**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 |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------|

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

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

| Large                  Accelerated Filer o | Accelerated                  Filer o | Non-Accelerated                  Filer x |
|--------------------------------------------|--------------------------------------|------------------------------------------|

----

**PART          1 – FINANCIAL INFORMATION**

**Item          1. Financial Statements**

|                                                                                                                                                                                                                                                                           |   | December                    31, |        | June                    30, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|-------------|-----------------------------|--------|
|                                                                                                                                                                                                                                                                           |   | 2006                            |        | 2006                        |   |
|                                                                                                                                                                                                                                                                           |   | (unaudited)                     |        |                        |   |
| ASSETS:                                                                                                                                                                                                                                                                        |   |                            |        |                        |   |   |   |
| CURRENT                    ASSETS:                                                                                                                                                                                                                                             |   |                            |        |                        |   |   |   |
| Cash                                                                                                                                                                                                                                                                           |   | $                               | 0           |                        | $      | 610,884 |   |
| Accounts                    receivable, net of allowance for doubtful accounts of $2,879,983                    and $                    1,962,138 respectively                                                                                                                |   |                            | 7,620,051   |                        |   | 11,235,904 |   |
| Inventory                                                                                                                                                                                                                                                                      |   |                            | 201,370     |                        |   | 211,058 |   |
| Costs                    and estimated earnings in excess of billings on uncompleted                    contracts                                                                                                                                                              |   |                            | 45,888      |                        |   | 71,720 |   |
| Prepaid                    expenses and other current assets                                                                                                                                                                                                                   |   |                            | 155,280     |                        |   | 204,832 |   |
| Total                    current assets                                                                                                                                                                                                                                        |   |                            | 8,022,589   |                        |   | 12,334,398 |   |
| PROPERTY                    AND EQUIPMENT, net of accumulated depreciation and amortization                    of                    $7,632,421 and $7,178,262, respectively                                                                                                   |   |                            | 2,648,198   |                        |   | 2,919,876 |   |
| OTHER                    ASSETS:                                                                                                                                                                                                                                               |   |                            |        |                        |   |   |   |
| Deferred                    financing costs                                                                                                                                                                                                                                    |   |                            | 1,779,496   |                        |   | 2,372,662 |   |
| Other                                                                                                                                                                                                                                                                          |   |                            | 202,666     |                        |   | 167,220 |   |
| Total                    other assets                                                                                                                                                                                                                                          |   |                            | 1,982,162   |                        |   | 2,539,882 |   |
|                                                                                                                                                                                                                                                                           |   |                            |        |                        |   |   |   |
| TOTAL                                                                                                                                                                                                                                                                          |   | $                               | 12,652,949  |                        | $      | 17,794,156 |   |
| LIABILITIES                    AND STOCKHOLDERS’ EQUITY/(DEFICIENCY):                                                                                                                                                                                                    |   |                            |        |                        |   |   |   |
|                                                                                                                                                                                                                                                                           |   |                            |        |                        |   |   |   |
| CURRENT                    LIABILITIES:                                                                                                                                                                                                                                        |   |                            |        |                        |   |   |   |
| Cash                    Overdraft                                                                                                                                                                                                                                              |   | $                               | 109,456     |                        | $      | 0 |   |
| Accounts                    payable                                                                                                                                                                                                                                            |   |                            | 1,891,604   |                        |   | 1,011,700 |   |
| Liability                    for repurchased account receivable                                                                                                                                                                                                                |   |                            | 150,000     |                        |   | 189,197 |   |
| Accrued                    expenses                                                                                                                                                                                                                                            |   |                            | 876,065     |                        |   | 1,569,993 |   |
| Billings                    in excess of costs and estimated earnings on uncompleted                    contracts                                                                                                                                                              |   |                            | 74,345      |                        |   | 42,400 |   |
| Secured                    convertible notes payable                                                                                                                                                                                                                           |   |                            | 780,703     |                        |   | - |   |
| Accrued                    payroll and related fringe benefits                                                                                                                                                                                                                 |   |                            | 520,352     |                        |   | 429,717 |   |
| Current                    maturities of long-term debt                                                                                                                                                                                                                        |   |                            | 145,150     |                        |   | 188,310 |   |
| Income                    taxes payable                                                                                                                                                                                                                                        |   |                            | 230,677     |                        |   | 1,838,509 |   |
| Derivative                    liabilities: notes, warrants and options                                                                                                                                                                                                         |   |                            | -           |                        |   | 27,163,901 |   |
| Other                    current liabilities                                                                                                                                                                                                                                   |   |                            | 180,325     |                        |   | 121,533 |   |
| Total                    current liabilities                                                                                                                                                                                                                                   |   |                            | 4,958,677   |                        |   | 32,555,260 |   |
| LONG-TERM                    DEBT:                                                                                                                                                                                                                                             |   |                            |             |                        |   |  |   |
| Secured                    notes payable                                                                                                                                                                                                                                       |   |                            | 4,464,778   |                        |   | 500,000 |   |
| Other                                                                                                                                                                                                                                                                          |   |                            | 114,226     |                        |   | 188,244 |   |
| Total                    long-term debt                                                                                                                                                                                                                                        |   |                            | 4,579,004   |                        |   | 688,244 |   |
| SERIES                    A REDEEMABLE CONVERTIBLE PREFERRED STOCK, $.01 par value; 1,300,000                    shares                    authorized, issued and outstanding at December 31, 2006 and June                    30,                    2006                     |   |                            | 1,300,000   |                        |   | 1,300,000 |   |
| COMMITMENTS                    AND CONTINGENCIES                                                                                                                                                                                                                               |   |                            |        |                        |   |   |   |
| STOCKHOLDERS’                    EQUITY(DEFICIENCY):                                                                                                                                                                                                                     |   |                            |        |                        |   |   |   |
| Series                    B preferred stock, $.01 par value; 50,000 shares issued and authorized;                    0                    shares outstanding at December 31, 2006 and June 30, 2006                                                                            |   |                            | -           |                        |   | - |   |
| Nondesignated                    preferred stock, no par value; 8,650,000 shares authorized; 0                    shares                    issued and outstanding at December 31, 2006 and June 30,                    2006                                                   |   |                            | -           |                        |   | - |   |
| Common                    stock, $.0001 par value; 150,000,000 shares authorized; 35,012,326                    shares                    outstanding at December 31, 2006 and 33,571,215 shares issued                    and                    outstanding at June 30, 2006 |   |                            | 3,501       |                        |   | 3,357 |   |
| Additional                    paid-in-capital                                                                                                                                                                                                                                  |   |                            | 45,063,664  |                        |   | 38,429,185 |   |
| Accumulated                    deficit                                                                                                                                                                                                                                         |   |                            | (43,251,897 | )                           |   | (55,181,890 | ) |
| Total                    stockholders’ equity (deficiency)                                                                                                                                                                                                               |   |                            | 1,815,268   |                        |   | (16,749,348 | ) |
| TOTAL                                                                                                                                                                                                                                                                          |   | $                               | 12,652,949  |                        | $      | 17,794,156 |   |

----

|                                                                                                                                                                    |   | Three                          Months Ended                          December                          31, 2006 |       | Thirteen                          Weeks Ended                          December                          27, 2005 |   | Six                          Months Ended                          December                          31, 2006 |   | Twenty-Six                          WeeksEnded                          December                          27, 2005 |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------|------------|
| Revenues                                                                                                                                                                |   | $                                                                                                               | 2,023,458  |                                                                                                                   | $      | 17,714,342                                                                                                    |   | $                                                                                                                  | 4,507,269  |   | $ | 22,878,681 |   |
| Cost                          of revenues                                                                                                                               |   |                                                                                                            | 2,142,560  |                                                                                                                   |   | 8,190,710                                                                                                     |   |                                                                                                               | 4,998,299  |   |   | 12,575,980 |   |
| Gross                          (loss) profit                                                                                                                            |   |                                                                                                            | (119,102   | )                                                                                                                      |   | 9,523,632                                                                                                     |   |                                                                                                               | (491,030   | ) |   | 10,302,701 |   |
| Operating                          expenses:                                                                                                                            |   |                                                                                                            |       |                                                                                                                   |   |                                                                                                          |   |                                                                                                               |       |   |   |   |   |
| Selling,                          general and administrative expenses                                                                                                   |   |                                                                                                            | 2,205,963  |                                                                                                                   |   | 2,559,551                                                                                                     |   |                                                                                                               | 3,848,446  |   |   | 5,460,094 |   |
|                                                                                                                                                                    |   |                                                                                                            |       |                                                                                                                   |   |                                                                                                          |   |                                                                                                               |       |   |   |   |   |
| (Loss)/income                          from operations                                                                                                                  |   |                                                                                                            | (2,325,065 | )                                                                                                                      |   | 6,964,081                                                                                                     |   |                                                                                                               | (4,339,476 | ) |   | 4,842,607 |   |
|                                                                                                                                                                    |   |                                                                                                            |       |                                                                                                                   |   |                                                                                                          |   |                                                                                                               |       |   |   |   |   |
| Other                          income (expense):                                                                                                                        |   |                                                                                                            |       |                                                                                                                   |   |                                                                                                          |   |                                                                                                               |       |   |   |   |   |
| Mark-to-market                          gain on embedded derivatives                                                                                                    |   |                                                                                                            | 0          |                                                                                                                   |   | 22,191,192                                                                                                    |   |                                                                                                               | 15,721,986 |   |   | 1,191,633 |   |
| Interest                          expense                                                                                                                               |   |                                                                                                            | (589,839   | )                                                                                                                      |   | (1,032,437                                                                                                    | )      |                                                                                                               | (1,791,722 | ) |   | (2,445,217 | ) |
| Gain                          on extinguishmentent of embedded derivative liability and                          (loss) on                          exercise of options |   |                                                                                                            | 0          |                                                                                                                   |   | 0                                                                                                             |   |                                                                                                               | 987,105    |   |   | (449,850 | ) |
| Other                          income/(expense), net                                                                                                                    |   |                                                                                                            | 39,267     |                                                                                                                   |   | (456                                                                                                          | )      |                                                                                                               | 39,811     |   |   | (22,510 | ) |
| Total                          other (expense)/income:                                                                                                                  |   |                                                                                                            | (550,572   | )                                                                                                                      |   | 21,158,299                                                                                                    |   |                                                                                                               | 14,957,180 |   |   | (1,725,944 | ) |
| (Loss)/income                          before benefit/provision for income taxes                                                                                        |   |                                                                                                            | (2,875,637 | )                                                                                                                      |   | 28,122,380                                                                                                    |   |                                                                                                               | 10,617,704 |   |   | 3,116,663 |   |
| (Benefit)/provision                          for income taxes                                                                                                           |   |                                                                                                            | (672,247   | )                                                                                                                      |   | 3,159,138                                                                                                     |   |                                                                                                               | (1,312,289 | ) |   | 3,167,356 |   |
| Net                          (loss)/income                                                                                                                              |   |                                                                                                            | (2,203,390 | )                                                                                                                      |   | 24,963,242                                                                                                    |   |                                                                                                               | 11,929,993 |   |   | (50,693 | ) |
| Dividends                          on preferred stock                                                                                                                   |   |                                                                                                            | 19,500     |                                                                                                                   |   | 19,500                                                                                                        |   |                                                                                                               | 39,000     |   |   | 39,000 |   |
| Net                          (loss)/profit attributable to common shareholders                                                                                          |   | $                                                                                                               | (2,222,890 | )                                                                                                                      | $      | 24,943,742                                                                                                    |   | $                                                                                                                  | 11,890,993 |   | $ | (89,693 | ) |
| Basic                        and diluted net (loss)/profit per common share:                                                                                            |   |                                                                                                            |       |                                                                                                                   |   |                                                                                                          |   |                                                                                                               |       |   |   |   |   |
| Basic                                                                                                                                                                   |   | $                                                                                                               | (0.07      | )                                                                                                                      | $      | 0.74                                                                                                          |   | $                                                                                                                  | 0.09       |   | $ | 0.00 |   |
| Diluted                                                                                                                                                                 |   | $                                                                                                               | (0.07      | )                                                                                                                      | $      | 0.02                                                                                                          |   | $                                                                                                                  | 0.09       |   | $ | 0.00 |   |
| Weighted                        average number of common shares outstanding:                                                                                            |   |                                                                                                            |       |                                                                                                                   |   |                                                                                                          |   |                                                                                                               |       |   |   |   |   |
| Basic                                                                                                                                                                   |   |                                                                                                            | 33,973,679 |                                                                                                                   |   | 33,571,215                                                                                                    |   |                                                                                                               | 33,892,121 |   |   | 33,229,815 |   |
| Diluted                                                                                                                                                                 |   |                                                                                                            | 33,973,679 |                                                                                                                   |   | 150,000,000                                                                                                   |   |                                                                                                               | 33,892,121 |   |   | 33,229,815 |   |

----

|                                                                         |   | Common                        Stock     |         | Additional                       |   |                                   |   |                                       |               |
|------------------------------------------------------------------------------|--------|-----------------------------------------|--------------|----------------------------------|--------|----------------------------------------|--------|--------------------------------------------|--------------------|
|                                                                         |   | Number                        of Shares |         | Par                        Value |   | Paid-in                        Capital |   | Accumulated                        Deficit |               | Total |   |
| Balance                        at June 30, 2006                              |   |                                    | 33,571,215   |                             | $      | 3,357                                  |   | $                                          | 38,429,185         |   | $ | (55,181,890 | ) | $ | (16,749,348 | ) |
| Exercise                        of options                                   |   |                                    | 1,441,111    |                             |   | 144                                    |   |                                       | 129,556            |   |   |   |   |   | 129,700 |   |
| Extinguishment                        of embedded derivative liability       |   |                                    |         |                             |   |                                   |   |                                       | 6,539,023          |   |   |   |   |   | 6,539,023 |   |
| Tax                        benefit on extinguishment of embedded derivatives |   |                                    |         |                             |   |                                   |   |                                       | 4,900              |   |   |   |   |   | 4,900 |   |
| Dividends                        on Series A preferred stock                 |   |                                    |         |                             |   |                                   |   |                                       | (39,000            | ) |   |   |   |   | (39,000 | ) |
| Net                        income                                            |   |                                    |    |                             |   |                              |   |                                       |     |   |   | 11,929,993 |   |   | 11,929,993 |   |
| Balance                        at December 31, 2006                          |   |                                    | 35,012,326   |                             | $      | 3,501                                  |   | $                                          | 45,063,664         |   | $ | (43,251,897 | ) | $ | 1,815,268 |   |

----

|                                                                                                                                               |   | Six                    Months Ended |        | Twenty-Six                    Weeks Ended |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|-------------|-------------------------------------------|--------|
|                                                                                                                                               |   | December                    31,     |        | December                    27,           |   |
|                                                                                                                                               |   | 2006                                |        | 2005                                      |   |
| CASH                    FLOWS FROM OPERATING ACTIVITIES:                                                                                           |   |                                |        |                                      |   |   |   |
| Net                    income/(loss)                                                                                                               |   | $                                   | 11,929,993  |                                      | $      | (50,693 | ) |
| Adjustments                    to net cash (used in) provided by operating activities                                                              |   |                                |        |                                      |   |   |   |
| Mark-to-market                    income on embedded derivative liabilities                                                                        |   |                                | (15,721,986 | )                                         |   | (1,191,633 | ) |
| Non-cash                    interest expense on convertable secured note                                                                           |   |                                | 739,724     |                                      |   | 902,506 |   |
| (Gain)                    on extinguismment of embedded derivatives/loss on exercise of                    options                                 |   |                                | (987,105    | )                                         |   | 449,850 |   |
| Depreciation                    and amortization                                                                                                   |   |                                | 454,159     |                                      |   | 352,308 |   |
| Provision                    for doubtful accounts, net                                                                                            |   |                                | 917,845     |                                      |   | 1,250,000 |   |
| Amortization                    of deferred financing cost                                                                                         |   |                                | 593,166     |                                      |   | 587,690 |   |
| Amortization                    of discount on secured convertible note                                                                            |   |                                | 119,669     |                                      |   | 631,517 |   |
| Stock-based                    compensation                                                                                                        |   |                                | 0           |                                      |   | 1,450,389 |   |
| Changes                    in operating assets and liabilities:                                                                                    |   |                                |        |                                      |   |   |   |
| Accounts                    receivable                                                                                                             |   |                                | 2,508,811   |                                      |   | (7,488,086 | ) |
| Inventory                                                                                                                                          |   |                                | 9,688       |                                      |   | (56,871 | ) |
| Costs                    and estimated earnings in excess of billings on uncompleted                    contracts                                  |   |                                | 25,832      |                                      |   | (185,531 | ) |
| Prepaid                    expenses and other current assets                                                                                       |   |                                | 98,796      |                                      |   | (347,520 | ) |
| Other                    assets                                                                                                                    |   |                                | (35,446     | )                                         |   | 152,046 |   |
| Accounts                    payable and accrued expenses                                                                                           |   |                                | 197,733     |                                      |   | 886,573 |   |
| Accrued                    payroll and related fringe benefits                                                                                     |   |                                | 90,635      |                                      |   | (8,152 | ) |
| Income                    tax payable                                                                                                              |   |                                | (1,602,932  | )                                         |   | 3,140,989 |   |
| Other                    current liabilities                                                                                                       |   |                                | 58,792      |                                      |   | 133,532 |   |
| Billings                    in excess of costs and estimated earnings on uncompleted                    contracts                                  |   |                                | 31,945      |                                      |   | (20,966 | ) |
| NET                    CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES:                                                                            |   |                                | (570,681    | )                                         |   | 587,948 |   |
|                                                                                                                                               |   |                                |        |                                      |   |   |   |
| CASH                    FLOWS FROM INVESTING ACTIVITIES:                                                                                           |   |                                |        |                                      |   |   |   |
| Purchases                    of property and equipment                                                                                             |   |                                | (182,481    | )                                         |   | (938,756 | ) |
| Proceeds                    from third party receivables                                                                                           |   |                                | 189,197     |                                      |   | 0 |   |
| NET                    CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES                                                                             |   |                                | 6,716       |                                      |   | (938,756 | ) |
|                                                                                                                                               |   |                                |        |                                      |   |   |   |
| CASH                    FLOWS FROM FINANCING ACTIVITIES:                                                                                           |   |                                |        |                                      |   |   |   |
| Principal                    payments of long-term debt                                                                                            |   |                                | (117,178    | )                                         |   | (100,152 | ) |
| Cash                    Overdraft                                                                                                                  |   |                                | 109,456     |                                      |   | 0 |   |
| Proceeds                    from long–term debt                                                                                              |   |                                | 0           |                                      |   | 157,063 |   |
| Exercise                    of stock options                                                                                                       |   |                                | 0           |                                      |   | 150 |   |
| Cancellation                    of liability to a related party                                                                                    |   |                                | (39,197     | )                                         |   | 0 |   |
| Payments                    for deferred financing costs                                                                                           |   |                                | 0           |                                      |   | (2,312,830 | ) |
| Repayment                    and cancellation of secured note payable to a related party                                                           |   |                                | 0           |                                      |   | (2,761,868 | ) |
| Proceeds                    from secured notes payable                                                                                             |   |                                | 0           |                                      |   | 7,350,000 |   |
| NET                    CASH (USED IN)/PROVIDED BY FINANCING ACTIVITIES                                                                             |   |                                | (46,919     | )                                         |   | 2,332,363 |   |
|                                                                                                                                               |   |                                |        |                                      |   |   |   |
| NET                    (DECREASE) INCREASE IN CASH                                                                                                 |   |                                | (610,884    | )                                         |   | 1,981,555 |   |
|                                                                                                                                               |   |                                |        |                                      |   |   |   |
| CASH                    – BEGINNING OF PERIOD                                                                                                |   |                                | 610,884     |                                      |   | 512,711 |   |
|                                                                                                                                               |   |                                |        |                                      |   |   |   |
| CASH                    – END OF PERIOD                                                                                                      |   | $                                   | 0           |                                      | $      | 2,494,266 |   |
|                                                                                                                                               |   |                                |        |                                      |   |   |   |
| Cash                    paid during the period for:                                                                                                |   |                                |        |                                      |   |   |   |
| Interest                                                                                                                                           |   | $                                   | 320,489     |                                      | $      | 91,477 |   |
| Income                    taxes                                                                                                                    |   | $                                   | 8,070       |                                      | $      | 0 |   |
|                                                                                                                                               |   |                                |        |                                      |   |   |   |
| SUPPLEMENTAL                    SCHEDULE OF NON-CASH ACTIVITIES:                                                                                   |   |                                |        |                                      |   |   |   |
| Extinguishment                    of derivative liabilities                                                                                        |   | $                                   | 6,539,022   |                                      | $      | 0 |   |
| Reduction                    of long-term debt through note conversion - Laurus                                                                    |   | $                                   | 29,700      |                                      | $      | 0 |   |
| Laurus                    note conversion                                                                                                          |   | $                                   | 100,000     |                                      | $      | 0 |   |
| Tax                    benefit on extinguishment of embedded derivatives                                                                           |   | $                                   | 4,900       |                                      | $      | 0 |   |
| Recognition                    of embedded derivative liabilities                                                                                  |   | $                                   | 0           |                                      | $      | 7,680,727 |   |
| Recognition                    of discount on secured convertible note                                                                             |   | $                                   | 0           |                                      | $      | 6,778,211 |   |
| Capitalized                    gain on extinguishment of secured note payable – related                    party                             |   | $                                   | 0           |                                      | $      | 1,122,794 |   |
| Financing                    cost related to guaranties of CEO remunerated through sale of                    discounted                    shares |   | $                                   | 0           |                                      | $      | 1,195,708 |   |
| Property                    and equipment acquired through financing                                                                               |   | $                                   | 0           |                                      | $      | 157,063 |   |
| Account                    receivable repurchased in connection with refinancing                                                                   |   | $                                   | 0           |                                      | $      | 189,197 |   |
| Paid-in                    capital arising from reduction in derivative option liability                    on option                    exercise  |   | $                                   | 0           |                                      | $      | 135,000 |   |
| Capitalized                    cancellation of put right relating to redeemable common                    stock                                    |   | $                                   | 0           |                                      | $      | 76,089 |   |
| Financing                    cost related to issuance of options to preferred                    stockholders                                      |   | $                                   | 0           |                                      | $      | 44,650 |   |

----

| 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”) and North Atlantic Laboratories, 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                December 31, 2006, the results of operations for the three and six                months                ended December 31, 2006 and the thirteen and twenty-six weeks ended                December 27, 2005 and cash flows for the six months ended December                31,                2006 and the twenty-six weeks ended December 27, 2005 have been included.                Certain prior period amounts have been reclassified to conform to                the                December 31, 2006 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 and six months ended                December 31, 2006 and the thirteen and twenty-six weeks ended December                27,                2005, respectively: |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |  |
|--------|--|

|                                                                                                           |   | Three                    Months EndedDecember                    31, 2006 |       | Thirteen                    Weeks EndedDecember                    27, 2005 |   | Six                    Months EndedDecember                    31, 2006 |   | Twenty-Six                    Weeks EndedDecember                    27, 2005 |        |
|----------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|-------------|
| Numerator:                                                                                                     |   |                                                                 |       |                                                                        |   |                                                                    |   |                                                                          |        |
| Net                  (loss)/ income attributable to common shareholders                                        |   | $                                                                         | (2,222,890 | )                                                                           | $      | 24,943,742                                                              |   | $                                                                             | 11,890,993  |   | $ | (89,693 | ) |
| (Deduct)/Add:                                                                                                  |   |                                                                      |       |                                                                        |   |                                                                    |   |                                                                          |        |   |   |   |   |
| Mark-to-market                  gain                                                                           |   |                                                                      | -          |                                                                        |   | (22,191,192                                                             | )      |                                                                          | (15,721,986 | ) |   | - |   |
| Interest                  on convertible debt                                                                  |   |                                                                      | -          |                                                                        |   | 780,743                                                                 |   |                                                                          | 739,724     |   |   | - |   |
| Income                  tax effect                                                                             |   |                                                                      | -          |                                                                        |   | (60,613                                                                 | )      |                                                                          | -           |   |   | - |   |
| Dividends                  on preferred stock                                                                  |   |                                                                      | 19,500     |                                                                        |   | 19,500                                                                  |   |                                                                          | 39,000      |   |   | 39,000 |   |
| Net                  (loss) income attributable to common shareholders and assumed                  conversion |   | $                                                                         | (2,203,390 | )                                                                           | $      | 3,492,180                                                               |   | $                                                                             | (3,052,269  | ) | $ | (50,693 | ) |
| Denominator:                                                                                                   |   |                                                                      |       |                                                                        |   |                                                                    |   |                                                                          |        |   |   |   |   |
| Share                  reconciliation:                                                                         |   |                                                                      |       |                                                                        |   |                                                                    |   |                                                                          |        |   |   |   |   |
| Shares                  used for basicIncome/(loss) per share                                                  |   |                                                                      | 33,973,679 |                                                                        |   | 33,571,215                                                              |   |                                                                          | 33,892,121  |   |   | 33,229,815 |   |
| Effect                  of dilutive items:                                                                     |   |                                                                      |       |                                                                        |   |                                                                    |   |                                                                          |        |   |   |   |   |
| Stock                  options/warrants                                                                        |   |                                                                      | -          |                                                                        |   | 48,142,277                                                              |   |                                                                          | -           |   |   | - |   |
| Convertible                  debt                                                                              |   |                                                                      | -          |                                                                        |   | 80,183,150                                                              |   |                                                                          | -           |   |   | - |   |
| Interest                  on convertible debt                                                                  |   |                                                                      | -          |                                                                        |   | 4,897,998                                                               |   |                                                                          | -           |   |   | - |   |
| Series                  A convertible preferredstock                                                           |   |                                                                      | -          |                                                                        |   | 1,300,000                                                               |   |                                                                          | -           |   |   | - |   |
| Sub-total                  before share limitation                                                             |   |                                                                      | 33,973,679 |                                                                        |   | 168,094,640                                                             |   |                                                                          | 33,892,121  |   |   | 33,229,815 |   |
| Limitation                  to authorized shares                                                               |   |                                                                      | -          |                                                                        |   | (18,094,640                                                             | )      |                                                                          | -           |   |   | - |   |
| Shares                  used for diluted loss/income per share                                                 |   |                                                                      | 33,973,679 |                                                                        |   | 150,000,000                                                             |   |                                                                          | 33,892,121  |   |   | 33,229,815 |   |
| Net                  (loss)/income per share:                                                                  |   |                                                                      |       |                                                                        |   |                                                                    |   |                                                                          |        |   |   |   |   |
| Basic                                                                                                          |   | $                                                                         | (.07       | )                                                                           | $      | .74                                                                     |   | $                                                                             | (.09        | ) | $ | .00 |   |
| Diluted                                                                                                        |   | $                                                                         | (.07       | )                                                                           | $      | .02                                                                     |   | $                                                                             | (.09        | ) | $ | .00 |   |

| 4. | PROVISION                FOR INCOME TAXES - The provision for income taxes for the three and                six                months ended December 31, 2006 and the thirteen and twenty-six weeks                ended                December 27, 2005 consists of the                following: |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                  |   | Three                  Months Ended                  December                  31, 2006 |     | Thirteen                  Weeks EndedDecember                  27, 2005 |   | Six                  MonthsEndedDecember                  31, 2006 |   | Twenty-six                  Weeks EndedDecember                  27,2005 |       |
|-------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|----------|-------------------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|--------------------------------------------------------------------------|------------|
|                                                  |   |                                                                                         |     |                                                                    |   |                                                               |   |                                                                     |       |
| Federal                –                current |   | $                                                                                            | (680,317 | )                                                                       | $      | 2,235,624                                                          |   | $                                                                        | (1,327,229 | ) | $ | 2,235,624 |   |
| State                – current                  |   |                                                                                         | 8,070    |                                                                    |   | 923,514                                                            |   |                                                                     | 14,940     |   |   | 931,732 |   |
| Total                                                 |   | $                                                                                            | (672,247 | )                                                                       | $      | 3,159,138                                                          |   | $                                                                        | (1,312,289 | ) | $ | 3,167,356 |   |

----

| 5. | CONTINGENCIES                -                The                Company is a plaintiff in approximately 20 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, 2006,                claiming an aggregate of approximately $8,000,000 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 $1,500,000. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6. | FINANCING                AND RELATED PARTY TRANSACTIONS- On September 29, 2006, the Company                entered                into                an Omnibus Amendment with Laurus Master Fund, Ltd. (“Laurus”) and amended                and restated its existing secured                convertible term note (the “Note”). The Omnibus Amendment and the Note                improve for the Company certain                terms of the original agreements. The Omnibus Amendment significantly                reduce the shares issuable to Laurus                and, among other things, includes the following terms:   |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Principal      Borrowing Terms and Prepayment**

|  | · | the                average closing price of the Company’s common stock for the five (5)                trading days immediately                prior to the  first                of each month is equal to or greater than                $.10; |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   |
|--------|--------|--------|
|  | · | the                amount of the payment then due is not an amount greater than thirty                percent (30%) of the aggregate                dollar trading volume of the common stock for the period of twenty-two                (22) trading days immediately                prior to the first day of each month for which payment is                due; |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|

|  | · | the                common stock to be issued has been registered under an effective                registration statement under the                Securities Act of 1933 or is otherwise covered by an exemption from                registration for resale pursuant                to Rule 144 of the Securities Act of                1933; |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   |
|--------|--------|--------|
|  | · | Laurus’                aggregate beneficial ownership of the Company’s shares of common stock                does not and would                not by virtue thereof exceed 9.99%; |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|

|  | · | the                Company is not in default of the Note;                and |
|--|--------|------------------------------------------------------------------------------|

|   |   |   |
|--------|--------|--------|
|  | · | the                maximum number of shares of common stock into which the Note is                convertible is not exceeded. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------|

----

**Events      of Default and Collateral**

|  | · | a                failure to pay interest and principal payments under the Note when                due on                the first day of the month                or prior to the expiration of the three-business day grace period,                unless                agreed otherwise; |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   |
|--------|--------|--------|
|  | · | a                breach by the Company of any material covenant or term or condition                of the                Note in any agreement                made in connection therewith and, to the extent subject to cure,                the                continuation of such breach                without  remedy                for a period of fifteen or thirty days, as the case may                be; |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | a                    breach of any material representation or warranty made in the                    Note or in                    any agreement made in connection                    therewith; |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | any                    form of bankruptcy or insolvency proceeding instituted by or                    against the                    Company, which is not vacated within 30                    days; |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | any                    attachment or lien in excess of $75,000 in the aggregate made                    upon the                    Company’s assets or a judgment rendered against its property involving                    a                    liability of more than $75,000 which shall remain unvacated,                    unbonded or                    unstated for a period of 30 days; |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | a                    failure to timely deliver shares of common stock when due upon                    conversion                    of the Note or a failure to timely deliver a replacement                    note; |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | a                    Securities and Exchange Commission (“SEC”) stop trade order or principal                    market trading suspension of the Company’s common stock is in effect for 5                    consecutive trading days or 5 days during a period of 10 consecutive                    trading days, if the Company is not able to cure such trading                    suspension                    within 30 days of receiving notice or are not able to list its                    common                    stock on another principal market within 60 days of such                    notice; |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | an                    indictment or threatened indictment of the Company or any of                    its executive                    officers under any criminal statute or commencement or threatened                    commencement of criminal or civil proceedings against                    the Company or any of its executive officers pursuant to which                    statutory                    or proceeding penalties or remedies available include forfeiture                    of any of                    its property; and |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | the                    departure of Michael O’Reilly from senior                    management. |
|--|--------|-------------------------------------------------------------------------------------------------------|

**Registration      Rights**

----

| 7. | SUBSEQUENT                EVENTS |
|----|----------------------------------|

| ·   | 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 |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|
| ·   | all                invoices submitted for payment are reviewed for proper                documentation. |
|--------------------|---------------------------------------------------------------------------------------------------------|

----

|  | · | 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. |
|--|--------|-----------------------------------------------------------------------------------------------|

*Three      months ended December 31, 2006 and thirteen weeks ended December 27,      2005*

----

*Six-months      ended December 31, 2006 and the twenty- six weeks ended December 27,      2005*

----

|  | · | the                adoption of SFAS No. 123R, and the related inclusion in operating                expenses                of $1,450,389, the fair value                of options vesting during the twenty-six weeks ended December 27,                2005.                All but $56,250 of this unusually                large amount of option expense arose from the employment-related                option to                purchase 15,469,964 shares                granted to our chief executive officer, which grant of options was                a                required condition of the Laurus financing;                and |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | a                decrease of $277,038 in professional fees. |
|--|--------|-------------------------------------------------------------|

----

| ·   | 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 continue our process of optimizing the efficiency of                our                support staff through enhanced task allocation while reducing unneeded                resources and reviewing non-project related expenses in an effort                to                reduce costs, where appropriate, 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. 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                addressing 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 |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   |
|--------|--------|--------|
|  | · | all                invoices submitted for payment are reviewed for proper                documentation. |
|--|--------|---------------------------------------------------------------------------------------------------------|

----

|                                                         |   | Total  |       | 1                Year |   | 2-3                Years |   | 4-5                Years |      | Thereafter |   |
|--------------------------------------------------------------|--------|--------|------------|-----------------------|--------|--------------------------|--------|--------------------------|-----------|------------|--------|
|                                                         |   |   |       |                  |   |                     |   |                     |      |       |   |
| Operating                Leases                              |   | $      | 3,519,898  |                  | $      | 583,581                  |   | $                        | 991,951   |       | $      | 1,035,386 |   | $ | 908,980 |   |
|                                                         |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| Capitalized                Leases-Principal                  |   |   | 259,376    |                  |   | 145,150                  |   |                     | 110,371   |       |   | 3,855 |   |   | - |   |
|                                                         |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| Capitalized                Leases- Interest                  |   |   | 17,938     |                  |   | 13,374                   |   |                     | 4,560     |       |   | 4 |   |   | - |   |
|                                                         |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| Laurus                Note Principal                         |   |   | 5,942,175  |                  |   | 619,494                  |   |                     | 5,322,681 |       |   | - |   |   | - |   |
|                                                         |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| Laurus                Note Interest                Expense   |   |   | 1,324,244  |                  |   | 580,506                  |   |                     | 743,738   |       |   | - |   |   | - |   |
|                                                         |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| Spotless                Note Principal                       |   |   | 500,000    |                  |   | 285,969                  |   |                     | 214,031   |       |   | - |   |   | - |   |
|                                                         |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| Spotless                Note Interest                Expense |   |   | 78,485     |                  |   | 14,031                   |   |                     | 64,454    |       |   | - |   |   | - |   |
|                                                         |   |   |       |                  |   |                     |   |                     |      |       |   |   |   |   |   |   |
| Total                                                        |   | $      | 11,642,116 |                  | $      | 2,242,105                |   | $                        | 7,451,786 |       | $      | 1,039,245 |   | $ | 908,980 |   |

| ·   | 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 $259,376 of other long-term debt with maturities ranging                from                2 months to 44 months for financed trucks and vehicles with interest                rates                ranging from 0.01% 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, 2006. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | 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 2                months to 44 months with interest rates ranging from .01% to                13.99%. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 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:              February 20, 2007 | By:                                                                                    | /s/              Michael O’Reilly |
|                                 | MICHAEL                O’REILLY                                                            |
|                                 | President                and Chief Executive Officer(Principal                Executive Officer) |

|                                 |                                                                               |                                    |
|--------------------------------------|------------------------------------------------------------------------------------|-----------------------------------------|
| Date:              February 20, 2007 | By:                                                                      | /s/              Arthur J. Wasserspring |
|                                 | ARTHUR              J. WASSERSPRING                                                |
|                                 | Chief                Financial Officer(Principal                Financial Officer) |

----

| Exhibit                  No. |   | Description                                                                                                                                                 |
|------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                         |   |                                                                                                                                                        |
| 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. |

----