SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 FORM 10-QSB/A-2


(X)  Quarterly  report  pursuant  to  Section  13 or 15 (d)  of  the  Securities
     Exchange Act of 1934.

     For the quarterly period ended October 31, 1996 or

( )  Transition  report  pursuant  to Section 13 or 15 (d) of the  Securities
     Exchange Act of 1934.

     For the Transition period from __________ to __________.

     Commission File Number: 0 -17072

                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
              (Formerly Comprehensive Environmental Systems, Inc.)

          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)      (Zip Code)

                                 (516) 694-7060
              (Registrant's telephone number, including area code)

Comprehensive Environmental Systems Inc. 72B Cabot Street West Babylon, NY 11704
              (Former name, former address and former fiscal year,
                          if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports)  and (2) has been  subject to such  filing
requirements for the past 90 days.

          YES __X__                          NO _____

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

Common Stock, Par Value $.0001                             10,062,349
(Title of Each Class)                           (Outstanding at August 31, 1997)

Transitional Small Business Disclosure Format (check one) : Yes _____  No __X__



<PAGE>



Part I - FINANCIAL INFORMATION
Item 1.  Financial Statements

THE  FOLLOWING  AMENDS IN ITS ENTIRETY FORM 10-QSB FOR THE QUARTER ENDED OCTOBER
31, 1996 AS  PREVIOUSLY  FILED WITH THE  SECURITIES  AND EXCHANGE  COMMISSION ON
DECEMBER 17, 1996 AND JULY 14, 1997.

              WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
              (Formerly Comprehensive Environmental Systems, Inc.)
                     CONSOLIDATED BALANCE SHEETS (RESTATED)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                     October 31,      April 30,
                                                                        1996            1996
                                                                    ------------    ------------
<S>                                                                 <C>             <C>         
ASSETS
CURRENT ASSETS
   Cash                                                             $    447,104    $    282,933
   Accounts receivable, net of allowance for doubtful
      accounts of $137,000 at October 31,1996 and
      $75,000 at April 30, 1996                                        2,640,597       2,043,740
   Current portion of note receivable                                     32,940            --
   Inventories and prepaid supplies                                      265,065         265,065
   Prepaid expenses                                                      185,617            --
   Other current assets                                                  190,046         148,557
                                                                    ------------    ------------
                  Total Current Assets                                 3,761,369       2,740,295
                                                                    ------------    ------------

PROPERTY AND EQUIPMENT, net of
   accumulated depreciation and amortization                           3,262,552       3,143,477
                                                                    ------------    ------------

OTHER ASSETS
   Note receivable                                                       292,060            --
   Investment in non-marketable securities, net of
     valuation allowance of $5,993,841 at April 30, 1996                    --           628,000
   Goodwill, net of accumulated amortization                             125,604         131,170
    Other assets                                                          74,063          62,447
                                                                    ------------    ------------

   TOTAL ASSETS                                                     $  7,515,648    $  6,705,389
                                                                    ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Current portion of long-term debt                                $    312,898    $    260,952
   Accounts payable and accrued expenses                               1,511,372       1,335,287
   Note payable                                                          100,000            --
   Deposit                                                                  --           150,000
   Income taxes payable                                                   34,603          59,080
   Other current liabilities                                                --           228,591
   Obligations of unconsolidated subsidiary, net                         145,054            --
                                                                    ------------    ------------
         Total Current Liabilities                                     2,103,927       2,033,910

OTHER LIABILITIES
   Long-term debt, net of current portion                                469,347         382,324
                                                                    ------------    ------------
         Total Liabilities                                             2,573,274       2,416,234
                                                                    ------------    ------------

STOCKHOLDERS' EQUITY
   Preferred stock, $.01 par value, 10,000,000 shares authorized,
     no shares issued or outstanding                                        --              --
   Common stock, $.0001 par value, 50,000,000 shares authorized,
     9,103,477 issued less 20,000 treasury shares                            910             617
   Additional paid-in capital                                         26,632,509      25,159,377
   Treasury stock                                                        (10,000)        (58,000)
   Stock subscription receivable                                            --           (46,988)
   Accumulated deficit                                               (21,681,045)    (20,765,851)
                                                                    ------------    ------------
         Total Stockholders' Equity                                    4,942,374       4,289,155
                                                                    ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          $  7,515,648    $  6,705,389
                                                                    ============    ============
</TABLE>


          See Accompanying Notes to Consolidated Financial Statements.
                                        1


<PAGE>



              WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
              (Formerly Comprehensive Environmental Systems, Inc.)
                CONSOLIDATED STATEMENTS OF OPERATIONS (RESTATED)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                  Three Months Ended                       Six Months Ended
                                                                  ------------------                       ----------------
                                                                      October 31,                             October 31,
                                                               1996                1995                1996                1995
                                                            -----------         -----------         -----------         -----------

<S>                                                         <C>                 <C>                 <C>                 <C>        
Revenues                                                    $ 3,178,140         $ 2,601,913         $ 8,251,542         $ 6,371,661

Cost of revenues                                              2,419,412           1,675,792           5,962,768           3,893,219
                                                            -----------         -----------         -----------         -----------

    Gross profit                                                758,728             926,121           2,288,774           2,478,442

Selling, general and
   administrative expenses                                      968,172             998,295           2,206,678           2,474,940
Management restructuring costs                                1,193,000                --             1,193,000                --
                                                            -----------         -----------         -----------         -----------

 Income (loss) before other
   income(expense)                                           (1,402,444)            (72,174)         (1,110,904)              3,502
                                                            -----------         -----------         -----------         -----------

Other income (expense):
 Settlement of legal claims, net                                296,654                --               296,654             (17,500)
 Losses on investments                                         (195,068)               --              (295,071)               --
 Income from joint venture                                         --                22,512                --                22,512
 Gain on sale of marketable security                               --                63,999                --                63,999
 Gain on sale of assets, net                                    221,710                --               221,710                --
 Realized gain on sale of building                                 --                  --                  --               188,624
 Interest expense                                               (13,236)               --               (29,131)               --
 Interest and dividend income                                       709              39,732               1,548              39,732
                                                            -----------         -----------         -----------         -----------
     Total other income (expense)                               310,769             126,243             195,710             297,367
                                                            -----------         -----------         -----------         -----------

         Income (loss) before
            income taxes                                     (1,091,675)             54,069            (915,194)            300,869

Income taxes                                                       --                  --                  --                  --
                                                            -----------         -----------         -----------         -----------

         Net income (loss)                                  $(1,091,675)        $    54,069         $  (915,194)        $   300,869
                                                            ===========         ===========         ===========         ===========

Earnings (loss) per common share                            $      (.12)        $       .01         $      (.11)        $       .07
                                                            ===========         ===========         ===========         ===========

Weighted average number of
common shares outstanding                                     9,065,977           5,427,366           8,331,449           4,419,095
                                                            ===========         ===========         ===========         ===========
</TABLE>


          See Accompanying Notes to Consolidated Financial Statements.

                                        2


<PAGE>



              WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
              (Formerly Comprehensive Environmental Systems, Inc.)
           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (RESTATED)
                    FOR THE SIX MONTHS ENDED OCTOBER 31, 1996
                                   (Unaudited)


<TABLE>
<CAPTION>
                                         Common Stock
                                         ------------       Additional                     Stock
                                     Number of     Par       Paid-in       Treasury     Subscription    Accumulated
                                      Shares      Value      Capital         Stock       Receivable        Deficit          Total
                                     ---------    -----    -----------     --------     ------------    -------------   ------------
<S>                                  <C>          <C>      <C>             <C>           <C>            <C>             <C>        
Balance at April 30, 1996           6,097,366    $617     $25,159,377     $(58,000)     $(46,988)      $(20,765,851)   $ 4,289,155
                                                                                                       
  Private placements of                                                                                
     common stock                    2,600,000     260       1,232,165                                                    1,232,425
                                                                                                       
   Issuance of common                                                                                  
      stock for services               261,111      26         205,974                                                      206,000
                                                                                                       
        Issuance of treasury stock                                                                     
     to settle legal obligations        70,000                               58,000                                          58,000
                                                                                                       
 Return of common stock as                                                                             
    part of legal settlement           (20,000)                             (10,000)                                        (10,000)
                                                                                                       
  Collection of stock subscription                                                                     
     receivable                                                                            46,988                            46,988
                                                                                                       
  Issuance of common stock for                                                                         
     partial payment of management                                                                     
     restructuring charges              75,000       7          34,993                                                       35,000
                                                                                                       
  Net loss                                                                                                  (915,194)      (915,194)
                                    ----------    ----     -----------     --------      --------       ------------    -----------
                                                                                                       
Balance at October  31, 1996         9,083,477    $910     $26,632,509     $(10,000)     $   --         $(21,681,045)   $ 4,942,374
                                    ==========    ====     ===========     ========      ========       ============    ===========
</TABLE>



          See Accompanying Notes to Consolidated Financial Statements.

                                        3


<PAGE>



              WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
              (Formerly Comprehensive Environmental Systems, Inc.)
                CONSOLIDATED STATEMENTS OF CASH FLOWS (RESTATED)
                            FOR THE SIX MONTHS ENDED
                                   (Unaudited)

                                                      October 31,    October 31
                                                        1996           1995
                                                     -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES
   Net Income (loss)                                 $  (915,194)   $   300,869
   Adjustments to reconcile net income to net cash
   flows from operating activities:
     Depreciation and amortization                       321,329        121,033
     Gain on sale of building                               --         (188,624)
     Issuance of common stock for services               206,000        442,250
     Losses on investments                               295,071           --
    Transfer of investment as partial consideration
         for termination agreement                       330,000           --
      Income from joint venture                             --          (22,512)
     Management restructuring costs                      211,000           --
      Gain on sale of assets, net                       (221,710)          --
     Settlement of legal claims, net                    (305,000)          --
   Changes in operating assets and liabilities:
     Accounts receivable                                (596,857)      (540,593)
     Inventories and prepaid supplies                       --         (274,667)
     Prepaid expenses                                   (185,617)          --
     Note receivable                                        --           50,000
     Other current assets                                (41,489)      (214,535)
     Other assets                                        (11,616)       (48,405)
     Accounts payable and accrued expenses               176,085        696,533
     Current Income taxes                                (24,477)         5,636
     Other current liabilities                          (228,591)        33,105
     Reserve for contingencies                              --         (367,309)
     Deferred income taxes                                  --           42,000
                                                     -----------    -----------
NET CASH FLOWS FROM OPERATING ACTIVITIES                (991,066)        34,781
                                                     -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Payment for investment in subsidiary                     --          (10,000)
   Deposits advanced                                        --          397,943
   Proceeds from the sale of assets                      221,710           --
   Obligations of unconsolidated subsidiary, net         145,054           --
   Acquisition of fixed assets                          (431,909)    (1,528,552)
   Deferred acquisition costs, net                          --         (103,938)
                                                     -----------    -----------
NET CASH FLOWS FROM INVESTING ACTIVITIES                 (65,145)    (1,244,547)
                                                     -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from note payable                            100,000           --
   Proceeds from long-term debt                          223,000           --
   Principal payments of long-term debt                 (232,031)       (99,407)
   Payment of note payable                                  --          (75,000)
   Proceeds from issuance of common stock, net
       of advance deposits                             1,082,425      3,137,784
   Stock subscription receivable                          46,988       (534,920)
                                                     -----------    -----------
NET CASH FLOWS FROM FINANCING ACTIVITIES               1,220,382      2,428,457
                                                     -----------    -----------

NET CHANGE IN CASH AND CASH EQUIVALENTS                  164,171      1,218,691

CASH AND EQUIVALENTS-BEGINNING                           282,933        648,023
                                                     -----------    -----------
CASH AND EQUIVALENTS-ENDING                          $   447,104    $ 1,866,714
                                                     ===========    ===========




          See Accompanying Notes to Consolidated Financial Statements.

                                        4


<PAGE>



              WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
              (Formerly Comprehensive Environmental Systems, Inc.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED OCTOBER 31, 1996
                                   (Unaudited)

(1)  Consolidated Financial Statements The consolidated balance sheet at the end
     of the preceding fiscal year has been derived from the audited consolidated
     balance sheet  contained in the Company's  Form 10-KSB and is presented for
     comparative  purposes.  All other financial  statements are unaudited.  All
     unaudited  amounts are subject to year-end  adjustments and audit,  but the
     Company believes all  adjustments,  consisting only of normal and recurring
     adjustments, necessary to present fairly the financial position, results of
     operations and changes in cash flows for all interim periods presented have
     been  made.  The  results  of  operations  for  interim   periods  are  not
     necessarily indicative of the operating results for the full year.

     Footnote  disclosures normally included in financial statements prepared in
     accordance with generally accepted accounting  principles have been omitted
     in accordance  with the published  rules and  regulations of the Securities
     and Exchange Commission.  These consolidated financial statements should be
     read in  conjunction  with  the  financial  statements  and  notes  thereto
     included in the Company's Form 10-KSB for the most recent fiscal year.

(2)  Management  Restructuring  Costs  As part of the  management  restructuring
     during  September  1996,  the Company  entered  into  separate  termination
     agreements with the former Chief Executive Officer("CEO"),  Chief Operating
     Officer("COO") and Special Securities  Counsel("SSC") to the Company. These
     agreements  call for pay-outs of existing  compensation  arrangements  plus
     additional   benefits  in  the  form  of   transferring  an  investment  in
     non-marketable  securities  of $330,000,  issuing  stock  options and other
     miscellaneous benefits.  Included in Management  Restructuring Costs on the
     Consolidated  Statements of Income are the termination costs related to the
     former CEO and SSC for $216,000 and $35,000,  respectively.  At October 31,
     1997, approximately $176,000 of the amounts due the former CEO, represented
     by a promissory  note,  are included in Long-term  Debt.  Also  included in
     Management  Restructuring  Costs are amounts actually paid and the value of
     the  non-marketable  securities  transferred at closing of the  termination
     agreement  with  the  former  COO  totaling  $594,000  As a  result  of the
     indictment  of the former  COO and SCC in October  1996 on charges of stock
     fraud and manipulation,  the Company has withheld  subsequent  payments and
     has not accrued for the unpaid  balance of the  termination  agreement with
     the former COO totaling approximately $636,000. Even if the indictments and
     the  allegations  contained  therein  are proven not to be true,  there was
     still a lack of fiduciary  responsibility to the Company by both the former
     COO and SSC.  In light of the  facts and  circumstances,  the  Company  has
     already  made  formal  demands  to the COO and  SSC for the  return  of all
     consideration  paid and  assets  transferred  pursuant  to the  termination
     agreements  through the date of the indictment  and is vigorously  pursuing
     this  matter.   The  Company  has  also   formally   cancelled  all  option
     certificates   previously   issued  in  connection   with  the  termination
     agreements.   In   addition,   Management   Restructuring   Costs   include
     approximately   $348,000  of  legal  and  professional   fees  incurred  in
     connection with these agreements and the subsequent  matters resulting from
     the indictment.

(3)  Statements of Cash Flows


<TABLE>

NON-CASH INVESTING AND FINANCING ACTIVITIES

     <S>                                                                       <C>        <C>   
     Issuance of restricted common shares for the investment
     in New York Testing Laboratories, Inc. and Subsidiaries                   $     --   $ 67,500
                                                                               =========   ========

     Step-up in basis of property and equipment resulting from the allocated
     purchase price in excess of net assets acquired
     from New York Testing Laboratories, Inc. and Subsidiaries                 $     --   $328,681
                                                                               =========   ========

     Issuance of common shares  in exchanged for services                      $ 206,000   $442,250
                                                                               =========   ========

     Transfer of non-marketable security as partial
        consideration for termination agreement                                $ 528,000   $    --
                                                                               =========   ========

     Note receivable and return of common stock accepted
      as partial consideration in settlement of a legal claim                  $ 285,000   $    --
                                                                               =========   ========

     Issuance of long-term debt in connection with the partial
       settlement of a legal claim and separate consulting  agreement          $ 155,000   $    --
                                                                               =========   ========
     
SUPPLEMENTAL INFORMATION
     
      Interest Paid                                                            $  29,131   $ 24,256
                                                                               =========   ========
     
      Taxes Paid                                                               $     346   $    224
                                                                               =========   ========
</TABLE>
     
     
                                        5
     
     
     
<PAGE>
     


              WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
              (Formerly Comprehensive Environmental Systems, Inc.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED OCTOBER 31, 1996
                                   (Unaudited)

(4)  Restatement of Consolidated  Financial Statements The 10-QSB for the period
     ended October 31, 1996 is being restated to reflect a current period charge
     for $792,000 of previously deferred  restructuring costs as well as include
     those costs,  previously categorized as other expenses,  $401,000, as costs
     included in determining income from operations. The restatement resulted in
     a decrease in net income and accumulated deficit of $792,000,  or a loss of
     $.09 per share in each respective period. The Company originally  reported,
     $139,325,  or $.02  earnings  per  share,  for the three  month  period and
     $594,806,  or $.07  earnings  per share,  for the six month  period.  These
     numbers  were  restated  to a net loss of  $(652,675),  or  (.07)  loss per
     share.for the three month period, and $(197,194),  or $(.02) loss per share
     for the six month period ended.

     In  connection  with the April 30,  1997 year end  accounting  closing  and
     subsequent analysis performed,  it was determined that errors had been made
     with respect to the  determination  of the  carrying  value of the deferred
     income  tax asset as of April 30,  1996 and April 30,  1995.  In  addition,
     $432,000 of  compensation  paid to a former officer of the Company had been
     accounted for as a reduction of additional  paid-in capital during the year
     ended April 30,1996. The effect of these changes resulted in an increase to
     the Company's Accumulated Deficit of $3,016,000, a decrease in the Deferred
     income tax asset of  $2,584,000,  and an increase of $432,000 in additional
     paid-in capital as of April 30, 1996. The Company  further  determined that
     the October 31, 1996  10-QSB/A-1  included  additional  misstatements.  The
     accompanying  consolidated  financial  statements  have  been  restated  to
     correct the  errors,  resulting  in the  following  changes to  accumulated
     deficit as of October 31, 1996 and the related consolidated  statements for
     the six month period then ended.


<TABLE>
<CAPTION>
                                                                                                            
                                                                         Net Loss            Net Loss        Loss          Loss    
                                                                         Quarter            Six months        Per        Per Share, 
                                                 Accumulated              ended               ended          Share,      Six months 
                                                   Deficit               10/31/96            10/31/96       Quarter       ended   
------- -------- -------- ------- -----
<S>                                              <C>                  <C>                   <C>              <C>           <C>   
As previously reported and restated              $(17,947,045)        $  (652,675)          $(197,194)       $(.07)        $(.02)

Overstatement of deferred income tax                                                                                      
asset as of April 30, 1995                         (1,782,533)               --                  --           --            --

Overstatement of deferred income tax                                                                                      
asset as of and for the year ended April                                                                                  
30 ,1996                                             (801,467)               --                  --           --            --

Overstatement of additional paid-in                                                                                       
capital and understatement of                                                                                             
compensation expense as of and for the                                                                                    
year ended April 30, 1996                            (432,000)               --                  --           --            --

Compensation expense previously                                                                                           
charged to additional paid-in capital                (148,000)               --              (148,000)        --            (.02)

Inventory book to physical adjustments               (105,000)           (105,000)           (105,000)        (.01)         (.01)

Write-down of investments                            (100,000)               --              (100,000)        --            (.01)

Accrual of special charges                           (198,000)           (198,000)           (198,000)        (.02)         (.03)

Provision for doubtful accounts                       (62,000)            (31,000)            (62,000)        (.005)        (.01)

Accrual of other selling, general, and                                                                                    
administrative expenses                               (80,000)            (80,000)            (80,000)        (.01)         (.01)

Other                                                 (25,000)            (25,000)            (25,000)        (.005)        --
                                                 ------------         -----------           ---------        ------        -----
As adjusted, October 31, 1996                    $(21,681,045)        $(1,091,675)          $(915,194)       $(.12)        $(.11)
                                                 ============         ===========           =========        ======        =====
</TABLE>
                                                                             
     In addition to the above, the Company reclassified certain income statement
     and balance  sheet amounts to account for an  unconsolidated  subsidiary in
     the process of  liquidation,  Laboratory  Testing  Services,  Inc.,  on the
     equity basis, which had previously been consolidated.

     Reclassifications  of $108,000 for each of the quarters ended July 31, 1996
     and  October  31,   1996,   were  made   decreasing   selling  and  general
     administrative  expenses and increasing cost of sales to reflect the proper
     classification of certain accounts.


                                        6


<PAGE>



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

The following discussion of the fiscal quarters ended October 31, 1996 and 1995,
is being updated as of September 29, 1997 and should be read in conjunction with
the Consolidated Financial Statements contained herein.

RESULTS OF OPERATIONS
---------------------

Core  operations for the six months showed revenues and a net loss of $8,252,000
and  $915,000,  respectively,  versus  $6,372,000  and net  income of  $301,000,
respectively,  for the same period last year. This represents an increase of 30%
in revenues from the prior year  resulting  from the expansion of  environmental
service  operations.  For the quarter ended October 31, 1996, revenues increased
approximately  $576,000, or 22%, from the same period last year. The current net
loss is the direct result of Management  Restructuring Costs discussed in Note 2
and below.

Gross profit decreased to 28% compared to 39% for the first six months of fiscal
1996.  The gross profit also  decreased from 36% to 24% when comparing the three
months ended October 31, 1995 to 1996.  This  decrease  results from a change in
the mix of work  compared to last year,  to  environmental  services and testing
operations,  which is more labor intensive,  as well as certain larger contracts
that normally carry a slightly lower gross profit margin.

Selling,  general and administrative  expenses decreased  approximately  268,000
from the first six months of last year  compared to the first six months of this
year. As a percentage of revenues, these expenses were approximately 27% and 39%
for the six months ended October 31, 1996 and 1995, respectively. These expenses
also  decreased  $30,000 when  comparing  the quarter  ended October 31, 1996 to
1995. This is the direct result of management's  continued efforts to streamline
overhead and build a more efficient operation.

Management  restructuring  costs include  non-recurring  charges for termination
expenses  for the  COO,  CEO  and  SCC  for  $594,000,  $  216,000  and  35,000,
respectively as well as legal fees for  approximately  $348,000.  At October 31,
1996,  only  $176,000  remains  as an  obligation  to the CEO.  As  such,  these
settlements will not have a significant  impact on future cash flows,  financial
condition or results of operations.

The gain on sale of assets  results  primarily  from the sale of a  professional
engineering  licence  in the name of New York  Testing  Laboratories,  Inc.  for
$225,000 during the current quarter for cash.

During the quarter ended October 31, 1996, the Company  settled its  arbitration
action with Spartan  Dismantling Corp. for $300,000 and is included as income in
settlement of legal claims.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

Working  capital at October 31, 1996 including  cash, was $1,657,000 an increase
of $951,000 or 135% from April 30, 1996. Cash and accounts receivable  increased
by $164,000 and  $597,000,  respectively  from April 30, 1996. As of October 31,
1996, the current ratio was 1.8:1. This represents a substantial  improvement in
liquidity  from April 30,  1996 where such ratio was 1.35:1.  It is  managements
continued goal to maintain low levels of long-term debt financing.

During the six months ended  October 31, 1996,  the Company  raised net proceeds
from the issuance of common stock of approximately  $1,082,000.  Said funds were
used to purchase various  operational  fixed assets,  provide working capital to
finance  accounts  receivable  and pay  monies  required  at the  closing of the
termination agreements in September 1996.

The Company  believes that the current  levels of working  capital and liquidity
will not be sufficient to support the continued increase in its revenue base and
scope of operations.  In this regard,  management will be seeking new sources of
permanent capital through domestic private  placements of equity and convertible
debt as well as establishing a working capital credit facility with a local bank
to finance accounts receivable to enhance cash flow and business growth.


                                        7


<PAGE>



PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Pending Litigation
------------------

In  November,  1994,  the  Company  commenced  a civil  action in New York State
Supreme  Court to recover  monies  advanced to Mohave Shores  Development,  Inc.
("Mohave")  in  anticipation  of  developing  land on an Indian  reservation  in
Arizona.  The Company  seeks the return of its $250,000  deposit plus legal fees
and punitive damages.  Management intends to continue aggressively pursuing this
matter.

In a civil action which was commenced in August 1995 in United  States  District
Court,  the Company,  various current and prior officers and directors have been
named in a lawsuit with various  shareholders  from Seattle,  Washington who had
purchased  shares  through  the  same  broker.   The  lawsuit  contains  various
allegations  asserting  misrepresentations  to the broker and  non-disclosure in
public filings of various Reg-S and S-8 stock issuances made by the Company from
August  through  October  1994.  The officers and  directors  named in the civil
action were Messrs. Mangan (Chief Operating Officer), Varsi (President),  Lehrer
(Chairman & CEO), Mazzella (Director) and O'Reilly (Director). Management denies
any  wrongdoing,  asserts  that the  complaint  is without  merit and intends to
vigorously defend these claims. The Company settled this lawsuit in May 1997 for
approximately  $120,000,  net of insurance  proceeds,  with monthly  payments of
$6,250.

Item 2. Changes in Securities

          None

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: None
          (b)  Reports on Form 8-K

               Reports filed on Form 8-K dated  September 12, 1996 and September
          26, 1996 are hereby incorporated by reference.


                                   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 29, 1997


                              WINDSWEPT ENVIRONMENTAL GROUP, INC.




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




                              By:/s/ Alan W.Schoenbart
                                 -------------------------------------
                                   ALAN W. SCHOENBART, CPA
                                   Chief Financial Officer


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