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

                                    FORM 10-Q

(Mark One)

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

     For the quarterly period ended September 28, 2004,

                                       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: 000-17072

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

              Delaware                                11-2844247
              --------                                ----------
              (State or other jurisdiction of         (I.R.S. Employer
              incorporation or organization)          Identification No.)

                100 Sweeneydale Avenue, Bay Shore, New York 11706
                ------------------------------------------- -----
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (631) 434-1300
              (Registrant's telephone number, including area code)



     Indicate by check mark whether the registrant (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 by check mark whether the registrant is an accelerated filer (as
     defined in Rule 12b-2 of the Exchange Act)          Yes         No  X
                                                             ---        ---

     The number of shares of Common Stock, par value $.0001, outstanding on
     November 4, 2004 was 77,936,358.


<PAGE>


                         PART 1 - FINANCIAL INFORMATION

  Item 1. Financial Statements

                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS
                      SEPTEMBER 28, 2004 AND JUNE 29, 2004
<TABLE>
<CAPTION>
                                                                                           September 28,        June 29,
                                                                                               2004              2004
                                                                                         ---------------    ---------------
                                                                                           (Unaudited)
  <S>                                                                                    <C>                 <C>
  ASSETS:

  CURRENT ASSETS:
     Cash                                                                                $    204,452        $     63,562
     Accounts receivable, net of allowance for doubtful accounts
        of $848,472 and $689,140, respectively                                              7,492,789           6,652,806
     Inventory                                                                                140,722             151,270
     Costs and estimated earnings in excess of billings on uncompleted contracts              275,972             608,047
     Refundable income taxes                                                                        -             641,795
     Prepaid expenses and other current assets                                                276,351             257,565
                                                                                         -------------       -------------
     Total current assets                                                                   8,390,286           8,375,045

  PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of
     $5,873,657 and $5,707,705, respectively                                                2,647,522           2,757,463

  OTHER ASSETS                                                                                204,657             198,657
                                                                                         -------------       -------------

  TOTAL                                                                                  $ 11,242,465        $ 11,331,165
                                                                                         =============       =============

  LIABILITIES AND STOCKHOLDERS' EQUITY:

  CURRENT LIABILITIES:
     Accounts payable                                                                    $  1,617,558        $  2,309,328
     Accrued expenses                                                                       1,944,408           1,101,701
     Short-term notes payable to related party                                              5,000,000           5,000,000
     Billings in excess of cost and estimated earnings on uncompleted contracts                53,022             239,511
     Accrued payroll and related fringe benefits                                              958,573             924,725
     Current maturities of long-term debt                                                     258,620             307,224
     Other current liabilities                                                                948,107             596,527
                                                                                         -------------       -------------
     Total current liabilities                                                             10,780,288          10,479,016
                                                                                         -------------       -------------

  LONG-TERM DEBT                                                                              298,177             340,104
                                                                                         -------------       -------------

  COMMITMENTS AND CONTINGENCIES



  SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK, $.01 par value; 1,300,000
     shares authorized; 1,300,000 shares outstanding at September 28, 2004
     and June 29, 2004                                                                      1,300,000           1,300,000
                                                                                         -------------       -------------

  STOCKHOLDERS' DEFICIT:
     Series B preferred stock, $.01 par value; 50,000 shares authorized;
        0 shares outstanding                                                                        -                   -
     Nondesignated preferred stock, no par value; 8,650,000 shares authorized;
        0 shares outstanding at September 28, 2004 and June 29, 2004                                -                   -
     Common stock, $.0001 par value; 150,000,000 shares authorized; 77,936,358 shares
        outstanding at September 28, 2004 and June 29, 2004.                                    7,794               7,794
     Additional paid-in-capital                                                            33,902,517          33,922,017
     Accumulated deficit                                                                  (35,046,311)        (34,717,766)
                                                                                         -------------       -------------
     Total stockholders' deficit                                                           (1,136,000)           (787,955)

  TOTAL                                                                                  $ 11,242,465        $ 11,331,165
                                                                                         =============       =============
</TABLE>

  See notes to consolidated financial statements.

                                       2

<PAGE>

                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
                                                      Thirteen Weeks Ended
                                                     ---------------------------------
                                                      September 28,     September 30,
                                                          2004               2003
                                                          ----               ----
    <S>                                              <C>                   <C>
    Revenues                                         $  5,478,506          $  5,259,926

    Cost of revenues                                    4,362,123             3,929,942
                                                     ------------          ------------

    Gross profit                                        1,116,383             1,329,984
                                                      ------------          ------------

    Operating expenses (income):
    Selling, general and administrative expenses        1,232,034             1,201,591
    Benefit related to variable accounting
       treatment for officer options                            -              (159,092)
                                                      ------------          ------------
    Total operating expenses                            1,232,034             1,042,499
                                                      ------------          ------------

    (Loss) income from operations                        (115,651)              287,485
                                                      ------------          ------------

    Other expense (income):
       Interest expense                                   211,104                28,143
       Other, net                                            (799)              (23,960)
                                                      ------------          ------------
    Total other expense                                   210,305                 4,183

    (Loss) income before provision for income taxes      (325,956)              283,302

    Provision for income taxes                              2,589                74,151
                                                      ------------          ------------

    Net (loss) income                                    (328,545)              209,151

    Dividends on preferred stock                           19,500                19,500
                                                      ------------          ------------

    Net (loss) income attributable to
      common shareholders                             $  (348,045)          $   189,651
                                                      ============          ============

    Basic and diluted net (loss) income per
      common share:
    Basic                                                   $(.00)                $.00
                                                            ======                =====
    Diluted                                                 $(.00)                $.00
                                                            ======                =====

    Weighted average number of common shares
      outstanding:
    Basic                                              77,936,358            77,936,358
                                                      ============          ============
    Diluted                                            77,936,358            81,137,932
                                                      ============          ============
</TABLE>
    See notes to consolidated financial statements.

                                       3

<PAGE>

                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
           CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (UNAUDITED)
<TABLE>
<CAPTION>
                                                                    Additional
                                         Number of        Par         Paid-in       Accumulated
                                          Shares         Value        Capital          Deficit             Total
                                          ------         -----        -------          -------             -----
<S>                                      <C>             <C>        <C>             <C>                <C>
Balance at June 30, 2004                 77,936,358      $7,794     $33,922,017     $(34,717,766)      $  (787,955)

Dividends on Series A preferred stock                                   (19,500)                           (19,500)

Net loss                                          -           -               -         (328,545)         (328,545)
                                         -----------     -------    ------------    ----=--------      ------------

Balance at September 28, 2004            77,936,358      $7,794     $33,902,517     $(35,046,311)      $(1,136,000)
                                         ===========     =======    ============    =============      ============
</TABLE>


                See notes to consolidated financial statements.

                                       4

<PAGE>

                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                                      Thirteen Weeks Ended
                                                                                              ----------------    -----------------
                                                                                               September 28,        September 30,
                                                                                                   2004                 2003
                                                                                              ----------------     ----------------
    <S>                                                                                           <C>                  <C>
    CASH FLOWS FROM OPERATING ACTIVITIES:
       Net (loss) income                                                                          $  (328,545)         $  209,151
       Adjustments to reconcile net (loss) income to net cash provided by (used in)
          operating activities:
          Depreciation and amortization                                                               165,952              142,396
          Provision for doubtful accounts, net                                                        159,332               88,975
          Benefit related to officer options and redeemable common stock                                    -             (159,092)
       Changes in operating assets and liabilities:
          Accounts receivable                                                                        (999,315)          (2,144,819)
          Inventory                                                                                    10,548              (14,414)
          Costs and estimated earnings in excess of billings on uncompleted contracts                 332,075               10,650
          Refundable income taxes                                                                     641,795                    -
          Prepaid expenses and other current assets                                                   (18,786)             118,096
          Other assets                                                                                 (6,000)                   -
          Accounts payable and accrued expenses                                                       131,437              297,880
          Accrued payroll and related fringe benefits                                                  33,848                7,682
          Other current liabilities                                                                   351,580              (85,921)
          Billings in excess of costs and estimated earnings on uncompleted contracts                (186,489)             (80,405)
                                                                                                  ------------         ------------
    NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                               287,432           (1,609,821)
                                                                                                  ------------         ------------

    CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchases of property and equipment                                                            (56,011)              (2,150)
                                                                                                  ------------         ------------
    NET CASH USED IN INVESTING ACTIVITIES                                                             (56,011)              (2,150)
                                                                                                  ------------         ------------

    CASH FLOWS FROM FINANCING ACTIVITIES:
       Principal payments of long-term debt                                                           (90,531)            (115,475)
       Payment of preferred stock dividends                                                                 -              (19,500)
       Proceeds from short-term notes payable to a related party                                            -            1,835,000
                                                                                                  ------------         ------------
    NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                                               (90,531)           1,700,025
                                                                                                  ------------         ------------

    NET INCREASE IN CASH                                                                              140,890               88,054

    CASH - BEGINNING OF PERIOD                                                                         63,562              130,096
                                                                                                  ------------         ------------

    CASH - END OF PERIOD                                                                          $   204,452          $   218,150
                                                                                                  ============         ============

    Cash paid during the period for:
       Interest                                                                                   $   168,726          $    12,171
                                                                                                  ============         ============
       Income taxes                                                                               $         -          $         -
                                                                                                  ============         ============
</TABLE>


    See notes to consolidated financial statements.

                                       5

<PAGE>

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

1.   BASIS FOR PRESENTATION - The accompanying unaudited consolidated financial
     statements include the accounts of Windswept Environmental Group, Inc. (the
     "Company") and its  wholly-owned  subsidiaries,  Trade-Winds Environmental
     Restoration, Inc. ("Trade-Winds") and North Atlantic Laboratories, Inc. The
     unaudited  consolidated  financial  statements  have been  prepared  by the
     Company in accordance with accounting  principles generally accepted in the
     United States of America ("generally  accepted accounting  principles") for
     interim  financial  statements and with the  instructions  to Form 10-Q and
     Article 10 of Regulation S-X.  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 the
     Company, all adjustments (consisting of only normal and recurring accruals)
     considered  necessary  to present  fairly  the  financial position  of the
     Company and its  subsidiaries  on a consolidated  basis as of September 28,
     2004, the results of operations for the thirteen weeks ended  September 28,
     2004 and September 30, 2003 and cash flows for the thirteen  weeks ended
     September 28, 2004 and  September 30, 2003,  have been  included.  Certain
     prior period amounts have been reclassified to conform to the September 28,
     2004 presentation.

     The results for the thirteen  weeks ended September 28, 2004 and September
     30, 2003 are not necessarily  indicative of the results for an entire year.
     These  unaudited  consolidated  financial  statements  should  be read in
     conjunction with the Company's audited  consolidated  financial  statements
     and notes thereto  included in the Company's Form 10-K for the fiscal year
     ended June 29, 2004.

2.   STOCK OPTIONS - In December 2002, the Financial Accounting Standards Board
     ("FASB") issued Statement of Financial  Accounting  Standards  ("SFAS)" No.
     148, "Accounting for Stock-Based  Compensation-Transition  and Disclosure -
     an amendment of FASB  Statement No. 123 (" SFAS 148").  SFAS No. 148 amends
     SFAS No. 123, "Accounting for Stock-Based Compensation"  ("SFAS 123"), to
     provide  alternative  methods of transition for a voluntary  change to the
     fair value based method of accounting for stock-based employee compensation
     and does not permit the use of the original SFAS No. 123 prospective method
     of  transition  in fiscal years  beginning after December  15,  2003.  In
     addition,  SFAS No. 148 amends the disclosure  requirements of SFAS No. 123
     to require  prominent  disclosures  in both  annual and  interim  financial
     statements  about  the  method  of  accounting for  stock-based   employee
     compensation  and  the  effect  of the  method  used on  reported  results,
     regardless of whether,  when, or how an entity adopts the preferable,  fair
     value based method of accounting.  SFAS No. 148 improves the prominence and
     clarity of the pro  forma  disclosures  required  by  SFAS  No.  123  by
     prescribing a specific  tabular  format and by requiring  disclosure in the
     "Summary of Significant Accounting Policies" or its equivalent and improves
     the  timeliness  of those  disclosures  by  requiring  their  inclusion  in
     financial reports  for  interim  periods.  The  Company  has  adopted  the
     disclosure requirements  of SFAS No. 148.  The Company  will  continue to
     account for stock-based employee  compensation under APB Opinion No. 25 and
     its related interpretations.

     The following table illustrates the effect on net income and net income per
     share if the Company had applied the fair value recognition provisions of
     SFAS No. 123, "Accounting  for Stock-Based  Compensation,"  to stock-based
     employee compensation for all periods:

                                       6

<PAGE>

<TABLE>
<CAPTION>

                                                             Thirteen Weeks Ended
                                                       -------------------------------------
                                                         September 28,        September 30,
                                                             2004                 2003
                                                       ---------------      ----------------
<S>                                                       <C>                   <C>
Net (loss) income attributable to
   common shareholders as reported                        $(348,045)            $189,651
Less:  Stock-based employee
   compensation cost determined
   under the fair value method, net of
   related tax effects                                       25,849               40,265
                                                          ----------            ---------
Pro forma net (loss) income
   attributable to common
   shareholders                                           $(373,894)            $149,386
                                                          ==========            =========

Net (loss) income per share:
   Basic - as reported                                        $(.00)                $.00
                                                              ======                =====
   Basic - pro forma                                          $(.00)                $.00
                                                              ======                =====

   Diluted - as reported                                      $(.00)                $.00
                                                              ======                =====
   Diluted - pro forma                                        $(.00)                $.00
                                                              ======                =====
</TABLE>

3.   NET (LOSS) INCOME PER COMMON SHARE -The calculation of basic and
     diluted net (loss) income per common share was calculated for all
     periods in accordance with the requirements of Statement of Financial
     Accounting Standards No. 128, "Earnings per Share".

     The following table sets forth the computation of the basic and diluted
     net (loss) income per share for the thirteen weeks ended September 28,
     2004 and September 30, 2003, respectively:
<TABLE>
<CAPTION>
                                                                Thirteen Weeks Ended
                                                       --------------------------------------
                                                        September 28,          September 30,
                                                            2004                    2003
                                                       --------------         ---------------
<S>                                                       <C>                   <C>
Numerator:
Net (loss) income attributable to
   common shareholders                                    $ (348,045)           $   189,651
                                                          ===========           ============
Denominator:
  Share reconciliation:
  Shares used for basic (loss)
    income per share                                      77,936,358             77,936,358
  Effect of dilutive items:
     Stock options                                                 -              3,201,574
     Convertible securities                                        -                      -
                                                          -----------           ============

   Shares used for dilutive (loss)
     income per share                                     77,936,358             81,137,932
                                                          ===========           ============
Net (loss) income per share:
   Basic                                                       $(.00)                  $.00
   Diluted                                                     $(.00)                  $.00
</TABLE>

     The dilutive net loss per share computation for the thirteen week
     period ended September 28, 2004 excludes 8,075,420 shares related
     to stock options because the effect of including them would be
     anti-dilutive. The dilutive net income per share computation for
     the thirteen week period ended September 30, 2003 excludes
     approximately 8,000,000 shares related to employee stock options
     because the effect of including them would be anti-dilutive. For
     all periods presented, 1,300,000 shares of common stock issuable
     upon the exercise of the Series A Redeemable Convertible Preferred
     Stock were excluded from diluted earnings per share because the
     effect of including them would be anti-dilutive.

                                       7
<PAGE>
4.   PROVISION FOR INCOME TAXES - The provision for income taxes for
     the thirteen weeks ended September 28, 2004 and September 30, 2003
     consists of the following:
<TABLE>
<CAPTION>
                                              Thirteen Weeks Ended
                                        ------------------------------------
                                          September 28,       September 30,
                                               2004                2003
                                        ----------------    ----------------
<S>                                          <C>                <C>
Federal - current                            $    -             $70,726
State - current                              2,589               3,425
                                             -------            --------
Total                                        $2,589             $74,151
                                             =======            ========
</TABLE>
     The effective rate for income taxes differs from the statutory
     rate primarily as a result of the 100% valuation allowance against
     deferred tax assets. The Company has a 100% valuation allowance
     against deferred tax assets because management believes that it is
     more likely than not that such deferred tax assets will not be
     realized.

5.   CONTINGENCIES - On August 5, 2004, Trade-Winds commenced an action
     in the New York State Supreme Court, County of New York, claiming
     that Trade-Winds is entitled to approximately $1,255,000 of
     contractual billings relating to a large roof tar removal project.

     On October 22, 2004, Trade-Winds commenced an action against a
     local utility in the New York State Supreme Court, County of New
     York, claiming that Trade-Winds is entitled to approximately
     $2,000,000 of contractual billings and related damages with
     respect to its removal of sediment from an oil storage tank.

     The Company is a party to litigation matters and claims that are
     in the ordinary course of its operations, and while the results of
     such 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 Company's consolidated
     financial statements.

6.   RELATED PARTY TRANSACTIONS - As of September 28, 2004, the Company owed

     Spotless Plastics (USA), Inc.("Spotless"), a company that owns 79% of
     the common stock of the Company, $5,000,000, which bears interest at
     the rate of LIBOR (1.97% at September  28, 2004) plus 1% per annum
     and is payable on demand. The Company has increased its liquidity by
     entering into an Account Receivable  Finance Agreement ("ARFA")
     dated as of February 5, 2004 with Spotless  pursuant to which Spotless
     may purchase  certain of the Company's accounts receivable without
     recourse for cash, subject to certain terms and conditions.  The
     Company accounts for its transfers of accounts  receivable
     to  Spotless as sales  under  Statement  of  Financial  Standards
     No. 140, "Accounting for Transfers   and   Servicing  of  Financial
     Assets  and Extinguishments of Liabilities."  Under the ARFA,  Spotless
     may, but is not obligated  to, purchase one or more of the Company's
     accounts  receivable that are  approved by Spotless  in its sole
     discretion,  in respect of the particular  debtor, invoices and
     related credit. As part of the agreement, Spotless may purchase
     any accounts  receivable at a 15% discount to invoice prices,  which
     the Company believes is at least as favorable to it as would
     be  available  from an  unaffiliated  third-party,  based upon a
     good-faith estimate of an applicable discount negotiated at arm's
     length,  as may be adjusted by Spotless in its sole discretion.  In
     addition, the Company pays varying monthly  discount fees on any
     purchased  accounts  receivable based upon  invoice prices.  All
     discounts  and  fees  under  the  ARFA  are characterized as interest
     expense  in  the  consolidated  statements  of operations.  Further,
     the Company (a) manages any accounts receivable that it sells to
     Spotless while remitting to Spotless any proceeds  received and
     (b) bears any related  litigation  costs.  For the  thirteen  weeks
     ended September  28, 2004,  the Company sold  approximately $972,000
     of accounts receivable to Spotless and incurred approximately $146,000
     of discounts and fees associated with these sales.

     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
     RESULTS OF OPERATIONS

     OVERVIEW

     The Company, through its wholly-owned subsidiaries, provides a full array
     of emergency response, remediation and disaster restoration services to a
     broad range of clients. The Company has expertise in areas of hazardous

                                       8
<PAGE>

     materials remediation, microbial remediation, testing, toxicology,
     training, wetlands restoration, wildlife and natural resources
     rehabilitation, technical advisory, restoration and site renovation
     services.

     The Company's revenues are derived primarily from providing emergency
     response, remediation and disaster restoration services, and its cost of
     revenues consists primarily of labor and labor related costs, insurance,
     benefits and job-related insurance, repairs, maintenance, equipment rental,
     materials and supplies, disposal costs and depreciation of capital
     equipment. The Company's selling, general, and administrative expenses
     primarily consist of expenses related to provisions for doubtful accounts,
     legal fees, sales salaries, marketing, consulting, insurance and travel and
     entertainment.

     In April 2003, the Company commenced a remediation project in New York City
     for a local utility to remove sediment from an oil storage tank. During the
     course of the project, the sediment in the tank was found to be
     substantially different than the sediment that the customer represented to
     be in the tank prior to the inception of the project. The Company continued
     to work on the project so as not to default on the terms which it
     understood to exist with the customer. The additional costs incurred to
     remove this matter in the amount of approximately $1,600,000 were billed to
     the customer. However, the collectibility of such monies cannot be assured.
     Accordingly, the Company has not recognized the revenue associated with
     this claim. The project has been substantially completed and the customer
     has refused to acknowledge its liability for the additional charges billed
     by the Company. The Company has retained legal counsel to review its claim
     with the customer and believes that additional monies billed will be
     collected. As of June 29, 2004, the Company had recognized revenue of
     approximately $1,700,000 with respect to original scope of this project. As
     of August 30, 2004, all amounts due under the original contract have been
     paid to the Company.

     The Company has encountered slow collections of certain of its accounts
     receivable, and its liquidity has been severely adversely affected by its
     unrecouped costs incurred in connection with the aforementioned oil storage
     tank project. Accordingly, the Company has needed to borrow increased
     amounts from Spotless. As a result of the additional borrowings, the amount
     outstanding from Spotless was $5,000,000 as of September 28, 2004. The
     Company has considered various alternatives to increase its liquidity. In
     this connection, the Company increased its liquidity by entering into the
     ARFA, dated as of February 5, 2004, with Spotless pursuant to which
     Spotless has purchased certain of the Company's accounts receivable without
     recourse for cash, subject to certain terms and conditions. Through
     September 24, 2004, the date of the last accounts receivable purchase,
     Spotless had purchased an aggregate amount of our accounts receivable
     equaling $4,991,252 for an aggregate purchase price of $4,080,050.

     Spotless has informed the Company in a letter dated September 29, 2004,
     that, at this time, it intends to provide only an additional $150,000 in
     financing to the Company pursuant to the ARFA. Spotless has also indicated
     that it does not intend to provide any additional debt or equity financing
     to the Company. The Company is assessing the impact, if any, of Spotless'
     recent expression of intent. The Company's board of directors has appointed
     a special committee consisting of independent director Anthony P. Towell to
     investigate its alternatives.

     In the opinion of management, the Company expects to have sufficient
     working capital to fund its current operations as long as it does not
     encounter further difficulty collecting its accounts receivable or
     experience significant growth. However, market conditions and their effect
     on the Company's liquidity may restrict the Company's use of cash. In the
     event that sufficient positive cash flow from operations is not generated,
     the Company may need to seek additional financing in addition to the
     financing contemplated by the ARFA. Spotless is under no contractual
     obligation to provide any funds, and it has indicated that, at the present
     time, it does not intend to provide any additional debt or equity financing
     to the Company outside the ARFA. Currently, the Company has no credit
     facility for additional borrowing.

     ABILITY TO CONTINUE AS A GOING CONCERN

     The Company's accompanying consolidated financial statements have been
     prepared assuming that it will continue as a going concern. They do not
     include any adjustments that might result should the Company be unable to
     continue as a going concern, and no assurance can be given that it will
     continue as a going concern.

     CRITICAL ACCOUNTING POLICIES

     Management's discussion and analysis of its financial position and results
     of operations are based upon the Company's unaudited consolidated financial
     statements, which have been prepared in accordance with

                                        9

<PAGE>

     accounting principles generally accepted in the United States of America.
     The preparation of these unaudited financial statements requires management
     to make estimates and judgments that affect the reported amounts of assets,
     liabilities, revenues and expenses and related disclosure of contingent
     assets and liabilities. Actual results could differ from those estimates.
     Management believes that the critical accounting policies and areas that
     require the most significant judgments and estimates to be used in the
     preparation of the unaudited financial statements are accounting for
     contracts, allowance for doubtful accounts and the valuation allowance
     against deferred tax assets.

     Contract Accounting - Revenue derived from services provided to customers
     over periods of less than one month is recognized at the completion of the
     related contracts. Revenue from firm fixed price contracts that extend over
     periods of one month or more is recognized using the
     percentage-of-completion method, measured by the percentage of costs
     incurred to date compared to estimated total costs for each contract.
     Provisions for estimated losses on uncompleted contracts are made in the
     period in which such losses are determined. Changes in job performance, job
     conditions, estimated profitability, the effect of contract penalty
     provisions and final contract settlements may result in revisions to
     estimates of costs and income and are recognized in the period in which the
     revisions are determined. Revenues from time and material contracts that
     extend over a period of more than one month are recognized as services are
     performed.

     Allowance for Doubtful Accounts - The Company maintains an allowance for
     doubtful trade accounts receivable for estimated losses resulting from the
     inability of its customers to make required payments. In determining
     collectibility, the Company reviews available customer financial
     information including public filings and credit reports and also consults
     legal counsel to assist in determining collectibility. When it is deemed
     probable that a specific customer account is uncollectible, that balance is
     included in the reserve calculation. Actual results could differ from these
     estimates under different assumptions.

     Deferred Tax Asset Valuation Allowance - The Company records a valuation
     allowance to reduce its deferred tax assets to the amount that is more
     likely than not to be realized. Due to the Company's prior history of
     losses, the Company has recorded a full valuation allowance against its net
     deferred tax assets as of September 28, 2004. The Company currently
     provides for income taxes only to the extent that it expects to pay cash
     taxes for current income. Should the Company be profitable in the future at
     levels which cause management to conclude that it is more likely than not
     that it will realize all or a portion of the deferred tax assets, the
     Company would record the estimated net realizable value of the deferred tax
     assets at that time and would then provide for income taxes at its combined
     federal and state effective rates.

     RESULTS OF OPERATIONS

     THIRTEEN WEEKS ENDED SEPTEMBER 28, 2004 AND SEPTEMBER 30, 2003

     Revenue

     Total revenues for the thirteen weeks ended September 28, 2004 increased by
     $218,580, or 4%, to $5,478,506 from $5,259,926 for the thirteen weeks ended
     September 30, 2003. This increase was primarily attributable to increased
     emergency response work associated with hurricanes in Florida.

     Cost of Revenues

     Cost of revenues increased $432,181 or 11%, to $4,362,123 for the thirteen
     weeks ended September 28, 2004 as compared to $3,929,942 for the thirteen
     weeks ended September 30, 2003, primarily due to cost overruns incurred on
     a fixed price contract of approximately $200,000 and due an increased
     volume of remediation activity. Gross profit decreased $213,601 to
     $1,116,383 for the thirteen weeks ended September 28, 2004 from $1,329,984
     for the thirteen weeks ended September 30, 2003.

     Selling, General and Administrative Expenses

     Selling, general and administrative expenses increased by $30,443, or 3%,
     to $1,232,034 for the thirteen weeks ended September 28, 2004 from
     $1,201,591 for the thirteen weeks ended September 30, 2003 and constituted
     approximately 23% of revenues in each period. This increase was primarily
     attributable to increases in legal expenses of approximately $108,000, bad
     debt expense of approximately $75,000 and consulting expenses of
     approximately $50,000, offset by decreases in sales salaries, sales travel
     and entertainment, marketing and other

                                       10

<PAGE>

     salaries of approximately $183,000. All of these decreases were a result of
     management reductions in staff and discretionary spending.

     Benefit Related to Variable Accounting Treatment for Officer Options

     Under the terms of an employment agreement with the Company and a separate
     agreement with Spotless, the Company's President and Chief Executive
     Officer may sell to the Company, or in certain circumstances to Spotless,
     all shares of common stock of the Company held by him and all shares of
     common stock underlying vested options to purchase shares of common stock
     of the Company held by him upon the occurrence of certain events. The
     benefit related to variable accounting treatment for officer options was
     $159,092 for the thirteen weeks ended September 30, 2003. There was no
     benefit or expense required to be recorded in the thirteen weeks ended
     September 28, 2004 due to the low market price of the Company's common
     stock. The benefit in the thirteen weeks ended September 30, 2003 was due
     to a decrease in the market price of the Company's common stock and/or a
     change in the number of options outstanding that are vested. Due to the
     terms of the options, changes in the market price of the Company's common
     stock, in either direction, result in a corresponding expense or benefit.

     Interest Expense

     Interest expense increased by $182,961 to $211,104 for the thirteen weeks
     ended September 28, 2004 from $28,143 for the thirteen weeks ended
     September 30, 2003. The increase in interest expense was primarily
     attributable to the discount recorded when Spotless purchased accounts
     receivable from the Company under the ARFA and greater amounts of debt
     outstanding resulting from increased borrowings from Spotless for working
     capital.

     Provision for Income Taxes

     The provision for income taxes for the thirteen weeks ended September 28,
     2004 was $2,589 compared to $74,151 for the thirteen weeks ended September
     30, 2003.

     Net Loss

     A net loss of $(328,545) was incurred for the thirteen weeks ended
     September 28, 2004 as compared to net income of $283,302 incurred for the
     thirteen weeks ended September 30, 2003. The change was the result of the
     factors discussed above.

     LIQUIDITY AND CAPITAL RESOURCES

     As of September 28, 2004, the Company had a cash balance of $204,452,
     working capital deficit of $(2,390,002) and stockholders' deficit of
     $(1,136,000). As of June 29, 2004, the Company had cash balances of
     $63,562, working capital deficit of $(2,103,971) and stockholders' deficit
     of $(787,955). Historically, the Company has financed its operations
     primarily through issuance of debt and equity securities, through
     short-term borrowings from its majority shareholder, Spotless, and through
     cash generated from operations.

     Spotless has informed the Company in a letter dated September 29, 2004,
     that, at this time, it intends to provide only an additional $150,000 in
     financing to the Company pursuant to the ARFA. Spotless has also indicated
     that it does not intend to provide any additional debt or equity financing
     to the Company. The Company is assessing the impact, if any, of Spotless'
     recent expression of intent. The Company's board of directors has appointed
     a special committee consisting of independent director Anthony P. Towell to
     investigate its alternatives.

     In the opinion of management, the Company expects to have sufficient
     working capital to fund its current operations as long as it does not
     encounter further difficulty collecting its accounts receivable or
     experience significant growth. However, market conditions and their effect
     on the Company's liquidity may restrict the Company's use of cash. In the
     event that sufficient positive cash flow from operations is not generated,
     the Company may need to seek additional financing in addition to the
     financing contemplated by the ARFA. Spotless is under no contractual
     obligation to provide any funds, and it has indicated that, at the present
     time, it does not intend to provide any additional debt or equity financing
     to the Company outside the ARFA. Currently, the Company has no credit
     facility for additional borrowing.

                                       11

<PAGE>


     Under the ARFA, Spotless may, but is not obligated to, purchase one or more
     of the Company's accounts receivable that are approved by Spotless in its
     sole discretion, in respect of the particular debtor, invoices and related
     credit. As part of the agreement, Spotless may purchase any accounts
     receivable at a 15% discount to invoice prices, which the Company believes
     is at least as favorable to it as would be available from an unaffiliated
     third-party, based upon a good-faith estimate of an applicable discount
     negotiated at arm's length, as may be adjusted by Spotless in its sole
     discretion. In this regards, all of Spotless' purchases have been made at
     15% discount except one made in April 2004 for the amount of $711,450 in
     relation to an account receivable balance of $1,028,194, which constituted
     a 31% discount. In addition, the Company pays varying monthly discount fees
     on any purchased accounts receivable based upon invoice prices. All
     discounts and fees under the ARFA are characterized as interest expense.
     Through September 28, 2004, the Company has incurred approximately $911,000
     of such discounts and fees. Further, the Company (a) manages any accounts
     receivable that it sells to Spotless while remitting to Spotless any
     proceeds received and (b) bears any related litigation costs.

     As of September 28, 2004, the Company owed Spotless $5,000,000 in
     short-term loans to fund working capital. During the thirteen weeks ended
     September 28, 2004, the Company did not make any repayments to Spotless.
     All current borrowings from Spotless bear interest at the London Interbank
     Offering Rate ("LIBOR") plus 1 percent (1.97% at September 28, 2004) and
     are secured by all of the Company's assets. On September 10, 2004, the
     Company paid accrued interest to Spotless through August 24, 2004 of
     approximately $151,000. As of September 28, 2004, interest of $11,966 was
     accrued and unpaid on these borrowings.

     Net cash provided by operating activities was $287,432 for the thirteen
     weeks ended September 28, 2004 as compared to net cash used in operations
     of $1,609,821 for the thirteen weeks ended September 30, 2003. Accounts
     receivable increased by $999,315 for the thirteen weeks ended September 28,
     2004 as a result of increased sales related to the hurricanes in Florida.
     Accounts receivable increased by $2,144,819 for the thirteen weeks ended
     September 30, 2003 due to hurricane-related work and difficulties with cash
     collections. Refundable income taxes decreased by $641,795 for the thirteen
     weeks ended September 28, 2004 due to the receipt of a federal income tax
     refund. Accounts payable and accrued expenses increased by $131,437 for the
     thirteen weeks ended September 28, 2004 as a result of an increased volume
     of remediation activity. Accounts payable and accrued expenses increased
     $297,880 for the thirteen weeks ended September 30, 2003 due to increased
     sales volume.

     Cash used for capital expenditures was $56,011 during the thirteen weeks
     ended September 28, 2004 as compared to $2,150 for the thirteen weeks ended
     September 30, 2003.

     Financing activities for the thirteen weeks ended September 28, 2004 used
     net cash of $90,531 for repayments of long-term debt. Financing activities
     for the thirteen weeks ended September 30, 2003 provided net cash of
     $1,700,025. This amount included repayments of long-term debt of $115,475,
     proceeds from borrowings from Spotless of $1,835,000 and payments of
     preferred stock dividends of $19,500.

     The Company's liquidity has been severely adversely affected by its
     unrecouped costs incurred in connection with an oil storage tank project.
     The Company believes that it will be successful in collecting for this
     project, but no assurance can be given as to the timing or amount of any
     such recovery. Management believes the Company will require positive cash
     flow from operations to meet its working capital needs over the next twelve
     months unless the Company increases its borrowings from Spotless, obtains
     debt or equity financing from a third party or is able to sufficiently
     utilize the ARFA with Spotless. In the event that positive cash flow from
     operations is not generated, the Company may be required to seek additional
     financing, from Spotless or otherwise, to meet its working capital needs.
     Management continues to pursue additional funding sources, but has been
     unable to attract debt or equity capital on terms more favorable than those
     available from Spotless. So long as the Company has sufficient working
     capital, it anticipates continued revenue growth in new and existing
     service areas and continues to bid on large projects, though there can be
     no assurance that any of the Company's bids will be accepted or that it
     will have sufficient working capital. The Company is striving to improve
     its gross margin and control its selling, general and administrative
     expenses. In this regard, in recent months the Company has reduced its
     expenses, including those relating to marketing, at an annualized rate of
     approximately $2 million. 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 achieving positive cash flow from operations or
     obtaining additional financing. The Company's future cash requirements are
     expected to depend on numerous factors, including, but not limited to:

                                       12

<PAGE>

     (a) the ability to obtain environmental or related construction contracts,
     (b) the ability to generate positive cash flow from operations, and the
     extent thereof, (c) the ability to raise additional capital or obtain
     additional financing, and (d) economic conditions.

     The table below summarizes contractual obligations and commitments as of
     September 28, 2004:
<TABLE>
<CAPTION>

                                    Total            1 Year            2-3 Years        4-5 Years
                                    -----            ------            ---------        ---------
         <S>                     <C>                <C>                 <C>              <C>
         Operating leases        $1,170,744         $447,116            $723,628         $ -
         Long-term debt             556,797          258,620             266,871          31,306
                                 -----------        ---------           ---------        --------
                                 $1,727,541         $705,736            $990,499         $31,306
                                 ===========        =========           =========        ========
</TABLE>

     OFF-BALANCE SHEET ARRANGEMENTS

     The Company does not have any off-balance sheet arrangements.

     INFLATION

     Inflation has not had a material impact on the Company's operations over
     the past three fiscal years or during the thirteen weeks ended September
     28, 2004.

     SEASONALITY

     Since the Company and its subsidiaries are able to perform their services
     throughout the year, the business is not considered seasonal in nature.
     However, it is affected by the timing of large contracts in certain of its
     service areas, i.e., asbestos and mold abatement and construction, as well
     as the timing of catastrophes.

     FORWARD-LOOKING STATEMENTS

     Statements contained in this Form 10-Q include "forward-looking statements"
     within the meaning of Section 27A of the Securities Act and Section 21E of
     the Exchange Act. Forward-looking statements involve known and unknown
     risks, uncertainties and other factors which could cause the actual
     results, performance and achievements, whether expressed or implied by such
     forward-looking statements, not to occur or be realized. Such
     forward-looking statements generally are based upon the Company's best
     estimates 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:

         o  the market acceptance and amount of sales of the Company's services,
         o  the Company's success in increasing revenues and reducing expenses,
         o  the frequency and magnitude of environmental disasters or
            disruptions resulting in the need for the types of services the
            Company provides,
         o  the extent of the enactment, enforcement and strict interpretations
            of laws relating to environmental remediation,
         o  the competitive environment within the industries in which the
            Company operates,
         o  the Company's ability to raise additional capital,
         o  the Company's ability to continue as a going concern,
         o  the Company's ability to effectively implement and maintain its
            internal controls and procedures,
         o  the Company's ability to attract and retain qualified personnel, and
         o  the other factors and information disclosed and discussed in other
            sections of this Quarterly Report on Form 10-Q and in the Company's
            Report on Form 10-K for the fiscal year ended June 29, 2004.

     Investors 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.
     The Company undertakes no obligation to publicly update or revise any
     forward-looking statements, whether as a result of new information, future
     events or otherwise.

                                       13
<PAGE>

     The foregoing discussion and analysis provides information which management
     believes is relevant to an assessment and understanding of the Company's
     results of operations and financial condition. This discussion should be
     read in conjunction with the consolidated financial statements and notes
     thereto appearing in Item 1 and with the consolidated financial statements
     included in the Company's annual report on Form 10-K for the period ended
     June 29, 2004.

     ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company is exposed to potential loss from market risks that may occur
     as a result of changes in the market price of the Company's common stock
     (with respect to the variable accounting treatment of a put option for
     shares of common stock and common stock options held by an officer of the
     Company) and as a result of changes in interest rates (primarily with
     respect to its debt obligations to Spotless). There have been no material
     changes to the nature of Company's market risks since the Company's Annual
     Report on Form 10-K for the period ended June 29, 2004.

     ITEM 4.  CONTROLS AND PROCEDURES

     As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, an
     evaluation was performed under the supervision and with the participation
     of the Company's principal executive and financial officers of the
     effectiveness of the design and operation of the Company's "disclosure
     controls and procedures" (as defined under Rule 13a-15(e) and Rule
     15d-15(e)) as of the end of the period covered by this quarterly report on
     Form 10-Q. During such time, in order to address issues relating to revenue
     recognition and allocation of expenses associated with the Company's
     contract and billing procedures which include, but are not limited to,
     direct participation by the Company's chief executive officer in customer
     invoice preparation and the evaluation of the accuracy of vendor invoices,
     the audit committee appointed a task force to assist management in
     addressing these matters, and the Company has implemented or is in the
     process of implementing the following changes to its internal controls and
     procedures, among others, under the supervision of the chief executive
     officer:

     o  authorizing the Company's in-house attorney to oversee its contract and
        billing procedures;
     o  standardizing and consolidating the Company's form of
        contracts; and
     o  requiring customers to agree in writing with respect to rates, including
        cost estimates where appropriate, before the Company commences projects.

     The Company is assigning high priority to the short-term and long-term
     correction of its internal control weaknesses, and will continue to
     evaluate the effectiveness of its internal controls and procedures on an
     on-going basis and will take further action as might be appropriate. Other
     than implementing the improvements discussed above, there were no
     significant changes in internal controls or other factors that could
     significantly affect these internal controls.

     In connection with the foregoing, the Company's principal executive and
     financial officers have concluded that, except as noted above, and subject
     to the inherent limitations in all control systems, the Company's current
     disclosure controls and procedures were effective as of the end of the
     period covered by this quarterly report to ensure that information that is
     required to be disclosed in the reports the Company files or submits under
     the Exchange Act is recorded, processed, summarized and reported within the
     time periods specified in the SEC's rules and forms, and include controls
     and procedures designed to ensure that information the Company is required
     to disclose in such reports is accumulated and communicated to management,
     including its principal executive and financial officers, as appropriate to
     allow timely decisions regarding required disclosure.

                           PART 2 - OTHER INFORMATION
                           --------------------------

     ITEM 1.      LEGAL PROCEEDINGS
                  -----------------

                  On August 5, 2004, Trade-Winds commenced an action against the
                  New York City Economic Development Corporation (the "EDC") in
                  the New York State Supreme Court, County of New York, claiming
                  that Trade-Winds is entitled to approximately $1,255,000 of
                  contractual billings relating to a large roof tar removal
                  project. On October 15, 2004, the EDC filed a motion to

                                       14

<PAGE>

                  dismiss, denying Trade-Winds' claims. The Company is in the
                  process of preparing a response and intends to pursue this
                  case vigorously.

                  On October 22, 2004, Trade-Winds commenced an action against
                  Consolidated Edison Company in the New York State Supreme
                  Court, County of New York, claiming that Trade-Winds is
                  entitled to approximately $2,000,000 of contractual billings
                  and related damages with respect to its removal of sediment
                  from an oil storage tank.

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

     ITEM 2.      UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

                  Not applicable.

     ITEM 3.      DEFAULTS UPON SENIOR SECURITIES

                  The Company is required to pay quarterly dividends on its
                  Series A Convertible Preferred Stock, par value $.01 per share
                  (the "Series A Preferred"), which dividends accrue from the
                  initial date of issuance of the Series A Preferred, are
                  cumulative and, if not paid when due, bear interest on the
                  unpaid amount of the past due dividends at the prime rate
                  published in The Wall Street Journal on the date the dividend
                  was payable, plus 3%. The Company is currently in arrears on
                  its Series A Preferred dividend payments and interest thereon
                  in the aggregate amount of approximately $60,000 due to a lack
                  of available cash. If the Company fails to make any four
                  consecutive quarterly dividend payments on the Series A
                  Preferred, the majority in interest of the holders of the
                  Series A Preferred have the right to elect an additional
                  director to the Company's Board of Directors, to serve as a
                  director until such accrued and unpaid dividends have been
                  paid in full. There can be no assurance when or if the Company
                  will make any Series A Preferred dividend payments.

     ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                  Not applicable

     ITEM 5.      OTHER INFORMATION

                  Not applicable.

     ITEM 6.      EXHIBITS

                  The following exhibits are included as part of this report:

                  31.1  Certification of Chief Executive Officer pursuant to
                        Sarbanes-Oxley Section 302(a)
                  31.2  Certification of Chief Financial Officer pursuant to
                        Section 302(a)
                  32.1  Certification of Chief Executive Officer and Chief
                        Financial Officer pursuant to 18 U.S.C. Section 1350.

                                       15

<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.


                                         WINDSWEPT ENVIRONMENTAL GROUP, INC.




     Date: November 12, 2004             By:    /s/ Michael O'Reilly
                                             ------------------------------
                                         MICHAEL O'REILLY,
                                         President and Chief Executive Officer
                                         (Principal Executive Officer)





     Date: November 12, 2004             By:    /s/ Charles Kelly, Jr.
                                             ------------------------------
                                         CHARLES L. KELLY, JR.
                                         Chief Financial Officer
                                         (Principal Financial Officer)

                                       16