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, 1999

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

     For the Transition period from __________ to __________.

                         Commission File Number: 0-17072

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

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

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

                                 (516) 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                                        13,970,155
--------------------------------------------------------------------------------
(Title of Each Class)                         (Outstanding at February 28, 1999)

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


<PAGE>



PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements


                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                   January 31,           April 30,
                                                                                                      1999                  1998
                                                                                                 ------------          ------------
                                            ASSETS                                                (Unaudited)
<S>                                                                                              <C>                   <C>
CURRENT ASSETS
   Cash                                                                                          $    100,836          $     33,915
   Accounts receivable, net of allowance for doubtful
      accounts of $161,870 and $280,000, respectively                                               2,840,919             2,517,517
   Due from Officer                                                                                   100,000                  --
   Inventories                                                                                        147,245               161,266
   Costs and estimated earnings in excess of billings on
     uncompleted contracts                                                                             17,795                55,352
   Prepaid and other current assets                                                                   326,196               325,061
   Deferred income taxes                                                                              110,000                  --
                                                                                                 ------------          ------------
         Total current assets                                                                       3,642,991             3,093,111

PROPERTY AND EQUIPMENT, net of accumulated depreciation of
   $2,589,376 and $1,953,634, respectively                                                          2,406,795             2,799,191

OTHER ASSETS
   Goodwill, net of accumulated amortization of $43,627 and $36,526,
     respectively                                                                                      78,399                85,500
   Note receivable, net of current portion of $114,197 and $80,460,
     respectively                                                                                     133,037               209,245
   Other assets                                                                                       166,952               167,642
                                                                                                 ------------          ------------
   TOTAL ASSETS                                                                                  $  6,428,174          $  6,354,689
                                                                                                 ============          ============

                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
   Accounts payable and accrued expenses                                                         $  3,160,945          $  3,269,973
   Revolving credit note payable                                                                    1,875,512                  --
   Advances from factor                                                                                  --               1,505,968
   Billings in excess of costs and estimated earnings on
     uncompleted contracts                                                                            220,221               266,000
   Payroll taxes payable                                                                               57,458               641,790
   Sales taxes payable                                                                                253,602                91,605
   Current portion of long-term debt                                                                  777,679               955,367
   Obligations of unconsolidated subsidiary, net                                                      196,112               196,112
                                                                                                 ------------          ------------
         Total current liabilities                                                                  6,541,529             6,926,815

OTHER LIABILITIES
   Convertible notes, net of current portion                                                          690,000               800,000
   Long-term debt, net of current portion                                                             569,333               227,604
   Other liabilities                                                                                     --                  37,000
                                                                                                 ------------          ------------
         Total liabilities                                                                          7,800,862             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;
     13,521,566 and 11,552,374 shares issued and outstanding,
       respectively                                                                                     1,352                 1,155
   Additional paid-in capital                                                                      28,697,093            28,126,648
   Accumulated deficit                                                                            (31,371,133)          (30,989,396)
   Less deferred compensation                                                                            --                 (75,137)
                                                                                                 ------------          ------------
         Total stockholders' equity (deficit)                                                      (2,672,688)           (2,936,730)
                                                                                                 ------------          ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                             $  6,428,174          $  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               Nine Months Ended
                                                                    -----------------------------     ------------------------------
                                                                             January 31,                       January 31,
                                                                         1999             1998            1999              1998
                                                                    -------------    ------------     ------------     -------------
<S>                                                                 <C>              <C>              <C>              <C>
Revenues                                                            $  3,058,186     $  2,840,676     $ 11,018,496     $  9,737,411

Cost of revenues                                                       2,894,453        2,680,110        8,421,988        8,951,962
                                                                    ------------     ------------     ------------     ------------

         Gross profit                                                    163,733          160,566        2,596,508          785,449

Selling, general and administrative expenses                             733,411          970,141        2,436,761        3,235,254
                                                                    ------------     ------------     ------------     ------------

         Income (loss) from operations                                  (569,678)        (809,575)              15       (2,449,805)
                                                                    ------------     ------------     ------------     ------------

Other income (expense):
 Interest expense                                                       (245,265)         (90,366)        (679,316)        (591,562)
 Other, net                                                                 --            102,993           27,832          104,728
                                                                    ------------     ------------     ------------     ------------

         Total other income (expense)                                   (245,265)          12,627         (651,484)        (486,834)
                                                                    ------------     ------------     ------------     ------------

         Loss before income tax expense (benefit)                       (814,943)        (796,948)        (491,737)      (2,936,639)

Income tax expense (benefit)                                             165,000             --           (110,000)            --
                                                                    ------------     ------------     ------------     ------------

         Net loss                                                       (979,943)        (796,948)        (381,737)      (2,936,639)

Dividends on Series A Convertible Preferred Stock                         19,500           19,500           58,500           72,096
                                                                    ------------     ------------     ------------     ------------

         Net loss  attributable to common shareholders              $   (999,443)    $   (816,448)    $   (440,237)    $ (3,008,735)
                                                                    ============     ============     ============     ============

Net loss per common share:
        Basic and Diluted                                           $       (.07)    $      (.08)     $       (.03)    $       (.30)
                                                                    ============     ============     ============     ============

Weighted average number of common shares outstanding:
       Basic and Diluted                                              13,842,010       10,475,481       12,779,318       10,147,194
                                                                    ============     ============     ============     ============
</TABLE>


See accompanying notes to consolidated financial statements.


                                                              2

<PAGE>


                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                   FOR THE NINE MONTHS ENDED JANUARY 31, 1999
                                   (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             671,021             67       276,015           --             --          276,082

Issuance of common stock for legal settlements     38,874              4        13,420           --             --           13,424

Issuance of common stock for
employee and director compensation                258,333             26        98,374           --             --           98,400

Amortization of deferred compensation                --             --            --             --           75,137         75,137

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

Issuance of common stock and options for
 accrued preferred dividends and related
 interest                                         245,964             25       101,211           --             --          101,236

Net loss                                             --             --            --         (381,737)          --         (381,737)
                                               ----------   ------------  ------------   ------------   ------------   ------------

Balance at January 31, 1999                    13,521,566   $      1,352  $ 28,697,093   $(31,371,133)  $       --     $ (2,672,688)
                                               ==========   ============  ============   ============   ============   ============
</TABLE>


See accompanying notes to consolidated financial statements.


                                        3

<PAGE>


                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            FOR THE NINE MONTHS ENDED
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                             January 31,        January 31,
                                                                                                 1999              1998
                                                                                            -----------        -----------
<S>                                                                                         <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                                                 $  (381,737)       $(2,936,639)
   Adjustments to reconcile net loss to net cash
   provided (used) by operating activities:
     Depreciation and amortization                                                              755,568          1.329,463
     Provision (credit) for doubtful accounts                                                    (3,948)            80,187
     Issuance of common stock and stock options for services                                    138,274            138,246
      Gain on settlement of lawsuit                                                                --             (102,993)
      Deferred income taxes                                                                    (110,000)              --
      Other, net                                                                                (15,332)            (1,735)
   Changes in operating assets and liabilities:
     Accounts receivable                                                                       (319,454)          (322,016)
     Inventories                                                                                 14,021             (5,242)
     Costs and estimated earnings in excess of billings on uncompleted contracts                 37,557            (80,955)
     Prepaid and other current assets                                                           205,304            360,623
     Other assets                                                                                 8,103            (10,181)
     Accounts payable and accrued expenses                                                      330,347          1,311,451
     Payroll taxes payable                                                                     (584,332)           233,610
      Sales taxes payable                                                                       161,997               --
     Billings in excess of costs and estimated earnings  on uncompleted contracts               (45,779)              --
                                                                                            -----------        -----------

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                                                190,589             (6,181)
                                                                                            -----------        -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Collection of notes receivable                                                                42,651             43,903
   Advances to officer                                                                         (100,000)           (73,455)
   Deposit on equipment lease                                                                   (30,000)              --
   Proceeds from sale of assets                                                                    --               14,614
   Proceeds from insurance settlement                                                            20,332               --
   Purchases of property and equipment                                                         (263,346)          (623,692)
                                                                                            -----------        -----------

NET CASH USED BY INVESTING ACTIVITIES                                                          (330,363)          (638,630)
                                                                                            -----------        -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Principal payments of long-term debt and factor advances                                  (2,374,317)          (536,213)
   Proceeds from revolving bank line, net                                                     1,875,512            703,675
    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                                                       206,695            144,116
                                                                                            -----------        -----------

NET INCREASE (DECREASE) IN CASH                                                                  66,921           (500,695)

CASH -BEGINNING                                                                                  33,915            654,377
                                                                                            -----------        -----------

CASH - ENDING                                                                               $   100,836        $   153,682
                                                                                            ===========        ===========

Cash paid during the period for:

Interest                                                                                    $   594,755        $    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.

     Loss Per Share - Basic loss per share is computed  based upon the  weighted
     average number of common shares  outstanding  during each period presented.
     Stock  options,   convertible  notes  and  other  applicable  common  stock
     equivalents did not have an effect on the  computation of diluted  earnings
     per share in the quarter and nine month period  ended  January 31, 1999 and
     1998 since they were anti-dilutive.

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 January 31,1999 the Company
     has a  stockholders'  deficit of $2,672,688 and an  accumulated  deficit of
     $31,371,133.  The Company has financed  its  operations  to date  primarily
     through issuances of debt and equity  securities.  At January 31, 1999, the
     Company had $100,836 in cash, and a working  capital deficit of $2,898,538.
     The working  capital  deficit has  increased  primarily due to the net loss
     incurred in the quarter.  In addition,  as of January 31, 1999, the Company
     was  in  arrears  with  respect  to  certain  sales  tax   obligations   of
     approximately  $254,000.  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.  Nine month 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  note-holder  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.


                                        5

<PAGE>


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


4.   EQUITY TRANSACTIONS (CONT.)

     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.

     During the nine months ended January 31, 1999,  the Company  issued 534,382
     shares  valued at $231,082  related to prior  fiscal year  obligations  for
     legal and consulting services. The Company issued 136,639 shares and 38,874
     shares valued at $45,000 and $13,424, respectively, for current fiscal year
     legal services and a legal settlement. 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
     issued  133,333  shares of common  stock  valued  at  $50,000  to its Chief
     Executive  Officer  in  connection  with  his  annual  bonus  formula.  The
     Company's five directors were issued 5,000 shares each valued at $11,400 in
     the  aggregate.  The Company  issued 245,964 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.

     On October 2, 1998 the Company  issued 50,000 stock options to an employee,
     exercisable  at $.40.  On October 16, 1998 the Company  issued 50,000 stock
     options to an employee,  exercisable  at $.375.  On November 13, 1998,  the
     Company   issued  450,000  stock  options  to  certain  of  its  employees,
     exercisable at $.375. These options expire in October 2003. During the nine
     month period ended January 31, 1999, 697,937 stock options were forfeited.

     In February 1999 the Company and its general counsel agreed to a two - year
     retainer agreement for legal services. Under the agreement, general counsel
     received 333,333 shares of restricted  stock, or $100,000,  for the term of
     the agreement, and will receive $30,000 quarterly through December 31, 2000
     for legal services . In addition,  the Company issued 115,266 shares of its
     common stock for consulting and legal services in February 1999.

5.   RELATED PARTY TRANSACTIONS

     The  Company  purchased  materials  and  supplies of  $175,964,  and had an
     outstanding  balance  payable at January  31,  1999 of $93,500 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.

     On  December  16,  1998  the  Company   entered  into  an  operating  lease
     arrangement  with its Chief  Executive.  Under the  arrangement the Company
     will lease a forty-two  foot  fully-equipped  custom built Topaz boat for a
     period of two  years.  Annual  rentals  approximate  $75,000.  The  leasing
     arrangement was necessitated by a Marine Contractor Assistance Contract the
     Company  received  with KeySpan  Energy  Corporation,  covering the similar
     period, January 1, 1999 through December 31, 2000. The arrangement provides
     the Company with its largest floating vessel, capable of handling specialty
     equipment and  facilitating  an offshore  support crew. The lease carries a
     one year renewal option.

     Due from officer  represents the $100,000 the Chief Executive received as a
     bonus based upon the  calculation  at the end of the second  quarter of the
     current  fiscal  year.  Due to the net loss  incurred by the Company in the
     current fiscal quarter, the bonus is now due back to the Company.

6.   DEBT

     On June 1, 1998 the Company  entered into a 2 1/2 year (as amended  January
     19,  1999) 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


                                        6

<PAGE>


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


6.   DEBT (CONT.)

     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 nine months  ended  January 31,  1999,  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 $172,882 of annual insurance premium
     financing  and  $101,236 of common  stock and options  issued in payment of
     accrued  preferred  dividends  and  related  interest.  Non-cash  financing
     representing the present value of the Oxford  settlement  discounted at 10%
     (see Note 9),  or  $164,508,  was  transferred  from  accounts  payable  to
     long-term debt.

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 intends to defend the action vigorously.

     The Company is a third party defendant in a litigation matter,  Glenn Merto
     vs. George D. Nagrodsky and Windswept  Environmental  Group,  Inc., whereby
     Mr.  Merto  is  claiming  damages  in a "slip  and  fall"  incident  on the
     Company's subleased premises on or about January12,  1999. Mr. Nagrodsky is
     the Company's landlord.  Management believes the plaintiff suffered minimal
     injuries and the Company is fully insured against such loss.

     One of the Company's  subsidiaries  is a defendant in a litigation  matter,
     Peggy  Magidson  vs. New York  Testing  Laboratories,  Inc. et al,  whereby
     plaintiff  charges sexual  harassment by an employee of New York Testing in
     the fall of 1991.  The  Company  believes  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 material  adverse  effect on
     the consolidated financial position, results of operations or cash flows of
     the Company.


                                        7

<PAGE>


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


8.   COMMITMENTS AND CONTINGENCIES (CONT.)

     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  compliance
     examination  for the period March 1, 1994 through  September 28, 1997.  The
     examination is still in progress and the findings are as yet  inconclusive.
     There  has  not  been a  deficiency  assessed  to  date  relating  to  this
     examination.

     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  remitted  a  final  payment  to  the  IRS 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.

9.   SUBSEQUENT EVENTS

     On February 1, 1999 the Company and its lender, BACC, agreed to a temporary
     over-advance of $325,000 ratably reduced to zero through April 16,1999. The
     over-advance  was  necessitated  when a $430,000  receivable  from a Nassau
     County,  New  York-  funded  project  was  not  paid  within  the  lender's
     prescribed ninety day time line. During the over-advance period the Company
     will be charged an  additional 5 1/2 % above its current  interest cost and
     incur a $25,000 over-advance fee. The Company expects payment on the county
     funded receivable in March 1999; however, no assurance can be given in this
     regard.

     On March 1, 1999 the  Company  and Oxford  Health  Plans,  Inc.  ("Oxford")
     agreed to a $175,000  stipulation  of  settlement  of  certain  outstanding
     indebtedness for employee health insurance. The Company will pay the amount
     due, without interest, beginning May 1, 1999 over a twelve month period. In
     the event of default,  the Company will owe Oxford  $202,047  (the original
     liability amount), less amounts paid under the settlement  agreement,  plus
     interest from the date of default.


                                        8

<PAGE>


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

The  following  discussion  of the fiscal nine months ended January 31, 1999 and
1998, 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 increase its gross margins,  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 loss and net loss per share for the  quarter  and nine  month  period  ended
January   31,1999  was   ($979,943)   and  ($.07)  and  ($381,737)  and  ($.03),
respectively,  compared  to a net loss and loss per  share for the  quarter  and
nine-month   period  ended  January  31,  1998  of  ($796,948)  and  ($.08)  and
($2,936,639) and ($.30), respectively.

Revenues for the quarter ended January 31, 1999 increased by $217,510, or 8%, to
$3,058,186  from  $2,840,676.  Revenues for the first nine months of fiscal 1999
increased by $1,281,085, or 13%, to $11,018,496 from $9,737,411. The increase in
revenues was  primarily  reflected in the results of the  Company's  Trade-Winds
subsidiary,   where  construction  /  renovation   revenues  increased  95%,  or
approximately   $1,352,000.   This  is  attributable   to  certain   residential
construction  projects  the  Company has  undertaken  on the eastern end of Long
Island,  as well as a Nassau  County funded cancer  rehabilitation  center.  The
revenues of the other Company subsidiaries,  North Atlantic  Laboratories,  Inc.
("NAL") and New York Testing Laboratories,  Inc.("NYTL"), declined approximately
$170,000  compared to the prior  periods,  with  declines in revenues of 12% for
NAL, to $1,101,615 from  $1,251,193,  and 4% for NYTL, to $528,198 from $548,640
over the nine month  period.  The decline in NAL  revenues  reflect a decline in
sampling and analysis  testing  revenues.  The decline in NYTL revenues  reflect
delays in new municipal contracts for lead testing by our consulting clientele.

Gross  margins for the quarter and nine month period ended January 31, 1999 were
5% and 24%, respectively,  compared to 6% and 8% for the quarter and nine months
ended January 31, 1998, respectively. The increased margins for the nine - month
period 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  has turned  down work where  competitive
factors  would  lead to  projected  project  losses.  Margins  at the  Company's
Trade-Winds  subsidiary increased to 20% from 3% over the comparative prior nine
month period.  Margins  declined  from 30% at October  31,1998 to 24% at January
31,1999. The decline in margin was attributable to a number of factors primarily
as  follows:  a.) The  Company  was  involved  in a highly  technical  fuel tank
replacement  project at JFK  Airport.  The  Company  incurred  significant  cost
overruns which had not been  previously  budgeted for partially due to unplanned
equipment  retrieval  delays;  b) projects  during the  quarter  were at a lower
margin  than  previous  quarter's   projects;   and  c.)  various  asbestos  and
construction  projects  which  began  in  earlier  quarters  experienced  margin
adjustments  as costs  exceeded  original  estimates.  The gross  margins in the
period ended January 31, 1998 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 January 31,
1999  declined by  $236,730,  or 24%, to $733,411  from  $970,141 in the quarter
ended January 31, 1998.  Selling,  general and  administrative  expenses for the
nine month  period  ended  January 31, 1999  declined  by  $798,493,  or 25%, to
$2,436,761  from $3,235,254 in the nine month period ended January 31, 1998. The
decline  for  the  nine-month   period  was  primarily  related  to  approximate
reductions  as follows:  bad debt  expense,  $84,000  (due to improved  internal
controls and management collection efforts);  legal expenses,  $50,000 (due to a
reduction in SEC investigation and compliance


                                        9

<PAGE>


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

RESULTS OF OPERATIONS (cont.)

and other non-operational type legal matters), health insurance, $42,000 (due to
mandatory  contributions required of employees since the third quarter of fiscal
1998),  goodwill  amortization  expense of $111,000 (due to the impairment  loss
recorded in the fourth quarter of  fiscal1998),  fines and  penalties,  $128,000
(reduced due to the  settlement  agreement with the Internal  Revenue  Service),
sales  and  office  salaries  and  related  taxes,  $300,000  (due to the  staff
reductions in February and September 1998),  consulting expenses of $43,000 (due
to a reduction  in  laboratory  consulting  and an  assessment  of the  wildlife
consulting  business  fees),  and $35,000 in  advertising  due to a reduction in
yellow  page  geographic   coverage.   The  decline  in  selling,   general  and
administrative expenses for the quarter ended January 31, 1999 was primarily due
to a $25,000 reduction in consulting expenses related to wildlife rehabilitation
business,  $36,000 in  amortization  expense related to the absence of the North
Atlantic  goodwill  charge,  and sales and office  salaries  and  related  taxes
amounting to $155,000  due to the staff  reductions  in February  and  September
1998.

Interest expense for the quarter ended January 31, 1999 increased  $154,899,  or
171% , to $245,265, from $90,366 in the quarter ended January 31, 1998. Interest
expense for the nine months ended January 31, 1999 increased $87,754, or 15%, to
$679,316 from $591,562 in the nine month period ended  January  31,1998.  During
the nine month period ended  January 31, 1998 the Company  incurred  $356,154 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 nine month period ended January 31, 1999
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.  Only $750,000 of financing was  outstanding  during the
quarter and nine-month period ended January 31, 1998 at favorable interest rates
approximating  11% versus  approximately  $2,500,000  of  outstanding  financing
during the  quarter  and nine  month  period  ended  January  31,  1999 at rates
approximating 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 January  31,  1999 the Company has a
stockholders'  deficit of $2,672,688 and an accumulated  deficit of $31,371,133.
The Company has financed its operations to date primarily  through  issuances of
debt and equity  securities.  At January 31,  1999,  the Company had $100,836 in
cash, and a working capital  deficit of $2,898,538.  The working capital deficit
has  increased  primarily  due to the  net  loss  incurred  in the  quarter.  In
addition,  as of January 31,  1999,  the Company was in arrears  with respect to
certain sales tax  obligations of  approximately  $254,000.  These factors raise
substantial  doubt about the Company's  ability to continue as a going  concern.
The 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.  Nine-month results reflect  management's 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.

On February 1, 1999 the  Company  and its  lender,  BACC,  agreed to a temporary
over-advance  of $325,000  ratably  reduced to zero through April  16,1999.  The
over-advance was necessitated  when a $430,000  receivable from a Nassau County,
New York- funded project was not paid within the lender's  prescribed ninety day
time  line.  During  the  over-advance  period  the  Company  will be charged an
additional  5 1/2 %  above  its  current  interest  cost  and  incur  a  $25,000
over-advance fee. The Company expects payment on the county funded receivable in
March 1999; however, no assurance can be given in this regard.

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.


                                       10

<PAGE>


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

THE YEAR 2000

The Company has taken actions to make its systems,  services, and infrastructure
Year  2000  ("Y2K")  compliant.  Specifically  the  Company  believes  that  its
accounting system, estimating system, and all corporate office computers are Y2K
compliant.  The Company is now assessing the mechanical or navigational  systems
on our  fleet of  floating  vessels,  and  although  we have not  completed  the
process,  it has not  indicated  any  necessary  changes  to date.  We expect to
complete  this  process by August 1999.  We have  inquired of our vendors in the
laboratory and consulting  division  regarding  making our all our equipment Y2K
compliant.   We  now  estimate  the  costs  related  to  Y2K  compliance  to  be
approximately $25,000,  exclusive of consulting fees, and the Company expects to
pay these costs out of working capital.

The  Company has made  inquiries  and been  advised  that its banks' and primary
lender's  systems are Y2K  compliant.  The Company  being an emergency  response
provider keeps a full  inventory of supplies and other  materials on hand at all
times.  In addition,  we are not dependent on a single source of supply from any
of our vendors  presently.  Our  inquiries  of our largest  vendors  have led to
indications that they are, or expect to be, Y2K compliant by December 1999.

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

he Company has a full-time  in-house computer  consultant  devoted to assessing
The Company has a full-time  in-house computer  consultant  devoted to assessing
and analyzing Y2K issues, and arranging for their final resolution,  although at
this time,  we believe we have  inventoried  and resolved  the most  significant
issues.  The Company may  inevitably be prone to some form of Y2K impact that is
at this time  unforeseen.  Due to the nature of our  business,  primarily  labor
based, with minimal equipment usage,  management has assessed that the risks are
not likely to be material.  Further,  we believe that our contingency plan is in
place  due to the fact  that  our  internal  systems  are Y2K  compliant  and we
maintain a large  supply of  materials  and  supplies  necessary  to support our
emergency response readiness.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

See Note 8 to the Condensed Consolidated Financial Statements.

Item 2. Changes in Securities

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.  In November  1998 the
Company issued 133,333 shares of Common Stock to its Chief Executive Officer. In
December 1998 the Company  issued 16,000 shares of its Common Stock related to a
legal  settlement.  In January 1999, the Company issued 57,692 and 30,240 shares
of its Common  Stock,  respectively,  for legal  services.  In February 1999 the
Company and its general  counsel  agreed to a two - year retainer  agreement for
legal services. Under the agreement,  general counsel received 333,333 shares of
Common stock for the term of the agreement for legal services . In addition, the
Company issued 26,829 and 88,427 shares of its common stock  ,respectively,  for
consulting  and  legal  services  in  February  1999.  These  transactions  were
non-public  offerings exempt from registration under the Securities Act of 1933,
as amended, pursuant to Section 4(2) thereof.

Item 3. Defaults Upon Senior Securities

On February 1, 1999 the  Company  and its  lender,  BACC,  agreed to a temporary
over-advance  of $325,000  ratably  reduced to zero through April  16,1999.  The
over-advance was necessitated  when a $430,000  receivable from a Nassau County,
New York - funded project was not paid within the lender's prescribed ninety day
time  line.  During  the  over-advance  period  the  Company  will be charged an
additional  5 1/2 %  above  its  current  interest  cost  and  incur  a  $25,000
over-advance fee. The Company expects payment on the county funded receivable in
March 1999; however, no assurance can be given in this regard.

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

None


                                       11

<PAGE>


PART II - OTHER INFORMATION (continued)

Item 5.   Other Information

          None

Item 6.   Exhibits and Reports on Form 8-K

     (a)  Exhibits: 10.20-    Extension  Revolving Credit Master Promissory Note
                              dated January 19, 1999.

                    10.21-    Loan and  Security  Agreement  dated as of June 1,
                              1999,  as  modified  from  time  to  time,   dated
                              February 1,1999.

                    10.22-    Equipment lease agreement between Michael O'Reilly
                              and Trade-Winds  Environmental  Restoration,  Inc.
                              dated December 16, 19998

                       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:   March 15, 1999

                                            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