**UNITED      STATES **

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

**FORM      10-Q**

|   | x | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE                ACT OF                1934 |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|
|   |   | For              the quarterly period ended September 30,              2007  |
|--------|--------|-----------------------------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|
|   |   | OR |
|--------|--------|----|

|  | o | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE                ACT OF                1934 |
|--|---|---------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|
|   |   | For              the transition period from _____________ to              __________.  |
|--------|--------|---------------------------------------------------------------------------------------------|

| Delaware                                                |   | 11-2844247                         |
|---------------------------------------------------------|--------|------------------------------------|
| (State                or other jurisdiction of          |   | (I.R.S.                Employer    |
| incorporation                or organization)           |   | Identification                No.) |
|                                                    |   |                               |
| 895                Waverly Avenue, Holtsville, New York |   | 11742                              |
| (Address                of principal executive offices) |   | (Zip                Code)          |

(631)      289-5500

----

**PART        1 – FINANCIAL INFORMATION**

**Item        1. Financial Statements**

|                                                                                                                                                                                                                                                                             |   | September 30, |        | June 30, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-------------|---------------|--------|
|                                                                                                                                                                                                                                                                             |   | 2007               |        | 2007          |   |
|                                                                                                                                                                                                                                                                             |   | (unaudited)        |        |          |   |
|                                                                                                                                                                                                                                                                             |   |               |        |          |   |   |   |
| ASSETS:                                                                                                                                                                                                                                                                          |   |               |        |          |   |   |   |
| CURRENT                  ASSETS:                                                                                                                                                                                                                                                 |   |               |        |          |   |   |   |
| Cash                                                                                                                                                                                                                                                                             |   | $                  | 39,842      |          | $      | 156,616 |   |
| Accounts                  receivable, net of allowance for doubtful accounts of $2,613,501                  and $                  2,522,678 respectively                                                                                                                        |   |               | 7,173,690   |          |   | 6,977,425 |   |
| Inventory                                                                                                                                                                                                                                                                        |   |               | 185,011     |          |   | 123,273 |   |
| Costs                  and estimated earnings in excess of billings on uncompleted                  contracts                                                                                                                                                                    |   |               | 53,674      |          |   | 17,523 |   |
| Prepaid                  expenses and other current assets                                                                                                                                                                                                                       |   |               | 1,002,519   |          |   | 1,278,112 |   |
| Total                  current assets                                                                                                                                                                                                                                            |   |               | 8,454,736   |          |   | 8,552,949 |   |
|                                                                                                                                                                                                                                                                             |   |               |        |          |   |   |   |
| PROPERTY                  AND EQUIPMENT, net of accumulated depreciation and amortization                  of                  $8,351,092 and $8,104,302, respectively                                                                                                           |   |               | 2,380,181   |          |   | 2,478,931 |   |
|                                                                                                                                                                                                                                                                             |   |               |        |          |   |   |   |
| OTHER                  ASSETS:                                                                                                                                                                                                                                                   |   |               |        |          |   |   |   |
| Deferred                  financing costs                                                                                                                                                                                                                                        |   |               | 896,852     |          |   | 1,196,539 |   |
| Other                                                                                                                                                                                                                                                                            |   |               | 139,834     |          |   | 136,359 |   |
| Total                  other assets                                                                                                                                                                                                                                              |   |               | 1,036,686   |          |   | 1,332,898 |   |
|                                                                                                                                                                                                                                                                             |   |               |        |          |   |   |   |
| TOTAL                                                                                                                                                                                                                                                                            |   | $                  | 11,871,603  |          | $      | 12,364,778 |   |
|                                                                                                                                                                                                                                                                             |   |               |        |          |   |   |   |
| LIABILITIES                  AND STOCKHOLDERS’ (DEFICIENCY)                                                                                                                                                                                                                |   |               |        |          |   |   |   |
|                                                                                                                                                                                                                                                                             |   |               |        |          |   |   |   |
| CURRENT                  LIABILITIES:                                                                                                                                                                                                                                            |   |               |        |          |   |   |   |
| Accounts                  payable                                                                                                                                                                                                                                                |   | $                  | 2,418,648   |          | $      | 2,599,514 |   |
| Liability                  for repurchased account receivable                                                                                                                                                                                                                    |   |               | 150,000     |          |   | 150,000 |   |
| Accrued                  expenses                                                                                                                                                                                                                                                |   |               | 1,270,460   |          |   | 1,743,619 |   |
| Billings                  in excess of costs and estimated earnings on uncompleted                  contracts                                                                                                                                                                    |   |               | 42,691      |          |   | 64 |   |
| Secured                  convertible notes payable                                                                                                                                                                                                                               |   |               | 845,948     |          |   | 908,430 |   |
| Secured                  non-convertible notes payable                                                                                                                                                                                                                           |   |               | 1,100,000   |          |   | 1,000,000 |   |
| Accrued                  payroll and related fringe benefits                                                                                                                                                                                                                     |   |               | 1,210,416   |          |   | 1,135,281 |   |
| Current                  maturities of long-term debt                                                                                                                                                                                                                            |   |               | 145,478     |          |   | 127,727 |   |
| Other                  current liabilities                                                                                                                                                                                                                                       |   |               | 524,786     |          |   | 366,612 |   |
| Total                  current liabilities                                                                                                                                                                                                                                       |   |               | 7,708,427   |          |   | 8,031,247 |   |
|                                                                                                                                                                                                                                                                             |   |               |        |          |   |   |   |
| LONG-TERM                  DEBT:                                                                                                                                                                                                                                                 |   |               |             |          |   |  |   |
| Secured                  notes payable                                                                                                                                                                                                                                           |   |               | 4,046,394   |          |   | 3,991,494 |   |
| Other                                                                                                                                                                                                                                                                            |   |               | 187,355     |          |   | 126,774 |   |
| Total                  long-term debt                                                                                                                                                                                                                                            |   |               | 4,233,749   |          |   | 4,118,268 |   |
|                                                                                                                                                                                                                                                                             |   |               |        |          |   |   |   |
| SERIES                  A REDEEMABLE CONVERTIBLE PREFERRED STOCK, $.01 par value; 1,300,000                  shares                  authorized, issued and outstanding at September 30, 2007 and June                  30,                  2007                                |   |               | 1,300,000   |          |   | 1,300,000 |   |
|                                                                                                                                                                                                                                                                             |   |               |        |          |   |   |   |
| COMMITMENTS                  AND CONTINGENCIES                                                                                                                                                                                                                                   |   |               |        |          |   |   |   |
|                                                                                                                                                                                                                                                                             |   |               |        |          |   |   |   |
| STOCKHOLDERS’                  (DEFICIENCY):                                                                                                                                                                                                                               |   |               |        |          |   |   |   |
| Series                  B preferred stock, $.01 par value; 50,000 shares authorized; 0                  shares                  issued and outstanding at September 30, 2007 and June 30,                  2007                                                                  |   |               | -           |          |   | - |   |
| Nondesignated                  preferred stock, no par value; 8,650,000 shares authorized; 0 shares                  issued and outstanding at September 30, 2007 and June 30,                  2007                                                                             |   |               | -           |          |   | - |   |
|                                                                                                                                                                                                                                                                             |   |               |        |          |   |   |   |
| Common                  stock, $.0001 par value; 150,000,000 shares authorized; 41,986,396                  shares                  issued and outstanding at September 30, 2007 and 38,395,625 shares                  issued                  and outstanding at June 30, 2007 |   |               | 4,199       |          |   | 3,840 |   |
|                                                                                                                                                                                                                                                                             |   |               |        |          |   |   |   |
| Additional                  paid-in-capital                                                                                                                                                                                                                                      |   |               | 45,497,012  |          |   | 45,305,585 |   |
| Accumulated                  deficit                                                                                                                                                                                                                                             |   |               | (46,871,784 | )             |   | (46,394,162 | ) |
| Total                  stockholders’ (deficiency)                                                                                                                                                                                                                          |   |               | (1,370,573  | )             |   | (1,084,737 | ) |
|                                                                                                                                                                                                                                                                             |   |               |        |          |   |   |   |
| TOTAL                                                                                                                                                                                                                                                                            |   | $                  | 11,871,603  |          | $      | 12,364,778 |   |

----

|                                                                                                                                                             |   |  Three Months Ended |       |  Three Months Ended |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|------------|------------------------------------|--------|
|                                                                                                                                                             |   |  September 30,           |       |  September 30,           |   |
|                                                                                                                                                             |   |  2007                         |       |  2006                         |   |
|                                                                                                                                                             |   |                          |       |                          |   |
| Revenues                                                                                                                                                         |   | $                                  | 4,501,266  |                               | $      | 2,483,811 |   |
|                                                                                                                                                             |   |                               |       |                               |   |   |   |
| Cost                    of revenues                                                                                                                              |   |                               | 2,827,913  |                               |   | 2,855,739 |   |
|                                                                                                                                                             |   |                               |       |                               |   |   |   |
| Gross                    profit/(loss)                                                                                                                           |   |                               | 1,673,353  |                               |   | (371,928 | ) |
|                                                                                                                                                             |   |                               |       |                               |   |   |   |
| Operating                    expenses:                                                                                                                           |   |                               |       |                               |   |   |   |
| Selling,                    general and administrative expenses                                                                                                  |   |                               | 1,542,549  |                               |   | 1,642,483 |   |
|                                                                                                                                                             |   |                               |       |                               |   |   |   |
| Income/(Loss)                    from operations                                                                                                                 |   |                               | 130,804    |                               |   | (2,014,411 | ) |
|                                                                                                                                                             |   |                               |       |                               |   |   |   |
| Other                    expense/(income):                                                                                                                       |   |                               |       |                               |   |   |   |
| Mark-to-market                    gain on embedded derivatives                                                                                                   |   |                               | -          |                               |   | (15,721,986 | ) |
| Interest                    expense                                                                                                                              |   |                               | 605,810    |                               |   | 1,201,883 |   |
| Gain                    on partial extinguishment of embedded derivative option liability                    arising                    from exercise of options |   |                               | -          |                               |   | (987,105 | ) |
| Other                    income, net                                                                                                                             |   |                               | (214       | )                                  |   | (544 | ) |
| Total                    other expense/(income):                                                                                                                 |   |                               | 605,596    |                               |   | (15,507,752 | ) |
|                                                                                                                                                             |   |                               |       |                               |   |   |   |
| (Loss)/income                    before provision/(benefit) for income taxes                                                                                     |   |                               | (474,792   | )                                  |   | 13,493,341 |   |
|                                                                                                                                                             |   |                               |       |                               |   |   |   |
| Provision/(benefit)                    for income taxes                                                                                                          |   |                               | 2,830      |                               |   | (640,042 | ) |
|                                                                                                                                                             |   |                               |       |                               |   |   |   |
| Net(loss)/                    income                                                                                                                             |   |                               | (477,622   | )                                  |   | 14,133,383 |   |
|                                                                                                                                                             |   |                               |       |                               |   |   |   |
| Dividends                    on preferred stock                                                                                                                  |   |                               | 19,500     |                               |   | 19,500 |   |
|                                                                                                                                                             |   |                               |       |                               |   |   |   |
| Net(loss)/income                    attributable to common shareholders                                                                                          |   | $                             | (497,122   | )                                  | $      | 14,113,883 |   |
|                                                                                                                                                             |   |                               |       |                               |   |   |   |
| Basic                    and diluted net loss per common share:                                                                                                  |   |                               |       |                               |   |   |   |
| Basic                    and diluted                                                                                                                             |   | $                             | (0.01      | )                                  | $      | 0.40 |   |
|                                                                                                                                                             |   |                               |       |                               |   |   |   |
|                                                                                                                                                             |   |                               |       |                               |   |   |   |
| Weighted                    average number of common shares outstanding:                                                                                         |   |                               |       |                               |   |   |   |
| Basic                    and Diluted                                                                                                                             |   |                               | 40,715,550 |                               |   | 35,110,563 |   |

----

|                                                   |   | Common Stock    |       |           |   |                           |   |               |       |
|--------------------------------------------------------|--------|----------------------|------------|----------------|--------|--------------------------------|--------|--------------------|------------|
|                                                   |   | Number ofShares |       | Par Value |   | Additional Paid-inCapital |   | AccumulatedDeficit |       | Total |   |
|                                                   |   |                 |       |           |   |                           |   |               |       |   |   |   |   |   |   |   |
| Balance                  June 30, 2007                 |   |                 | 38,395,625 |           | $      | 3,840                          |   | $                  | 45,305,585 |   | $ | (46,394,162 | ) | $ | (1,084,737 | ) |
|                                                   |   |                 |       |           |   |                           |   |               |       |   |   |   |   |   |   |   |
| Conversion                  of notes and interest      |   |                 | 2,336,152  |           |   | 234                            |   |               | 210,020    |   |   |   |   |   | 210,254 |   |
| Exercise                  of options                   |   |                 | 1,254,619  |           |   | 125                            |   |               | (125       | ) |   |   |   |   | - |   |
| Stock                  option compensation             |   |                 |       |           |   |                           |   |               | 1,032      |   |   |   |   |   | 1,032 |   |
| Dividends                  on Series A preferred stock |   |                 |       |           |   |                           |   |               | (19,500    | ) |   |   |   |   | (19,500 | ) |
|                                                   |   |                 |       |           |   |                           |   |               |       |   |   |   |   |   |   |   |
| Net                  loss                              |   |                 |       |           |   |                           |   |               |       |   |   | (477,622 | ) |   | (477,622 | ) |
|                                                   |   |                 |       |           |   |                           |   |               |       |   |   |   |   |   |   |   |
| Balance                  September 30, 2007            |   |                 | 41,986,396 |           | $      | 4,199                          |   | $                  | 45,497,012 |   | $ | (46,871,784 | ) | $ | (1,370,573 | ) |

----

|                                                                                                          |   | Three Months Ended |     |
|---------------------------------------------------------------------------------------------------------------|--------|------------------------------|----------|
|                                                                                                          |   |                         |     |   |   |
|                                                                                                          |   | September 30            |     | September 30 |   |
|                                                                                                          |   | 2007                         |     | 2006 |   |
|                                                                                                          |   |                         |     |   |   |
| CASH                  FLOWS FROM OPERATING ACTIVITIES:                                                        |   |                         |     |   |   |   |   |
| Net                  (loss)/income                                                                            |   | $                       | (477,622 | ) | $ | 14,133,383 |   |
| Adjustments                  to net cash used in operating activities                                         |   |                         |     |   |   |   |   |
| Mark-to-market                  gain on embedded derivative liabilities                                       |   |                         | -        |   |   | (15,721,986 | ) |
| Non-cash                  interest expense on convertable secured note                                        |   |                         | 83,003   |   |   | 739,724 |   |
| Gain                  on exercise of options -Laurus                                                          |   |                         | -        |   |   | (987,105 | ) |
| Depreciation                  and amortization                                                                |   |                         | 246,790  |   |   | 228,271 |   |
| Provision                  for doubtful accounts, net                                                         |   |                         | 90,823   |   |   | 448,302 |   |
| Amortization                  of deferred financing cost                                                      |   |                         | 303,187  |   |   | 296,583 |   |
| Amortization                  of discount on secured convertible note                                         |   |                         | 119,669  |   |   | - |   |
| Stock-based                  compensation                                                                     |   |                         | 1,032    |   |   | - |   |
| Changes                  in operating assets and liabilities:                                                 |   |                         |     |   |   |   |   |
| Accounts                  receivable                                                                          |   |                         | (257,060 | ) |   | 1,385,631 |   |
| Inventory                                                                                                     |   |                         | (61,737  | ) |   | 8,992 |   |
| Costs                  and estimated earnings in excess of billings on uncompleted                  contracts |   |                         | (36,151  | ) |   | 47,600 |   |
| Prepaid                  expenses and other current assets                                                    |   |                         | 237,835  |   |   | 36,833 |   |
| Other                  assets                                                                                 |   |                         | (2,854   | ) |   | (47,502 | ) |
| Accounts                  payable and accrued expenses                                                        |   |                         | (734,655 | ) |   | (153,371 | ) |
| Accrued                  payroll and related fringe benefits                                                  |   |                         | 75,135   |   |   | (57,083 | ) |
| Income                  tax receivable                                                                        |   |                         | 37,758   |   |   | (929,485 | ) |
| Other                  current liabilities                                                                    |   |                         | 158,174  |   |   | 46,693 |   |
| Billings                  in excess of costs and estimated earnings on uncompleted                  contracts |   |                         | 42,627   |   |   | (2,683 | ) |
|                                                                                                          |   |                         |     |   |   |   |   |
| NET                  CASH USED IN OPERATING ACTIVITIES:                                                       |   |                         | (174,046 | ) |   | (527,203 | ) |
|                                                                                                          |   |                         |     |   |   |   |   |
| CASH                  FLOWS FROM INVESTING ACTIVITIES:                                                        |   |                         |     |   |   |   |   |
| Purchases                  of property and equipment                                                          |   |                         | (3,719   | ) |   | - |   |
| NET                  CASH USED IN INVESTING ACTIVITIES                                                        |   |                         | (3,719   | ) |   | - |   |
|                                                                                                          |   |                         |     |   |   |   |   |
| CASH                  FLOWS FROM FINANCING ACTIVITIES:                                                        |   |                         |     |   |   |   |   |
| Principal                  payments of long-term debt                                                         |   |                         | (35,509  | ) |   | (52,468 | ) |
| Proceeds                  from third party receivables                                                        |   |                         | -        |   |   | 189,197 |   |
| Payments                  for deferred financing costs                                                        |   |                         | (3,500   | ) |   | - |   |
| Proceeds                  from secured notes payable                                                          |   |                         | 100,000  |   |   | - |   |
| NET                  CASH PROVIDED BY FINANCING ACTIVITIES                                                    |   |                         | 60,991   |   |   | 136,729 |   |
|                                                                                                          |   |                         |     |   |   |   |   |
| NET                  DECREASE IN CASH                                                                         |   |                         | (116,774 | ) |   | (390,474 | ) |
|                                                                                                          |   |                         |     |   |   |   |   |
| CASH –                  BEGINNING OF PERIOD                                                        |   |                         | 156,616  |   |   | 610,884 |   |
|                                                                                                          |   |                         |     |   |   |   |   |
| CASH –                  END OF PERIOD                                                              |   | $                            | 39,842   |   | $ | 220,410 |   |
|                                                                                                          |   |                         |     |   |   |   |   |
| Cash                  paid during the period for:                                                             |   |                         |     |   |   |   |   |
| Interest                                                                                                      |   | $                            | 24,285   |   | $ | 157,258 |   |
| Income                  taxes                                                                                 |   | $                            | 2,830    |   | $ | 290,509 |   |
|                                                                                                          |   |                         |     |   |   |   |   |
| SUPPLEMENTAL                  SCHEDULE OF NON-CASH ACTIVITIES:                                                |   |                         |     |   |   |   |   |
| Extinguishment                  of derivative liabilitiues                                                    |   | $                            | -        |   | $ | 6,539,022 |   |
| Reduction                  of long-term debt through stock conversion - Laurus                                |   | $                            | 127,251  |   | $ | 29,700 |   |

----

| 1. | BASIS                FOR PRESENTATION – The accompanying unaudited consolidated financial                statements include the accounts of Windswept Environmental Group,                Inc.                (the “Company”) and its subsidiaries, Trade-Winds Environmental                Restoration, Inc. (“Trade-Winds”), North Atlantic Laboratories, Inc.,                Environmental Restoration Inc. and RestoreNet Inc. All inter-company                accounts and transactions have been eliminated in consolidation.                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                30, 2007, the results of operations for the three months ended September                30, 2007 and September 30, 2006 and cash flows for the three months                ended                September 30, 2007 and September 30, 2006 have been included. Certain                prior period amounts have been reclassified to conform to the September                30, 2007 presentation. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | STOCK-BASED                COMPENSATION – The                Company consummated various transactions where it paid the consideration                primarily in options or warrants to purchase its common stock. These                transactions include financing transactions and providing incentives                to                attract, retain and motivate employees, officers and directors. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | exercise                price (the price to be paid for a share of the Company’s common                stock); |
|--|--------|----------------------------------------------------------------------------------------------------------------------|

|  | · | price                of the Company’s common stock on the day the options or warrants are                granted; |
|--|--------|-------------------------------------------------------------------------------------------------------------------------|

|  | · | the                expected number of days that the options or warrants will be held                before                they are exercised, based  on                the average of their vesting and contractual                periods; |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | trading                volatility of the Company’s common stock, based on historical prices for a                retrospective period                equal to the expected holding period together with certain other                factors;                and |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | the                annual risk-free interest rate on the day the option or warrant is                granted                for the expected holding period. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 3. | NET(LOSS)/                INCOME PER COMMON SHARE – Basic and diluted (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                (loss)/income per share for the three months ended September 30,                2007 and                the three months ended September 30, 2006,                respectively: |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                    |   | ThreeMonths Ended |       | ThreeMonths Ended |   |
|---------------------------------------------------------------------------------------------------------|--------|------------------------|------------|------------------------|--------|
|                                                                                                    |   | September 30,2007 |       | September 30,2006 |   |
| Numerator:                                                                                              |   |                   |       |                   |   |   |   |
| Net(loss)/                  income attributable to common shareholders                                  |   | $                      | (497,122   | )                      | $      | 14,113,883 |   |
| (Deduct)/Add:                                                                                           |   |                   |       |                   |   |   |   |
| Mark-to-market                  gain                                                                    |   |                   | -          |                   |   | (15,721,986 | ) |
| Interest                  on convertible debt                                                           |   |                   | -          |                   |   | 739,724 |   |
| Dividends                  on preferred stock                                                           |   |                   | 19,500     |                   |   | 19,500 |   |
| Net                  (loss) attributable to common shareholders and assumed                  conversion |   | $                      | (477,622   | )                      | $      | (848,879 | ) |
| Denominator:                                                                                            |   |                   |       |                   |   |   |   |
| Share                  reconciliation:                                                                  |   |                   |       |                   |   |   |   |
| Shares                  used for basic (loss)/income per share                                          |   |                   | 40,715,550 |                   |   | 35,110,563 |   |
| Effect                  of dilutive items:                                                              |   |                   |       |                   |   |   |   |
| Stock                  options                                                                          |   |                   | -          |                   |   | - |   |
| Convertible                  securities                                                                 |   |                   | -          |                   |   | - |   |
| Shares                  used for diluted (loss)/income per share                                        |   |                   | 40,715,550 |                   |   | 35,110,563 |   |
| (Loss)/income                  per share:                                                               |   |                   |       |                   |   |   |   |
| Basic                  and diluted                                                                      |   | $                      | (.01       | )                      | $      | .40 |   |

| 4. | PROVISION                FOR INCOME TAXES – The provision for income taxes for the three                months ended September 30, 2007 and the three months ended September                30,                2006 consists of the following: |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                          |   | Three MonthsEnded |   | Three MonthsEnded |   |
|-----------------------------------------------|--------|------------------------|--------|------------------------|--------|
|                                          |   | September 30,2007 |   | September 30,2006 |   |
|                                          |   |                   |   |                   |   |
| Federal –                  current |   | $                      | -      |                   | $      | (646,912 | ) |
| State –                  current   |   |                   | 2,830  |                   |   | 6,870 |   |
| Total                                         |   | $                      | 2,830  |                   | $      | (640,042 | ) |

| 5. | CONTINGENCIES –                The                Company is a plaintiff in 17 lawsuits, including those described                in the                Notes to the Financial Statements included in the Company’s Annual Report                on Form 10-K for the year ended June 30, 2007, claiming an aggregate                of                approximately $7,500,000 pursuant to which it is seeking to collect                amounts it believes are owed to it by customers included in its accounts                receivable, primarily with respect to changed                work orders or other modifications to its scope of work. The defendants                in                these actions have asserted counterclaims for an aggregate of                approximately $1,000,000. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 6. | FINANCING                AND RELATED PARTY TRANSACTIONS -                In                July 2007, the Company issued an additional non-convertible secured                note                to Laurus in the principal amount of $100,000, on the same terms                and                conditions as the other non-convertible notes previously issued to                Laurus                in January and April 2007. The note bears interest at a rate of 17.5%                per                annum and is due on January 8,                2008. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | customers                refusing to pay prior to receiving insurance reimbursements; |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | customers’                facility managers needing to wait for insurance adjustors to approve                work                before the remission of payment;                and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | certain                customers refusing to pay in connection with disputed change                orders. |
|--------|--------|------------------------------------------------------------------------------------------------------------|

----

|  | · | we                generally do not commence projects until we have a fully executed                contract; |
|--|--------|--------------------------------------------------------------------------------------------------------------|

|  | · | our                contracts provide that our customers are directly obligated for our                services; |
|--|--------|-----------------------------------------------------------------------------------------------------------------|

|  | · | we                require client approval with respect to the work performed or to                be                performed; |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------|

|  | · | we                seek deposits or mobilization fees for our time and materials contracts; |
|--|--------|--------------------------------------------------------------------------------------------|

|  | · | we                engage local legal counsel in the areas in which we operate in order                to                file liens against customers’ real property in the event of contract                disputes; and |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | we                review all invoices for proper documentation prior to submission                to                customers for payment. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | the                prime interest rate was projected to increase 0.25% per quarter for                the                first year; |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|  | · | the                future volatility of common stock was projected at                150%; |
|--|--------|--------------------------------------------------------------------------------------------|

|  | · | the                stock price annual growth rate was estimated at the cost of                equity; |
|--|--------|-------------------------------------------------------------------------------------------------------|

|  | · | a                default on registration requirements was projected at                5.0%; |
|--|--------|---------------------------------------------------------------------------------------------|

|  | · | other                forms of default were projected at 5.0% initially, increasing 0.1%                monthly; |
|--|--------|-----------------------------------------------------------------------------------------------------------------|

|  | · | the                availability of alternative financing to redeem the note, if exercise                of                redemption option was triggered,                starting at 0%, increasing monthly by 1% to a maximum of                25%; |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | the                twenty-two day trading volume remaining flat;                and |
|--|--------|-------------------------------------------------------------------------------------|

|  | · | the                weighted average reset period projected at                $0.0899 |
|--|--------|--------------------------------------------------------------------------------------|

----

|  | · | exercise                price (the price to be paid for a share in our                stock); |
|--|--------|-----------------------------------------------------------------------------------------------|

|  | · | price                of our stock on the day the options or warrants are                granted; |
|--|--------|--------------------------------------------------------------------------------------------------|

|  | · | the                expected number of days that the options or warrants will be held                before                they are exercised, based on                the average of their vesting and contractual                periods; |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | trading                volatility of our stock, based on historical prices for a retrospective                period equal to the expected                holding period together with certain other factors as applicable;                and |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | the                annual risk-free interest rate on the day the option or warrant is                granted                for the expected holding period. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | The                original contract or other evidence provides a legal basis for the                claim; |
|--|--------|-------------------------------------------------------------------------------------------------------------|

|  | · | The                additional costs were caused by circumstances that were unforeseen                at the                contract date and were not                the result of deficiencies in our                performance; |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Costs                associated with the claims are identifiable;                and |
|--|--------|--------------------------------------------------------------------------------------|

|  | · | The                evidence supporting the claims is objective and                verifiable. |
|--|--------|-----------------------------------------------------------------------------------------------|

----

----

|  | · | Obtain                profitable environmental or related construction contracts. So long                as we                have sufficient working capital, we anticipate that we will continue                to                bid on large projects, although there can be no assurance that any                of our                bids will be accepted or that we will have sufficient working capital. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Control                our selling, general and administrative expenses, which were increased                in                connection with our need to incur labor, operating and equipment                expenses                in relation to our operations in the gulf coast and Florida regions                during                fiscal 2006. In order to control our selling, general and administrative                expenses, we have and are continuing the process of optimizing the                efficiency of our support staff through enhanced task allocation                while                reducing unneeded resources and reviewing non-project related expenses                to                reduce costs, while preserving the quality of our                service. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Raise                additional capital or obtain additional financing. Management has                preliminarily explored additional funding sources, but has been unable                to                attract additional debt or equity capital. In addition, the existence                of                the Laurus and Spotless security interests may impair our ability                to raise                additional debt capital. In addition, the small number of available                authorized shares of our common stock may impair our ability to obtain                equity capital. No assurance can be given that we will be able to                obtain                additional debt or equity capital, although our management expects                to                continue seeking any such favorable                opportunities. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Generate                positive cash flow from operations. We seek to obtain profitable                contracts                that generate gross profits more than sufficient to pay our expenses                and                reduce our difficulty with cash collections and slow cash                flow. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | customers                refusing to pay prior to receiving insurance                reimbursements; |
|--|--------|------------------------------------------------------------------------------------------------------|

|  | · | customers’                facility managers needing to wait for insurance adjustors to approve                work                before the remission of                payment; and |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | · | certain                customers refusing to pay in connection with disputed change                orders. |
|--|--------|------------------------------------------------------------------------------------------------------------|

|  | · | we                generally do not commence projects until we have a fully executed                contract; |
|--|--------|--------------------------------------------------------------------------------------------------------------|

|  | · | our                contracts provide that our customers are directly obligated for our                services; |
|--|--------|-----------------------------------------------------------------------------------------------------------------|

|  | · | we                require client approval with respect to the work performed or to                be                performed; |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------|

|  | · | we                seek deposits or mobilization fees for time and material                contracts; |
|--|--------|------------------------------------------------------------------------------------------------------|

|  | · | we                engage local legal counsel in the areas in which we operate in order                to                file liens against customers’ real property                in the event of contract disputes;                and |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | we                review all invoices for proper documentation prior to submission                to                customers for payment. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|                                            |   | Total  |       | 1                Year |   | 2-3                Years |   | 4-5                Years |      | Thereafter |   |
|-------------------------------------------------|--------|--------|------------|-----------------------|--------|--------------------------|--------|--------------------------|-----------|------------|--------|
|                                            |   |   |       |                  |   |                     |   |                     |      |       |   |
| Operating                Leases                 |   | $      | 3,443,947  |                  | $      | 643,694                  |   | $                        | 1,215,590 |       | $      | 1,078,829 |   | $ | 505,834 |   |
|                                            |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| Capitalized                Leases-Principal     |   |   | 218,992    |                  |   | 115,120                  |   |                     | 77,904    |       |   | 25,968 |   |   | - |   |
|                                            |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| Capitalized                Leases- Interest     |   |   | 17,881     |                  |   | 9,753                    |   |                     | 6,612     |       |   | 1,517 |   |   | - |   |
|                                            |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| Laurus-Short                Term Note Principal |   |   | 600,000    |                  |   | 600,000                  |   |                     | -         |       |   | - |   |   | - |   |
|                                            |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| Laurus-Short                Term Note-Interest  |   |   | 76,684     |                  |   | 76,684                   |   |                     | -         |       |   | - |   |   | - |   |
|                                            |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| BB&T                Notes (1)               |   |   | 113,841    |                  |   | 30,358                   |   |                     | 66,715    |       |   | 22,768 |   |   | - |   |
|                                            |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| BB&T                Interest (1)            |   |   | 20,070     |                  |   | 5,352                    |   |                     | 19,704    |       |   | 4,014 |   |   | - |   |
|                                            |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| Laurus                Note-Principal            |   |   | 5,730,028  |                  |   | 990,794                  |   |                     | 4,739,234 |       |   | - |   |   | - |   |
|                                            |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| Laurus                Note-Interest             |   |   | 1,027,240  |                  |   | 653,857                  |   |                     | 373,382   |       |   | - |   |   | - |   |
|                                            |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| Spotless                Note-Principal          |   |   | 500,000    |                  |   | 500,000                  |   |                     | -         |       |   | - |   |   | - |   |
|                                            |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| Spotless                Note-Interest           |   |   | 87,377     |                  |   | 87,377                   |   |                     | -         |       |   | - |   |   | - |   |
|                                            |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| Total                                           |   | $      | 11,836,060 |                  | $      | 3,712,989                |   | $                        | 6,484,141 |       | $      | 1,133,096 |   | $ | 505,834 |   |

----

|  | (1) | Reflects                amounts assumed in connection with our acquisition of Environmental                Restoration (NC). |
|--|-----|------------------------------------------------------------------------------------------------------------------------------|

|  | · | the                Laurus note at a rate of 10.25% per                annum; |
|--|--------|------------------------------------------------------------------------------|

|  | · | the                Spotless note at a rate of 6.36% per annum; and |
|--|--------|--------------------------------------------------------------------|

----

|  | · | an                aggregate of $218,992 of other long-term debt with maturities ranging                from                3 months to 55 months for financed trucks and vehicles with interest                rates                ranging from 3.90% to 13.99%. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | the                timing of large projects in certain of our service areas, i.e., asbestos                and mold abatement and                construction; |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | the                timing of catastrophes; and |
|--|--------|------------------------------------------------|

|  | · | inclement                weather conditions. In particular, extended periods of rain, cold                weather                or other inclement weather                conditions may result in delays in commencing or completing projects,                in                whole or in part. Any such delays may adversely affect our operations                and                financial results and may adversely affect the performance of other                projects due to scheduling and staffing                conflicts |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | the                market acceptance and amount of sales of our                services; |
|--|--------|------------------------------------------------------------------------------------------|

|  | · | our                success in increasing revenues and reducing                expenses; |
|--|--------|-----------------------------------------------------------------------------------------|

|  | · | the                frequency and magnitude of environmental disasters or disruptions                resulting in the need for the types of services we                provide; |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | our                ability to service our debt and other financial obligations, particularly                if required to pay in cash; |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|  | · | the                extent of the enactment, enforcement and strict interpretations of                laws                relating to environmental                remediation; |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | our                ability to obtain and manage new and large                projects; |
|--|--------|----------------------------------------------------------------------------------------|

|  | · | the                competitive environment within the industries in which we                operate; |
|--|--------|------------------------------------------------------------------------------------------------------|

|  | · | our                ability to raise or access capital; |
|--|--------|--------------------------------------------------------|

|  | · | our                ability to continue as a going                concern; |
|--|--------|---------------------------------------------------------------------------|

|  | · | our                ability to effectively implement and maintain internal controls and                procedures; |
|--|--------|-------------------------------------------------------------------------------------------------------------------|

|  | · | our                dependence on key personnel; |
|--|--------|-------------------------------------------------|

|  | · | our                ability to timely collect our accounts                receivable; |
|--|--------|--------------------------------------------------------------------------------------|

|  | · | our                ability to attract and retain qualified personnel;                and |
|--|--------|------------------------------------------------------------------------------------------|

|   | · | the                other factors and information disclosed and discussed in other sections                of                this quarterly report on Form 10-Q and in our report on Form 10-K                for the                fiscal year ended June 30, 2007. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | · | Laurus                note at a rate of 10.25% per annum; |
|--|--------|-----------------------------------------------------------|

|  | · | Spotless                note at a rate of 6.36% per annum;                and |
|--|--------|-------------------------------------------------------------------------------|

|  | · | Various                other debt for financed trucks and vehicles with maturities ranging                from 3                months to 55 months with                interest rates ranging from 3.90% to                13.99%. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 10.1   | Second                Amended and Restated Secured Term Note, dated July 17, 2007, issued                by                Windswept to Laurus in the principal amount of $600,000 (Incorporated                by                reference to Exhibit 10.53 of Windswept’s Annual Report on Form 10-K for                the year ended June 30, 2007, filed with the SEC on October 15,                2007). |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.2   | Reaffirmation                and Ratification Agreement, dated July 17, 2007 (Incorporated by                reference                to Exhibit10.54 of Windswept’s Annual Report on Form 10-K for the year                ended June 30, 2007, filed with the SEC on October 15,                2007).                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 31.1   | Certification                of Chief Executive Officer pursuant to Sarbanes-Oxley Section                302(a).                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 31.2   | Certification                of Chief Financial Officer pursuant to Sarbanes-Oxley Section                302(a).                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 32     | Certification                of Chief Executive Officer and Chief Financial Officer pursuant to                18                U.S.C. Section 1350.                                                                                                                                                                                                                                                                 |

----

|                                   |   | WINDSWEPT                ENVIRONMENTAL GROUP, INC.   |
|----------------------------------------|--------|------------------------------------------------------|
|                                   |   |                                                 |
|                                   |   |                                                 |
| Date:                December 18, 2007 | By:    | /s/                Michael O’Reilly            |
|                                   |   | MICHAEL                O’REILLY                |
|                                   |   | President                and Chief Executive Officer |
|                                   |   | (Principal                Executive Officer)         |
|                                   |   |                                                 |
|                                   |   |                                                 |
| Date:                December 18, 2007 | By:    | /s/                Arthur J. Wasserspring            |
|                                   |   | ARTHUR                J. WASSERSPRING                |
|                                   |   | Chief                Financial Officer               |
|                                   |   | (Principal                Financial Officer)         |

----

| Exhibit                No. |   | Description                                                                                                                                                                                                                                                                                                                                                                                                           |
|----------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.1                       |   | Second                Amended and Restated Secured Term Note, dated July 17, 2007, issued                by                Windswept to Laurus in the principal amount of $600,000 (Incorporated                by                reference to Exhibit 10.53 of Windswept’s Annual Report on Form 10-K for                the year ended June 30, 2007, filed with the SEC on October 15,                2007). |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.2                       |   | Reaffirmation                and Ratification Agreement, dated July 17, 2007 (Incorporated by                reference                to Exhibit10.54 of Windswept’s Annual Report on Form 10-K for the year                ended June 30, 2007, filed with the SEC on October 15,                2007).                                                                                                        |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 31.1                       |   | Certification                of Chief Executive Officer pursuant to Sarbanes-Oxley Section                302(a).                                                                                                                                                                                                                                                                                                     |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 31.2                       |   | Certification                of Chief Financial Officer pursuant to Sarbanes-Oxley Section                302(a).                                                                                                                                                                                                                                                                                                     |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 32                         |   | Certification                of Chief Executive Officer and Chief Financial Officer pursuant to                18                U.S.C. Section 1350.                                                                                                                                                                                                                                                                 |

----