, and intends
     to defend the action vigorously.

     The  Company  is  party  to  other litigation  matters and claims which are
     normal in the  course of its  operations,  and  while the  results  of such
     litigation  and  claims  cannot be  predicted  with  certainty,  management
     believes  that the final outcome of such matters will not have a materially
     adverse  effect  on  the  consolidated   financial  position,   results  of
     operations and cash flows of the Company.

     Other Proceedings

     In   January   1996   Laboratory    Testing   Services,   Inc.  ("LTS"),  a
     wholly-owned  subsidiary,  filed a Chapter  11  petition  in United  States
     Bankruptcy  Court in the Eastern District of New York.  Subsequently,  this
     case was converted to a Chapter 7 Bankruptcy proceeding.  LTS is in process
     of liquidation  through these bankruptcy  proceedings.  Management believes
     that the Company's  financial  condition and results of operations will not
     be materially affected by this proceeding.


7.   SUBSEQUENT EVENTS

     Letter of Intent

     On  September  13,  1999  the  Company  executed  a  non-binding  Letter of
     Intent with Spotless Plastics (USA), Inc. ("Spotless") relating to Spotless
     investing  $2,500,000  in  the  Company for a majority  voting position and
     concurrently   loaning  the  Company   $2,000,000  in  a  convertible  debt
     financing. Spotless is a wholly-owned subsidiary of Spotless Group Limited,
     a publicly traded Australian company.  The proposed  transaction would give
     Spotless  nominees majority  representation on the Board of Directors.  The
     transaction  is  subject  to  the  execution  and  delivery  of  definitive
     documentation,  approval  by both boards of  directors,  the receipt by the
     Company's  Board of  Directors  of a fairness  opinion and other  customary
     conditions  to  closing.   Management   believes  the   transaction   would
     significantly  enhance  the  Company's  liquidity  and would  position  the
     Company for future profitable growth upon consummation of the transaction.


                                        7

<PAGE>

     Equity Transactions

     On  August 6,  1999 the  Company   issued  40,000  shares  of  common stock
     in a private placement transaction for proceeds of $6,000.

     On  September 10, 1999  the  Company  issued 223,988 shares of common stock
     in  payment of dividends and accumulated  interest  aggregating $69,996  on
     its Series A redeemable convertible preferred stock.


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

The following  discussion of the fiscal  quarters  ended July 31, 1999 and  1998
should  be  read  in  conjunction  with  the  Unaudited  Condensed  Consolidated
Financial  Statements contained herein, including the notes thereto.

This  Item 2 and  other  items  in  this  Form  10-QSB  contain  forward-looking
statements  within the meaning of Section 27A of the  Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. The Company's actual results
could differ materially from those set forth in the forward-looking  statements.
Forward-looking  statements  included  in this  Form  10-QSB  involve  known and
unknown risks, uncertainties and other factors which could cause actual results,
performance  (financial and operating) or  achievements  expressed or implied by
such  forward  looking  statements  not to occur or be  realized.  Such  forward
looking statements generally are based upon the best estimates by the Company of
future results,  performance or achievement,  based upon current  conditions and
the most  recent  results  of  operations.  Forward  looking  statements  may be
identified  by the use of forward  looking  terminology  such as "may",  "will",
"expect",  "believe",  "estimate",  "anticipate",  "continue", or similar terms,
variations  of those terms or the negative of those terms.  Potential  risks and
uncertainties  include,  among other things,  such factors as the ability of the
Company  to  consummate  the  proposed transaction with Spotless Plastics (USA),
Inc., the  amount of  the  Company's  revenues,  the  success of the  Company in
limiting or  reducing its expenses, the frequency and magnitude of environmental
disasters or  disruptions,  the  effects of new laws or regulations  relating to
environmental   remediation,   the  Company's  ability  to  raise  capital,  the
competitive  environment  within  the  Company's  industry,  dependence  on  key
personnel, economic conditions, and the other factors and information  disclosed
and discussed in other sections in this Form 10-QSB, and in the Company's annual
report on Form 10-KSB for the  year  ended  April 30, 1999. Readers of this Form
10-QSB   should   carefully   consider   such  risks,  uncertainties  and  other
information,  disclosures and discussions  which contain  cautionary  statements
identifying  important  factors  that could  cause  actual  results  to   differ
materially  from those  provided in the forward looking statements.

RESULTS OF OPERATIONS

Net   loss   and   net  loss  per  share  were  $(39,795)  and  $0.00   for  the
three-month period ended July 31, 1999 compared to net income and net income per
share of $22,737  and $0.00  during  the  comparable  period in the prior  year.
Revenues  decreased by $661,931,  or 19.2%,  from  $3,443,463 in the three-month
period ended July 31, 1998 to  $2,781,532 in the  three-month  period ended July
31, 1999. Gross margins decreased to 28.5% for the three-month period ended July
31, 1999 from 32.6% for the quarter  ended July 31, 1998,  primarily  due to the
decreased  revenues creating a higher percentage of indirect costs  attributable
to each revenue  dollar.  The  decrease in revenue in the first  quarter for the
current  year is  primarily  due to a decline  in  asbestos  and lead  abatement
revenue of approximately $1,300,000,  which was partially offset by increases in
emergency  response services  revenues of approximately  $500,000 and additional
revenue increases from tank testing, removal and installation services. Asbestos
abatement contracts are usually large contracts performed over longer periods of
time.  The Company's  cash flow  restrictions  and interest rate  considerations
limited  its  ability  to fund  additional  projects  in the  asbestos  and lead
abatement area due to the competitive  nature and lower profit margins generally
associated with this type of work.

                                        8

<PAGE>

Selling,  general and  administrative  expenses declined by $187,254,  or 22.3%,
from $838,595 for the three-month period ended July 31, 1998 to $651,341 for the
three-month  period ended July 31, 1999. The decline was primarily  related to a
decrease in sales and  administrative  salaries of approximately  $134,000 and a
decrease in marketing and promotional expenses of approximately $48,000.

Interest expense declined $93,852 from $276,306 for the three-month period ended
July 31, 1998 to $182,454 for the  three-month  period ended July  31,1999.  The
substantial  decrease in interest expense during the quarter ended July 31, 1999
was principally  attributable to a higher interest rate for receivable factoring
in the months of May and June 1998 as well as a penalty for early termination of
the financing agreement with the Company's factor.


LIQUIDITY AND CAPITAL RESOURCES

The Company's financial  statements have been prepared assuming that the Company
will  continue  as a going  concern.  As of July  31,  1999  the  Company  has a
stockholders'  deficit of $3,090,689 and an accumulated  deficit of $32,336,667.
The Company has financed its operations to date primarily  through  issuances of
debt and equity  securities.  At July 31, 1999, the Company had $23,552 in cash,
and a working capital deficit of $3,261,805.  In addition,  as of July 31, 1999,
the  Company  was in  arrears  with  respect to  certain  payroll  and sales tax
obligations of approximately $100,000 and $530,000, respectively, and as of July
31, 1998 was in arrears with respect to preferred stock dividends of $48,750.
In addition,  the Company is in arrears with many of its vendors. These factors
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.  These financial  statements do not include any adjustments  that might
result from the outcome of this uncertainty.

Although   management   believes,  based  on  the  development of  the Company's
business  operations  and its  preliminary  discussions  with various  potential
investors  and  other  sources  of  financing,  that  it may be  able  to  raise
additional  capital  sufficient to meet its working  capital needs over the next
twelve  months,  no assurance  can be given that it will be  successful  in this
respect.  The Company is  currently  seeking  strategic  alliances  or strategic
transactions,  such as the proposed  transaction  with Spotless  Plastics (USA),
Inc.,  to improve its  financial  condition.  The Company  requires  substantial
working capital to support its ongoing operations. Revenue growth is expected in
new service  areas,  as the result of the  Company's  ability to provide a broad
range of services. As is common in the environmental services industry, payments
for services rendered are generally received pursuant to specific draw schedules
after services are rendered.  Thus, pending the receipt of payments for services
rendered,  the Company must typically fund substantial project costs,  including
significant  labor and bonding costs,  from financing sources within and outside
the  Company.  Certain  contracts,  in  particular  those  with state or federal
agencies, may provide for payment terms of up to 90 days or more and may require
the posting of  substantial  performance  bonds which are generally not released
until  completion  of the  project.  As of July 31,  1999,  the  Company  has no
available debt capacity  under its line with BACC and is in default  thereunder.
Accordingly,  BACC currently has the right to foreclose on the Company's assets,
which  could  force the  Company  out of  business.  The  Company is striving to
improve its gross margin and control its selling,  general,  and  administrative
expenses.  There can be no  assurance,  however,  that changes in the  Company's
plans or other events  affecting  the  Company's  operations  will not result in
accelerated or unexpected  cash  requirements,  or that it will be successful in
obtaining the additional  financing to meet its  obligations as they become due.
The  Company's  future  cash  requirements  are  expected  to depend on numerous
factors,  including,  but not limited to: (i) the ability to successfully bid on
environmental or related  construction  contracts,  (ii) the ability to generate
positive cash flow from operations, and the extent thereof, (iii) the ability to
raise  additional  capital or obtain  additional  financing,  and (iv)  economic
conditions.  The Company  believes  that its  current  resources  together  with
anticipated positive cash flow from operations, if any, and its ability to raise
additional  capital,  should provide sufficient cash to meet the Company's needs
for  approximately  the  next  twelve  months.  See  Note  7  to  the  Condensed
Consolidated Financial Statements.

                                       9
<PAGE>

Cash Flow

Net  cash  used  by   operating   activities  was $40,848 in the fiscal  quarter
ended July 31,  1999,  as compared to net cash used by operating  activities  of
$258,102  in the  fiscal  quarter  ended  July  31,  1998.  Accounts  receivable
increased  $85,868 or 8.3% to $2,435,066.  Accounts payable and accrued expenses
decreased by $291,141 or 8.2% to $3,286,400,  primarily as a result of decreased
costs  relating  to the  19.2%  decrease  in  revenues.  Cash  used for  capital
expenditures was $6,988 in the fiscal 2000 period, as compared to $56,810 in the
fiscal 1999 period.

The Year 2000

The   Company   has   taken   actions   to   make  its  systems,   services  and
infrastructure Year 2000 compliant.  Specifically, the Company believes that its
accounting system, estimating system, and all corporate office computers are Y2K
compliant.  The Company  also  believes  that the  mechanical  and  navigational
systems on its fleet of floating  vessels,  are Y2K  compliant.  The Company has
inquired of its vendors in the laboratory and consulting  division regarding the
Company's  equipment  being Y2K  compliant.  The Company now estimates the costs
related to Y2K compliance to be approximately  $25,000,  exclusive of consulting
fees, and the Company expects to pay these costs out of working capital.

The  Company  has  made   inquires  and been advised that its banks' and primary
lender's  systems are Y2K  compliant.  As an emergency  response  provider,  the
Company keeps a full inventory of supplies and other materials  available at all
times.  The Company's  inquiries of its largest  vendors have led to indications
that they are or expect to be, Y2K compliant by December 1999.

The  Company  has  numerous   customer   relationships.  The  Company's  current
customers will not  necessarily be the same as those in the Year 2000 due to the
nature of its business. However, the Company's inquiries of its largest and most
likely continuing  clients indicate that they are in the process of becoming Y2K
compliant and many believe that they are already Y2K compliant. If this were not
the case,  the  Company's  services  may be more  difficult  to provide to these
customers. Increased difficulties would also arise if electric power or wireless
communications systems failed.

The  Company  has  a  computer  consultant  devoted  to assessing  and analyzing
Y2K issues and arranging for their final resolution.  Although at this time, the
Company believes that it has resolved the most significant  issues,  the Company
may  encounter  some Y2K impact,  which at this time is  unforeseen.  Due to the
nature of the Company's  business,  which is primarily  labor based,  management
believes  that it is taking the  necessary  steps to resolve  Year 2000  issues;
however,  there can be no  assurance  that a failure to  resolve  any such issue
would not have a material  adverse effect on the Company.  The Company is in the
process of developing a Y2K contingency plan to the extent deemed appropriate.

Seasonality

Since  the  Company  and  its  subsidiaries  are  able to perform their services
throughout the year, the business is not considered seasonal in nature. However,
it is affected by the timing of large contracts in certain of its service areas,
i.e.,   asbestos   abatement  and  construction,   as  well  as  the  timing  of
catastrophes.

                                       10

<PAGE>

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

          See Note 6 to the Condensed Consolidated Financial Statements.

Item 2. Changes in Securities

On June 28, 1999 the Company granted options to purchase an aggregate of 750,000
shares of common stock to the directors of the Company,  which included  250,000
options granted to Michael O'Reilly,  the Company's Chief Executive Officer. All
of these options are exercisable immediately at an exercise price of $.1875, and
expire June 27, 2004.  The issuance of these  options were private  transactions
exempt from registration under Section 4(2) of the Securities Act.

In July 1999,  the Company issued an aggregate of 842,334 shares of common stock
and warrants to purchase 200,000 shares of common stock  exercisable at $.20 per
share for the period  through  July 22, 2004 to an  aggregate  of 8 investors in
private  placement  transactions  for aggregate gross proceeds of $136,350.  The
issuance of these shares of common stock and warrants were private  transactions
exempt from registration under Section 4(2) of the Securities Act.

On July 15, 1999,  the Company  issued  25,000  shares of common stock valued at
$5,078 as  compensation  to  directors.  The  issuance of these shares of common
stock were private  transactions  exempt from registration under Section 4(2) of
the Securities Act.

On July 20,  1999,  the Company  granted  options to purchase  an  aggregate  of
171,407  shares  of  common  stock to 19  employees.  All of these  options  are
exercisable  two years after date of grant at an exercise  price of $.3438,  and
expire July 19, 2004.  The issuance of these  options were private  transactions
exempt from registration under Section 4(2) of the Securities Act.

On July 29, 1999,  the Company  issued 70,000 shares of restricted  common stock
valued at $10,500 to a consultant for services.  The issuance of these shares of
common stock was a private  transaction  exempt from registration  under Section
4(2) of the Securities Act.

On August 6, 1999 the Company issued 40,000 shares of restricted common stock to
one investor in a private place  transaction  for gross proceeds of $6,000.  The
issuance of these shares of common stock was a private  transaction  exempt from
registration under Section 4(2) of the Securities Act.

On August 18, 1999,  the Company  granted  options to purchase  10,000 shares of
common stock at an exercise  price of $.3906 per share,  to one employee.  These
options are exercisable two years after the date of grant, and expire five years
after date of grant.  The issuance of these  options  were private  transactions
exempt from registration under Section 4(2) of the Securities Act.

On August 27, 1999,  the Company  granted  options to purchase  50,000 shares of
common  stock at an exercise  price of $.3125 per share,  to one  employee.  The
issuance of these  options were private  transactions  exempt from  registration
under Section 4(2) of the Securities Act.

On September  10, 1999,  the Company  issued  223,988  shares of common stock in
payment of dividends and related  interest  aggregating  $69,996 on its Series A
redeemable  convertible  preferred stock. The issuance of these shares of common
stock was a private  transaction  exempt from registration under Section 4(2) of
the Securities Act.


                                       11


<PAGE>
Item 3. Defaults Upon Senior Securities

        None


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

        None

Item 5. Other Information

        None

Item 6. Exhibits and Reports on Form 8-K

        (a)  Exhibits: 27 - Financial Data Schedule
        (b)  Reports on Form 8-K:

             No  reports on  Form  8-K  have  been filed  during the quarter for
             which this report is filed.












                                       12

<PAGE>

                                   SIGNATURES


Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities  and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.

Dated:    September 17, 1999

                              WINDSWEPT ENVIRONMENTAL GROUP, INC.



                              By:  /s/ Michael O'Reilly
                                   MICHAEL O'REILLY,
                                   Chairman and Chief Executive Officer



                              By:  /s/Daniel G. Rosenberg
                                   DANIEL G. ROSENBERG,
                                   Chief Financial Officer