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

                                   FORM 10-QSB

(Mark One)

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

     For the quarterly period ended July 31, 1997

( )  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                          10,410,396
--------------------------------------------------------------------------------
(Title of Each Class)                          (Outstanding at October 31, 1997)

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



<PAGE>


PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements

<TABLE>
<CAPTION>
                                        WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
                                                     CONSOLIDATED BALANCE SHEETS

                                                                                                  July 31,
                                                                                                    1997                 April 30,
                                                                                                 (Unaudited)               1997
                                                                                                ------------           ------------
<S>                                                                                             <C>                    <C>         
ASSETS
CURRENT ASSETS
    Cash                                                                                        $    117,427           $    654,377
    Accounts receivable, net of allowance for doubtful
       accounts of $250,000 and $200,000 at July 31,
       1997 and April 30, 1997, respectively                                                       3,034,395              2,195,284
    Inventories and prepaid supplies                                                                 177,193                158,714
    Costs in excess of billings on contracts in progress                                             274,200                   --
    Due from officer                                                                                  49,053                   --
    Other current assets                                                                             276,752                426,220
                                                                                                ------------           ------------
            Total current assets                                                                   3,929,020              3,434,595
                                                                                                ------------           ------------

PROPERTY AND EQUIPMENT, net of
    accumulated depreciation and amortization                                                      3,122,060              2,841,783
                                                                                                ------------           ------------

OTHER ASSETS
    Goodwill, net                                                                                  1,488,866              1,529,320
    Note receivable, net of current portion                                                          196,125                200,282
    Other assets                                                                                     231,818                233,271
                                                                                                ------------           ------------

    TOTAL ASSETS                                                                                $  8,967,889           $  8,239,251
                                                                                                ============           ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES

    Note payable to bank                                                                        $    745,930           $       --
    Accounts payable and accrued expenses                                                          2,937,485              2,573,708
    Payroll taxes payable                                                                            527,715                347,404
    Current portion of long-term debt                                                                684,373                765,432
    Billings in excess of cost on contracts in progress                                              506,000                 18,765
    Obligations of unconsolidated subsidiary, net                                                    196,112                196,112
                                                                                                ------------           ------------
            Total current liabilities                                                              5,597,615              3,901,421

OTHER LIABILITIES
    Convertible notes                                                                                800,000                800,000
    Long-term debt, net of current portion                                                           467,446                454,560
    Other liabilities                                                                                 75,000                   --
                                                                                                ------------           ------------

            Total liabilities                                                                      6,940,061              5,155,981
                                                                                                ------------           ------------

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

STOCKHOLDERS' EQUITY
    Preferred stock, $.01 par value,
      10,000,000 shares authorized; 1,300,000
      Series A redeemable convertible shares issued and outstanding                                     --                     --
    Common stock, $.0001 par value,
      50,000,000 shares authorized;
      10,069,455 shares issued, 10,049,455, outstanding                                                1,007                    979
    Additional paid-in capital                                                                    27,741,402             27,318,031
    Treasury stock, 20,000 shares at cost                                                            (10,000)               (10,000)
    Accumulated deficit                                                                          (26,753,609)           (25,379,601)
    Less deferred compensation                                                                      (250,972)              (146,139)
                                                                                                ------------           ------------
            Total stockholders' equity                                                               727,828              1,783,270
                                                                                                ------------           ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                      $  8,967,889           $  8,239,251
                                                                                                ============           ============
</TABLE>

See Accompanying Notes to Consolidated Financial Statements.

                                        1


<PAGE>


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


                                                     July 31,         July 31,
                                                       1997             1996
                                                    -----------     -----------
Revenues                                            $ 3,295,363     $ 5,073,402

Cost of revenues                                      3,039,914       3,328,727
                                                    -----------     -----------

        Gross profit                                    255,449       1,744,675

Selling, general and administrative expenses          1,321,220       1,453,135
                                                    -----------     -----------

        Income (loss) from operations                (1,065,771)        291,540
                                                    -----------     -----------

Other income (expense):
  Losses on investments                                    --          (100,003)
  Interest expense                                     (308,237)        (15,056)
                                                    -----------     -----------
        Total other income (expense)                   (308,237)       (115,059)
                                                    -----------     -----------

        Net income (loss)                           $(1,374,008)    $   176,481
                                                    ===========     ===========

Earnings (loss) per common share                    $      (.14)    $       .02
                                                    ===========     ===========

Weighted average number of
  common shares outstanding                           9,835,410       7,597,922
                                                    ===========     ===========



See Accompanying Notes to Consolidated Financial Statements.

                                        2



<PAGE>


<TABLE>
<CAPTION>
                                        WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                              FOR THE THREE MONTHS ENDED JULY 31, 1997
                                                             (Unaudited)


                                                                     Common Stock
                                                             -------------------------------       Additional
                                                              Number of             Par              Paid-in             Treasury   
                                                                Shares             Value             Capital               Stock    
                                                             ------------       ------------       ------------        ------------
<S>                                                            <C>              <C>                <C>                 <C>          
Balance at April 30, 1997                                       9,766,074       $        979       $ 27,318,031        $    (10,000)

Issuance of common stock for services                              86,011                  9             65,084                --   

Issuance of common stock for
 employee and director compensation                               175,552                 17            127,509                --   

 Issuance of common stock to settle
   legal obligations                                               21,818                  2             14,998                --   

Accretion of discount on  convertible
    notes                                                            --                 --              239,126                --   

Amortization of deferred compensation                                --                 --                 --                  --   

Dividends paid                                                       --                 --              (23,346)               --   

Net loss                                                             --                 --                 --                  --   
                                                             ------------       ------------       ------------        ------------

Balance at July 31, 1997                                       10,049,455       $      1,007       $ 27,741,402        $    (10,000)
                                                             ============       ============       ============        ============

<CAPTION>
                                                              Accumulated         Deferred                           
                                                                Deficit         Compensation          Total 
                                                             ------------       ------------       ------------
<S>              <C> <C>                                     <C>                <C>                <C>         
Balance at April 30, 1997                                    $(25,379,601)      $   (146,139)      $  1,783,270

Issuance of common stock for services                                --              (15,000)            50,093

Issuance of common stock for
 employee and director compensation                                  --             (150,000)           (22,474)

 Issuance of common stock to settle
   legal obligations                                                 --                 --               15,000

Accretion of discount on  convertible
    notes                                                            --                 --              239,126

Amortization of deferred compensation                                --               60,167             60,167

Dividends paid                                                       --                 --              (23,346)

Net loss                                                       (1,374,008)              --           (1,374,008)
                                                             ------------       ------------       ------------

Balance at July 31, 1997                                     $(26,753,609)          (250,972)      $    727,828
                                                             ============       ============       ============
</TABLE>



See Accompanying Notes to Consolidated Financial Statements.

                                        3


<PAGE>



<TABLE>
<CAPTION>
                                        WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                     FOR THE THREE MONTHS ENDED
                                                             (Unaudited)

                                                                                                   July 31,               July 31,
                                                                                                     1997                   1996
                                                                                                 -----------            -----------
<S>                                                                                              <C>                    <C>        
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income (loss)                                                                            $(1,374,008)           $   176,481
    Adjustments to reconcile net income (loss) to net cash
    flows from operating activities:
      Depreciation and amortization                                                                  542,562                160,300
      Provision for doubtful accounts                                                                 76,997                 31,000
      Issuance of common stock for services                                                           60,776                150,000
      Losses on investment                                                                              --                  100,003
    Changes in operating assets and liabilities:
      Accounts receivable                                                                           (916,108)            (1,155,260)
      Inventories                                                                                    (18,479)              (105,000)
      Due from officer                                                                               (49,053)                  --
      Other current assets                                                                           149,468                (89,260)
      Other assets                                                                                    (9,567)                21,791
      Accounts payable and accrued expenses                                                          420,620                279,321
      Current Income taxes                                                                           180,311                (38,375)
      Billings  in excess of costs on contracts in progess, net                                      213,035                   --
      Other current liabilities                                                                         --                 (228,591)
                                                                                                 -----------            -----------

NET CASH USED BY OPERATING ACTIVITIES                                                               (723,446)              (697,590)
                                                                                                 -----------            -----------

CASH FLOWS FROM INVESTING ACTIVITIES
    Obligations of unconsolidated subsidiary, net                                                       --                  147,987
    Collection of notes receivable                                                                     4,157                   --
    Acquisition of fixed assets                                                                     (390,091)              (196,197)
                                                                                                 -----------            -----------

NET CASH USED BY INVESTING ACTIVITIES                                                               (385,934)               (48,210)
                                                                                                 -----------            -----------

CASH FLOWS FROM FINANCING ACTIVITIES
    Principal payments of long-term debt                                                            (150,154)               (33,135)
    Proceeds from revolving bank line, net                                                           745,930                   --
    Dividends paid on redeemable preferred stock                                                     (23,346)                  --
    Proceeds from issuance of common stock                                                              --                1,129,413
                                                                                                 -----------            -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                                            572,430              1,096,278
                                                                                                 -----------            -----------

NET INCREASE (DECREASE) IN CASH                                                                     (536,950)               350,478

CASH - BEGINNING                                                                                     654,377                282,933
                                                                                                 -----------            -----------

CASH - ENDING                                                                                    $   117,427            $   633,411
                                                                                                 ===========            ===========

Cash paid during the period for:

Interest                                                                                         $    34,027            $      --
                                                                                                 ===========            ===========
Taxes                                                                                            $      --              $      --
                                                                                                 ===========            ===========
</TABLE>



See Accompanying Notes to Consolidated Financial Statements.

                                        4


<PAGE>



              WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE QUARTER ENDED JULY 31, 1997
                                   (Unaudited)

1.   CONSOLIDATED FINANCIAL STATEMENTS

     The consolidated  balance sheet at April 30, 1997 has been derived from the
     audited  consolidated  balance sheet  contained in Windswept  Environmental
     Group,  Inc.'s (the "Company") Form 10-KSB and is presented for comparative
     purposes. The unaudited interim financial statements of the Company for the
     three months ended July 31, 1997 and 1996 have been  prepared by management
     and  include  all   adjustments,   consisting  only  of  normal   recurring
     adjustments, necessary to present fairly the unaudited interim periods. 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 he  financial
     statements  and notes  thereto  included in the  Company's  Form 10-KSB for
     fiscal year ended April 30, 1997.

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 periods presentation.

3    LIQUIDITY AND BUSINESS RISKS

     As of July 31, 1997 the Company has an  accumulated  deficit of $26,753,609
     and has not  generated  positive  cash flow from  operations  to date.  The
     Company has financed its operations to date primarily  through issuances of
     debt and equity  securities.  At July 31, 1997, the Company had $117,427 in
     cash,  and a working  capital  deficit of  $1,668,595.  In addition,  as of
     October 31, 1997 and July 31, 1997, the Company was in arrears with respect
     to certain payroll tax obligations of approxinately  $575,000 and $528,000,
     respectively.

     In May 1997, the Company  entered into a revolving bank credit  facility to
     obtain a  revolving  credit line of  $1,500,000,  secured by certain of the
     Company's assets.  Borrowings remain at a maximum of $750,000.  The Company
     is working independently and in conjunction with its bank to find financing
     sources  above the $750,000 line which the bank has made  available,  using
     the  same  collateral  provided  to the  bank.  The  Company  has  received
     proposals which it is in the process of evaluating.

     The Company  believes that,  should this financing be made  available,  the
     Company  would have  adequate  capital  resources  to meet its current cash
     requirements  for a period of at least twelve months.  Management  believes
     that should the bank not make  available the  additional  financing,  there
     will be alternative  debt and/or equity  sources  available to the Company.
     The Company is  currently  engaged in various  discussions  with  potential
     investors regarding possible equity  transactions.In  addition, 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  effecting  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
     will  depend on  numerous  factors,  including,  but no limited to: (i) the
     ability to successfully  bid on construction  contracts (ii) the ability to
     generate  positive cash flow from  operations,  and (iii) general  economic
     conditions.

4.   EQUITY TRANSACTIONS

     During the quarter ended July 31, 1997,  the Company  issued 100,000 common
     share valued at $75,000 to a new employee. The Company also agreed to issue
     an additonal  100,000  common  shares to the same  employee on the one year
     employment anniversary date.

5.   RELATED PARTY TRANSACTIONS

     Due from officer represent  interest bearing (8%) advances to the Company's
     chief executive officer due upon demand.  The Company  purchased  materials
     and supplies of $38,317,  and had an outstanding balance payable of $56,598
     to  Eastco  Industrial  Safety  Corp.,  of which one of it's  directors  is
     affiliated.  The same director is owed $100,000 on a 12%  convertible  note
     payable in full on December 1999.


                                        5


<PAGE>



              WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE QUARTER ENDED JULY 31, 1997
                                   (Unaudited)

6.   NOTE PAYABLE TO BANK

     Secured Revolving Credit Facility

     In May 1997,  the Company  executed a revolving  bank credit  facility (the
     "Facility")  which provides for  borrowings of up to $1,500,000  secured by
     all of the Company's  assets not  previously  pledged under a debt or lease
     obligation.  The  Facility  bears  interest  at the bank's  prime rate plus
     $1.5%. The Facility expires May 1, 2000.

     Borrowings  shall be limited to the lesser of $1.5  million  less  reserves
     determined by the bank or 80% of the  Company's  eligible  receivables,  as
     defined. Said reserves remain at a minimum $750,000.

     The Facility requires certain minimum tangible net worth,  working capital,
     and other restrictive  covenants.  The Company was in default of certain of
     these covenants at July 31, 1997.

7.   STATEMENT OF CASH FLOWS

     During  the  quarter  ended  July  31,  1997,  the  Company   financed  the
     acquisition  of certain  machinery  and office  equipment of  approximately
     $82,000 through various capital lease  transactions.  The Company  utilized
     approximately  $72,000 of its common stock to repay  liabilities of $57,000
     and prepaid certain public relations expenses in the amount of $15,000.  In
     connection with an employment agreement reached during the first quarter of
     fiscal 1998 the Company  recorded  deferred  compensation of $150,000 after
     issuing  100,000 shares of its common stock valued at $75,000 and recording
     an other liability of $75,000 for the shares to be issued on the employment
     anniversary date. See Note 4.

     During  the  quarter  ended July 31,  1996 the  Company  issued  $58,000 in
     treasury shares to settle legal obligations.

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
     former Chief Operating  Officer and the former Special Securitie Counsel on
     charges  including   violations  of  federal   securities  law,   including
     fraudulent  issuances of 700,000 shares of the Company's  common stock. The
     former Chief Operating Officer and the former Special  Securitites  Counsel
     both subsequently  pleaded guilty to the charges in the Federal indictment.
     The SEC has  been  investigating  what  role,if  any,  other  officers  and
     directors,  including the current Chairman and Chief Executive  Officer and
     the former Chief  Financial  Officer,  may have had in connection with such
     activities.  The Company  hascooperated and continues to cooperate with the
     SEC by providing  documents in response to subpoenas issued to it. To date,
     no charges have been filed  against the  Company,  it's CEO, or it's former
     CFO, as a result of the investigation. However, the SEC could seek an order
     enjoining the Company from violating the securities laws.

     The Company is currently negotiating with the tax authorities regarding the
     late payment of the required  withholding  taxes. No assurance can be given
     that  the  Company  will  be  able  to  reach  an  agreement  with  the tax
     authorities,  that the tax authorities will not immediately seek payment of
     the taxes, or that the tax authorities  will not commence an action or file
     a lien against the Company in order to recover the taxes.

     The Company is currently in default of its bank agreement due to failure to
     comply with certain of its loan  covenants.  The Company is also in default
     of its $700,000 convertible notes due to non-payment of interest.

     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,  based
     on advice of counsel,  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.


                                        6


<PAGE>



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

The following  discussion of the fiscal  quarters  ended July 31, 1997 and 1996,
should  be  read in  conjunction  with  the  Consolidated  Financial  Statements
contained herein.

RESULTS OF OPERATIONS

Net loss and loss  per  share  was  $(1,374,008)  and  $(.14)  at July 31,  1997
compared  to net income and  earnings  per shareof  $176,481  and $.02 per share
during the same period in 1996.

Revenues decreased by $1,778,039,  or 35%, from $5,073,402 to $3,295,363,  while
gross  margins  declined to 8%  compared to 34% for the first  quarter of fiscal
1997.  In the  quarter  ended July 31, 1996 the  Company  generated  revenues of
$2,200,000  on a New York City Housing  Authority  paint  removal  project.  The
decrease  in gross  margin  was a result  of the  recognition  of  losses in the
current period related to certain  longer-term  contracts with projected losses,
the effect of higher  labor  costs due to  unionization  in June 1996,  and cost
overruns on certain  fixed  price  contracts  during the quarter  ended July 31,
1997.

Non-cash  charges  increased from $441,000 for the quarter ended July 31,1996 to
$680,000  in the  present  quarter,  or 54% over the prior  comparative  period.
During the  present  quarter  the  Company  incurred  approximately  $240,000 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. The Company also
incurred  approximately $36,000 in goodwill  amortization  (included in selling,
general,  and  administrative   charges)  associated  with  the  North  Atlantic
acquisition  which it also  concluded in the fourth  quarter of fiscal  1997.The
Company incurred increased  depreciation  charges and bad debt provision charges
of approximately  $55,000 and $46,000,  respectively in this fiscal period which
offset  the  $100,000  losses on  investments  in the  prior  fiscal  year.  The
increased  depreciation  charges  are  reflective  of the  Company's  growth  in
equipment capacity necessary to provide its broad range of services.

Selling,  general and administrative  expenses declined by $131,915, or 9%, from
$1,453,135 as of July 31,1996 to $1,321,220 as of July 31, 1997. The decline was
primarily related to a reduction in promotion,  consulting and legal expenses of
approximately  $315,000  in the  prior  comparative  quarter  offset  by  higher
employee  compensation  costs,  goodwill  amortization  expense of $40,000,  and
$25,000 in fines for late payroll  filings in the current  quarter.  The Company
has hired various engineering,  technical  consulting,  business development and
marketing  personnel  which  it  is  paying  on a  non-commission  based  salary
structure to develop and extend  various  strategic  lines of business for which
the Company has set its strategic  focus. The Company intends to provide various
additional  value-added  services to its existing clientele and to significantly
enhance its service offering to more profitable business areas.

Interest expense reflects the $240,000 accretion of the discount described above
and  approximately  $21,000  of  interest  on  convertible  notes.  The  balance
represents amortization of debt issue costs and fees associated with the current
bank facility as well as normal interest charges related to its bank facilty and
outstanding equipment loans.

LIQUIDITY AND CAPITAL RESOURCES

As of July 31, 1997 the Company has an accumulated  deficit of  $26,753,609  and
has not generated  positive cash flow from  operations to date.  The Company has
financed its operations to date primarily  through  issuances of debt and equity
securities.  At July 31, 1997,  the Company had $117,427 in cash,  and a working
capital deficit of $1,668,595.  In addition, as of October 31, 1997 and July 31,
1997, the Company was in arrears with respect to certain payroll tax obligations
of approxinately $575,000 and $528,000,  respectively.  During the quarter ended
July 31, 1997, the Company invested  approximately  $390,000 in its property and
equipment.  Of this amount $275,000 was spent on leasehold improvements relating
to the new Bay Shore  headquarters and central operations  facility,  $60,000 in
transportation  equipment and $55,000 on various other  machinery and equipment.
The Company also paid down  approximately  $150,000 of equipment  loans and paid
$23,346 in  dividends  to the  holders  of  mandatorily  redeemable  convertible
preferred stock.

In May 1997, the Company entered into a revolving bank credit facility to obtain
a  revolving  credit  line of  $1,500,000,  secured by certain of the  Company's
assets.  Borrowings  remain at a maximum  of  $750,000.  The  Company is working
independently  and in conjunction with it's bank to find financing sources above
the $750,000 line which the bank has made  available,  using the same collateral
provided to the bank. The Company has received various  proposals which it is in
the process of evaluating. The Company is currently in default of this agreement
due to failure to comply with certain of its loan covenants. The Company is also
in default of its $700,000 convertible notes due to non-payment of interest.


                                        7


<PAGE>



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

LIQUIDITY AND CAPITAL RESOURCES (CONT.)

The Company believes that, should this financing be made available,  the Company
would have adequate capital  resources to meet its current cash requirements for
a period of at least twelve months. Management believes that should the bank not
make available the additional  financing,  there will be alternative debt and/or
equity  sources  available to the Company.  The Company is currently  engaged in
various   discussions  with  potential   investors   regarding  possible  equity
transactions.In  addition,  the Company is striving to improve its gross  margin
and control its selling,  general, and administrative  expenses. There can be no
assurance,  however,  that  changes  in the  Company's  plans  or  other  events
affecting the Company's  operations will not result in accelerated or unexpected
cash  requirements,  or that it will be successful  in obtaining the  additional
financing to meet its obligations as they become due. The Company's  future cash
requirements will depend on numerous factors,  including, but no limited to: (i)
the ability to successfully  bid on  construction  contracts (ii) the ability to
generate  positive  cash  flow  from  operations,  and  (iii)  general  economic
conditions.

The  Company  has  reached  certain  short  term  agreements  with  federal  tax
authorities  on certain of its past due  payroll  withholding  taxes.  It is the
Company's intent to clear up the balance of these taxes as soon as it can obtain
financing.  No  assurance  can be  given  that  the  tax  authorities  will  not
immediately  seek  payment of the taxes,  or that the tax  authorities  will not
commence  an action or file a lien  against  the Company in order to recover the
taxes.

Any forward looking statements  contained in this document reflect  management's
current intentions and expectations. Actual future results could vary materially
depending  on  certain  risks  and  uncertainties,  including  factors  such  as
financing,  operational spending, revenue levels, and the other factors referred
to in this document.


                                        8


<PAGE>


PART II - OTHER INFORMATION

Item 1. Legal Proceedings

     In October 1996, the United States Attorney for the Eastern District of New
     York obtained a federal grand jury indictment  against,  among others,  the
     former Chief Operating  Officer and the former Special Securitie Counsel on
     charges  including   violations  of  federal   securities  law,   including
     fraudulent  issuances of 700,000 shares of the Company's  common stock. The
     former Chief Operating Officer and the former Special  Securitites  Counsel
     both subsequently  pleaded guilty to the charges in the Federal indictment.
     The SEC has  been  investigating  what  role,if  any,  other  officers  and
     directors,  including the current Chairman and Chief Executive  Officer and
     the former Chief  Financial  Officer,  may have had in connection with such
     activities.  The Company has cooperated and continues to cooperate with the
     SEC by providing  documents in response to subpoenas issued to it. To date,
     no charges have been filed  against the  Company,  it's CEO, or it's former
     CFO, as a result of the investigation. However, the SEC could seek an order
     enjoining the Company from violating the securities laws.

Item 2. Changes in Securities

     None

Item 3. Defaults Upon Senior Securities

     The Company is  currently in default of its secured  revolving  credit line
     with  North Fork Bank due to  failure  to comply  with  certain of the loan
     covenants.  The Company is also default of its $700,000  convertible  notes
     due to non-payment of interest.

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

     None

Item 5. Other Information

     None

Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits: 27 - Financial Data Schedule

     (b)  Reports on Form 8-K

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


                                        9


<PAGE>



                                   SIGNATURES

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

Dated:  October 31, 1997

                                          WINDSWEPT ENVIRONMENTAL GROUP, INC.



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



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



                                       10