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 January 31, 2000

( )  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)

                                 (631) 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                        38,456,254
(Title of Each Class)                   (Outstanding at March 10, 2000)

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>
                                                                                  January 31,
                                                                                     2000          April 30,
                                                                                  (Unaudited)        1999
                                                                                  -----------      ---------
                                     ASSETS
<S>                                                                             <C>              <C>
CURRENT ASSETS
     Cash                                                                       $     753,285    $     46,336
     Accounts receivable, net of allowance for doubtful
     accounts of $210,000 and $100,000, respectively                                2,458,026       2,249,198
     Due from officer                                                                   -             100,000
     Inventories                                                                      179,298         129,620
     Costs and estimated earnings in excess of billings
     on uncompleted contracts                                                          85,507         157,000
     Prepaid and other current assets                                                 304,417         379,970
                                                                                -------------    ------------
          Total current assets                                                      3,780,533       3,062,124
PROPERTY AND EQUIPMENT, net of accumulated depreciation of
     $3,465,701 and $2,798,662, respectively                                        1,887,715       2,333,530

OTHER ASSETS
     Goodwill, net of accumulated amortization of $53,020
     and $45,994, respectively                                                         69,006          76,032
     Notes receivable, net of current portion of  $57,141 and
     $105,764, respectively                                                             3,557         110,912
     Other assets                                                                     166,097         162,524
                                                                                -------------    ------------

     TOTAL ASSETS                                                               $   5,906,908    $  5,745,122
                                                                                =============    ============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
     Accounts payable and accrued expenses                                      $   3,195,971    $  3,558,041
     Notes payable - other                                                            216,775            -
     Revolving credit note payable                                                      -           1,200,596
     Billings in excess of costs and estimated earnings on
     uncompleted contracts                                                            103,704         226,000
     Payroll taxes payable                                                             83,772         107,570
     Sales taxes payable                                                              266,642         481,826
     Current portion of long-term debt                                                269,034       1,033,502
     Obligations of unconsolidated subsidiary, net                                    210,007         196,112
                                                                                -------------    ------------
          Total current liabilities                                                 4,345,905       6,803,647

OTHER LIABILITIES
     Convertible notes                                                              2,680,000         790,000
     Long-term debt, net of current portion                                            83,547         198,732
                                                                                -------------    ------------
          Total liabilities                                                         7,109,452       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' DEFICIT
     Preferred Stock, 10,000,000 shares authorized - 1,300,000 Series A;
     50,000 Series B; 8,650,000 not designated
     Series B, par value $.01 issued and outstanding 9,346 and -0- shares,
     respectively                                                                          93            -
     Common Stock, $.0001 par value,
     50,000,000 shares authorized; 38,456,254 and 14,135,073 shares
     issued and outstanding, respectively                                               3,846           1,414
     Additional paid-in capital                                                    31,962,530      28,948,201
     Accumulated deficit                                                          (34,469,013)    (32,296,872)
                                                                                -------------     -----------
Total stockholders' deficit                                                        (2,502,544)     (3,347,257)
                                                                                -------------     -----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                     $   5,906,908     $ 5,745,122
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       2
<PAGE>

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

<TABLE>
<CAPTION>
                                                                 January 31,          January 31,
                                                                    2000                  1999
                                                                ------------         ------------
<S>                                                             <C>                  <C>
Revenues                                                        $  2,493,450         $  3,058,186
Cost of revenues                                                   2,164,497            2,894,453
                                                                ------------         ------------
     Gross margin                                                    328,953              163,733

Selling, general and administrative expenses                         743,216              733,411
                                                                ------------         ------------

     Loss from operations                                           (414,263)            (569,678)
                                                                ------------         ------------

Other income (expense):
  Interest expense                                                 (114,887)            (245,265)
  Other, net                                                         33,829                 -
                                                                -----------          -----------
     Total other expense                                            (81,058)            (245,265)
                                                                -----------          -----------

     Loss before income tax                                        (495,321)            (814,943)
Income tax expense                                                     -                 165,000
                                                                -----------          -----------


     Net loss                                                      (495,321)            (979,943)

Dividends on Series A Convertible Preferred Stock                    19,500               19,500
                                                                -----------          -----------

     Net loss attributable to common shareholders               $ (514,821)          $  (999,443)
                                                                ===========          ===========

Basic and diluted net loss per common share                     $      (.01)         $      (.07)
                                                                ===========          ===========

Weighted average number of common shares outstanding:
     Basic and diluted                                           38,453,993           13,842,010
                                                                ===========          ===========
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       3
<PAGE>

                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                            FOR THE NINE MONTHS ENDED
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                 January 31,         January 31,
                                                                    2000                1999
                                                                ------------        ------------
<S>                                                             <C>                 <C>
Revenues                                                        $  8,461,373        $ 11,018,496
Cost of revenues                                                   6,832,985           8,421,988
                                                                ------------        ------------
     Gross margin                                                  1,628,388           2,596,508

Selling, general and administrative expenses                       3,083,128           2,436,761
                                                                ------------        ------------

     (Loss) income from operations                                (1,454,740)            159,747
                                                                ------------        ------------

Other income (expense):
   Interest expense                                                 (662,101)           (679,316)
   Other, net                                                         44,700              27,832
                                                                ------------        ------------
     Total other expense                                            (617,401)           (651,484)

     Loss before extraordinary item and
     income tax benefit                                           (2,072,141)           (491,737)
Income tax benefit                                                      -                110,000
                                                                ------------        ------------
     Net loss before extraordinary item                           (2,072,141)           (381,737)
Extraordinary item - loss on extinguishment of debt                  100,000                -
                                                                ------------        ------------
     Net loss                                                     (2,172,141)           (381,737)

Dividends on Series A Convertible Preferred Stock                     58,500              58,500
                                                                ------------        ------------

     Net loss attributable to common shareholders               $ (2,230,641)       $   (440,237)
                                                                ============        ============

Basic net loss per common share
   Before extraordinary item                                    $       (.09)       $       (.03)
   Extraordinary item                                                   (.00)               (.00)
                                                                ------------        ------------
   Basic net loss per share                                     $       (.09)       $       (.03)
                                                                ============        ============

Diluted net loss per common share                               $       (.09)       $       (.03)
                                                                ============        ============
Weighted average number of common shares outstanding:

     Basic and diluted                                            23,190,321          12,779,318
                                                                ============        ============

</TABLE>

          See accompanying notes to consolidated financial statements.

                                       5
<PAGE>


                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
                   FOR THE NINE MONTHS ENDED JANUARY 31, 2000
                                   (Unaudited)

<TABLE>
<CAPTION>

                                             Common Stock          Preferred Stock        Additional
                                       Number of       Par        Number of       Par      Paid-in       Accumulated
                                        Shares        Value        Shares        Value     Capital         Deficit        Total
                                       ---------      -----       ---------      -----    ----------     -----------    ---------

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

Proceeds from private placements
of common and preferred stock          23,167,017      2,317        9,346          93       2,639,940                     2,642,350

Exercise of stock options                  20,000          2                                    7,498                         7,500

Issuance of common stock for services     863,450         86                                  201,723                       201,809

Issuance of common stock for employee
and director compensation                  25,000          3                                    5,076                         5,079

Compensation related to officer options                                                       138,080                       138,080

Issuance of common stock for accrued
preferred stock dividends and related
interest                                  225,714         22                                   70,514                        70,536

Note conversion                            20,000          2                                    9,998                        10,000

Dividends on preferred stock                   -           -                                  (58,500)                      (58,500)

Net loss                                       -           -                                        -      (2,172,141)   (2,172,141)
                                       ----------    -------        -----       -----     -----------    ------------   -----------

Balance at January 31, 2000            38,456,254    $ 3,846        9,346       $  93     $31,962,530    $(34,469,013)  $(2,502,544)
                                       ==========    =======        =====       =====     ===========    ============   ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       5
<PAGE>


                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            FOR THE NINE MONTHS ENDED
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                        January 31,           January 31,
                                                                                           2000                  1999
                                                                                        -----------           -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                    <C>                    <C>
     Net loss                                                                          $ (2,172,141)          $  (381,737)
     Adjustments to reconcile net loss to net cash
     (used in) provided by operating activities:
       Depreciation and amortization                                                        696,949               755,568
       Provision (credit) for doubtful accounts                                             110,000                (3,948)
       Issuance of common stock and stock options for director compensation                   5,078                   -
       Compensation related to officer options                                              138,080                   -
       Issuance of common stock and stock options for services                              201,809               138,274
       Issuance of common stock for dividends and
       related interest on redeemable preferred stock                                        70,536                   -
       Gain on disposal of equipment                                                            -                 (15,332)
       Deferred income taxes                                                                    -                (110,000)
     Changes in operating assets and liabilities:
       Accounts receivable                                                                 (318,828)             (319,454)
       Due from officer                                                                     100,000              (100,000)
       Inventories                                                                          (49,678)               14,021
       Costs and estimated earnings in excess of billings on uncompleted contracts           71,493                37,557
       Prepaid and other current assets                                                      75,553               205,304
       Accounts payable and accrued expenses                                               (362,070)              330,347
       Payroll and sales taxes payable                                                     (238,982)             (422,335)
       Obligations of unconsolidated subsidiary                                              13,895                   -
       Billings in excess of costs and estimated earnings  on uncompleted contracts        (122,296)              (45,779)
                                                                                        -----------           -----------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES                                      (1,780,602)               82,486
                                                                                        -----------           -----------

CASH FLOWS FROM INVESTING ACTIVITIES
     Collection of notes receivable                                                         107,355                42,651
     Other assets                                                                           (26,457)                8,103
     Proceeds from insurance settlement                                                         -                  20,332
     Purchases of property and equipment                                                   (221,224)             (293,346)
                                                                                        -----------           -----------
NET CASH USED IN INVESTING ACTIVITIES                                                      (140,326)             (222,260)
                                                                                        -----------           -----------

CASH FLOWS FROM FINANCING ACTIVITIES
     Principal payments of long-term debt and factor advances                              (979,653)           (2,374,317)
     (Payments) proceeds of revolving bank line, net                                     (1,200,596)            1,875,512
     Proceeds from equipment term loan                                                          -                 595,000
     Proceeds from private placements                                                     2,642,351                   -
     Proceeds from issuance of  short term notes                                            225,829                   -
     Payments on short term notes                                                            (9,054)                  -
     Proceeds from notes due affiliate                                                    2,000,000                   -
     Dividends paid on redeemable preferred stock                                           (58,500)              (19,500)
     Proceeds from exercise of stock options                                                  7,500                   -
     Proceeds from issuance of Common Stock                                                     -                 130,000
                                                                                        -----------           -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                                 2,627,877               206,695
                                                                                        -----------           -----------

NET INCREASE IN CASH                                                                        706,949                66,921

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

CASH - END OF PERIOD                                                                    $   753,285           $   100,836
                                                                                        ===========           ===========

Cash paid during the period for:
Interest                                                                                $   767,527           $   594,755
                                                                                        ===========           ===========
Taxes                                                                                   $    -                $     2,750
                                                                                        ===========           ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       6
<PAGE>



                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE NINE MONTHS ENDED JANUARY 31, 2000
                                   (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  financial  statement  presentation.   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  January  31,
     2000 the  Company   had  a   stockholders'  deficit of  $2,502,544  and  an
     accumulated  deficit of   $34,469,013.  The   Company   has   financed  its
     operations  to date   primarily  through   issuances  of  debt  and  equity
     securities. At January 31, 2000 the Company  had  $753,285  in  cash, and a
     working  capital  deficit  of  $565,372.  In  addition,  as  of January 31,
     2000,  the Company  was  in  arrears  with  respect to certain  payroll and
     sales  tax    obligations   of    approximately   $84,000   and   $267,000,
     respectively.  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.

     On October 29, 1999 the Company  consummated  an equity and debt  financing
     transaction  with  Spotless  Plastics  (USA),  Inc.  (see  Note  6  )  that
     significantly   improved  the  Company's   liquidity  and  cash   position.
     Management  believes  the  Company  will  require  positive  cash flow from
     operations to meet its working  capital needs over the next twelve  months.
     In the event that positive cash flow from operations is not generated,  the
     Company may be required to seek  additional  financing  to meet its working
     capital needs. The Company currently has no credit facility. Revenue growth
     is  expected  in new  and  existing  service  areas.  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 project  costs,  including  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
     performance  bonds which are generally not released until completion of the
     project.  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 achieving
     positive cash flow from operations or obtaining additional  financing.  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.

3.   INCOME TAXES

     No provision  or (benefit)  for income taxes was recorded for the three and
     nine month  periods  ended  January  31,  2000 due to the net  losses.  Any
     deferred  tax assets  which may have arisen  during the period would have

                                       7
<PAGE>

     a full valuation allowance provided against such asset.

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.

     On October  29,1999 options to purchase  2,000,000  shares of Common Stock,
     previously granted,  vested. The Company recorded  compensation  expense in
     the amount of $138,080.  Additionally,  options to purchase  2,674,714  and
     2,811,595 shares of Common Stock were granted to Michael O'Reilly (see Note
     6).

     Issuances of Common and Preferred Stock and Warrants

     During the six months  ended  October 31, 1999 the Company  issued  882,334
     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 $142,350.  The warrants  expire on
     July 22, 2004.

     On July 29, 1999 a former  employee  exercised  options to  purchase  7,000
     common shares at an exercise price of $.375 per share.

     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.

     On October 29, 1999 the Company  issued  9,346 shares of Series B preferred
     stock and 22,284,683  shares of Common Stock in a transaction with Spotless
     Plastics  (USA),  Inc. and its subsidiary for  consideration  of $2,500,000
     (see Note 6).

     On November 16, 1999 a former employee exercised options to purchase 13,000
     common shares at an exercise price of $.375 per share.


     Issuance of Convertible Debt

     On October 29,1999 the Company borrowed  $2,000,000 from Spotless  Plastics
     (USA),  Inc.  and  issued  a  secured   promissory  note  convertible  into
     25,304,352  shares of Common  Stock or 25,305  shares of Series B Preferred
     (see Note 6).

                                       8
<PAGE>


5.   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.  No  charges  have been  filed  against  the  Company or any other
     current  member  of  management  as  a  result  of  the  Eastern   District
     investigation.  On November 22, 1999 the Securities and Exchange Commission
     accepted the Company's  settlement offer in its "Order  Instituting  Public
     Administrative  Proceedings,  Making Findings,  Imposing Remedial Sanctions
     and  Issuing  Cease-and-Desist  Order."  Under  the  terms of the order the
     Company  neither  admitted nor denied any allegations and did not incur any
     monetary  fines.  The order  requires the Company to develop and  institute
     certain  policies,  procedures  and manuals that will improve its corporate
     governance,  including the adoption of an audit committee charter, a formal
     conflict of interest policy and a formal employee handbook.  The order also
     requires the Company to obtain a secure off site storage  facility to store
     its backup data files and system  software  and to make  certain  reporting
     disclosures.  The Company has  implemented  such  policies,  procedures and
     manuals and made such  disclosures.  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  is in  negotiations  to settle  such  claims for an
     amount not to exceed $25,000.

     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  of the  Company,  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.

6.   SALE OF CONTROLLING INTEREST AND REFINANCING

     On October  26,  1999 the Board of  Directors  of  Windswept  Environmental
     Group, Inc. ("the "Company")  created a class of 50,000 shares of preferred
     stock,  par value $.01 per share,  designated  as the Series B  Convertible
     Preferred  Stock  (the  "Series  B  Preferred").  Each  share  of  Series B
     Preferred has a liquidation  preference of $79.04, is initially convertible
     into 1,000  shares of Common  Stock,  par value  $.0001  per share,  of the
     Company (the "Common  Stock")  (subject to  adjustment)  and is entitled to
     cast 1,000 votes, together with the Common Stock and the Series A Preferred
     Stock,  par value $.01 per share,  on any matters  subject to a vote of the
     holders of the Common Stock.

     On October 29, 1999 the Company entered into a subscription  agreement with
     Spotless  Plastics  (USA),  Inc.,  a Delaware  corporation  ("Spotless"  or
     "Affiliate"),  pursuant to which the Company sold to Windswept  Acquisition
     Corporation,  a  Delaware  corporation  and a wholly  owned  subsidiary  of
     Spotless  ("Acquisition  Corp."),  22,284,683  shares of Common Stock,  and
     9,346 shares of Series B Preferred,  for an aggregate

                                       9
<PAGE>

     subscription  price  of  $2,500,000  (the "Purchase  Price") or $.07904 per
     share  of  Common Stock and $79.04 per share  of  Series  B  Preferred.  At
     October 31,  1999  Acquisition Corp's  Common Stock  holdings equate to 58%
     of the  Company's  issued  and  outstanding  common  shares. If Acquisition
     Corp. were to convert  the shares of Series B  Preferred  stock  to  Common
     Stock,  it would hold 66.2%  of the Company's issued and outstanding common
     shares.

     In addition, the Company and Trade-Winds Environmental  Restoration,  Inc.,
     North Atlantic Laboratories, Inc. and New York Testing Laboratories,  Inc.,
     each of which is a  wholly-owned  subsidiary  of the Company,  as joint and
     several obligors (collectively,  the "Obligors"),  borrowed $2,000,000 from
     Spotless (the "Loan")  pursuant to a secured  convertible  promissory  note
     dated October 29, 1999 (the "Note") which bears interest at a rate equal to
     LIBOR plus one percent (1%).  The Note matures on October 29, 2004,  and is
     convertible into either  25,304,352 shares of Common Stock or 25,305 shares
     of Series B Preferred shares at Spotless' option. Additionally Spotless has
     the right to defer the maturity  date of the note for one year.  At October
     31,  1999 the common  shares  issuable  upon  conversion  of the Note would
     represent 39.7% of the Company's issued and outstanding  common shares.  In
     connection with the note, each of the Obligors  granted Spotless a security
     interest in  substantially  all of their  respective  assets  pursuant to a
     Security Agreement dated October 29, 1999.

     Upon the  occurrence  of the  change in control  of the  Company  described
     above,  options to purchase 2,000,000 shares of Common Stock exercisable at
     $.01 per share granted to Michael O'Reilly on September 12, 1996 vested and
     became   exercisable  over  a  five-year   period.   The  Company  recorded
     compensation  expense  in the  amount  of  $138,080  due to this  change in
     control.

     The  Board  of  Directors  has  approved  an  amendment  to  the  Company's
     certificate of incorporation  increasing the number of authorized shares of
     Common  Stock  from  50,000,000  to  100,000,000  (the  "Amendment").   The
     Amendment  is expected to become  effective  promptly  after the  Company's
     compliance  with  Section  14(c)  of the  Exchange  Act and the  rules  and
     regulations  thereunder,  approval by the  stockholders  of the Company and
     filing with the Secretary of State of the State of Delaware.

     In addition,  on October 29, 1999,  the Company  entered into an Employment
     Agreement  with  Michael  O'Reilly.  This  agreement  is for a term of five
     years,  calls for a base salary of  $260,000  per year and a bonus equal to
     2.5% of the  Company's  pre-tax  income  (as that  term is  defined  in the
     Employment Agreement). Upon the termination of Mr. O'Reilly's employment by
     the Company (other than  termination for cause,  death or disability or his
     resignation  without good reason, as defined in the Employment  Agreement),
     Mr. O'Reilly will be entitled to sell, in a single transaction,  any or all
     of shares of Common Stock held by him as of October 29, 1999 and all shares
     of Common Stock  underlying  options to purchase  shares of Common Stock of
     the Company held by him as of October 29, 1999 (collectively, the "O'Reilly
     Shares"),  to the extent  vested and  exercisable,  back to the Company (or
     pursuant to the Letter  Agreement  [as defined  below],  to Spotless to the
     extent that the  Company's  capital would be impaired by such a repurchase)
     at a mutually  agreeable price. If the parties are not able to agree upon a
     purchase  price,  then the purchase  price will be determined  based upon a
     procedure  using  the  appraised  value of the  Company  at the  time  such
     obligation to purchase arises.  Similarly,  pursuant to a letter agreement,
     dated as of October 29, 1999, by and between Michael  O'Reilly and Spotless
     (the "Letter  Agreement"),  Michael O'Reilly has the right, upon receipt of
     notice that  Spotless and any of its  affiliates  has acquired a beneficial
     ownership of more than seventy-five percent (75%) of the outstanding shares
     of  Common  Stock  (on a fully  diluted  basis),  to  require  Spotless  to
     purchase, in a single transaction,  the O'Reilly Shares. The purchase price
     applicable to any such purchase shall be at a price  mutually  agreed upon.
     If the  parties  are not  able to agree  upon a  purchase  price,  then the
     purchase  price  will  be  determined  based  upon a  procedure  using  the
     appraised  value of the  Company at the time such  obligation  to  purchase
     arises. As a condition  precedent to requiring the Company or Spotless,  as
     the case may be, to repurchase the O'Reilly  Shares,  Michael O'Reilly must
     forfeit the Conversion Date Option (as defined below), except to the extent
     that the Conversion Date Option is at that time vested and exercisable.

     The  Company has  granted to Mr.  O'Reilly an option to purchase  2,674,714
     shares of Common Stock, which vests and becomes exercisable,  to the extent
     of one third of the option  grant,  on each of the first,  second and third
     anniversaries  of October 29,  1999.  The  Company has also  granted to Mr.
     O'Reilly  an option to  purchase

                                       10
<PAGE>


     2,811,595  shares  of Common  Stock  (the "Conversion  Date Option")  which
     are   exercisable  on  or  after  October  29,  2006;  provided,  that  the
     exercisability of such option will be accelerated if and to the extent that
     Spotless  converts  or exchanges  the Note.  These options are exerciseable
     at $.07904 per share of Common Stock, representing the fair market value of
     the stock on the date of grant.

     On October 29, 1999 the Company used some of the  proceeds  from the equity
     and debt  financing  with Spotless to repay the  revolving  credit note and
     term loan with Business Alliance Capital Corporation ("BACC").  The related
     security agreement with BACC was simultaneously  terminated. The prepayment
     penalty of $100,000 paid to BACC is presented as an  extraordinary  item in
     the Consolidated Statements of Operations.

     In September  1999, the Company  borrowed  $100,000 from Spotless  Plastics
     (USA),  Inc. The  borrowings  bore interest at a rate of 6% and were repaid
     with accrued interest in November 1999.


                                       11

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

The  following  discussion of the three and nine month periods ended January 31,
2000 and 1999,  should be read in conjunction  with the  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 amount of the
Company's revenues, the Company's ability to improve it's gross margin and limit
or reduce 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 before extraordinary item for the three and nine
month periods ended January 31, 2000 was ($495,321) and ($0.01) and ($2,072,141)
and  ($.09),  respectively,  compared  to a net loss and loss per  share  before
extraordinary  item for the three and nine month  periods ended January 31, 1999
of ($979,943) and ( $.07) and ($381,737) and ($.03), respectively. Extraordinary
item and  extraordinary  item per share for the nine month period ended  January
31, 2000 was a loss of $100,000and ($.00).

Three Months Ended January 31, 2000 and 1999

Revenues for the quarter ended January 31, 2000 decreased by $564,736, or 18.5%,
to  $2,493,450  from  $3,058,186  for the quarter  ended  January 31. 1999.  The
decrease  in  revenues  for the quarter  ended  January  31, 2000 was  primarily
attributable  to  the  Company's  Trade-Winds   Environmental  Restoration  Inc.
subsidiary,   where  revenues   decreased  in  construction  and  renovation  by
approximately  $436,000 and revenues  decreased in fireproofing by approximately
$131,000.  Such  decline in  revenues  is  principally  attributable  to limited
working  capital  resources  necessary to adequately  support an increase in the
volume or scope of contracts the Company was able to  participate  in during the
quarter,  and the inability of the Company to focus personnel on the development
of  revenue  caused by the  demand on key  Company  personnel's  time  needed to
complete the negotiation of equity and debt  investment  with Spotless  Plastics
(USA), Inc. during the previous quarter.

Gross  margins for the three  months ended  January 31, 2000  increased to 13.2%
from 5.4% for the three months ended January 31, 1999.  Substantially all of the
increase in gross margins is  attributable  to lower material  costs  associated
with the lower construction and renovation  revenue, as well as the mix of labor
costs for services.

Selling,  general and administrative  expenses for the quarter ended January 31,
2000  increased  by  approximately   $10,000  or  1.4%.  Selling,   general  and
administrative  expenses as a percentage of sales increased in the quarter ended
January  31,  2000 to  29.8%  from  24% for the  comparable  prior  year  period
primarily as a result of lower revenues for the quarter ended January 31, 2000.

                                       12
<PAGE>

Interest  expense for the three  months  ended  January 31,  2000  decreased  by
$130,378, or 53.2%, to $114,887 from $245,265 for the three months ended January
31, 1999. The decrease in interest expense is attributable to lower average loan
balances and lower interest rates from the Company's  principal  lender compared
to the prior year's comparable quarter. The Company anticipates  maintaining the
significantly  lower  interest costs in future periods as a result of the equity
and debt transaction with Spotless Plastics (USA), Inc.

Nine Months Ended January 31, 2000 and 1999

Revenues for the first nine months of fiscal year 2000  decreased by $2,537,123,
or 23.2%,  to $8,461,373  from  $11,018,496  for the first nine months of fiscal
year 1999.  The decrease in revenues for the nine months ended  January 31, 2000
was  primarily   attributable   to  the  Company's   Trade-Winds   Environmental
Restoration  Inc.  subsidiary,  where  revenues  decreased in  construction  and
renovation by approximately $1,670,000. During this period revenue from asbestos
and lead abatement  declined by  approximately  $1,889,000,  which was partially
offset by increases in emergency response and other services. The Company's cash
flow  difficulties  and interest cost  considerations,  prior to the transaction
with  Spotless  Plastics  (USA),  Inc.,  limited its ability to fund  additional
construction  and  abatement  projects.   Additionally,  the  revenues  for  the
Company's  North  Atlantic  Laboratory  subsidiary  decreased  by  approximately
$643,000 due to a loss of key personnel and the non-renewal of a major contract.

Gross margins for the nine months ended January 31, 2000 decreased to 19.2% from
23.6% for the nine  months  ended  January  31,  1999.  Approximately  2% of the
decrease in gross margins is  attributable  to  disproportionately  higher labor
costs during the nine months ended January 31, 2000 resulting from the change in
the composition of the contracts  performed during the period.  Labor costs vary
with  the mix of  services  provided.  The  decline  in  gross  margins  is also
attributable  to  certain  indirect  costs  remaining   constant  despite  lower
revenues.

Selling,  general and administrative  expenses for the nine months ended January
31, 200 increased by $646,367,  or 26.5%,  to $3,083,128 from $2,436,761 for the
nine months ended January 31, 1999. The increase was primarily  attributable  to
the following items: bad debt expense of $110,000, a provision for litigated and
disputed  items of  $160,000,  accounting  fees of $67,000,  and state and local
taxes,  penalties and interest of approximately  $230,000,  legal and consulting
fees related to the equity and debt financing with Spotless Plastics (USA), Inc.
of  $182,381,  the  compensatory  effect of the  vesting of  options  previously
granted to Mr. Michael O'Reilly of $138,080 and  compensation  authorized by the
Board of  Directors  to Mr.  O'Reilly  for his role as  Chairman of the Board of
Directors  of  $100,000.  This  increase  was offset by a reduction in the sales
force  and  advertising  costs  which  decreased  costs  in the nine  months  by
approximately $383,000 and $71,000, respectively.

Interest  expense for the nine  months  ended  January 31, 2000 was  $662,101 as
compared to $679,316 for the nine months ended January 31, 1999. The decrease in
interest expense is attributable the savings in the third quarter of the current
year due mostly to the debt and equity transaction with Spotless Plastics (USA),
Inc.  The  Company  anticipates  significantly  lower  interest  costs in future
periods as a result of this transaction.

The extraordinary  item - loss on the  extinguishment of debt of $100,000 in the
six  months  ended  October  31,  1999 is due to a  prepayment  penalty  paid to
Business Alliance Capital Corporation, the Company's former principal lender.

LIQUIDITY AND CAPITAL RESOURCES

The Company's financial  statements have been prepared assuming that the Company
will  continue  as a going  concern.  As of January  31,  2000 the Company has a
stockholders'  deficit of $2,502,544 and an accumulated  deficit of $34,469,013.
The Company has financed its operations to date primarily  through  issuances of
debt and equity  securities.  At January 31,  2000 the  Company had  $753,285 in
cash, and a working capital deficit of $565,372.  In addition, as of January 31,
2000,  the Company was in arrears with respect to certain  payroll and sales tax
obligations  of  approximately  $84,000 and $267,000.  The Company has paid down
these  arrears by $10,000 and $283,000  respectively,  during the  quarter.  The
Company  expects  to  continue  to pay down these  arrears  in the  future  from
available working capital.  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.

                                       13
<PAGE>

On October  29,  1999,  the  Company  consummated  an equity and debt  financing
transaction with Spotless Plastics (USA), Inc. that  significantly  improved the
Company's  liquidity  and cash  position.  The Company  received  $2,500,000  in
exchange for equity and $2,000,000 of debt  financing.  Management  believes the
Company  will require  positive  cash flow from  operations  to meet its working
capital needs over the next twelve months.  In the event that positive cash flow
from operations is not generated, the Company may be required to seek additional
financing to meet its working capital needs. The Company currently has no credit
facility  for  additional  borrowing.  Revenue  growth  is  expected  in new and
existing  service areas. 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 project  costs,  including
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 performance  bonds which are generally not released  until  completion of the
project.  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 achieving positive cash flow from
operations  or  obtaining  additional  financing.   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.

In September 1999, the Company borrowed  $100,000 from Spotless  Plastics (USA),
Inc. The  borrowings  bore  interest at a rate of 6% and was repaid with accrued
interest in November 1999.

CASH FLOW

Net cash used by operating  activities  was $1,780,602 for the nine months ended
January  31,  2000.  The  amount  used  by  operating  activities  is  primarily
attributable  to the net loss after  adjusting for noncash items;  increases and
decreases in the assets and liabilities used approximately $831,000 of cash. The
major  components  of this  amount was used to  decrease  accounts  payable  and
accrued  expenses by $362,070  and a $238,982  decrease in payroll and sales tax
payable resulting from the settlement of outstanding sales tax issues. Cash used
in investing activities for the nine months ended January 31, 2000 was $140,326.
This was  primarily due to capital  expenditures  of $221,000 and an increase to
other  assets of  $26,000,  offset by the  collection  of a note  receivable  of
$107,000.  The net cash  provided by  financing  activities  for the nine months
ended January 31, 2000 was $2,627,877.  Of this amount,  $1,968,000 was provided
from the transaction with Spotless Plastics (USA), Inc.,  described above, after
paying off the  indebtedness to the Company's  previous lender of  approximately
$2,622,000  and  repayment of a short-term  $100,000  loan to Spotless  Plastics
(USA), Inc.

THE YEAR 2000

The Company has  incurred  costs of  approximately  $25,000  relating to actions
taken to make its systems,  services  and  infrastructure  Year 2000  compliant,
which the Company paid out of its working capital.  To date, the Company has not
experienced any material  difficulties  relating to Year 2000 computer problems,
and does not  anticipate  any such  material  difficulties  in the  future.  The
Company intends to continue to monitor this situation.

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.

                                       14
<PAGE>


PART II - OTHER INFORMATION

Item 1. Legal Proceedings

        See Note 5 to the Condensed Consolidated Financial Statements.

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

        Dan  Rosenberg  is no longer the Company's Chief  Financial  Officer and
has been temporarily  replaced by Charles L. Kelly,  Chief Financial Officer and
Vice President of Finance and Administration of Spotless Plastics (USA), Inc.

Item 6. Exhibits and Reports on Form 8-K

(a)     Exhibits:

        27.    Financial Data Schedule

(b)     Reports on Form 8-K

        Current  report on  Form 8-K  (Date of Report:  December  1, 1999) filed
with the SEC on December 8, 1999.

                                       15
<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 there unto duly authorized.

Dated: March 15, 2000

                                        WINDSWEPT ENVIRONMENTAL GROUP, INC.



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



                                        By: /s/ Charles L. Kelly
                                            CHARLES L. KELLY
                                            Chief Financial Officer

                                       16