<PAGE>

                       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 December 31, 1998

                                      OR

         ( )      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934
         For the transition period from _________ to _________

         Commission file number 000-22653

                            Coventry Industries Corp.
       -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

                                     Florida
       -----------------------------------------------------------------
         (State or other jurisdiction of incorporation or organization)

                                   65-0353816
       -----------------------------------------------------------------
                        (IRS Employer Identification No.)

           1900 Corporate Blvd., Suite 400 East, Boca Raton, FL 33431
       -----------------------------------------------------------------
                    (Address of principal executive offices)

                                  561-988-2544
       -----------------------------------------------------------------
                           (Issuer's telephone number)

               7777 Glades Road., Suite 211, Boca Raton, FL 33434
       -----------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ( ).

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. As of January 31, 1999 the
registrant had issued and outstanding 6,300,000 shares of common stock.

         Transitional Small Business Disclosure Format (check one);
Yes ( ) No (x)


<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                   COVENTRY INDUSTRIES CORP. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                       DECEMBER 31, 1998 AND JUNE 30, 1998
<TABLE>
<CAPTION>

                                                                                                December            June
                                 ASSETS                                                         31, 1998           30,1998
                                 ------                                                         --------           -------
                                                                                               (Unaudited)
<S>                                                                                         <C>               <C>
Current assets:
     Cash and cash equivalents                                                               $    31,573       $     52,188
     Accounts receivable, net of allowance for doubtful accounts
         of $50,000                                                                            2,956,815          1,196,993
     Inventory                                                                                 1,008,138          1,071,140
     Other current assets                                                                        211,957            198,255
                                                                                             -----------       ------------
              Total current assets                                                             4,208,483          2,518,576
Property, plant and equipment, net of accumulated depreciation                                 2,766,525          2,762,667
Goodwill, net of accumulated amortization                                                      2,369,862          1,391,724
Other assets                                                                                     596,374            702,153
                                                                                             -----------       ------------

              Totals                                                                         $ 9,941,244       $  7,375,120
                                                                                             ===========       ============

                  LIABILITIES AND STOCKHOLDERS' EQUITY
                  ------------------------------------

Current liabilities:
     Current portion of long-term debt                                                       $   290,381       $    322,655
     Short-term notes payable                                                                    504,547            335,902
     Accounts payable and accrued expenses                                                     1,793,383          1,574,136
     Demand note payable to stockholder                                                          282,000
     Note payable to former stockholder                                                          175,000            151,824
                                                                                             -----------       ------------
              Total current liabilities                                                        3,045,311          2,384,517
Long-term debt, net of current portion                                                         1,762,246            395,325
Minority interest                                                                                123,000                   
                                                                                             -----------       ------------
              Total liabilities                                                                4,930,557          2,779,842
                                                                                             -----------       ------------
Stockholders' equity:
     Series A preferred stock, $.001 per value; 30 shares authorized,
         issued and outstanding                                                                     -                  -
     Series C preferred stock, $.001 par value; 30,000 shares
         authorized, issued and outstanding                                                           30                 30
     Series E preferred stock, $.001 par value; 115,000 shares
         authorized, 55,000 and 115,000 shares issued and out-
         standing                                                                                     55                115
     5% convertible preferred stock, $.001 par value; 2,500 shares
         authorized, 1,250 shares issued and outstanding                                               1                  1
     Common stock, $.001 par value; 25,000,000 shares authorized,
         6,300,000 and 3,032,797 shares issued and outstanding                                     6,300              3,033
     Additional paid-in capital                                                               23,485,967         21,398,987
     Unearned compensation and advertising fees                                               (2,311,292)        (2,311,292)
     Accumulated deficit                                                                     (16,170,374)       (14,495,596)
                                                                                              -----------       ------------
              Total stockholders' equity                                                       5,010,687          4,595,278
                                                                                             -----------       ------------
              Totals                                                                         $ 9,941,244       $  7,375,120
                                                                                             ===========       ============

</TABLE>
See Notes to Condensed Consolidated Financial Statements.

                                       -1-
<PAGE>

                   COVENTRY INDUSTRIES CORP. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
              SIX AND THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997
                                   (Unaudited)


<TABLE>
<CAPTION>


                                                                      Six Months                      Three Months
                                                                  Ended December 31,                Ended December 31,     
                                                            ----------------------------      -----------------------------
                                                                 1998            1997             1998              1997    
                                                            -----------      -----------      -----------       -----------
<S>                                                         <C>              <C>              <C>               <C>        
Revenues                                                    $ 3,873,589      $ 5,196,354      $ 2,257,994       $ 2,842,816
Cost of revenues                                              2,581,906        3,881,832        1,431,286         2,185,749
                                                            -----------      -----------      -----------       -----------
Gross profit                                                  1,291,683        1,314,522          826,708           657,067
                                                            -----------      -----------      -----------       -----------
Selling, general and administrative
    expenses                                                  2,409,324        2,317,676        1,932,392         1,601,554
Professional fees                                               192,237          647,471          152,365           600,000
Depreciation and amortization                                   192,667          219,174          108,272           136,620
                                                            -----------      -----------      -----------       -----------
        Totals                                                2,794,228        3,184,321        2,193,029         2,338,174
                                                            -----------      -----------      -----------       -----------
Operating loss                                               (1,502,545)      (1,869,799)      (1,366,321)       (1,681,107)
                                                            -----------      -----------      -----------       -----------
Other income (expense):
    Interest                                                    (94,932)        (100,500)         (51,832)          (65,285)
    Other                                                        (7,551)          15,160           (7,551)          (12,172)
                                                            -----------      -----------      -----------       -----------
        Totals                                                 (102,483)         (85,340)         (59,383)          (77,457)
                                                            -----------      -----------      -----------       -----------
Net loss                                                     (1,605,028)      (1,955,139)      (1,425,704)       (1,758,564)

Dividends on preferred stock                                     69,750                            34,875
                                                            -----------      -----------      -----------       ----------- 

Net loss applicable to common stock                         $(1,674,778)     $(1,955,139)     $(1,460,579)      $(1,758,564)
                                                            ===========      ===========      ============      =========== 


Basic loss per common share                                       $(.45)           $(.79)           $(.33)            $(.63)
                                                                  =====            =====            =====             =====

Weighted average common shares
    outstanding                                               3,732,145        2,461,003        4,431,492         2,790,371
                                                            ===========      ===========      ============      ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.

                                       -2-

<PAGE>



                   COVENTRY INDUSTRIES CORP. AND SUBSIDIARIES

            CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                       SIX MONTHS ENDED DECEMBER 31, 1998
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                      Preferred Stock                             
                         -----------------------------------------------------------------------  
                             Series A         Series C          Series E         5% Convertible 
                         ---------------   ---------------    ----------------   ---------------  
                         Shares   Amount   Shares   Amount    Shares    Amount   Shares   Amount  
                         ------   ------   ------   ------    ------    ------   ------   ------  
<S>                        <C>     <C>      <C>      <C>      <C>        <C>     <C>       <C>    
Balance, July 1, 1998      30               30,000   $30      115,000    $115    1,250      $1    

Common stock issued
    for:
    Purchase business
      combination                                                                                 

    Conversion of Series
      E preferred stock                                       (60,000)    (60)                    

    Professional and
      other services,
      employee compensa-
      tion and other
      expenses                                                                                      

Dividends declared                                                                                

Net loss          
                           --    ---        ------   ---       ------   -----    -----      --    
Balance, December
    31, 1998               30    $ -        30,000   $30       55,000   $  55    1,250      $1    
                           ==    ===        ======   ===       ======   =====    =====      ==    
</TABLE>
(RESTUBBED TABLE)
<TABLE>
<CAPTION>
                                                               Unearned
                                                               Compensa-
                              Common Stock       Additional    tion and
                           ------------------     Paid-in     Advertising    Accumulated
                            Shares     Amount     Capital        Fees          Deficit         Total
                            ------     ------     -------        ----          -------         -----
<S>                        <C>         <C>       <C>          <C>            <C>             <C>
Balance, July 1, 1998      3,032,797   $3,033    $21,398,987  $(2,311,292)   $(14,495,596)   $4,595,278

Common stock issued
    for:
    Purchase business
      combination            946,000      946        876,804                                    877,750

    Conversion of Series
      E preferred stock      600,000      600           (540)

    Professional and
      other services,
      employee compensa-
      tion and other
      expenses             1,721,203    1,721      1,210,716                                  1,212,437

Dividends declared                                                                (69,750)      (69,750)
Net loss                                                                       (1,605,028)   (1,605,028)
                           ---------   ------    -----------  -----------    ------------    ----------
Balance, December
    31, 1998               6,300,000   $6,300    $23,485,967  $(2,311,292)   $(16,170,374)   $5,010,687
                           =========   ======    ===========  ===========    ============    ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.

                                      -3-
<PAGE>

                   COVENTRY INDUSTRIES CORP. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                                1998                 1997
                                                                                             ------------       ----------
<S>                                                                                          <C>                <C>  
Operating activities:
     Net loss                                                                                $(1,605,028)       $(1,955,139)
     Adjustments to reconcile net loss to net cash used in
         operating activities:
         Depreciation                                                                            133,996            167,776
         Amortization                                                                             58,671             51,398
         Common stock issued for services, compensation and
              other expenses                                                                   1,212,437            591,904
         Changes in operating assets and liabilities, net of effects of
              purchased businesses:
              Accounts receivable                                                                 93,924            (83,597)
              Inventory                                                                           97,449           (243,799)
              Other current assets                                                                 6,827           (217,895)
              Other assets                                                                        71,653           (111,252)
              Accounts payable and accrued expenses                                             (214,991)           813,218
                                                                                             -----------        ----------- 
                  Net cash used in operating activities                                         (145,062)          (987,386)
                                                                                             -----------        ----------- 
Investing activities:
     Purchase of property and equipment                                                          (26,209)          (132,241)
     Purchases of businesses, net of cash received                                                (2,636)           (64,927)
                                                                                             -----------        ----------- 
                  Net cash used in investing activities                                          (28,845)          (197,168)
                                                                                             -----------        ----------- 
Financing activities:
     Net short-term borrowings (repayments)                                                      168,645            (85,646)
     Proceeds from note payable to stockholder                                                   170,000
     Payments on note payable to stockholder                                                     (20,000)
     Proceeds of long-term borrowings                                                                               165,499
     Repayments of long-term borrowings                                                         (165,353)
     Issuance of common stock                                                                                       788,951
                                                                                             -----------        ----------- 
                  Net cash provided by financing activities                                      153,292            868,804
                                                                                             -----------        ----------- 
Decrease in cash and cash equivalents                                                            (20,615)          (315,750)
Cash and cash equivalents, beginning of period                                                    52,188            335,321
                                                                                             -----------        ----------- 
Cash and cash equivalents, end of period                                                     $    31,573        $    19,571
                                                                                             ===========        ===========

Supplemental disclosure of cash flow data:
     Interest paid                                                                           $    94,932        $   100,500
                                                                                             ===========        ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.

                                      -4-
<PAGE>

                   COVENTRY INDUSTRIES CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1 - Unaudited interim financial statements:
                In the opinion of management, the accompanying unaudited
                condensed consolidated financial statements reflect all
                adjustments, consisting of normal recurring accruals, necessary
                to present fairly the financial position of Coventry Industries
                Corp. and its subsidiaries (collectively, the "Company") as of
                December 31, 1998 and its results of operations for the six and
                three months ended December 31, 1998 and 1997, changes in
                stockholders' equity for the six months ended December 31, 1998
                and cash flows for the six months ended December 31, 1998 and
                1997. Certain terms used herein are defined in the audited
                consolidated financial statements of the Company as of June 30,
                1998 and for the years ended June 30, 1998 and 1997 (the
                "Audited Financial Statements") included in the Company's Annual
                Report on Form 10-KSB for the year ended June 30, 1998 that was
                previously filed with the United States Securities and Exchange
                Commission (the "SEC"). Accordingly, these unaudited condensed
                consolidated financial statements should be read in conjunction
                with the Audited Financial Statements and the other information
                also included in the Form 10-KSB.

                The results of the Company's operations for the six and three
                months ended December 31, 1998 are not necessarily indicative of
                the results of operations for the full year ending June 30,
                1999.


Note 2 - Earnings (loss) per common share:
                As further explained in Note 1 to the Audited Financial
                Statements, the Company presents basic and, if appropriate,
                diluted earnings (loss) per share in accordance with the
                provisions of Statement of Financial Accounting Standards No.
                128, Earnings per Share ("FAS 128"). Diluted per share amounts
                have not been presented in the accompanying unaudited condensed
                consolidated statements of operations because the Company had a
                net loss for the six and three months ended December 31, 1998
                and 1997 and, accordingly, the assumed effects of the conversion
                of all of the Company's outstanding shares of 5% convertible
                preferred stock and the exercise of all of the Company's
                outstanding stock options and the application of the treasury
                stock method would have been anti-dilutive.



                                      -5-



<PAGE>


                   COVENTRY INDUSTRIES CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 3 - Purchase business combination:
                On December 7, 1998, the Company consummated an agreement
                whereby it acquired 80.1% of the issued and outstanding shares
                of common stock of BSD Healthcare Industries, Inc. ("BSD") in
                exchange for 946,000 shares of the Company's common stock (or
                approximately 19.9% of its then outstanding common shares). BSD
                was incorporated in 1989 as a "blind pool" or blank check"
                company for the purpose of either merging with or acquiring an
                operating company. BSD did not conduct any operations of a
                commercial nature or have any significant activities until
                February 1, 1998 when it acquired 100% of the common stock of
                two commonly-controlled companies, Respiratory Care Services,
                Inc. ("RCSI") and RCS Subacute, Inc. ("Subacute"). BSD is a
                holding company. RCSI, which was incorporated on July 1, 1988,
                provides quality respiratory therapy staff in a variety of
                health care settings. Subacute, which was incorporated on
                October 19, 1995, provides credentialed, licensed therapists
                experienced in all phases of skilled and subacute respiratory
                care. These services are provided primarily to Medicare
                patients.

                The Company has accounted for the acquisition of its 80.1%
                interest in BSD pursuant to the purchase method of accounting
                and, accordingly, the accompanying historical condensed
                consolidated financial statements include the results of
                operations of BSD and its subsidiaries from December 7, 1998,
                the date of acquisition. The cost of the acquisition of BSD and
                its subsidiaries was $877,750, of which $827,750 is the
                estimated fair value of the 946,000 shares of common stock
                issued by the Company to the former stockholders of BSD at the
                date of acquisition and the balance of $50,000 is the
                approximate amount of the Company's cash payments for legal,
                accounting and other costs related to the purchase.

                The cost of acquiring BSD and its subsidiaries, which exceeded
                the fair value of the net assets acquired by $1,036,809, was
                allocated as follows:

                  Cash and cash equivalents                           $  47,364
                  Accounts receivable                                 1,853,746
                  Goodwill                                            1,036,809
                  Other current and noncurrent assets                   111,267
                  Long-term debt                                     (1,500,000)
                  Other current liabilities                            (548,436)
                  Minority interest in subsidiaries of BSD             (123,000)
                                                                      ---------
                      Total cost of acquisition                       $ 877,750
                                                                      =========
                                      -6-


<PAGE>


                   COVENTRY INDUSTRIES CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 3 - Purchase business combination (concluded):
                The following unaudited pro forma information (in thousands,
                except per share amounts) shows the results of operations for
                the six and three months ended December 31, 1998 and 1997 as
                though the acquisition of BSD and its subsidiaries had been
                consummated on July 1, 1997:
<TABLE>
<CAPTION>
                                                                          Six Months                   Three Months
                                                                            Ended                          Ended
                                                                          December 31,                   December 31,
                                                                    ----------------------         ----------------------
                                                                      1998           1997            1998           1997 
                                                                    -------        -------         -------        -------
                    <S>                                              <C>            <C>             <C>            <C>    
                    Revenue                                         $ 6,228        $ 7,551         $ 3,391        $ 3,976
                    Cost of revenue                                   4,146          5,446           2,141          2,895
                                                                    -------        -------         -------        -------
                    Gross profit                                      2,082          2,105           1,250          1,081
                    Other expenses                                    3,335          3,709          (2,521)         2,685
                                                                    -------        -------         -------        -------
                    Net loss                                         (1,253)        (1,604)         (1,271)        (1,604)
                    Dividends on preferred stock                         70                             35               
                                                                    -------        -------         -------        -------
                    Net loss applicable to common
                       stock                                        $(1,323)       $(1,604)        $(1,306)       $(1,604)
                                                                    =======        =======         =======        ======= 

                    Basic loss per common share                       $(.31)         $(.47)          $(.29)         $(.43)
                                                                      =====          =====           =====          ===== 

                    Weighted average common
                       shares outstanding                         4,275,427      3,407,003       4,572,058      3,736,371
                                                                  =========      =========       =========      =========
</TABLE>

               In addition to combining the historical results of operations of
               the Company and BSD and its subsidiaries for each period, the
               unaudited pro forma results of operations include adjustments
               primarily to reflect for the entire period (i) the amortization
               of the goodwill recorded in connection with the acquisition of
               RCS based on an estimated useful life of five years and (ii)
               interest expense on a term loan obtained by BSD to finance the
               acquisition of its subsidiaries. The unaudited pro forma results
               of operations set forth above do not purport to represent what
               the combined results of operations actually would have been if
               the acquisition of BSD and its subsidiaries had been consummated
               on July 1, 1997 instead of December 7, 1998 or what the results
               of operations would be for any future periods.

               Additional audited and unaudited historical financial statements
               of BSD and its subsidiaries, including information with respect
               to the long-term obligations of BSD acquired by the Company, and
               unaudited pro forma information combining the accounts of the
               Company and BSD and its subsidiaries is included in the Company's
               Current Report on Form 8-K for December 1998 that was previously
               filed with the SEC on December 22, 1998. Accordingly, these
               unaudited condensed consolidated financial statements should be
               read in conjunction with the historical and pro forma financial
               statements and the other information included in the Form 8-K.

                                      * * *

                                      -7-
<PAGE>


Item 2. Management's Discussion and Analysis or Plan or Operation.

         The following discussion regarding the Company and its business and
operations contains "forward-looking statements" within the meaning of Private
Securities Litigation Reform Act 1995. Such statements consist of any statement
other than a recitation of historical fact and can be identified by the use of
forward-looking terminology such as "may," "expect," "anticipate," "estimate" or
"continue" or the negative thereof or other variations thereon or comparable
terminology. The reader is cautioned that all forward-looking statements are
necessarily speculative and there are certain risks and uncertainties that could
cause actual events or results to differ materially from those referred to in
such forward looking statements. The Company does not have a policy of updating
or revising forward-looking statements and thus it should not be assumed that
silence by management of the Company over time means that actual events are
bearing out as estimated in such forward looking statements.

Results of Operations

Six months ended December 31, 1998 vs. six months ended December 31, 1997

           Consolidated revenues for the six months ended December 31, 1998
decreased $1,322,765 or approximately 25% from the six months ended December 31,
1997. This decrease is mainly attributable to (i) the sale of LPS Acquisition
Corp. ("LPS") to The American Group, Inc. resulting in no revenues from LPS for
the six month period ended December 31, 1998 versus $897,876 in revenues for the
six month period ended December 31, 1997, (ii) the sale of Apollo Pipe & Valve
("Apollo") effective June 1998 resulting in no revenues from Apollo for the six
month period ended December 31, 1998 versus $155,487 in revenues for the six
month period ended December 31, 1997, (iii) the sale of American Industrial
Management, Inc. ("AIM") effective June 1998 resulting in no revenues from AIM
for the six month period ended December 31, 1998 versus $382,303 in revenues for
the six month period ended December 31, 1997 and (iv) a decrease of
approximately $309,000 in revenues for Federal Supply due to an overall decrease
in the operations of Federal. These decreases were offset by the acquisition of
80% of BSD Healthcare effective December 1, 1998. This resulted in an increase
in revenue $530,808 from the month of December for the six month period ended
December 31, 1998 versus no revenues for the six month period ended December 31,
1997.

         Gross profit margins as a percentage of revenues for the six months
ended December 31, 1998 increased approximately 8% to approximately 33% from
approximately 25% for the comparable six months ended December 31, 1997. The
Company's gross profit percentage has increased due to the sale of LPS and
Apollo which have historically had significantly lower gross profit margins than
the Company's remaining subsidiaries.

         Operating expenses decreased approximately 12% for the six months ended
December 31, 1998 compared to the six months ended December 31, 1997 primarily
as a result of decreased professional fees and depreciation and amortization
expenses. SG&A on a consolidated basis increased approximately $91,648 (or 4%)
during the six months ended December 31, 1998 from the six months ended December
31, 1997 as a result of the addition of SG&A expenses attributable to BSD which
was not part of the consolidated group in the prior period. Other operating
expenses were non-cash items including depreciation and amortization and
professional fees of approximately $385,000 for the six months ended December
31, 1998 compared to approximately $867,000 for the six months ended December
31, 1997.


<PAGE>

         The Company reported a net loss of $1,674,778 for the six months ended
December 31, 1998 as compared to a net loss of $1,955,139 for the six months
ended December 31, 1997. Approximately $1,405,000 of the net loss for the six
months ended December 31, 1998 is attributable to non-cash items including (i)
depreciation and amortization of approximately $193,000, (ii) approximately
$132,000 of costs associated with professional fees, (iii) approximately
$437,000 of costs associated with issuance of stock with respect to employment
agreements, (iv) approximately $298,000 of costs associated with settlement of
certain outstanding claims through the issuance of stock and (v) approximately
$345,000 of cost associated with the issuance of stock to certain consultants.

Three months ended December 31, 1998 vs. three months ended December 31, 1997

Consolidated revenues for the three months ended December 31, 1998 decreased
$584,822 or approximately 21% from the three months ended December 31, 1997.
This decrease is mainly attributable to (i) the sale of LPS Acquisition Corp.
("LPS") to The American Group, Inc. resulting in no revenues from LPS for the
three month period ended December 31, 1998 versus $626,223 in revenues for the
three month period ended December 31, 1997, (ii) the sale of Apollo Pipe & Valve
("Apollo") effective June 1998 resulting in no revenues from Apollo for the
three month period ended December 31, 1998 versus $114,427 in revenues for the
three month period ended December 31, 1997 and (iii) the sale of American
Industrial Management, Inc. ("AIM") effective June 1998 resulting in no revenues
from AIM for the three month period ended December 31, 1998 versus $248,983 in
revenues for the three month period ended December 31, 1997. These decreases
were offset by the acquisition of BSD Healthcare effective December 1, 1998.
This resulted in revenues of $530,808 for one month for the three month period
ended December 31, 1998 versus no revenues for the three month period ended
December 31, 1997.

         Gross profit margins as a percentage of revenues for the three months
ended December 31, 1998 increased approximately 14% to approximately 37% from
approximately 23% for the comparable three months ended December 31, 1997. The
Company's gross profit percentage has increased due to the sale of LPS and
Apollo which have historically had significantly lower gross profit margins than
the Company's remaining subsidiaries.

Operating expenses decreased approximately 6% for the three months ended
December 31, 1998 compared to the three months ended December 31, 1997 primarily
as a result of decreased professional fees. SG&A on a consolidated basis
increased approximately $330,838 (or 21%) during the three months ended December
31, 1998 from the three months ended December 31, 1997 as a result of the
addition of SG&A expenses attributable to BSD which was not part of the
consolidated group in the prior period. Other operating expenses were non-cash
items including depreciation and amortization and professional fees of
approximately $260,000 for the three months ended December 31, 1998 compared to
approximately $737,000 for the three months ended December 31, 1997.

         The Company reported a net loss of $1,460,579 for the three months
ended December 31, 1998 as compared to a net loss of $1,758,564 for the three
months ended December 31, 1997.




<PAGE>

Liquidity and Capital Resources

         The Company's working capital at December 31, 1998 was $1,163,172
compared to $134,059 at June 30, 1998. The increase in working capital is
primarily attributable to an increase in accounts receivable resulting from the
BSD acquisition. The Company does not presently anticipate any significant
capital expenditures, in order to pursue the Company's plan of operations for
fiscal 1999, consisting of its normal business operations. The Company used
approximately $145,062 of cash for operating activities for the six months ended
December 31, 1998, $28,845 for investing activities and received approximately
$153,292 from financing activities, primarily from increased short term debt.
The Company will be required to raise additional working capital to fund its
plan of operations for the balance of fiscal 1999.

         In January 1998 the Company completed a private placement of 5%
Convertible Preferred Stock, resulting in gross proceeds of $1,250,000. The
Company filed a proxy statement for a special meeting of shareholders at which
the conversion terms of additional shares of 5% Convertible Preferred Stock
would be submitted for approval by the Company's shareholders; however, no
meeting date was set. In February 1999, the Company and the holder of the
Preferred Stock entered into an agreement pursuant to which the Preferred Stock
will be exchanged for (i) $600,000 in cash, (ii) convertible notes aggregating
$819,000 with fixed conversion prices (iii) a nonconvertible note for $81,000
(iv) 250,000 shares of Common Stock and (v) the cancellation of outstanding
warrants. As of February 16, 1999, the Company owed the holder approximately 
$255,000 of dividends and penalties and the holder had the right to require the
Company to redeem the 1250 outstanding shares for $1300 per share. Readers are
encouraged to carefully review the preliminary proxy statement currently on file
with the Securities and Exchange Commission for a complete description of the
private placement and the conversion terms of the 5% Convertible Preferred
Stock. The funds received from the private placement have been utilized and the
Company is engaged in a private placement of Common Stock and warrants to raise
additional funds to fund its plan of operations for the balance of fiscal 1999
and to pay the above-described payment. (The securities being offered have not
been registered under the Securities Act of 1933 and may not be offered or
resold in the United States absent registration or any applicable exemption from
the registration requirement).Additionally, a substantial portion (approximately
$2,170,000) of the Company's property, plant and equipment and accounts
receivable are unencumbered and, accordingly, would provide additional sources
of internal working capital should the Company elect to enter into an asset
based lending arrangement. The Company also borrowed funds from its president.

Year 2000

The Company has been and continues to be in the process of evaluating its
information technology infrastructure for the Year 2000 compliance. The Company
has modified certain systems to be Year 2000 compliant. The Company does not
expect that the cost to modify its information technology infrastructure to Year
2000 compliance will be material to its financial condition or results of
operations. The Company does not anticipate any material disruption in its
operations as a result of any failure by the Company to be compliant. The
Company does not currently have information concerning Year 2000 compliance
status of its suppliers and customers. In the event that any of the Company's
major suppliers or customers does not successfully and timely achieve Year 2000
compliance, the Company's business or operations could be adversely affected.

<PAGE>

PART II - OTHER INFORMATION

Item 1.     Legal Proceedings.

            None.

Item 2.     Changes in Securities and Use of Proceeds.

                  During the three months ended December 31, 1998, the Company
issued an aggregate of 3,195,000 shares of Common Stock as follows: (i) 946,000
shares in the BSD acquisition, (ii) 665,000 shares to Lester Gann, president of
the Company's IFR subsidiary in connection with the amendment of his employment
agreement, (iii) 600,000 to Robert Hausman, the Company's president, upon
conversion of outstanding preferred stock, (iv) an aggregate of 545,000 shares
to, certain consultants for payment of accrued consulting fees and other
services (v) 305,000 shares to settle two outstanding claims against the
Company, (vi) 100,667 shares to pay legal fees and (vii) 33,333 as a severance
payment to an ex-officer of the Company. None of these shares were issued for
cash. All shares were issued in a transaction exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2).

Item 3.     Defaults Upon Senior Securities.

            As of December 31, 1998, the Company had a dividend arrearage of
$59,895 and accrued penalties of $150,000 for its 5% Convertible Preferred Stock
which increased to a dividend arrearage of $67,708 and accrued penalties of 
$187,500, as of February 17, 1999.

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

            None.

Item 5.     Other Information.

                  See the Company's Current Report on Form 8-K filed December
22, 1998 for a description of the Exchange Agreement and related agreements,
modifications to employment agreements and the issuance of shares for payment of
consulting fees and other accrued expenses.

As previously disclosed, the Company received a letter from the Nasdaq SmallCap
Market indicating that the Company had until February 19, 1999 to regain
compliance with the continued listing standards. On February 17, 1999, the
Company requested a hearing, which stayed the delisting process. The Company
expects to be in compliance with the listing standards prior to the hearing
date.

In February 1999, the Company entered into a Settlement Agreement with M.
Shulman & Associates pursuant to which Shulman agreed to waive any future fees,
including those that may be due in connection with the completed BSD
transaction, in exchange for the Company transferring the 120,000 shares of the
American Group, Inc. owned by it and the assumption by the Company of $100,000
of Notes held by Robert Hausman, the Company's president.

<PAGE>

Item 6.     Exhibits and Report on Form 8-K.

      (a)   Exhibits.

2.8               Exchange Agreement dated as of September 29, 1998 by and among
                  Coventry Industries, Inc. ("Coventry"), BSD Healthcare
                  Industries, Inc. ("BSD"), certain shareholders of BSD, People
                  First LLC ("PF")and the members of PF (the Exchange
                  Agreement")

4.2               Termination and Amendment Agreement dated December 9, 1998
                  between the Company and Barron Chase Securities, Inc.

10.4              Management agreement between Workforce Systems Corp. and
                  Robert Hausman is hereby incorporated by reference to the
                  Annual Report on Form 10-KSB for the fiscal year ended June
                  30, 1997.

10.5              Amended and Restated Consulting Acquisition Management
                  Agreement between Workforce Systems Corp. and Manny J. Shulman
                  and Shulman & Associates, Inc. is hereby incorporated by
                  reference to the registration statement on Form S-8 as filed
                  with the Securities and Exchange Commission on September 24,
                  1997

10.6              Stock Purchase and Sale Agreement dated September 22, 1997
                  between Workforce Systems Corp., a Florida corporation, and
                  Darren Apel, Barbara Hausman and Ronna Newman Rutstein, as
                  shareholders of LPS Acquisition Corp. is incorporated by
                  reference to the Report on Form 8-K as filed with the
                  Securities and Exchange Commission on September 22, 1997

10.7              Conversion Agreement dated October 7, 1997 between Workforce
                  Systems Corp., Federal Supply, Inc. and Robert Hausman and
                  Barbara Hausman is hereby incorporated by reference to the
                  Company's Annual Report on Form 10-KSB for the fiscal year
                  ended June 30, 1997.

10.8              Conversion Agreement dated September 25, 1997 between
                  Workforce Systems Corp., LPS Acquisition Corp, and Eric and
                  Adrienne Deckinger is hereby incorporated by reference to the
                  Company's to the Report on Form 10-QSB for the quarter ended
                  September 30,1997 as filed with the Securities and Exchange
                  Commission on November 7, 1997

10.9              Financial Advisory Agreement between Coventry Industries Corp.
                  and Barron Chase Securities, Inc. is hereby incorporated by
                  reference to the report on Form 10-QSB for the quarter ended
                  December 31, 1997 as filed with the Securities and Exchange
                  Commission on February 23, 1998.

10.10             Employment Agreement between Industrial Fabrication & Repair,
                  Inc. and Lester E. Gann is hereby attached as an exhibit to
                  the Report on Form 10-KSB for the fiscal year ended June 30,
                  1998.

<PAGE>

10.11             Amendment to the Management Agreement between Coventry
                  Industries Corp. and Robert Hausman is hereby attached as an
                  exhibit to the Report on Form 10-KSB for the fiscal year ended
                  June 30, 1998.

10.12             Intentionally deleted.

10.13             Amendment dated November 9, 1998 to Employment Agreement Dated
                  May 1, 1998 Between Industrial Fabrication and Repair,
                  Coventry Industries Corp, and Lester Gann is hereby
                  incorporated to the Current Report on Form 8-K filed December
                  22, 1999.

10.14             Amendment dated as of December 1, 1998 to Management Agreement
                  dated July 1, 1997 and amended November 1, 1997 between the
                  Company and Robert Hausman is hereby incorporated to the
                  Current Report on Form 8-K filed December 22, 1999.

10.15             Voting Agreement dated December 3, 1998 among Robert Hausman,
                  Lester Gann, Ronald Wilheim, Stephen Rosedale, Yucatan
                  Holdings,Connie Steinmetz, Strategic Capital Holdings, Inc.
                  and Arizona Development Corporation is hereby incorporated to
                  the Current Report on Form 8-K filed December 22, 1999.

10.16             Consulting Agreement between the Company and Connie Steinmetz
                  dated as of November 2, 1998 is hereby incorporated to the
                  Current Report on Form 8-K filed December 22, 1999.

10.17             Consulting Agreement between the Company and Strategic
                  Development dated as of November 9, 1998 is hereby
                  incorporated to the Current Report on Form 8-K filed December
                  22, 1999.

10.18             Exchange Agreement dated February 3, 1999 between the Company
                  and ProFutures Special Equities Fund, L.P.

10.19             Settlement Agreement dated February __, 1999 among the
                  Company, M. Shulman & Associates and Robert Hausman.


         (b) Reports on Form 8-K.

         During the three months ended the Company filed the following Reports
         on Form 8-K with the Securities and Exchange Commission:

         On December 22, 1998 the Company filed a Report on Form 8-K disclosing
         its completion of the acquisition of 80% of BSD Healthcare pursuant to
         the Exchange Agreement, and certain other matters.


<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                        Coventry Industries Corp.,
                                        a Florida corporation

Date: February __, 1999                 By: /s/ Robert Hausman
                                            -------------------
                                            Robert Hausman,
                                            President