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 October 31, 1998

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

            For the Transition period from __________ to __________.

                         Commission File Number: 0-17072

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

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

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

                                 (516) 694-7060
                           (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                             13,263,301 
  (Title of Each Class)                        (Outstanding at October 31, 1998)

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>
                                                                                                     October 31,
                                                                                                        1998              April 30,
                                                                                                     (Unaudited)            1998    
                                                                                                    ------------        ------------
<S>                                                                                                <C>                 <C>         
                                     ASSETS
CURRENT ASSETS
    Cash                                                                                           $    303,441        $     33,915
    Accounts receivable, net of allowance for doubtful
       accounts of $140,143 and $280,000, respectively                                                3,043,139           2,517,517
    Inventories                                                                                         163,533             161,266
    Costs and estimated earnings in excess of billings on uncompleted contracts                          38,000              55,352
    Prepaid and other current assets                                                                    371,768             325,061
    Deferred income taxes                                                                               275,000                --   
                                                                                                   ------------        ------------
            Total current assets                                                                      4,194,881           3,093,111

PROPERTY AND EQUIPMENT, net of accumulated depreciation of
    $2,376,126 and $1,953,634, respectively                                                           2,545,104           2,799,191

OTHER ASSETS
    Goodwill, net of accumulated amortization of $41,260 and $36,526, respectively                       80,766              85,500
    Note receivable, net of current portion of $83,031 and $80,460, respectively                        178,713             209,245
    Other assets                                                                                        145,318             167,642
                                                                                                   ------------        ------------
    TOTAL ASSETS                                                                                   $  7,144,782        $  6,354,689
                                                                                                   ============        ============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
    Accounts payable and accrued expenses                                                          $  3,206,802        $  3,361,578
    Revolving credit note payable                                                                     1,984,420                --
    Advances from factor                                                                                   --             1,505,968
    Billings in excess of costs and estimated earnings on uncompleted contracts                         162,500             266,000
    Payroll taxes payable                                                                               107,987             641,790
    Current portion of long-term debt                                                                   592,250             955,367
    Obligations of unconsolidated subsidiary, net                                                       196,112             196,112
                                                                                                   ------------        ------------
            Total current liabilities                                                                 6,250,071           6,926,815

OTHER LIABILITIES
    Convertible notes                                                                                   790,000             800,000
    Long-term debt, net of current portion                                                              598,244             227,604
    Other liabilities                                                                                      --                37,000
                                                                                                   ------------        ------------
            Total liabilities                                                                         7,638,315           7,991,419
                                                                                                   ------------        ------------
COMMITMENTS AND CONTINGENCIES

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

STOCKHOLDERS' EQUITY (DEFICIT)
    Preferred stock, $.01 par value,
      10,000,000 shares authorized                                                                         --                  --
    Common stock, $.0001 par value,
      50,000,000 shares authorized;
      13,263,301 and 11,552,374 shares issued and outstanding, respectively                               1,326               1,155
    Additional paid-in capital                                                                       28,630,136          28,126,648
    Accumulated deficit                                                                             (30,391,190)        (30,989,396)
    Less deferred compensation                                                                          (33,805)            (75,137)
                                                                                                   ------------        ------------
            Total stockholders' equity (deficit)                                                     (1,793,533)         (2,936,730)
                                                                                                   ------------        ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                               $  7,144,782        $  6,354,689
                                                                                                   ============        ============
</TABLE>


See accompanying notes to consolidated financial statements.

                                        1


<PAGE>


                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                           Three Months Ended               Six Months Ended
                                                                           ------------------               ----------------
                                                                               October 31,                     October 31,
                                                                           1998            1997           1998              1997
                                                                       ------------    ------------    ------------    ------------
<S>                                                                    <C>             <C>             <C>             <C>         
Revenues                                                               $  4,516,847    $  3,601,372    $  7,960,310    $  6,896,735

Cost of revenues                                                          3,206,378       3,086,938       5,527,535       6,271,852
                                                                       ------------    ------------    ------------    ------------
         Gross profit                                                     1,310,469         514,434       2,432,775         624,883

Selling, general and administrative expenses                                864,755       1,088,893       1,703,350       2,265,113
                                                                       ------------    ------------    ------------    ------------
         Income (loss) from operations                                      445,714        (574,459)        729,425      (1,640,230)
                                                                       ------------    ------------    ------------    ------------
Other income (expense):
 Interest expense                                                          (157,745)       (192,959)       (434,051)       (501,196)
 Other, net                                                                  12,500           1,735          27,832           1,735
                                                                       ------------    ------------    ------------    ------------
         Total other income (expense)                                      (145,245)       (191,224)       (406,219)       (499,461)
                                                                       ------------    ------------    ------------    ------------
         Income (loss) before income tax benefit                            300,469        (765.683)        323,206      (2,139,691)

Income tax benefit                                                         (275,000)           --          (275.000)           --   
                                                                       ------------    ------------    ------------    ------------
         Net income (loss)                                                  575,469        (765,683)        598,206      (2,139,691)

Dividends on Series A Convertible Preferred Stock                            19,500          19,500          39,000          42,846
                                                                       ------------    ------------    ------------    ------------
         Net income (loss) attributable to common shareholders         $    555,969    $   (785,183)   $    559,206    $ (2,182,537)
                                                                       ============    ============    ============    ============
Net income (loss) per common share:
        Basic                                                          $        .04    $       (.08)   $        .04    $       (.22)
                                                                       ============    ============    ============    ============
       Diluted                                                         $        .03    $       (.08)   $        .04    $       (.22)
                                                                       ============    ============    ============    ============
Weighted average number of common shares outstanding:
        Basic                                                            12,800,778      10,110,692      12,463,486       9,973,051
                                                                       ============    ============    ============    ============
        Diluted                                                          17,562,677      10,110,692      17,192,329       9,973,051
                                                                       ============    ============    ============    ============
</TABLE>


See accompanying notes to consolidated financial statements.

                                        2


<PAGE>


                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    FOR THE SIX MONTHS ENDED OCTOBER 31, 1998
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                    Common Stock           
                                              -------------------------   Additional
                                              Number of        Par          Paid-in      Accumulated       Deferred
                                               Shares         Value         Capital        Deficit       Compensation       Total
                                             -----------   ------------   ------------   ------------    ------------   ------------
<S>                                          <C>          <C>            <C>            <C>             <C>            <C>          
Balance at April 30, 1998                    11,552,374   $      1,155   $ 28,126,648   $(30,989,396)   $    (75,137)  $ (2,936,730)

Proceeds from private placements of
  common stock                                  735,000             73        129,927           --              --          130,000

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

Issuance of common stock for services           583,089             59        251,574           --              --          251,633

Issuance of common stock
  for legal settlement                           22,874              2          9,262           --              --            9,264

Issuance of common stock for
  employee and director compensation            125,000             13         48,387           --              --           48,400

Amortization of deferred compensation              --             --             --             --            41,332         41,332

Dividends on preferred stock                       --             --          (39,000)          --              --          (39,000)

Issuance of common stock and options for
  accrued preferred dividends and related
  interest                                      224,964             22         93,340           --              --           93,362

Net income                                         --             --             --          598,206            --          598,206 
                                            -----------   ------------   ------------   ------------    ------------   ------------

Balance at October 31, 1998                  13,263,301   $      1,326   $ 28,630,136   $(30,391,190)   $    (33,805)  $ (1,793,533)
                                            ===========   ============   ============   ============    ============   ============
</TABLE>


See accompanying notes to consolidated financial statements.

                                        3


<PAGE>


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

<TABLE>
<CAPTION>
                                                                 October 31,   October 31,
                                                                    1998           1997       
                                                                -----------    -----------
<S>                                                             <C>            <C>         
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income (loss)                                           $   598,206    $(2,139,691)
    Adjustments to reconcile net income (loss) to net cash
    used by operating activities:
      Depreciation and amortization                                 505,886        983,633
      Provision for doubtful accounts                                15,393         78,097
      Issuance of common stock and stock options for services        59,662        106,346
      Gain on disposal of equipment                                 (15,332)        (1,735)
      Deferred income taxes                                        (275,000)          --
    Changes in operating assets and liabilities:
      Accounts receivable                                          (541,015)    (1,273,217)
      Inventories                                                    (2,267)       (21,046)
      Costs and estimated earnings in excess of billings
        on uncompleted contracts                                     17,352         (6,965)
      Due from officer                                                 --          (62,070)
      Prepaid and other current assets                               92,525        244,623
      Other assets                                                     --          (17,538)
      Accounts payable and accrued expenses                         131,721      1,401,158
      Payroll taxes payable                                        (533,803)       263,214
      Billings in excess of costs and estimated earnings
        on uncompleted contracts                                   (103,500)          --   
                                                                -----------    -----------
NET CASH USED BY OPERATING ACTIVITIES                               (50,172)      (445,191)
                                                                -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES
   Collection of notes receivable                                    28,137         23,045
   Proceeds from sale of assets                                        --           14,614
   Proceeds from insurance settlement                                20,332           --
   Purchases of property and equipment                             (188,405)      (586,974)
                                                                -----------    -----------
NET CASH USED BY INVESTING ACTIVITIES                              (139,936)      (549,315)
                                                                -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES
    Principal payments of long-term debt and factor advances     (2,230,286)      (340,427)
    Proceeds from revolving bank line, net                        1,984,420        728,613
    Proceeds from equipment term loan                               595,000           --
    Dividends paid on redeemable preferred stock                    (19,500)       (23,346)
    Proceeds from issuance of common stock                          130,000           --   
                                                                -----------    -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                           459,634        364,840
                                                                -----------    -----------
NET INCREASE (DECREASE) IN CASH                                     269,526       (629,666)

CASH - BEGINNING                                                     33,915        654,377
                                                                -----------    -----------
CASH - ENDING                                                   $   303,441    $    24,711
                                                                ===========    ===========
Cash paid during the period for:

Interest                                                        $   385,152    $    97,093
                                                                ===========    ===========
Taxes                                                           $     2,750    $      --   
                                                                ===========    ===========
</TABLE>


See accompanying notes to consolidated financial statements.


                                        4


<PAGE>


                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.   BASIS OF PRESENTATION

     The accompanying  unaudited condensed  consolidated financial statements of
     the Company have been prepared by management in accordance  with  generally
     accepted accounting  principles for interim financial  information and with
     the   instructions   to  Form  10-QSB  and  Item  310  of  Regulation  S-B.
     Accordingly,  they do not  include  all of the  information  and  footnotes
     required by generally accepted accounting principles for complete financial
     statements.  In the opinion of management,  all adjustments  (consisting of
     normal recurring  accruals)  considered  necessary for a fair  presentation
     have been included.  The results of operations for interim  periods are not
     necessarily  indicative  of the results to be  expected  for the full year.
     These  consolidated   interim  financial   statements  should  be  read  in
     conjunction with the financial statements and notes thereto included in the
     Company's Form 10-KSB for the fiscal year ended April 30, 1998.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Reclassifications   -  Certain   amounts   included  in  the  prior  year's
     consolidated  financial  statements have been  reclassified to conform with
     the current period presentation.

3.   LIQUIDITY AND BUSINESS RISKS

     The Company's  financial  statements  have been prepared  assuming that the
     Company  will  continue  as a going  concern.  As of October  31,  1998 the
     Company  has a  stockholders'  deficit  of  $1,793,533  and an  accumulated
     deficit of  $30,391,190.  The Company has financed its  operations  to date
     primarily through issuances of debt and equity  securities.  At October 31,
     1998,  the Company had $303,441 in cash, and a working  capital  deficit of
     $2,055,190.  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.

     In June 1998,  the  Company  entered  into a revolving  credit  facility to
     obtain a  revolving  credit line of  $2,445,000,  secured by certain of the
     Company's  assets.  This revolving credit line was increased by $650,000 to
     $3,095,000 in October 1998. The current  quarter's  results reflect efforts
     to improve the  Company's  overall  gross  margins and control its selling,
     general,  and  administrative  expenses.  Revenue  growth  is  expected  to
     continue and further expense reductions are planned;  however, no assurance
     can be given in this regard.  The Company is  currently  engaged in various
     discussions   with   potential    investors   regarding   possible   equity
     transactions.  There can be no  assurance,  however,  that  changes  in the
     Company's plans or other events affecting the Company's operations will not
     result in accelerated or unexpected cash  requirements,  or that it will be
     successful in obtaining  additional  financing to meet its  obligations  as
     they become due. The  Company's  future cash  requirements  are expected to
     depend on numerous factors,  including, but not limited to: (i) the ability
     to successfully  bid on  environmental  or 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.

4.   EQUITY TRANSACTIONS

     During  May  1998  the  Company   received  $68,000  from  several  private
     accredited  investors for 425,000  shares,  or $.16 per common share.  Also
     during May 1998 , a  convertible  noteholder  converted a $10,000 note into
     20,000  shares of common  stock.  During  August and  September  1998,  the
     Company  received  $62,000 from several  private  accredited  investors for
     310,000 shares, or $.20 per common share.

     On August 18, 1998 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 to the Chief Executive Officer. In addition, options
     to purchase  100,000  shares of common  stock were issued to the  Company's
     Chief Financial Officer.  All of these options are exercisable  immediately
     at an exercise price of $.34, and expire August 17, 2003.

     On August 20, 1998 the Company's Board of Directors  approved the Company's
     1998  Stock  Incentive  Plan  ("Plan").  Under the  Plan,  the  Company  is
     permitted  to grant  awards up to a maximum of  2,000,000  shares of common
     stock as restricted stock, incentive stock options,  non-qualified options,
     phantom stock and otherwise.


                                        5


<PAGE>


                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

4.   EQUITY TRANSACTIONS (cont.)

     For the six months  ended  October 31,  1998,  the Company  issued  504,142
     shares  valued at $221,633  related to prior  fiscal year  obligations  for
     legal and consulting services.  The Company issued 78,947 shares and 22,874
     shares valued at $30,000 and $9,264 for current  fiscal year legal services
     and a legal settlement,  respectively. The Company issued 100,000 shares of
     common  stock  valued  at  $37,000  to  its  Vice   President  of  Business
     Development  which  it had  been  contractually  obligated  to  issue.  The
     Company's five directors were issued 5,000 shares each valued at $11,400 in
     the  aggregate.  The Company  issued 224,964 shares of its common stock and
     30,000 options  (exercisable at $.375) in payment of all accrued and unpaid
     preferred stock dividends and interest due through October 31, 1998. During
     the six month period ended  October 31, 1998,  467,604  stock  options were
     forfeited.

     On October 2, 1998 the Company  issued 50,000 stock options to an employee,
     exercisable at $.40. On November 13, 1998, the Company issued 550,000 stock
     options to certain of its employees,  exercisable  at $.375.  These options
     expire in October 2003.

5.   RELATED PARTY TRANSACTIONS

     The  Company  purchased  materials  and  supplies of  $127,651,  and had an
     outstanding  balance  payable at October  31,  1998 of $97,686 to a Company
     with which one of its  directors is  affiliated.  The same director is owed
     $100,000 on a 12% convertible note payable in full in December 1999.

6.   DEBT

     On June 1, 1998 the  Company  entered  into a  two-year  Loan and  Security
     Agreement ("LSA") with Business Alliance Capital Corporation ("BACC").  The
     LSA consisted of two parts, a term loan of $595,000  collateralized  by the
     Company's  equipment and  revolving  advances up to a maximum of $2,500,000
     (as amended  October  19,1998),  collateralized  by the Company's  accounts
     receivable,  subject to a borrowing  base of 80% of the Company's  eligible
     accounts,  as defined.  Interest on the LSA is at 3% above prime.  The term
     loan carries a five year principal amortization.  Interest is calculated on
     a monthly  minimum daily average loan balance of $750,000.  The LSA carries
     an annual fee of 1% and a  servicing  fee of .5% monthly (to be adjusted to
     .3% after the  Company  satisfies  certain  conditions,  as defined) of the
     average  outstanding  balance of the  advances.  The Company is required to
     maintain a $250,000 life insurance  policy on its CEO with BACC named as an
     irrevocable  beneficiary.  The  Company's  CEO has given BACC an  unlimited
     personal  guaranty on the LSA. In the event of a default,  as defined,  the
     Company is required to pay interest at 8% above the prime rate to BACC.  In
     conjunction  with the LSA, the Company utilized  approximately  $218,000 of
     the proceeds of the term loan to repay in full the outstanding note payable
     to the bank and certain other equipment related capital lease  obligations.
     The  Company  further  utilized  $200,000  of the  proceeds  to  effect  an
     agreement with the Internal Revenue Service relating to its overdue payroll
     taxes. On July 1, 1998, the Company terminated its factoring  agreement and
     transferred its receivable  collateralization  to BACC. The Factor was paid
     $1,432,638 in full satisfaction of the Company's  outstanding  liability to
     it. The Company  received an  additional  advance of $210,000,  for a total
     initial advance of $1,642,638.

7.   STATEMENTS OF CASH FLOWS

     During the six months  ended  October  31,  1998,  the  Company's  non-cash
     operating   activities   included   the  payment  of  $221,633  in  current
     liabilities  utilizing its common stock.  The Company also utilized $37,000
     in common stock to satisfy a previous contractual  obligation.  See Note 4.
     Non-cash financing  activities include $136,841 of annual insurance premium
     financing  and  $93,362 of common  stock and  options  issued in payment of
     accrued preferred dividends and related interest.


                                        6


<PAGE>


                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

8.   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.  To date,  no
     charges  have  been  filed  against  the  Company  or any  other  member of
     management as a result of the Eastern District  investigation.  The Company
     is awaiting the decision of the  Securities  and Exchange  Commission as to
     whether it will follow a staff recommendation that an enforcement action be
     filed seeking an injunction  against  future  violations of the  securities
     laws. The Company has vigorously opposed this recommendation on the grounds
     that all employees  accused of wrongdoing  have been  terminated  and other
     adequate remedial measures have been taken voluntarily by the Company.

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

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

     Other Proceedings

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

     Sales tax examination

     The Company is presently  undergoing a New York State sales tax examination
     for the period March 1, 1994 through September 28, 1997. The examination is
     still in progress and the findings are as yet inconclusive.

     Settlement with IRS

     In June 1998, the Company reached a tentative  settlement with the Internal
     Revenue Service ("IRS") relating to its outstanding  payroll tax liability.
     The  Company has paid the IRS  $375,000  through  November 3, 1998,  and is
     expected  to remit a final  payment of  approximately  $39,000 in  December
     1998. Previously paid penalties in excess of $85,000 were abated during the
     quarter ended October  31,1998 and are reflected as a reduction of selling,
     general, and administrative expenses.


                                        7


<PAGE>


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

The  following  discussion  of the fiscal six months ended  October 31, 1998 and
1997, 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 success of the  Company in  limiting  or reducing  its
expenses, the frequency and magnitude of environmental disasters or disruptions,
the effects of new laws or regulations  relating to  environmental  remediation,
the Company's ability to raise capital,  the competitive  environment within the
Company's industry,  dependence on key personnel,  economic conditions,  and the
other factors and information  disclosed and discussed in other sections in this
Form  10-QSB,  and in the  Company's  annual  report on Form 10-KSB for the year
ended April 30, 1998. 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 income and net income per share for the quarter and six month  period  ended
October  31,1998 was  $575,469  and $.04 and  $598,206  and $.04,  respectively,
compared to a net loss and loss per share for the quarter and  six-month  period
ended October 31, 1997 of  $(765,683)  and $(.08) and  $(2,139,691)  and $(.22),
respectively.

Revenues for the quarter ended October 31, 1998  increased by $915,475,  or 25%,
to $4,516,847 from $3,601,372.  Revenues for the first six months of fiscal 1999
increased by $1,063,575, or 15%, to $7,960,310 from $6,896,735.  The increase in
revenues was primarily  reflected in the second quarter results of the Company's
Trade-Winds  subsidiary,  where asbestos  remediation  revenues increased 31% or
approximately  $640,000, and construction/  renovation revenues increased 72% or
approximately  $797,000.  The revenues of the other Company subsidiaries,  North
Atlantic   Laboratories,   Inc.  ("NAL")  and  New  York  Testing  Laboratories,
Inc.("NYTL"),  remained  approximately flat compared to the prior periods,  with
slight declines in revenues of 2% for NAL, to $894,820 from $910,061, and 6% for
NYTL, to $561,499 from $594,494 over the six month period.

Gross  margins  for the  quarter  and six month  period  ended  October 31, 1998
increased to 29% and 31%,  respectively,  compared to 14% and 9% for the quarter
and six months ended October 31, 1997, respectively.  The increased margins were
attributable  primarily to management  efforts during the past year to provide a
broader and more  profitable mix of services at its Trade-Winds  subsidiary.  In
addition,  management  believes that it has become more proficient in estimating
its project costs and has turned down work where competitive  factors would lead
to projected  project losses.  Margins at the Company's  Trade-Winds  subsidiary
increased to 28% from 7% over the comparative prior six month period.  The gross
margins in the period ended October 31, 1997 were a result of the recognition of
losses in that period  related to certain  longer-term  contracts with projected
losses, the effect of higher labor and benefit (including worker's  compensation
insurance)  costs due to unionization in June 1996, and cost overruns on certain
fixed price contracts during the quarter ended July 31, 1997.

Selling,  general and administrative  expenses for the quarter ended October 31,
1998 declined by $224,138,  or 21%, to $864,755  from  $1,088,893 in the quarter
ended October 31, 1997. Selling, general and administrative expenses for the six
month period ended October 31, 1998  declined by $561,763,  or 25% to $1,703,350
from  $2,265,113 in the six month period ended October 31, 1997. The decline for
the six-month period was primarily related to approximate reductions as follows:
bad debt  expense,  $63,000 (due to improved  internal  controls and  management
collection  efforts);  legal  expenses,  $55,000  (due  to a  reduction  in  SEC
investigation  and compliance  and other  non-operational  type legal  matters),
health insurance,  $35,000 (due to mandatory contributions required of employees
since the third  quarter  of fiscal  1998),  goodwill  amortization  expense  of
$76,000  (due  to  the  impairment  loss  recorded  in  the  fourth  quarter  of
fiscal1998),  fines  and  penalties,  $127,000  (reduced  due to the  settlement
agreement  with the Internal  Revenue  Service),  sales and office  salaries and
related taxes,  $220,000 (due to the staff  reductions in February and September
1998), and $18,000 in laboratory consulting fees. The decline was offset in part
by a $100,000  estimated bonus accrual recorded for the Chief Executive  Officer
in accordance with his employment contract. The decline in selling,  general and
administrative expenses for the quarter ended October 31, 1998 was primarily due
to an abatement of fines and penalties of  approximately  $87,000 compared to an
approximate  $43,000  expense during the  comparative  quarter ended October 31,
1997, or accounting for $130,000 of the decline.  The balance of the decline for
the quarter ended October 31,

                                       8


<PAGE>


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

RESULTS OF OPERATIONS (cont.)

1998  consisted  primarily  of $38,000 in  goodwill  amortization  expense,  and
approximately $84,000 in sales and office salaries.

Interest  expense for the quarter ended October 31, 1998  declined  $35,214,  or
18%, to $157,745 from  $192,959 in the quarter ended October 31, 1997.  Interest
expense for the six months ended October 31, 1998 declined $67,145,  to $434,051
from $501,196 in the six-month period ended October 31,1997.  During the quarter
and six month period ended October 31, 1997 the Company  incurred  approximately
$116,000  and  $356,000  of interest  expense  relating  to the  accretion  of a
discount on the $700,000 of  convertible  notes issued in the fourth  quarter of
fiscal 1997. There was no related  accretion  charge in the comparative  periods
for fiscal 1999. The  substantial  interest  expense during the six month period
ended  October  31,  1998  was  principally  attributable  to the  high  cost of
receivable  factoring in the months of May and June 1998.  The Company began its
borrowing  base  agreement  with  BACC as of  July  2,1998.  (See  Note 6 to the
Condensed  Consolidated  Financial  Statements).  The LSA carries an  annualized
interest rate of approximately 18%.

LIQUIDITY AND CAPITAL RESOURCES

The Company's financial  statements have been prepared assuming that the Company
will  continue  as a going  concern.  As of October  31,  1998 the Company has a
stockholders'  deficit of $1,793,533 and an accumulated  deficit of $30,391,190.
The Company has financed its operations to date primarily  through  issuances of
debt and equity  securities.  At October 31,  1998,  the Company had $303,441 in
cash,  and  a  working  capital  deficit  of  $2,055,190.  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.

In June 1998, the Company  entered into a revolving  credit facility to obtain a
revolving credit line of $2,445,000, secured by certain of the Company's assets.
The  revolving  credit line was  increased by $650,000 to  $3,095,000 in October
1998. The current quarter's results reflect  managements  efforts to improve the
Company's  gross margins and control its selling,  general,  and  administrative
expenses.  Revenue growth is expected to continue and further expense reductions
are planned;  however,  no assurance can be given in this regard. The Company is
currently  engaged in various  discussions  with potential  investors  regarding
possible equity transactions.  There can be no assurance,  however, that changes
in the Company's plans or other events  affecting the Company's  operations will
not result in accelerated or unexpected  cash  requirements,  or that it will be
successful in obtaining the additional financing to meet its obligations as they
become due. The  Company's  future cash  requirements  are expected to depend on
numerous factors, including, but not limited to: (i) the ability to successfully
bid on  environmental  or  construction  contracts  (ii) the ability to generate
positive cash flow from operations, and the extent thereof, (iii) the ability to
raise  additional  capital or obtain  additional  financing,  and (iv)  economic
conditions.

The  Company  believes  that its current  resources  together  with  anticipated
continued  positive  cash  flow from  operations,  if any,  and the LSA,  should
provide  sufficient cash to meet the Company's needs for  approximately the next
twelve months.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

          See Note 8 to the Condensed Consolidated Financial Statements.

Item 2. Changes in Securities

          In May 1998, the Company issued an aggregate  425,000 shares of Common
          Stock to four accredited  investors for aggregate proceeds of $68,000.
          These transactions were non-public  offerings exempt from registration
          under the Securities Act of 1933, as amended,  pusuant to Section 4(2)
          thereof.

          In August 1998,  the Company  issued 150,000 shares of Common Stock to
          one accredited investor for $30,000. This transaction was a non-public
          offering exempt from registration under the Securities Act of 1933, as
          amended, pursuant to Section 4(2) thereof.

          In September  1998, the Company  issued an aggregate  80,000 shares of
          Common  Stock to a total of two  accredited  investors  for  aggregate
          proceeds of $16,000.  These  transactions  were  non-public  offerings
          exempt from registration under the Securities Act of 1933, as amended,
          pursuant to Section 4(2) thereof.

          In September 1998, the Company issued 80,000 shares of Common Stock to
          a  non-accredited   investor  for  $16,000.  This  transaction  was  a
          non-public offerings exempt from registration under the Securities Act
          of 1933, as amended, pursuant to Section 4(2) thereof.


                                        9

<PAGE>


PART II - OTHER INFORMATION (continued)

Item 3. Defaults Upon Senior Securities

          None

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

          None

Item 5. Other Information

          In October and  November  1998 the Company  issued  224,964 and 21,000
          shares  of Common  Stock,  respectively,  in  payment  of all  accrued
          dividends and interest on its Series A Preferred Stock through October
          31, 1998.

Item 6. Exhibits and Reports on Form 8-K

          (a)  Exhibits:  10.18 - Amendment  to  Advance  Limit in the Loan and
                                  Security Agreement dated June 1, 1998.

                          10.19 - Modified and Restated  Revolving Credit Master
                                  Promissory Note.

                             27 - Financial Data Schedule

          (b)  Reports on Form 8-K

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


                                   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:   November 17, 1998

                                         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,
                                                 Chief Financial Officer


                                       10