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

                                    FORM 10-Q

(Mark One)

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

              For the quarterly period ended December 28, 2004,

                                       OR

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

              For the transition period from _____________ to __________.

                        Commission File Number: 000-17072

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

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

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

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



     Indicate by check mark whether the registrant (1) filed all reports
     required to be filed by Section 13 or 15(d) of the Securities Exchange Act
     of 1934 during the preceding 12 months (or for such shorter period that the
     registrant was required to file such reports) and (2) has been subject to
     such filing requirements for the past 90 days. Yes  X    No
                                                        ---      ---
     Indicate by check mark whether the registrant is an accelerated filer (as
     defined in Rule 12b-2 of the Exchange Act) Yes       No  X
                                                    ---      ---

     The number of shares of Common Stock, par value $.0001, outstanding on
     January 27, 2005 was 77,936,358.


<PAGE>

                         PART 1 - FINANCIAL INFORMATION

  ITEM 1. FINANCIAL STATEMENTS
                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS
                       DECEMBER 28, 2004 AND JUNE 29, 2004
<TABLE>
<CAPTION>
                                                                                                   December 28,         June 29,
                                                                                                       2004               2004
                                                                                                  ---------------    ---------------
                                                                                                   (Unaudited)
  
                                                                                             <c>                <c>
  ASSETS:

  CURRENT ASSETS:
     Cash                                                                                         $      346,331     $       63,562
     Accounts receivable, net of allowance for doubtful accounts of $1,400,734 and $689,140,
       respectively                                                                                   10,116,673          6,652,806
     Inventory                                                                                           119,381            151,270
     Costs and estimated earnings in excess of billings on uncompleted contracts                         560,044            608,047
     Refundable income taxes                                                                                   -            641,795
     Prepaid expenses and other current assets                                                           206,657            257,565
                                                                                                  ---------------    ---------------
     Total current assets                                                                             11,349,086          8,375,045

  PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of $6,038,758
     and $5,707,705, respectively                                                                      2,482,421          2,757,463

  OTHER ASSETS                                                                                           170,657            198,657
                                                                                                  ---------------    ---------------

  TOTAL                                                                                           $   14,002,164     $   11,331,165
                                                                                                  ===============    ===============

  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):

  CURRENT LIABILITIES:
     Accounts payable                                                                             $    2,939,401     $    2,309,328
     Accrued expenses                                                                                  1,890,122          1,101,701
     Short-term notes payable to related party                                                         5,000,000          5,000,000
     Billings in excess of cost and estimated earnings on uncompleted contracts                           12,081            239,511
     Accrued payroll and related fringe benefits                                                         905,399            924,725
     Current maturities of long-term debt                                                                252,592            307,224
     Other current liabilities                                                                         1,210,334            596,527
                                                                                                  ---------------    ---------------
     Total current liabilities                                                                        12,209,929         10,479,016
                                                                                                  ---------------    ---------------

  LONG-TERM DEBT                                                                                         260,228            340,104
                                                                                                  ---------------    ---------------

  COMMITMENTS AND CONTINGENCIES



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

  STOCKHOLDERS' EQUITY (DEFICIT):
     Series B preferred stock, $.01 par value; 50,000 shares authorized; 0 shares outstanding                  -                  -
     Nondesignated preferred stock, no par value; 8,650,000 shares authorized; 0 shares
  outstanding at                                                                                               -                  -
        December 28, 2004 and June 29, 2004
     Common stock, $.0001 par value; 150,000,000 shares authorized; 77,936,358 shares
        outstanding at December 28, 2004 and June 29, 2004.                                                7,794              7,794
     Additional paid-in-capital                                                                       33,883,017         33,922,017
     Accumulated deficit                                                                             (33,658,804)       (34,717,766)
                                                                                                  ---------------    ---------------
     Total stockholders' equity (deficit)                                                                232,007           (787,955)

  TOTAL                                                                                           $   14,002,164     $   11,331,165
                                                                                                  ===============    ===============

  See notes to consolidated financial statements.
</TABLE>

                                       2

<PAGE>

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

                                                                 Thirteen Weeks Ended                 Twenty-Six Weeks Ended
                                                            ------------------------------       --------------------------------
                                                            December 28,     December 30,        December 28,       December 30,
                                                                2004            2003                2004                2003
                                                                ----            ----                ----                ----
    
                                                     <c>              <c>                 <c>                <c>
    Revenues                                                $ 7,359,279      $ 6,523,473         $12,837,785        $11,783,399

    Cost of revenues                                          4,369,867        4,909,711           8,731,991          8,839,653
                                                            ------------     ------------        ------------       ------------

    Gross profit                                              2,989,412        1,613,762           4,105,794          2,943,746
                                                            ------------     ------------        ------------       ------------

    Operating expenses (income):
    Selling, general and administrative expenses              1,502,846        1,204,868           2,735,450          2,406,459
    Benefit related to variable accounting
       treatment for officer options                                 -          (189,533)                 -            (348,625)
                                                            ------------     ------------        ------------       ------------
       Total operating expenses                               1,502,846        1,015,335           2,735,450          2,057,834
                                                            ------------     ------------        ------------       ------------

    Income from operations                                    1,486,566          598,427           1,370,344            885,912
                                                            ------------     ------------        ------------       ------------

    Other expense (income):
       Interest expense                                          55,352           31,504             266,456             59,647
       Other, net                                                  (755)               -              (1,322)           (23,960)
                                                            ------------     ------------        ------------       ------------
       Total other expense                                       54,597           31,504             265,134             35,687
                                                            ------------     ------------        ------------       ------------

    Income before provision for income taxes                  1,431,969          566,923           1,105,210            850,225

    Provision for income taxes                                   43,659          104,486              46,248            178,637
                                                            ------------     ------------        ------------       ------------


    Net income                                                1,388,310          462,437           1,058,962            671,588

    Dividends on preferred stock                                (19,500)         (19,500)            (39,000)           (39,000)
                                                            ------------     ------------        ------------       ------------


    Net income attributable to common shareholders          $ 1,368,810      $   442,937         $ 1,019,962        $   632,588
                                                            ============     ============        ============       ============

    Basic and diluted net income per common share:
    Basic                                                          $.02             $.01                $.01               $.01
                                                                   =====            =====               =====              =====
    Diluted                                                        $.02             $.01                $.01               $.01
                                                                   =====            =====               =====              =====

    Weighted average number of common shares outstanding:
    Basic                                                    77,936,358       77,936,358          77,936,358         77,936,358
                                                            ============     ============        ============       ============
    Diluted                                                  77,961,149       79,718,239          77,980,720         80,556,368
                                                            ============     ============        ============       ============

    See notes to consolidated financial statements.
</TABLE>

                                       3

<PAGE>

                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)


<TABLE>
<CAPTION>
                                            Common Stock         Additional
                                         Number of      Par         Paid-in       Accumulated
                                          Shares       Value        Capital         Deficit            Total
                                          ------       -----        -------         -------            -----

                                     <c>            <c>       <c>              <c>                  <c>
Balance at June 30, 2004                 77,936,358    $7,794    $33,922,017      $(34,717,766)        $(787,955)

Dividends on Series A preferred stock                                (39,000)                            (39,000)

Net income                                        -         -              -                 -         1,058,962
                                        ------------   -------   ------------     -------------        ----------

Balance at December 28, 2004              77,936,358   $7,794    $33,883,017      $(33,658,804)        $ 232,007
                                        ============   =======   ============     =============        ==========


See notes to consolidated financial statements.
</TABLE>

                                       4

<PAGE>


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

                                                                                                     Twenty-Six Weeks Ended
                                                                                              -------------------------------------
                                                                                                December 28,         December 30,
                                                                                                    2004                 2003
                                                                                              ----------------     ----------------
    
                                                                                       <c>                  <c>
    CASH FLOWS FROM OPERATING ACTIVITIES:
       Net income                                                                             $     1,058,962      $       671,588
       Adjustments to reconcile net income to net cash (used in) provided by
          operating activities:
          Depreciation and amortization                                                               331,053              283,248
          Provision for doubtful accounts, net                                                        711,594               56,451
          Benefit related to officer options and redeemable common stock                                    -             (348,625)
       Changes in operating assets and liabilities:
          Accounts receivable                                                                      (4,175,461)          (4,371,897)
          Inventory                                                                                    31,889               11,761
          Costs and estimated earnings in excess of billings on uncompleted contracts                  48,003              337,683
          Refundable income taxes                                                                     641,795            1,080,186
          Prepaid expenses and other current assets                                                    50,908              (6,834)
          Other assets                                                                                 28,000              (1,064)
          Accounts payable and accrued expenses                                                     1,379,494            (235,679)
          Accrued payroll and related fringe benefits                                                (19,326)              129,090
          Other current liabilities                                                                   613,807              223,663
          Billings in excess of costs and estimated earnings on uncompleted contracts                (227,430)             (42,544)
                                                                                              ----------------     ----------------
    NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES                                               473,288           (2,212,973)
                                                                                              ----------------     ----------------

    CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchases of property and equipment                                                            (56,011)            (263,678)
                                                                                              ----------------     ----------------
    NET CASH USED IN INVESTING ACTIVITIES                                                             (56,011)            (263,678)
                                                                                              ----------------     ----------------

    CASH FLOWS FROM FINANCING ACTIVITIES:
       Principal payments of long-term debt                                                          (134,508)            (193,027)
       Proceeds from long-term debt                                                                         -              160,098
       Payment of preferred stock dividends                                                                 -              (39,000)
       Proceeds from short-term notes payable to a related party                                            -            2,525,000
                                                                                              ----------------     ----------------
    NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                                              (134,508)           2,453,071
                                                                                              ----------------     ----------------

    NET INCREASE (DECREASE) IN CASH                                                                   282,769              (23,580)

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

    CASH - END OF PERIOD                                                                      $       346,331      $       106,516
                                                                                              ================     ================

    Cash paid during the period for:
       Interest                                                                               $       190,098      $        19,159
                                                                                              ================     ================
       Income taxes                                                                           $         2,250      $            -
                                                                                              ================     ================


    See notes to consolidated financial statements.

                                       5

</TABLE>

<PAGE>


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

1.       BASIS FOR PRESENTATION - The accompanying unaudited consolidated
         financial statements include the accounts of Windswept Environmental
         Group, Inc. (the "Company") and its wholly-owned subsidiaries,
         Trade-Winds Environmental Restoration, Inc. ("Trade-Winds") and North
         Atlantic Laboratories, Inc.  The unaudited consolidated financial
         statements have been prepared by the Company in accordance with
         accounting principles generally accepted in the United States of
         America ("generally accepted accounting principles") for interim
         financial statements and with the instructions to Form 10-Q and
         Article 10 of Regulation S-X.  Accordingly, they do not include all
         of the information and footnotes required by generally accepted
         accounting principles for complete financial statements.  In the
         opinion of the Company, all adjustments (consisting of only normal
         and recurring accruals) considered necessary to present fairly the
         financial position of the Company and its subsidiaries on a
         consolidated basis as of December 28, 2004, the results of operations
         for the thirteen and twenty-six weeks ended December 28, 2004 and
         December 30, 2003 and cash flows for the twenty-six weeks ended
         December 28, 2004 and December 30, 2003, have been included.  Certain
         prior period amounts have been reclassified to conform to the
         December 28, 2004 presentation.

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

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

                                       6

<PAGE>

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

                                                    Thirteen Weeks Ended                     Twenty-Six Weeks Ended
                                            ------------------------------------    -----------------------------------
                                              December 28,        December 30,        December 28,        December 30,
                                                   2004                2003               2004               2003
                                            ---------------      ---------------    ---------------     ---------------
         
                                <c>                  <c>                <c>                 <c>
         Net income attributable to
           common shareholders
           as reported                      $    1,368,810       $      442,937     $    1,019,962      $      632,588
         Less: Stock-based
           employee compensation
           cost determined under
           the fair value method,
           net of related tax effects               25,935               41,342             51,870              82,683
                                            ---------------      ---------------    ---------------     ---------------
         Pro forma net income
           attributable to common
           shareholders                     $    1,342,875       $      401,595     $      968,092      $      549,905
                                            ===============      ===============    ===============     ===============

         Net income per share:
           Basic - as reported                        $.02                 $.01               $.01               $.01
                                                      =====                =====              =====              =====
           Basic - pro forma                          $.02                 $.01               $.01               $.01
                                                      =====                =====              =====              =====

           Diluted - as reported                      $.02                 $.01               $.01               $.01
                                                      =====                =====              =====              =====
           Diluted - pro forma                        $.02                 $.01               $.01               $.01
                                                      =====                =====              =====              =====
</TABLE>

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

         The following table sets forth the computation of the basic and
         diluted net income per share for the thirteen and twenty-six weeks
         ended December 28, 2004 and December 30, 2003, respectively:
<TABLE>
<CAPTION>

                                                   Thirteen Weeks Ended                     Twenty-Six Weeks Ended
                                            ------------------------------------    -----------------------------------
                                             December 28,        December 30,         December 28,         December 30,
                                                 2004                2003                 2004                 2003
                                            ---------------      ---------------    ---------------     ---------------
         
                                <c>                  <c>                <c>                 <c>
         Numerator:
         Net income attributable to
           common shareholders              $    1,368,810       $      442,937     $    1,019,962      $      632,588
                                            ===============      ===============    ===============     ===============
         Denominator:
           Share reconciliation:
           Shares used for basic
            income per share                    77,936,358           77,936,358         77,936,358          77,936,358
           Effect of dilutive items:
            Stock options                           24,791            1,781,881             44,362           2,620,010
                                            ---------------      ---------------    ---------------     ---------------
           Shares used for dilutive
            income per share                    77,961,149           79,718,239         77,980,720          80,556,368
                                            ===============      ===============    ===============     ===============
         Net income per share:
           Basic                                      $.02                 $.01               $.01                $.01
           Diluted                                    $.02                 $.01               $.01                $.01
</TABLE>

                                       7

<PAGE>

         The dilutive net income per share computation for the thirteen and
         twenty-six week periods ended December 28, 2004 excludes 3,910,309
         and 3,710,309 shares, respectively, related to stock options because
         the effect of including them would be anti-dilutive. The dilutive net
         income per share computation for the thirteen week and twenty-six week
         periods ended December 30, 2003 excludes 3,910,309 and 3,710,309
         shares, respectively, related to stock options and warrants
         because the effect of including them would be anti-dilutive. For
         all periods presented, 1,300,000 shares of common stock issuable
         upon the exercise of the Series A Redeemable Convertible Preferred
         Stock were excluded from diluted earnings per share because the
         effect of including them would be anti-dilutive.

4.       PROVISION FOR INCOME TAXES - The provision for income taxes for
         the thirteen and twenty-six weeks ended December 28, 2004 and
         December 30, 2003 consists of the following:
<TABLE>
<CAPTION>
                                    Thirteen Weeks Ended                Twenty-Six Weeks Ended
                              --------------------------------    -----------------------------------
                                December 28,     December 30,        December 28,      December 30,
                                    2004             2003                2004              2003
                              ---------------  ---------------     ---------------   ---------------
         
                      <c>             <c>                  <c>               <c>
         Federal - current        $41,070         $101,061             $41,070           $171,787
         State - current            2,589            3,425               5,178              6,850
                                  --------        ---------            --------          ---------
         Total                    $43,659         $104,486             $46,248           $178,637
                                  ========        =========            ========          =========
</TABLE>
         The effective rate for income taxes differs from the statutory
         rate primarily as a result of the utilization of federal and state
         net operating losses. The Company has a 100% valuation allowance
         against deferred tax assets because management believes that it is
         more likely than not that such deferred tax assets will not be
         realized.

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

         On October 22, 2004, Trade-Winds commenced an action against
         Consolidated Edison Company in the New York State Supreme Court,
         County of New York, claiming that Trade-Winds is entitled to
         approximately $2,000,000 of contractual billings and related
         damages with respect to its removal of sediment from an oil
         storage tank. On December 6, 2004, Consolidated Edison Company
         filed an answer, denying Trade-Winds' claims. The case is
         currently in pre-trial discovery.

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

6.       RELATED PARTY TRANSACTIONS - As of December 28, 2004, the Company owed
         Spotless Plastics (USA), Inc. ("Spotless"), a company that owns 79% of
         the common stock of the Company, $5,000,000, which bears interest at
         the rate of LIBOR (2.55% at December 28, 2004) plus 1% per annum and
         is payable on demand.  As of December 28, 2004, interest of $43,641
         was accrued and unpaid on these borrowings.  The Company has increased
         its liquidity by entering into an Account Receivable Finance Agreement
         ("ARFA") dated as of February 5, 2004 with Spotless pursuant to which
         Spotless may purchase certain of the Company's accounts receivable
         without recourse for cash, subject to certain terms and conditions.
         The Company accounts for its transfers of accounts receivable to
         Spotless as sales under Statement of Financial Standards No. 140,
         "Accounting for Transfers and Servicing of Financial Assets and
         Extinguishments of Liabilities."  Under the ARFA, Spotless may, but
         is not obligated to, purchase one or more of the Company's accounts
         receivable that are approved by Spotless in its sole discretion, in
         respect of the particular debtor, invoices and related credit.  As
         part of the agreement, Spotless may purchase any accounts receivable
         at a 15% discount to invoice prices, which the Company believes
         is at least as favorable to it as would be available from an
         unaffiliated third-party, based upon a good-faith estimate of an
         applicable discount negotiated at arm's length, as

                                       8

<PAGE>

         may be adjusted by Spotless in its sole discretion.  In addition, the
         Company pays varying monthly discount fees on any purchased accounts
         receivable based upon invoice prices.  All discounts and fees under the
         ARFA are characterized as interest expense in the consolidated
         statements of operations.  Further, the Company (a) manages any
         accounts receivable that it sells to Spotless while remitting to
         Spotless any proceeds received and (b) bears any related litigation
         costs.  For the thirteen and twenty-six weeks ended December 28, 2004,
         the Company sold approximately $0 and $972,311, respectively,
         of accounts receivable to Spotless and incurred approximately $0 and
         $145,846, respectively, of discounts and fees associated with these
         sales.

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

OVERVIEW

The Company, through its wholly-owned subsidiaries, provides a full array of
emergency response, remediation and disaster restoration services to a broad
range of clients. The Company has expertise in areas of hazardous materials
remediation, microbial remediation, testing, toxicology, training, wetlands
restoration, wildlife and natural resources rehabilitation, technical advisory,
restoration and site renovation services.

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

In April 2003, the Company commenced a remediation project in New York City for
Consolidate Edison Company to remove sediment from an oil storage tank. During
the course of the project, the sediment in the tank was found to be
substantially different than the sediment that the customer represented to
be in the tank prior to the inception of the project. The Company continued
to work on the project so as not to default on the terms which it understood to
exist with the customer. The additional costs incurred to remove this matter in
the amount of approximately $1,600,000 were billed to the customer. However, the
collectibility of such monies cannot be assured. Accordingly, the Company has
not recognized the revenue associated with this claim. The project has been
substantially completed and the customer has refused to acknowledge its
liability for the additional charges billed by the Company. On October 22, 2004,
Trade-Winds commenced an action against Consolidated Edison Company in the New
York State Supreme Court, County of New York, claiming that Trade-Winds is
entitled to approximately $2,000,000 of contractual billings and related damages
with respect to its removal of sediment from an oil storage tank. On December 6,
2004, Consolidated Edison Company filed an answer, denying Trade-Winds' claims.
The case is currently in pre-trial discovery. As of August 30, 2004, all amounts
due under the original contract had been paid to the Company.

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

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

                                       9

<PAGE>

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

ABILITY TO CONTINUE AS A GOING CONCERN

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

CRITICAL ACCOUNTING POLICIES

Management's discussion and analysis of its financial position and results of
operations are based upon the Company's unaudited consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these
unaudited financial statements requires management to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses and related disclosure of contingent assets and liabilities. Actual
results could differ from those estimates. Management believes that the critical
accounting policies and areas that require the most significant judgments and
estimates to be used in the preparation of the unaudited financial statements
are accounting for contracts, allowance for doubtful accounts and the valuation
allowance against deferred tax assets.

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

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

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

                                       10

<PAGE>


RESULTS OF OPERATIONS

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

REVENUE

Total  revenues for the thirteen weeks ended December 28, 2004 increased by
$835,806,  or 13%, to $7,359,279  from  $6,523,473  for the thirteen weeks ended
December  30,  2003.  This  increase  was  primarily  attributable  to increased
emergency response work associated with hurricanes in Florida.

Cost of Revenues

Cost of revenues decreased $539,844 or 11%, to $4,369,867 for the thirteen weeks
ended December 28, 2004 as compared to $4,909,711 for the thirteen weeks
ended December 30, 2003, primarily due to a greater proportion of emergency
response work related to hurricanes in Florida and equipment-intensive projects
with higher gross margins and a corresponding reduction in labor costs. Gross
profit increased $1,375,650 or 85%, to $2,989,412 for the thirteen weeks ended
December 28, 2004 from $1,613,762 for the thirteen weeks ended December 30,
2003.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $297,978, or 25%, to
$1,502,846 for the thirteen weeks ended December 28, 2004 from $1,204,868 for
the thirteen weeks ended December 30, 2003 and constituted approximately 20% and
18%, respectively, of revenues in each period. This increase was primarily
attributable to increases in bad debt expense of approximately $400,000 and
legal expenses of approximately $108,000, offset by decreases in consulting
expenses of approximately $110,000 and sales salaries of approximately $75,000.
All of these decreases were a result of management reductions in staff and
discretionary spending.

Benefit Related to Variable Accounting Treatment for Officer Options

Under the terms of an employment agreement with the Company and a separate
agreement with Spotless, the Company's President and Chief Executive Officer may
sell to the Company, or in certain circumstances to Spotless, all shares of
common stock of the Company held by him and all shares of common stock
underlying vested options to purchase shares of common stock of the Company held
by him upon the occurrence of certain events. The benefit related to variable
accounting treatment for officer options was $189,533 for the thirteen weeks
ended December 30, 2003. There was no benefit or expense required to be recorded
in the thirteen weeks ended December 28, 2004 due to the low market price of the
Company's common stock. The benefit in the thirteen weeks ended December 30,
2003 was due to a decrease in the market price of the Company's common stock
and/or a change in the number of options outstanding that are vested. Due to the
terms of the options, changes in the market price of the Company's common stock,
in either direction, result in a corresponding expense or benefit.

Interest Expense

Interest expense increased by $23,848 to $55,352 for the thirteen weeks ended
December 28, 2004 from $31,504 for the thirteen weeks ended December 30, 2003.
The increase in interest expense was primarily attributable to greater amounts
of debt outstanding resulting from increased borrowings from Spotless for
working capital.

Provision for Income Taxes

The  provision for income taxes for the thirteen  weeks ended  December 28, 2004
was $43,659 compared to $104,486 for the thirteen weeks ended December
30, 2003.

                                       11

<PAGE>


Net Income

Net income of $1,388,310  was incurred for the thirteen weeks ended December 28,
2004 as compared to net income of $462,437 incurred for the thirteen weeks ended
December 30, 2003. The change was the result of the factors discussed above.

TWENTY-SIX WEEKS ENDED DECEMBER 28, 2004 AND DECEMBER 30, 2003

Revenue

Total revenues for the twenty-six weeks ended December 28, 2004 increased by
$1,054,386, or 9%, to $12,837,785 from $11,783,399 for the twenty-six weeks
ended December 30, 2003. This increase was primarily attributable to increased
emergency response work associated with hurricanes in Florida.

Cost of Revenues

Cost of revenues decreased $107,662 or 1%, to $8,731,991 for the twenty-six
weeks ended December 28, 2004 as compared to $8,839,653 for the twenty-six weeks
ended December 30, 2003, primarily due to a greater proportion of emergency
response work related to the hurricanes in Florida and equipment-intensive
projects with higher gross margins and a corresponding reduction in labor
costs. Gross profit increased $1,162,048 to $4,105,794 for the twenty-six weeks
ended December 28, 2004 from $2,943,746 for the twenty-six weeks ended
December 30, 2003.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $328,991, or 14%, to
$2,735,450 for the twenty-six weeks ended December 28, 2004 from $2,406,459 for
the twenty-six weeks ended December 30, 2003 and constituted approximately 21%
and 20%, respectively, of revenues in each period. This increase was primarily
attributable to increases in bad debt expense of approximately $475,000 and
legal expenses of approximately $277,000, offset by decreases in sales salaries
and sales travel and entertainment of approximately $222,000, marketing expenses
of approximately $123,000 and consulting expenses of approximately $60,000. All
of these decreases were a result of management reductions in staff and
discretionary spending.

Benefit Related to Variable Accounting Treatment for Officer Options

Under the terms of an employment agreement with the Company and a separate
agreement with Spotless, the Company's President and Chief Executive Officer may
sell to the Company, or in certain circumstances to Spotless, all shares of
common stock of the Company held by him and all shares of common stock
underlying vested options to purchase shares of common stock of the Company held
by him upon the occurrence of certain events. The benefit related to variable
accounting treatment for officer options was $348,625 for the twenty-six weeks
ended December 30, 2003. There was no benefit or expense required to be recorded
in the twenty-six weeks ended December 28, 2004 due to the low market price of
the Company's common stock. The benefit in the twenty-six weeks ended December
30, 2003 was due to a decrease in the market price of the Company's common stock
and/or a change in the number of options outstanding that are vested. Due to the
terms of the options, changes in the market price of the Company's common stock,
in either direction, result in a corresponding expense or benefit.

Interest Expense

Interest expense increased by $206,809 to $266,456 for the twenty-six weeks
ended December 28, 2004 from $59,647 for the twenty-six weeks ended December 30,
2003. The increase in interest expense was primarily attributable to the
discount recorded when Spotless purchased accounts receivable from the Company
under the ARFA and greater amounts of debt outstanding resulting from increased
borrowings from Spotless for working capital. For the twenty-six weeks ended
December 28, 2004, the Company incurred $145,846 of discounts and fees
associated with the sale of accounts receivable under the ARFA.

                                       12

<PAGE>


Provision for Income Taxes

The provision for income taxes for the twenty-six weeks ended December 28,
2004 was $46,248 compared to $178,637 for the twenty-six weeks ended December
30, 2003.

Net Income

Net income of $1,058,962 was incurred for the twenty-six weeks ended
December 28, 2004 as compared to net income of $671,588 incurred for the
twenty-six weeks ended December 30, 2003. The change was the result of the
factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES

As of December 28, 2004, the Company had a cash balance of $346,331, working
capital deficit of $(860,843) and stockholders' equity of $232,007. As of June
29, 2004, the Company had a cash balance of $63,562, working capital deficit of
$(2,103,971) and stockholders' deficit of $(787,955). Historically, the Company
has financed its operations primarily through issuance of debt and equity
securities, through short-term borrowings from its majority shareholder,
Spotless, and through cash generated from operations.

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

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

Under the ARFA, Spotless may, but is not obligated to, purchase one or more of
the Company's accounts receivable that are approved by Spotless in its sole
discretion, in respect of the particular debtor, invoices and related credit. As
part of the agreement, Spotless may purchase any accounts receivable at a 15%
discount to invoice prices, which the Company believes is at least as favorable
to it as would be available from an unaffiliated third-party, based upon a
good-faith estimate of an applicable discount negotiated at arm's length, as may
be adjusted by Spotless in its sole discretion. In this regards, all of
Spotless' purchases have been made at 15% discount except one made in April 2004
for the amount of $711,450 in relation to an account receivable balance of
$1,028,194, which constituted a 31% discount. In addition, the Company pays
varying monthly discount fees on any purchased accounts receivable based upon
invoice prices. All discounts and fees under the ARFA are characterized as
interest expense. For the twenty-six weeks ended December 28, 2004, the Company
has incurred approximately $168,190 of such discounts and fees. Further, the
Company (a) manages any accounts receivable that it sells to Spotless while
remitting to Spotless any proceeds received and (b) bears any related litigation
costs.

As of December 28, 2004, the Company owed Spotless $5,000,000 in short-term
loans to fund working capital. During the twenty-six weeks ended December 28,
2004, the Company did not make any repayments to Spotless. All current
borrowings from Spotless bear interest at the London Interbank Offering Rate
("LIBOR") plus 1 percent (2.55% at December 28, 2004) and are secured by all of
the Company's assets. On September 10, 2004, the Company paid accrued interest
to Spotless through August 24, 2004 of approximately $151,000. As of
December 28, 2004, interest of $43,641 was accrued and unpaid on these
borrowings.

                                       13

<PAGE>

Net cash provided by operating activities was $473,288 for the twenty-six weeks
ended December 28, 2004 as compared to net cash used in operations of $2,212,973
for the twenty-six weeks ended December 30, 2003. Accounts receivable increased
by $4,175,461 for the twenty-six weeks ended December 28, 2004 as a result of
increased revenues related to the hurricanes in Florida. Accounts receivable
increased by $4,371,897 for the twenty-six weeks ended December 30, 2003 due to
hurricane-related work and difficulties with cash collections. Refundable income
taxes decreased by $641,795 and $1,080,186 for the twenty-six weeks ended
December 28, 2004 and December 30, 2003, respectively, due to the receipt of a
federal income tax refunds. Accounts payable and accrued expenses increased by
$1,379,494 for the twenty-six weeks ended December 28, 2004 as a result of an
increased volume of remediation activity. Other current liabilities increased by
$613,807 for the twenty-six weeks ended December 28, 2004 primarily due to
increases in sales taxes payable and increased customer deposits.  Other current
liabilities increased by $223,663 for the twenty-six weeks ended December 30,
2003 primarily due to an increase in income taxes payable.

Cash used for capital expenditures was $56,011 during the twenty-six weeks
ended December 28, 2004 as compared to $263,678 for the twenty-six weeks
ended December 30, 2003.

Financing activities for the twenty-six weeks ended December 28, 2004 used net
cash of $134,508 for repayments of long-term debt. Financing activities for the
twenty-six weeks ended December 30, 2003 provided net cash of $2,453,071. This
amount included repayments of long-term debt of $193,027, proceeds from
long-term debt borrowings of $160,098, proceeds from borrowings from Spotless of
$2,525,000 and payments of preferred stock dividends of $39,000.

The Company's liquidity was severely adversely affected by its unrecouped costs
incurred in connection with an oil storage tank project. The Company believes
that it will be successful in collecting for this project, but no assurance can
be given as to the timing or amount of any such recovery. Management believes
the Company will require positive cash flow from operations to meet its working
capital needs over the next twelve months unless the Company increases its
borrowings from Spotless, successfully obtains debt or equity financing from a
third party or is able to sufficiently utilize the ARFA with Spotless. In the
event that positive cash flow from operations is not generated, the Company may
be required to seek additional financing, from Spotless or otherwise, to meet
its working capital needs.

So long as the Company has sufficient working capital, it anticipates continued
revenue growth in new and existing service areas and continues to bid on large
projects, though there can be no assurance that any of the Company's bids will
be accepted or that it will have sufficient working capital. The Company is
striving to improve its gross margin and control its selling, general and
administrative expenses. In this regard, in fiscal 2005 the Company has reduced
its expenses, including those relating to marketing, at an annualized rate of
approximately $2 million. There can be no assurance, however, that changes in
the Company's plans or other events affecting the Company's operations will not
result in accelerated or unexpected cash requirements, or that it will continue
to be successful in achieving positive cash flow from operations or in obtaining
additional financing. The Company's future cash requirements are expected to
depend on numerous factors, including, but not limited to: (a) the ability to
obtain environmental or related construction contracts, (b) the ability to
generate positive cash flow from operations, and the extent thereof, (c) the
ability to raise additional capital or obtain additional financing, and (d)
economic conditions.

                                       14

<PAGE>


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

                                                   Total        1 Year      2-3 Years     4-5 Years
                                                   -----        ------      ---------     ---------
    
                                         <c>           <c>           <c>           <c>
    Operating leases                            $1,060,481    $  450,754    $  609,727    $      -
    Long-term debt                                 512,820       252,592       247,592      12,636
    Series A redeemable convertible
       preferred stock                           1,300,000             -     1,300,000           -
    Short-term notes payable to
       related party                             5,000,000     5,000,000             -           -
                                                -----------   -----------   -----------   ---------
                                                $7,873,301    $5,703,346    $2,157,319    $ 12,636
                                                ===========   ===========   ===========   =========
</TABLE>

     OFF-BALANCE SHEET ARRANGEMENTS

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

     INFLATION

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

     SEASONALITY

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

     FORWARD-LOOKING STATEMENTS

     Statements contained in this Form 10-Q include "forward-looking statements"
     within the meaning of Section 27A of the Securities Act and Section 21E of
     the Exchange Act. Forward-looking statements involve known and unknown
     risks, uncertainties and other factors which could cause the actual
     results, performance and achievements, whether expressed or implied by such
     forward-looking statements, not to occur or be realized. Such
     forward-looking statements generally are based upon the Company's best
     estimates of future results, performance or achievement, based upon current
     conditions and the most recent results of operations. Forward-looking
     statements may be identified by the use of forward-looking terminology such
     as "may," "will," "expect," "believe," "estimate," "anticipate," "continue"
     or similar terms, variations of those terms or the negative of those terms.
     Potential risks and uncertainties include, among other things, such factors
     as:

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

                                       15

<PAGE>

     Investors should carefully consider such risks, uncertainties and other
     information, disclosures and discussions which contain cautionary
     statements identifying important factors that could cause actual results to
     differ materially from those provided in the forward-looking statements.
     The Company undertakes no obligation to publicly update or revise any
     forward-looking statements, whether as a result of new information, future
     events or otherwise.

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

     ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

     ITEM 4.  CONTROLS AND PROCEDURES

     As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, an
     evaluation was performed under the supervision and with the participation
     of the Company's principal executive and financial officers of the
     effectiveness of the design and operation of the Company's "disclosure
     controls and procedures" (as defined under Rule 13a-15(e) and Rule
     15d-15(e)) as of the end of the period covered by this quarterly report on
     Form 10-Q. During the thirteen week period ended September 28, 2004, in
     order to address issues relating to revenue recognition and allocation of
     expenses associated with the Company's contract and billing procedures
     which include, but are not limited to, direct participation by the
     Company's chief executive officer in customer invoice preparation and the
     evaluation of the accuracy of vendor invoices, the audit committee
     appointed a task force to assist management in addressing these matters,
     and the Company has implemented or is in the process of implementing the
     following changes to its internal controls and procedures, among others,
     under the supervision of the chief executive officer:

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

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

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

                                       16

<PAGE>

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

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

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

                  On October 22, 2004, Trade-Winds commenced an action against
                  Consolidated Edison Company in the New York State Supreme
                  Court, County of New York, claiming that Trade-Winds is
                  entitled to approximately $2,000,000 of contractual billings
                  and related damages with respect to its removal of sediment
                  from an oil storage tank. On December 6, 2004, Consolidated
                  Edison Company filed an answer, denying Trade-Winds' claims.
                  The case is currently in pre-trial discovery.

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

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

                  Not applicable.

     ITEM 3.      DEFAULTS UPON SENIOR SECURITIES
                  -------------------------------

                  The Company is required to pay quarterly dividends on its
                  Series A Convertible Preferred Stock, par value $.01 per share
                  (the "Series A Preferred"), which dividends accrue from the
                  initial date of issuance of the Series A Preferred, are
                  cumulative and, if not paid when due, bear interest on the
                  unpaid amount of the past due dividends at the prime rate
                  published in The Wall Street Journal on the date the dividend
                  was payable, plus 3%. The Company is currently in arrears on
                  its Series A Preferred dividend payments and interest thereon
                  in the aggregate amount of approximately $81,000 due to a lack
                  of available cash. Under the terms of the Company's
                  Certificate of Designations of the Series A Preferred, if the
                  Company fails to make any four consecutive quarterly dividend
                  payments on the Series A Preferred, the majority in interest
                  of the holders of the Series A Preferred have the right to
                  elect a second director to the Company's board of directors,
                  to serve as a director until such accrued and unpaid dividends
                  have been paid in full. The Company failed to pay its fourth
                  consecutive quarterly dividend payment on December 15, 2004 to
                  the holders of the Series A Preferred. The majority in
                  interest of the holders of the Series A Preferred has not
                  exercised the right to elect a second director to the
                  Company's board of directors. There can be no assurance when
                  or if the Company will make any Series A Preferred dividend
                  payments.

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

                  The 2004 Annual Meeting of Stockholders of the Company was
                  held on December 6, 2004, at which the following matter was
                  voted upon and adopted by the votes indicated:

                  To elect eight directors to the board of directors to serve
                  until the next annual meeting of stockholders, unless any such
                  director shall resign, become disqualified, disabled or
                  otherwise removed from office. The names of the directors and
                  votes cast in favor of their election and votes withheld are
                  as follows:

                                       17

<PAGE>

                       Nominee                      For          Withheld
                       -------                      ---          --------
                       Peter A. Wilson           72,311,838      4,158,605
                       Michael O'Reilly          72,313,138      4,157,305
                       Charles L. Kelly, Jr.     72,311,838      4,158,605
                       Brian S. Blythe           72,311,838      4,158,605
                       John J. Bongiorno         72,311,838      4,158,605
                       Ronald B. Evans           72,311,838      4,158,605
                       Anthony P. Towell         72,313,338      4,157,105
                       Dr. Kevin Phillips        72,313,288      4,157,155

     ITEM 5.      OTHER INFORMATION
                  -----------------

                  Not applicable.

     ITEM 6.      EXHIBITS
                  --------

                  The following exhibits are included as part of this report:

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




                                       18

<PAGE>



                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities and
     Exchange Act of 1934, the registrant has duly caused this report to be
     signed on its behalf by the undersigned thereunto duly authorized.


                                         WINDSWEPT ENVIRONMENTAL GROUP, INC.




     Date: February 10, 2005             By:    /s/ Michael O'Reilly
                                             ---------------------------------
                                         MICHAEL O'REILLY,
                                         President and Chief Executive Officer
                                         (Principal Executive Officer)





     Date: February 10, 2005             By:   /s/ Charles Kelly, Jr.
                                            ----------------------------------
                                         CHARLES L. KELLY, JR.
                                         Chief Financial Officer
                                         (Principal Financial Officer)


                                       19