UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended October 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the Transition period from __________ to __________.
Commission File Number: 0 -17072
WINDSWEPT ENVIRONMENTAL GROUP, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 11-2844247
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
100 Sweeneydale Avenue, Bay Shore, New York 11706
(Address of principle executive offices)
(516) 694-7060
(Issuer's telephone number)
Indicate by check mark whether the issuer (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days.
Yes _X_ No___
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Common Stock, Par Value $.0001 10,436,005
(Title of Each Class) (Outstanding at November 30, 1997)
Transitional Small Business Disclosure Format (check one): Yes___ No_X_
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
October 31,
1997 April 30,
(Unaudited) 1997
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 24,711 $ 654,377
Accounts receivable, net of allowance for doubtful
accounts of $252,100 and $200,000 at October 31,
1997 and April 30, 1997, respectively 3,390,405 2,195,284
Inventories 179,760 158,714
Costs in excess of billings on contracts in progress 244,200 --
Due from officer 62,070 --
Other current assets 212,390 426,220
------------ ------------
Total current assets 4,113,536 3,434,595
------------ ------------
PROPERTY AND EQUIPMENT, net of
accumulated depreciation and amortization 3,100,821 2,841,783
------------ ------------
OTHER ASSETS
Goodwill, net 1,450,077 1,529,320
Note receivable, net of current portion 177,237 200,282
Other assets 233,709 233,271
------------ ------------
TOTAL ASSETS $ 9,075,380 $ 8,239,251
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable to bank $ 728,613 $ --
Accounts payable and accrued expenses 3,778,380 2,573,708
Payroll taxes payable 610,618 347,404
Current portion of long-term debt 603,232 765,432
Billings in excess of cost on contracts in progress 256,000 18,765
Obligations of unconsolidated subsidiary, net 196,112 196,112
------------ ------------
Total current liabilities 6,172,955 3,901,421
OTHER LIABILITIES
Convertible notes 800,000 800,000
Long-term debt, net of current portion 393,872 454,560
Other liabilities 75,000 --
------------ ------------
Total liabilities 7,441,827 5,155,981
------------ ------------
SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK
par value $.01; 1,300,000 shares issued and outstanding 1,300,000 1,300,000
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value,
10,000,000 shares authorized; 1,300,000
Series A redeemable convertible shares issued and outstanding -- --
Common stock, $.0001 par value,
50,000,000 shares authorized;
10,410,396 shares issued, 10,390,396, outstanding 1,043 979
Additional paid-in capital 28,043,607 27,318,031
Treasury stock, 20,000 shares at cost (10,000) (10,000)
Accumulated deficit (27,519,292) (25,379,601)
Less deferred compensation (181,805) (146,139)
------------ ------------
Total stockholders' equity 333,553 1,783,270
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,075,380 $ 8,239,251
============ ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
1
<PAGE>
WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
October 31, October 31,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 3,601,372 $ 3,178,140 $ 6,896,735 $ 8,251,542
Cost of revenues 2,913,938 2,211,412 5,953,852 5,540,139
------------ ------------ ------------ ------------
Gross profit 687,434 966,728 942,883 2,711,403
Selling, general and
administrative expenses 1,261,893 1,176,172 2,583,113 2,629,307
Special charges -- 1,193,000 -- 1,193,000
------------ ------------ ------------ ------------
Loss before other
income(expense) (574,459) (1,402,444) (1,640,230) (1,110,904)
------------ ------------ ------------ ------------
Other income (expense):
Settlement of legal claims, net -- 296,654 -- 296,654
Losses on investments -- (195,068) -- (295,071)
Gain on sale of assets, net 1,735 221,710 1,735 221,710
Interest expense (192,959) (12,527) (501,196) (27,583)
------------ ------------ ------------ ------------
Total other income (expense) (191,224) 310,769 (499,461) 195,710
------------ ------------ ------------ ------------
Net loss $ (765,683) $ (1,091.675) $ (2,139,691) $ (915,194)
============ ============ ============ ============
Loss per common share $ (.08) $ (.12) $ (.22) $ (.11)
============ ============ ============ ============
Weighted average number of
common shares outstanding 10,110,692 9,065,977 9,973,051 8,331,449
============ ============ ============ ------------
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
2
<PAGE>
WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED OCTOBER 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Common Stock
------------ Additional
Number of Par Paid-in Treasury
Shares Value Capital Stock
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance at April 30, 1997 9,766,074 $ 979 $ 27,318,031 $ (10,000)
Issuance of common stock for services 416,146 42 243,838 --
Issuance of stock options for services -- -- 10,000 --
Issuance of common stock for
employee and director compensation 190,286 18 134,434 --
Issuance of common stock to settle
legal obligations 37,890 4 23,996 --
Accretion of discount on convertible
notes -- -- 356,154 --
Amortization of deferred compensation -- -- -- --
Dividends -- -- (42,846) --
Net loss -- -- -- --
------------ ------------ ------------ ------------
Balance at October 31, 1997 10,410,396 $ 1,043 $ 28,043,607 $ (10,000)
============ ============ ============ ============
<CAPTION>
Accumulated Deferred
Deficit Compensation Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance at April 30, 1997 $(25,379,601) $ (146,139) $ 1,783,270
Issuance of common stock for services -- (15,000) 228,880
Issuance of stock options for services -- -- 10,000
Issuance of common stock for
employee and director compensation -- (150,000) (15,548)
Issuance of common stock to settle
legal obligations -- -- 24,000
Accretion of discount on convertible
notes -- -- 356,154
Amortization of deferred compensation -- 129,334 129,334
Dividends -- -- (42,846)
Net loss (2,139,691) -- (2,139,691)
------------ ------------ ------------
Balance at October 31, 1997 $(27,519,292) (181,805) $ 333,553
============ ============ ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
(Unaudited)
<TABLE>
<CAPTION>
October 31, October 31,
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(2,139,691) $ (915,194)
Adjustments to reconcile net loss to net cash
flows from operating activities:
Depreciation and amortization 983,633 321,329
Provision for doubtful accounts 78,097 62,000
Issuance of common stock and stock options for services 106,346 206,000
Losses on investment -- 295,071
Special charges -- 211,000
Gain on sale of assets (1,735) (221,710)
Other, net -- 25,000
Changes in operating assets and liabilities:
Accounts receivable (1,273,217) (658,857)
Other current assets 244,623 (227,106)
Inventories (21,046) --
Due from officer (62,070) --
Other assets (17,538) (11,616)
Accounts payable and accrued expenses 1,401,158 151,608
Payroll taxes payable 263,214 (228,591)
Costs in excess of billings on contracts in progress, net (6,965) --
----------- -----------
NET CASH USED BY OPERATING ACTIVITIES (445,191) (991,066)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Obligations of unconsolidated subsidiary, net -- 145,054
Proceeds from sale of assets 14,614 221,710
Collection of notes receivable 23,045 --
Acquisition of fixed assets and leasehold improvements (586,974) (431,909)
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (549,315) (65,145)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable -- 100,000
Proceeds from long term debt -- 223,000
Principal payments of long-term debt (340,427) (232,031)
Proceeds from revolving bank line, net 728,613 --
Dividends paid on redeemable preferred stock (23,346) --
Proceeds from issuance of common stock -- 1,129,413
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 364,840 1,220,382
----------- -----------
NET INCREASE (DECREASE) IN CASH (629,666) 164,171
CASH - BEGINNING 654,377 282,933
----------- -----------
CASH - ENDING $ 24,711 $ 447,104
=========== ===========
Cash paid during the period for:
Interest $ 97,093 $ 29,131
=========== ===========
Taxes $ -- $ 346
=========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1997
(Unaudited)
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet at April 30, 1997 has been derived from the
audited consolidated balance sheet contained in Windswept Environmental
Group, Inc.'s (the "Company") Form 10-KSB and is presented for comparative
purposes. The unaudited interim financial statements of the Company for the
six and three months ended October 31, 1997 and 1996 have been prepared by
management and include all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the unaudited interim periods. The
results of operations for interim periods are not necessarily indicative of
the results to be expected for the full year. These consolidated interim
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Form 10-KSB for
fiscal year ended April 30, 1997.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reclassifications - Certain amounts included in the prior year's
consolidated financial statements have been reclassified to conform with
the current periods presentation.
3. LIQUIDITY AND BUSINESS RISKS
As of October 31, 1997 the Company has an accumulated deficit of
$27,519,292 and has not generated positive cash flow from operations to
date. The Company has financed its operations to date primarily through
issuances of debt and equity securities. At October 31, 1997, the Company
had $24,711 in cash, and a working capital deficit of $2,059,419 (inclusive
of the $728,613 note payable to bank). In addition, as of November 30, 1997
and October 31, 1997, the Company was in arrears with respect to certain
payroll tax obligations of approxinately $537,000 and $611,000,
respectively.
In May 1997, the Company entered into a revolving bank credit facility to
obtain a revolving credit line of $1,500,000, secured by all of the
Company's assets not previously pledged under a debt or lease obligation.
The facility bears interest at the bank's prime rate plus 1.5% and expires
May 1, 2000. Borrowings shall be limited to the lesser of $1.5 million less
reserves determined by the bank or 80% of the Company's eligible
receivables, as defined. Said reserves remain at a minimum $750,000. The
facility requires minimum tangible net worth, working capital, and other
restrictive covenants. The Company is currently in default of this
agreement due to failure to comply with certain of its loan covenants. The
Company is working independently and in conjunction with its bank to find
financing sources above the $750,000 line which the bank has made
available, using the same collateral provided to the bank. The Company has
received proposals which it is in the process of evaluating.
The Company believes that, should this financing be made available, the
Company would have adequate capital resources to meet its current cash
requirements for a period of at least twelve months. The Company is
striving to improve its gross margin and control its selling, general, and
administrative expenses. There can be no assurance, however, that changes
in the Company's plans or other events effecting the Company's operations
will not result in accelerated or unexpected cash requirements, or that it
will be successful in obtaining the additional financing to meet its
obligations as they become due. The Company's future cash requirements will
depend on numerous factors, including, but no limited to: (i) the ability
to successfully bid on construction contracts (ii) the ability to generate
positive cash flow from operations, and (iii) general economic conditions.
4. RELATED PARTY TRANSACTIONS
Due from officer represent interest bearing (8%) advances to the Company's
chief executive officer due upon demand. The Company purchased materials
and supplies of $157,437, and had an outstanding balance payable of
$157,331 to Eastco Industrial Safety Corp., of which one of it's directors
is affiliated. The same director is owed $100,000 on a 12% convertible note
payable in full on December 1999.
5
<PAGE>
WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1997
(Unaudited)
5. STATEMENT OF CASH FLOWS
During the six months ended October 31, 1997, the Company financed the
acquisition of certain machinery and office equipment of approximately
$87,000 through various capital lease transactions, and recorded
approximately $31,000 of prepaid insurance premiums which it financed. The
Company utilized approximately $231,000 of its common stock to repay
liabilities of $216,000 and prepaid certain public relations expenses in
the amount of $15,000. In connection with an employment agreement reached
during the first quarter of fiscal 1998 the Company recorded deferred
compensation of $150,000 after issuing 100,000 shares of its common stock
valued at $75,000 and recording an other liability of $75,000 for the
shares to be issued on the employment anniversary date. Additionally, the
Company accrued $19,500 of dividends which are in arrears on the redeemable
preferred stock.
6. COMMITMENTS AND CONTINGENCIES
Litigation
In October 1996, the United States Attorney for the Eastern District of New
York obtained a federal grand jury indictment against, among others, the
former Chief Operating Officer and the former Special Securities Counsel on
charges including violations of federal securities law, including
fraudulent issuances of 700,000 shares of the Company's common stock. The
former Chief Operating Officer and the former Special Securitites Counsel
both subsequently pleaded guilty to the charges in the Federal indictment.
The SEC has been investigating what role, if any, other officers and
directors, including the current Chairman and Chief Executive Officer and
the former Chief Financial Officer, may have had in connection with such
activities. The Company has cooperated and continues to cooperate with the
SEC by providing documents in response to subpoenas issued to it. To date,
no charges have been filed against the Company, it's CEO, or it's former
CFO, as a result of the investigation. However, the SEC could seek an order
enjoining the Company from violating the securities laws.
The Company has reached certain short term agreements with federal tax
authorities on certain of its past due payroll withholding taxes. It is the
Company's intent to clear up the balance of these taxes as soon as it can
obtain financing. No assurance can be given that the tax authorities will
not immediately seek payment of the taxes, or that the tax authorities will
not commence an action or file a lien against the Company in order to
recover the taxes.
The Company is currently in default of its bank agreement due to failure to
comply with certain of its loan covenants.
The Company is party to other litigation matters and claims which are
normal in the course of its operations, and while the results of litigation
and claims cannot be predicted with certainty, management believes, based
on advice of counsel, the final outcome of such matters will not have a
materially adverse effect on the consolidated financial position, results
of operations and cash flows of the Company.
7. SUBSEQUENT EVENTS
On December 10, 1997 the Company settled a lawsuit relating to $250,000
which former management advanced during fiscal 1994 to the Mohave Shores
Development, Inc. (Mohave) in anticipation of developing land on an Indian
reservation in Arizona under a joint venture agreement. The Company will
receive $120,000 over a four year period under a non-interest bearing
arrangement with payments once a year.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion of the fiscal quarters ended October 31, 1997 and 1996,
should be read in conjunction with the Consolidated Financial Statements
contained herein.
RESULTS OF OPERATIONS
Net loss and loss per share for the quarter and six months ended October 31,
1997 was $765,683 and $.08 and $2,139,691 and $.22, respectively, compared to a
net loss and loss per share for the quarter and six months ended October 31,
1996 of $1,091,675 and $.12 and $915,194 and $.11, respectively.
Revenues for the quarter ended October 31, 1997 increased $423,232, or 13%, to
$3,601,372 from $3,178,140. The increase in revenues is reflective of
approximately $646,000 revenues generated during the quarter by North Atlantic
Laboratories which was purchased by the Company in February 1997 (and therefore
not in the prior comparative quarter). Gross margins declined to 19% from 30% in
the prior comparative quarter. Revenues for the first six months of fiscal 1998
decreased by $1,354,807, or 16%, from $8,251,542 to $6,896,735, while gross
margins declined to 14% compared to 33% for the first six months of fiscal 1997.
In the quarter ended July 31, 1996 the Company generated revenues of $2,200,000
on a New York City Housing Authority paint removal project. The decrease in
gross margin was a result of the recognition of losses in the current period
related to certain longer-term contracts with projected losses, the effect of
higher labor and benefit (including worker's compensation insurance) costs due
to unionization in June 1996, and cost overruns on certain fixed price contracts
during the quarter ended July 31, 1997.
Selling, general and administrative expenses for the quarter ended October 31,
1997 increased by $85,721, or 7%, to $1,261,893 from $1,176,172. Selling,
general and administrative expenses for the six month period declined by
$46,194, or 2%, from $2,629,307 to $2,583,113. The Company has hired various
engineering, technical consulting, business development and marketing personnel
which it is paying on a non-commission based salary structure to develop and
extend various strategic lines of business for which the Company has set its
strategic focus. The Company intends to provide various additional value-added
services to its existing clientele and to significantly enhance its service
offering to more profitable business areas. These expenses were offset by a
reduction in promotion, consulting and legal expenses in the prior comparative
six month period. Additionally selling, general and administrative expenses
include $80,000 of goodwill amortization expense related to the North Atlantic
Laboratories acquisition and $60,000 in payroll tax penalties. These additional
expenses over the prior comparative quarterly period were primarily responsible
for the increase in selling, general, and administrative expenses in the
quarter.
Interest expense reflects the $356,000 accretion of the discount on the $700,000
of convertible notes, approximately $41,000 of interest on the convertible
notes, and approximately $10,000 of interest related to late payroll tax
withholdings. The balance represents amortization of debt issue costs and fees
associated with the current bank facility as well as normal interest charges
related to its bank facilty and outstanding equipment loans.
LIQUIDITY AND CAPITAL RESOURCES
As of October 31, 1997 the Company has an accumulated deficit of $27,519,292 and
has not generated positive cash flow from operations to date. The Company has
financed its operations to date primarily through issuances of debt and equity
securities. At October 31, 1997, the Company had $24,711 in cash, and a working
capital deficit of $2,059,419 (inclusive of the $728,613 note payable to bank).
In addition, as of November 30, 1997 and October 31, 1997, the Company was in
arrears with respect to certain payroll tax obligations of approximately
$537,000 and $611,000, respectively. During the six months ended October 31,
1997, the Company invested approximately $587,000 in its property and equipment.
Of this amount $432,000 was spent on leasehold improvements relating to the new
Bay Shore headquarters and central operations facility, $60,000 in
transportation equipment and $95,000 on various other machinery and equipment.
The Company also paid down approximately $340,000 of equipment loans and paid
$23,346 in dividends to the holders of mandatorily redeemable convertible
preferred stock. The Company has not paid the September 15, 1997 dividend
payment to the holders of the aforementioned preferred stock and is presently
accruing interest on the $19,500 payment which it has also accrued.
In May 1997, the Company entered into a revolving bank credit facility to obtain
a revolving credit line of $1,500,000, secured by certain of the Company's
assets. Borrowings remain at a maximum of $750,000. The Company is working
independently and in conjunction with it's bank to find financing sources above
the $750,000 line which the bank has made available, using the same collateral
provided to the bank. The Company has received various proposals which it is in
the process of evaluating. The Company is currently in default of this agreement
due to failure to comply with certain of its loan covenants.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (cont,).
LIQUIDITY AND CAPITAL RESOURCES (CONT.)
The Company believes that, should this financing be made available, the Company
would have adequate capital resources to meet its current cash requirements for
a period of at least twelve months. Management believes that should the bank not
make available the additional financing, there will be alternative debt and/or
equity sources available to the Company. The Company is currently engaged in
various discussions with potential investors regarding possible equity
transactions. In addition, the Company is striving to improve its gross margin
and control its selling, general, and administrative expenses. There can be no
assurance, however, that changes in the Company's plans or other events
affecting the Company's operations will not result in accelerated or unexpected
cash requirements, or that it will be successful in obtaining the additional
financing to meet its obligations as they become due. The Company's future cash
requirements will depend on numerous factors, including, but no limited to: (i)
the ability to successfully bid on construction contracts (ii) the ability to
generate positive cash flow from operations, and (iii) general economic
conditions.
The Company has reached certain short term agreements with federal tax
authorities on certain of its past due payroll withholding taxes. It is the
Company's intent to clear up the balance of these taxes as soon as it can obtain
financing. No assurance can be given that the tax authorities will not
immediately seek payment of the taxes, or that the tax authorities will not
commence an action or file a lien against the Company in order to recover the
taxes.
Any forward looking statements contained in this document reflect management's
current intentions and expectations. Actual future results could vary materially
depending on certain risks and uncertainties, including factors such as
financing, operational spending, revenue levels, and the other factors referred
to in this document.
8
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In October 1996, the United States Attorney for the Eastern District of New
York obtained a federal grand jury indictment against, among others, the
former Chief Operating Officer and the former Special Securities Counsel on
charges including violations of federal securities law, including
fraudulent issuances of 700,000 shares of the Company's common stock. The
former Chief Operating Officer and the former Special Securitites Counsel
both subsequently pleaded guilty to the charges in the Federal indictment.
The SEC has been investigating what role,if any, other officers and
directors, including the current Chairman and Chief Executive Officer and
the former Chief Financial Officer, may have had in connection with such
activities. The Company has cooperated and continues to cooperate with the
SEC by providing documents in response to subpoenas issued to it. To date,
no charges have been filed against the Company, it's CEO, or it's former
CFO, as a result of the investigation. However, the SEC could seek an order
enjoining the Company from violating the securities laws.
On December 10, 1997 the Company settled a lawsuit relating to $250,000
which former management advanced during fiscal 1994 to the Mohave Shores
Development, Inc. (Mohave) in anticipation of developing land on an Indian
reservation in Arizona under a joint venture agreement. The Company will
receive $120,000 over a four year period under a non-interest bearing
arrangement with payments once a year.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
The Company is currently in default of its secured revolving credit line
with North Fork Bank due to failure to comply with certain of the loan
covenants. The Company has not paid its September quarterly dividend
payment and is in arrears on its mandatorily redeemable preferred stock.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: 27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which
this report is filed.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Dated: December 12, 1997
WINDSWEPT ENVIRONMENTAL GROUP, INC.
By:/s/ Michael O'Reilly
---------------------------------------
MICHAEL O'REILLY, Chairman and
Chief Executive Officer
By:/s/ Alan W.Schoenbart
---------------------------------------
ALAN W. SCHOENBART, CPA,
Chief Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1997
<PERIOD-END> OCT-31-1997
<CASH> 24,711
<SECURITIES> 0
<RECEIVABLES> 3,244,166
<ALLOWANCES> 252,100
<INVENTORY> 179,760
<CURRENT-ASSETS> 4,113,536
<PP&E> 4,652,232
<DEPRECIATION> 1,551,411
<TOTAL-ASSETS> 9,075,380
<CURRENT-LIABILITIES> 6,172,955
<BONDS> 1,368,872
1,300,000
0
<COMMON> 1,043
<OTHER-SE> 332,510
<TOTAL-LIABILITY-AND-EQUITY> 9,075,380
<SALES> 6,896,735
<TOTAL-REVENUES> 6,896,735
<CGS> 5,953,852
<TOTAL-COSTS> 8,457,133
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 78,097
<INTEREST-EXPENSE> 501,196
<INCOME-PRETAX> (2,139,691)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,139,691)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,139,691)
<EPS-PRIMARY> (.22)
<EPS-DILUTED> (.22)
</TABLE>
