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 APRIL 1, 2003, 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: 0-17072

                       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 principle 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
     April 30, 2003 was 77,936,358.


<PAGE>


                         PART 1 - FINANCIAL INFORMATION
                         ------------------------------
  Item 1. Financial Statements

                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS
                         APRIL 1, 2003 AND JULY 2, 2002
<TABLE>
<CAPTION>
                                                                                                      April 1,          July 2,
                                                                                                        2003             2002
                                                                                                    (Unaudited)
                                                                                                  ----------------  ----------------
  <S>                                                                                             <C>               <C>
  ASSETS:

  CURRENT ASSETS:
     Cash                                                                                         $        58,575   $       399,679
     Accounts receivable, net of allowance for doubtful accounts of $553,891
        and $909,029, respectively                                                                      6,448,029         7,519,203
     Inventories                                                                                          239,932           296,474
     Costs and estimated earnings in excess of billings on uncompleted contracts                          471,077           501,424
     Recoverable income taxes                                                                             380,947                 -
     Prepaid expenses and other current assets                                                            236,792           144,274
                                                                                                  ----------------  ----------------
     Total current assets                                                                               7,835,352         8,861,054

  PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of
     $4,959,497 and $4,550,006, respectively                                                            1,813,375         1,144,369

  OTHER ASSETS                                                                                            264,805           207,115
                                                                                                  ----------------  ----------------

  TOTAL                                                                                           $     9,913,532   $    10,212,538
                                                                                                  ================  ================

  LIABILITIES AND STOCKHOLDERS' EQUITY:

  CURRENT LIABILITIES:
     Accounts payable                                                                             $     1,414,591    $    1,060,074
     Accrued expenses                                                                                   1,214,758         1,740,093
     Short-term notes payable to related party                                                          1,200,000           200,000
     Billings in excess of cost and estimated earnings on uncompleted contracts                           184,516           193,251
     Accrued payroll and related fringes                                                                  716,104           551,091
     Convertible notes payable to related party                                                                 -           100,000
     Current portion of long-term debt                                                                    172,180            71,265
     Income taxes payable                                                                                       -           450,820
     Other current liabilities                                                                            124,847           167,987
                                                                                                  ----------------  ----------------
     Total current liabilities                                                                          5,026,996         4,534,581
                                                                                                  ----------------  ----------------

  LONG-TERM DEBT                                                                                          242,425            63,703
                                                                                                  ----------------  ----------------

  COMMITMENTS AND CONTINGENCIES

  REDEEMABLE COMMON STOCK AND STOCK OPTIONS                                                               508,897           941,871
                                                                                                  ----------------  ----------------

  SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK, $.01 par value; 1,300,000 shares
     authorized; 1,300,000 shares outstanding at April 1, 2003 and July 2, 2002                         1,300,000         1,300,000
                                                                                                  ----------------  ----------------

  STOCKHOLDERS' EQUITY:
     Series B convertible preferred stock, $.01 par value; 50,000 shares
       authorized; 0 shares outstanding at April 1, 2003 and July 2, 2002                                       -                 -
     Nondesignated preferred stock, no par value; 8,650,000 shares authorized; 0 shares
       outstanding at April 1, 2003 and July 2, 2002                                                            -                 -
     Common stock, $.0001 par value; 150,000,000 shares authorized; 77,936,358 shares
        outstanding at April 1, 2003 and July 2, 2002.                                                      7,794             7,794
     Additional paid-in-capital                                                                        34,019,517        34,078,017
     Accumulated deficit                                                                              (31,192,097)      (30,713,428)
                                                                                                  ----------------  ----------------
     Total stockholders' equity                                                                         2,835,214         3,372,383
                                                                                                  ----------------  ----------------

  TOTAL                                                                                           $     9,913,532   $    10,212,538
                                                                                                  ================  ================
</TABLE>

  See notes to consolidated financial statements.

                                       2
<PAGE>


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

                                                                 Thirteen Weeks Ended                Thirty-Nine Weeks Ended
                                                           --------------------------------    ---------------------------------
                                                              April 1,          April 2,          April 1,           April 2,
                                                                2003             2002               2003               2002
                                                           --------------    --------------    --------------     --------------
    <S>                                                    <C>               <C>               <C>                <C>
    Revenues                                               $   3,648,548     $   5,823,792     $  14,105,571      $  26,559,419

    Cost of revenues                                           3,204,889         3,852,088        11,314,559         16,848,979
                                                           --------------    --------------    --------------     --------------

    Gross profit                                                 443,659         1,971,704         2,791,012          9,710,440
                                                           --------------    --------------    --------------     --------------

    Operating expenses:
    Selling, general and administrative expenses               1,463,083         1,326,056         4,049,641          3,657,172
    (Benefit) expense related to variable accounting
       treatment for officer options                            (270,409)         (487,324)         (432,974)           880,696
                                                           --------------    --------------    --------------     --------------
       Total operating expenses                                1,192,674           838,732         3,616,667          4,537,868
                                                           --------------    --------------    --------------     --------------

    (Loss) income from operations                               (749,015)        1,132,972          (825,655)         5,172,572
                                                           --------------    --------------    --------------     --------------

    Other expense (income):
       Interest expense                                           16,100            31,205            51,290            226,485
       Other, net                                                   (116)           (1,006)          (23,425)           (11,010)
                                                           --------------    --------------    --------------     --------------
       Total other expense                                        15,984            30,199            27,865            215,475
                                                           --------------    --------------    --------------     --------------

    (Loss) income before (benefit) provision for income
    taxes                                                       (764,999)        1,102,773          (853,520)         4,957,097

    (Benefit) provision for income taxes                        (365,534)          343,249          (374,851)         2,425,314
                                                           --------------    --------------    --------------     --------------

    Net (loss) income                                           (399,465)          759,524          (478,669)         2,531,783

    Dividends on preferred stock                                 (19,500)          (19,500)          (58,500)          (449,219)
                                                           --------------    --------------    --------------     --------------

    Net (loss) income attributable to common shareholders
                                                           $    (418,965)    $     740,024     $    (537,169)     $   2,082,564
                                                           ==============    ==============    ==============     ==============

    Basic and diluted net (loss) income per common share:
    Basic                                                          ($.01)             $.01             ($.01)              $.04
                                                                  =======            ======            ======             ======
    Diluted                                                        ($.01)             $.01             ($.01)              $.03
                                                                  =======            ======            ======             ======

    Weighted average number of common shares outstanding:
    Basic                                                     77,936,358        77,921,163        77,936,358         58,350,743
                                                           ==============    ==============    ==============     ==============
    Diluted                                                   77,936,358        86,967,474        77,936,358         86,222,738
                                                           ==============    ==============    ==============     ==============
</TABLE>

    See notes to consolidated financial statements.



<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
                                          ------         -----        -------            -------            -----
<S>                                      <C>             <C>        <C>               <C>                <C>
Balance at July 3, 2002                  77,936,358      $7,794     $34,078,017       $(30,713,428)      $3,372,383

Dividends on Series A preferred stock             -           -         (58,500)                 -          (58,500)
Net loss                                          -           -               -           (478,669)        (478,669)
                                         ----------      ------     ------------      -------------      -----------
Balance at April 1, 2003                 77,936,358      $7,794     $34,019,517       $(31,192,097)      $2,835,214
                                         ==========      ======     ============      =============      ===========
</TABLE>


See notes to consolidated financial statements.

                                       4
<PAGE>


                       WINDSWEPT ENVIRONMENTAL GROUP, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                                      Thirty-Nine Weeks Ended
                                                                                                -----------------------------------
                                                                                                 April 1, 2003       April 2, 2002
                                                                                                ---------------     ---------------
    <S>                                                                                         <C>                 <C>
    CASH FLOWS FROM OPERATING ACTIVITIES:
       Net (loss) income                                                                        $     (478,669)     $    2,531,783
       Adjustments to reconcile net (loss) income to net cash (used in) provided by operating
          activities:
          Depreciation and amortization                                                                409,491             530,736
          Provision for doubtful accounts                                                              196,913             244,644
         Compensation (benefit) expense related to officer options and redeemable common
             stock                                                                                    (432,974)            880,696
       Changes in operating assets and liabilities:
          Accounts receivable                                                                          874,261          (2,837,812)
          Inventories                                                                                   56,542             (64,148)
          Costs and estimated earnings in excess of billings on uncompleted contracts                   30,347              72,086
          Recoverable income taxes                                                                    (380,947)                  -
          Prepaid and other current assets                                                             (92,518)           (133,474)
          Other assets                                                                                 (57,690)             45,723
          Accounts payable and accrued expenses                                                       (170,818)            233,158
          Accrued payroll and related fringes                                                          165,013              67,123
          Income taxes payable                                                                        (450,820)            828,069
          Other current liabilities                                                                    (43,140)            190,478
          Billings in excess of costs and estimated earnings on uncompleted contracts                   (8,735)           (391,838)
                                                                                                ---------------     ---------------
    NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES                                               (383,744)          2,197,224
                                                                                                ---------------     ---------------

    CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchases of property and equipment                                                          (1,078,497)           (642,609)
                                                                                                ---------------     ---------------
    NET CASH USED IN INVESTING ACTIVITIES                                                           (1,078,497)           (642,609)
                                                                                                ---------------     ---------------
    CASH FLOWS FROM FINANCING ACTIVITIES:
       Principal payments of long-term debt                                                           (112,194)            (65,424)
       Proceeds from long-term debt                                                                    391,831             137,965
       Proceeds from exercise of stock options                                                               -              83,182
       Repayment of convertible note to related party                                                 (100,000)                  -
       Payment of convertible notes                                                                          -            (680,000)
       Payment of preferred stock dividends                                                            (58,500)           (195,000)
       Proceeds from short-term notes payable from related party                                     1,825,000           1,750,000
       Repayments of short-term notes payable to related party                                        (825,000)         (2,750,000)
                                                                                                ---------------     ---------------
    NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                                              1,121,137          (1,719,277)
                                                                                                ---------------     ---------------

    NET DECREASE IN CASH                                                                              (341,104)           (164,662)

    CASH - BEGINNING OF PERIOD                                                                         399,679             323,732
                                                                                                ---------------     ---------------

    CASH - END OF PERIOD                                                                        $       58,575      $      159,070
                                                                                                ===============     ===============

    Cash paid during the period for:
       Interest                                                                                 $       50,203      $      117,779
                                                                                                ===============     ===============
       Taxes                                                                                    $      232,731      $    1,554,620
                                                                                                ===============     ===============

    Non cash financing activities:
       Issuance of preferred stock dividend                                                     $             -     $      390,719
                                                                                                ===============     ===============
       Conversion of accrued and unpaid interest to common stock                                $             -     $      331,951
                                                                                                ===============     ===============
       Conversion of convertible note to related party                                          $             -     $    2,000,000
                                                                                                ===============     ===============
       Conversion of preferred stock                                                            $             -     $           93
                                                                                                ===============     ===============
</TABLE>

    See notes to consolidated financial statements.

                                       5
<PAGE>


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

1.   BASIS  FOR  PRESENTATION  -  The  accompanying  unaudited  consolidated
     financial statements include the accounts of Windswept Environmental Group,
     Inc.  (the  "Company")  and its  wholly-owned  subsidiaries.  The unaudited
     consolidated financial statements  have been  prepared  by the Company in
     accordance  with  accounting  principles  generally  accepted in the United
     States  of  America  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
     accounting  principles generally accepted in the United States of America
     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 April 1, 2003, the results of
     operations for the thirteen and thirty-nine  weeks ended April 1, 2003 and
     April 2, 2002 and cash flows for the thirty-nine  weeks ended April 1, 2003
     and April 2, 2002, have been  included.  Certain prior period amounts have
     been reclassified to conform to the April 1, 2003 presentation.

     The results for the thirteen and thirty-nine  weeks ended April 1, 2003 and
     April 2, 2002 are not  necessarily  indicative of the results for an entire
     year. These unaudited consolidated  financial statements should be read in
     conjunction with the Company's audited  consolidated financial statements
     and notes thereto  included in the Company's  Form 10-K for the fiscal year
     ended July 2, 2002.

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 for the quarter  ended  April 1,
     2003.  The  Company will continue to account for  stock-based  employee
     compensation under APB Opinion No. 25 and its related interpretations.

     The  following  table  illustrates  the effect on net income (loss) and net
     (loss) 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              Thirty-Nine Weeks Ended
                                                         ------------------------------     ------------------------------
                                                            April 1,        April 2,           April 1,         April 2,
                                                              2003            2002               2003             2002
                                                              ----            ----               ----             ----
     <S>                                                   <C>             <C>              <C>                <C>
     Net (loss) income attributable to common
     shareholders as reported                              ($418,965)      $740,024           ($537,169)        2,082,564
       Less:  Stock-based employee
       compensation cost determined under
       the fair value method, net of related
       tax effects                                           316,233        245,315             948,700          735,944
                                                           ----------      ---------        ------------       -----------
     Pro forma net (loss) income                           ($735,198)      $494,709         ($1,485,869)       $1,346,620
                                                           ==========      =========        ============       ===========


                                       6

<PAGE>

     Net (loss) income attributable to common
     shareholders per share:


       Basic - as reported                                     ($.01)          $.01               ($.01)             $.04
                                                              =======         ======             =======            ======
       Basic - pro forma                                       ($.01)          $.01               ($.02)             $.02
                                                              =======         ======             =======            ======

       Diluted - as reported                                   ($.01)          $.01               ($.01)             $.03
                                                              =======         ======             =======            ======
       Diluted - pro forma                                     ($.01)          $.01               ($.02)             $.02
                                                              =======         ======             =======            ======
</TABLE>

     The fair value of these options was estimated using the
     Black-Scholes option pricing model with the following weighted
     average assumptions:
<TABLE>
<CAPTION>
                                                              Thirteen Weeks Ended              Thirty-Nine Weeks Ended
                                                         ------------------------------     ------------------------------
                                                            April 1,        April 2,           April 1,         April 2,
                                                              2003            2002               2003             2002
                                                              ----            ----               ----             ----
     <S>                                                    <C>             <C>                <C>              <C>
     Risk free rate                                             2.62%           4.53%              2.62%            4.53%
     Dividend yield                                                0                0                  0                0
     Volatility                                                  136%            146%               136%             146%
     Expected Option Life                                   1 -5  yrs       2 - 5 yrs          1 -5  yrs        2 - 5 yrs
</TABLE>

3.   LIQUIDITY AND BUSINESS  RISKS - As of April 1, 2003,  the Company had a
     cash balance of $58,575,  working  capital of $2,808,356 and  stockholders'
     equity of $2,835,214. Historically, the Company has financed its operations
     primarily  through  issuance  of  debt  and  equity securities,   through
     short-term borrowings from its majority shareholder, Spotless Enterprises,
     Inc. ("Spotless"), and through cash generated from operations. Based on the
     Company's experience and for the reasons set forth below, in the opinion of
     management,  the Company expects to have sufficient working capital to fund
     its operations on an ongoing basis,  including for at least the next twelve
     months.  However, economic, market and other  conditions  may affect the
     Company's cash flows and liquidity. In the event that the Company is unable
     to generate sufficient positive cash flow from operations,  the Company may
     seek additional financing  from Spotless,  although  Spotless is under no
     legal obligation to provide such funds. The Company currently has no credit
     facility for additional borrowing.

     During the  thirty-nine  weeks ended April 1, 2003, in order to address the
     Company's cash flow and operational concerns, including funding the payment
     of income  taxes, the purchase of fixed assets, the delay in receipt of
     payment of large receivables and to fund net losses,  the Company borrowed
     $1,825,000 from Spotless. During the thirty-nine weeks ended April 1, 2003,
     the Company repaid $825,000 to Spotless.  All borrowings from Spotless bear
     interest at the London Interbank Offering Rate  ("LIBOR")  plus 1 percent
     (2.68%), are secured by all of the Company's assets and are  payable on
     demand.  As of April 1, 2003, the Company owed Spotless  $1,200,000 on such
     short-term notes to fund working capital.  Subsequent to April 1, 2003, the
     Company borrowed an additional  $250,000 so that, as of April 30, 2003, the
     Company owed Spotless $1,450,000.  During the thirty-nine weeks ended April
     1, 2003, the Company obtained financing of $391,831 from unrelated parties
     for purchases of vehicles and equipment.

     During the  thirty-nine  weeks ended April 1, 2003,  the  Company  repaid
     $100,000  principal  amount of 12% convertible  notes to a director of the
     Company.

     The Company's  future cash  requirements are expected to depend on numerous
     factors,  including, but not limited  to:  (i)  its  ability  to  obtain
     environmental or related  construction  contracts,  (ii) its  ability  to
     generate positive cash flow from operations,  and the extent thereof, (iii)
     its ability to raise additional  capital or obtain additional  financing to
     the extent necessary,  and (iv)  economic  and  industry  conditions.  The
     Company anticipates 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. The Company expects to generate
     positive cash flow from operations to meet its working capital needs on an
     ongoing basis,  including for at least the next twelve months. There can be
     no assurance, however, that changes in the Company's plans or other events
     affecting the Company's  operations  will not  result in  accelerated  or
     unexpected  cash  requirements,  or that it will be successful in achieving
     sufficient  positive  cash flow from operations  or  obtaining  additional
     financing to the extent  necessary.  The Company has taken several steps to
     improve its

                                       7

<PAGE>

     operating results and cash flows, including: (a) increasing its
     collection efforts with insurance companies to  accelerate  the flow of
     payments  to the  Company on  reconstruction  projects;  (b)  applying  for
     advance  payments  to fund the purchase of  materials  and the payment of
     subcontractors and large staffs of employees on  larger  projects;  (c)
     expanding  its  marketing  efforts  and  staff to  increase  the  Company's
     industry  prominence,  attract more bidding  opportunities and projects and
     broaden the Company's  customer  base;  (d) attempting to improve its gross
     margins and control its selling,  general  and  administrative  expenses.
     Management expects these efforts to improve its  results of  operations,
     including by producing a more steady flow of small to medium size  projects
     and by increasing  the Company's  exposure to those  customers that control
     larger, generally higher gross margin projects, though no assurance can be
     given that these actions will be successful.  In the event these efforts do
     not result in sufficient positive cash flow from  operations, the Company
     may be required to seek  additional  financing to meet its working  capital
     needs,  including  possibly from Spotless.  Management also continues to
     pursue additional funding sources.

4.   (BENEFIT) PROVISION FOR INCOME TAXES - The (benefit) provision for income
     taxes for the thirteen and thirty-nine weeks ended April 1, 2003 and April
     2, 2002 consists of the following:
<TABLE>
<CAPTION>
                                          Thirteen Weeks Ended              Thirty-Nine Weeks Ended
                                     ------------------------------     ------------------------------
                                        April 1,        April 2,           April 1,         April 2,
                                          2003            2002               2003             2002
                                          ----            ----               ----             ----
     <S>                                <C>           <C>                 <C>              <C>

     Federal - current                  $(365,534)    $  243,407          $ (380,947)      $1,712,997
     State - current                            -         99,842               6,096          712,317
                                        ----------    -----------         -----------      -----------
     Total                              $(365,534)    $  343,249          $ (374,851)      $2,425,314
                                        ==========    ===========         ===========      ===========
</TABLE>

     The  effective rate for income  taxes  differs  from the  statutory  rates
     primarily as a result of the 100% valuation  allowance against deferred tax
     assets.  The Company has a 100% valuation allowance against  deferred tax
     assets  because  management  believes  that it is more likely than not that
     such  deferred tax assets will not be  realized.  At April 1, 2003, the
     Company had  approximately  $1,124,000 in net operating loss  carryforwards
     for tax  purposes  that  expire  at  various  dates through  2020.  Due to
     Spotless' acquisition of greater than 50% ownership in October 1999,  the
     Company is limited to utilizing $68,000 of net operating loss carryforwards
     per annum.

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

     The following table sets forth the computation of the basic and diluted net
     (loss) income per share for the thirteen and thirty-nine weeks ended April
     1, 2003 and April 2, 2002, respectively:
<TABLE>
<CAPTION>
                                                              Thirteen Weeks Ended              Thirty-Nine Weeks Ended
                                                         ------------------------------     ------------------------------
                                                            April 1,        April 2,           April 1,         April 2,
                                                              2003            2002               2003             2002
                                                              ----            ----               ----             ----
     <S>                                                   <C>             <C>               <C>                 <C>
     Numerator:
       Net (loss) income attributable to
         common shareholders                                ($418,965)       $740,024         ($537,169)         $2,082,564
       Add interest on convertible notes,
         net of tax                                                 -           2,269                 -             100,514
                                                           -----------     -----------       -----------         -----------
                                                            ($418,965)       $742,293         ($537,169)         $2,183,078
                                                           ===========     ===========       ===========         ===========
     Denominator:
       Share reconciliation:
         Shares used for basic (loss)
           income per share                                77,936,358      77,921,163        77,936,358          58,350,743
         Effect of dilutive items:
           Stock options                                            -       7,777,798                 -           7,221,838
           Convertible securities                                   -       1,268,513                 -          20,650,157
                                                           -----------     -----------       -----------         -----------
         Shares used for dilutive (loss)
           income per share                                77,936,358      86,967,474        77,936,358          86,222,738
                                                           ===========     ===========       ===========         ===========

                                       8


<PAGE>
         Net (loss) income per share:
           Basic                                                ($.01)           $.01             ($.01)               $.04
           Diluted                                              ($.01)           $.01             ($.01)               $.03
</TABLE>

     The dilutive loss per share  computation  for the thirteen and  thirty-nine
     week periods ended April 1, 2003 excludes  approximately  4,369,000  and
     4,680,000  shares,  respectively, related to  employee  stock  options and
     approximately 418,000 shares for the thirty-nine week period ended April 1,
     2003 related to convertible notes,  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 was excluded from diluted earnings per share
     because the effect of including them would be anti-dilutive.

6.   CONTINGENCIES  -  On  October  12,  2001,   Trade-Winds   Environmental
     Restoration, Inc. ("Trade-Winds"), a  wholly-owned  subsidiary  of  the
     Company, commenced an action in the New York State Supreme Court, County of
     New  York,  claiming  that  Trade-Winds  was  entitled  to  approximately
     $1,060,000 of  contractual billings  relating to a large mold  remediation
     project.  In addition to denying an obligation  to pay the amount  claimed,
     the defendants asserted a counterclaim against Trade-Winds for $389,439. On
     January 7, 2003, Trade-Winds received $550,000 in full settlement of this
     action. The court has ordered that the record of this action be sealed.

     In November 1997,  Trade-Winds  was named as a third party  defendant in an
     action commenced in the New York State Supreme Court,  County of New York,
     under the caption  NICOLAI GRIB AND  VLADISLAV  KAZAROV  V.  TRADE-WINDS
     ENVIRONMENTAL  RESTORATION,  INC. AND GULF INSURANCE COMPANY, by a class of
     plaintiffs  claiming to be entitled to additional wages while working for a
     subcontractor of  Trade-Winds.  The Company has agreed to settle this case
     and  to pay  claims  that  have  been  validated  by  the  court  appointed
     accountant. The Company has reserved approximately $370,000 for this matter
     and is currently evaluating the potential amount to be paid for claims. The
     Company believes that the amount of claims ultimately paid will not have a
     material adverse effect on the Company's consolidated financial statements.

     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.

7.   RELATED PARTY  TRANSACTIONS - On November 16, 2001, the Company exchanged
     $1,700,000 of short-term notes payable for a demand promissory note payable
     to Spotless that is secured by the  Company's  assets and the assets of its
     subsidiaries,  pursuant  to  amendments  to  existing  security  agreements
     between each  of the Company and  its subsidiaries  and  Spotless.  The
     promissory note had an original  principal amount of $1,700,000 and accrues
     interest  at the rate of LIBOR plus one  percent  (1%) per annum.  Spotless
     may, but is under no obligation to, lend additional  amounts to the Company
     under this secured  promissory note. As of April 1, 2003, the Company owed
     Spotless $1,200,000 under this  promissory  note.  Subsequent to April 1,
     2003, the Company borrowed an additional $250,000 and as of April 30, 2003,
     the Company  owed  Spotless  $1,450,000  on such  short-term  loans to fund
     working capital.

     In the  thirty-nine  weeks ended April 1, 2003, the Company repaid $100,000
     principal amount of 12% convertible notes to a director of the Company.

8.   RECENT  ACCOUNTING  PRONOUNCEMENTS  - In June 2001, the FASB issued SFAS
     No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS No. 142
     addresses financial accounting and reporting  for acquired  goodwill and
     other intangible  assets.  Under SFAS No. 142, goodwill and some intangible
     assets will no longer be amortized, but rather reviewed for impairment on a
     periodic  basis.  This Statement was required to be adopted by the Company
     for the fiscal year  beginning July 3, 2002 and applied to all goodwill and
     other intangible assets recognized in its  financial  statements at that
     date.  Impairment  losses for goodwill and certain  intangible  assets that
     arose due to the initial application of this Statement  should be reported
     as resulting  from a change in accounting  principle.  The adoption of SFAS
     No.  142 did not  have a material impact on the  Company's  consolidated
     financial statements.

     In  August 2001,  the FASB  issued  SFAS No.  143,  "Accounting  for Asset
     Retirement  Obligations"  ("SFAS 143"). The standard  requires  entities to
     record the fair value of a liability for an asset retirement  obligation

                                       9

<PAGE>

     in the  period in which it is incurred.  When the  liability  is  initially
     recorded,  the entity  capitalizes a cost by increasing the carrying amount
     of the related  long-lived  asset.  Over time, the liability is accreted to
     its present value each period, and the capitalized cost is depreciated over
     the useful life of the related asset. Upon settlement of the liability,  an
     entity either settles the  obligation  for its recorded  amount or incurs a
     gain or loss upon settlement.  The standard is effective for fiscal years
     beginning  after June 15,  2002.  The  adoption  of SFAS 143 did not have a
     material impact on the Company's consolidated financial statements.

     In  October  2001,  the FASB  issued SFAS  No. 144, "Accounting  for the
     Impairment or Disposal of  Long-Lived Assets"  ("SFAS 144").  SFAS No. 144
     replaces SFAS No. 121,  "Accounting for the Impairment of Long-Lived Assets
     and for  Long-Lived  Assets to Be Disposed  Of." SFAS No. 144 requires that
     long-lived assets be measured at the lower of carrying amount or fair value
     less  cost  to  sell, whether reported in continuing  operations  or in
     discontinued operations.  Therefore, discontinued operations will no longer
     be measured at net realizable value or include amounts for operating losses
     that have not yet occurred.  SFAS No. 144 also  broadens the  reporting of
     discontinued  operations  to  include  all  components  of an  entity  with
     operations that can be distinguished from the rest of the entity and that
     will be eliminated from the ongoing operations of the entity in a disposal
     transaction.  The  provisions  of SFAS No. 144 are  effective for financial
     statements issued for fiscal years  beginning after December 15, 2001. The
     adoption of SFAS 144 did not  have a  material  impact  on the  Company's
     consolidated financial statements.

     In April 2002, the FASB issued SFAS No. 145, "Recission of FASB Statements
     No. 4, 44, and 64,  Amendment  of FASB Statement  No. 13,  and  Technical
     Corrections"  ("SFAS 145").  SFAS 145 rescinds SFAS 4, "Reporting Gains and
     Losses from  Extinguishment  of Debt",  and an amendment of that Statement,
     SFAS  64,   "Extinguishments of  Debt Made  to Satisfy   Sinking-Fund
     Requirements".  SFAS 145 also rescinds SFAS 44,  "Accounting for Intangible
     Assets  of Motor  Carriers".  SFAS 145  amends  SFAS  13,  "Accounting for
     Leases", to eliminate an inconsistency  between the required accounting for
     sale-leaseback  transactions and the required  accounting for certain lease
     modifications that have economic effects that are similar to sale-leaseback
     transactions.   SFAS  145  also amends other existing   authoritative
     pronouncements to make various technical corrections,  clarify meanings, or
     describe their applicability  under changed conditions.  Certain provisions
     of this statement related to the classification  of gains and losses from
     the  extinguishment of debt are  required  to be  adopted  by the  Company
     beginning  with the year  ended  July 1,  2003.  All other provisions are
     required  to be  adopted  after  May 15,  2002  and  early  application  is
     encouraged. The adoption of SFAS No. 145 is not expected to have a material
     impact on the Company's consolidated financial statements.

     In July  2002,  the  FASB  issued  SFAS No. 146, "Accounting  for  Costs
     Associated  with  Exit or  Disposal Activities"  ("SFAS  146").  SFAS  146
     addresses financial accounting and reporting for costs associated with exit
     or  disposal  activities  and  nullifies  EITF Issue No.  94-3,  "Liability
     Recognition for Certain Employee Termination  Benefits and Other Costs to
     Exit an Activity  (Including  Certain Costs Incurred in a  Restructuring").
     SFAS 146 requires recognition of a liability for a cost associated with an
     exit or disposal activity when the liability is incurred,  as opposed to
     when the entity commits to an exit plan under EITF 94-3.  This statement is
     effective  for exit or disposal  activities  initiated  after  December 31,
     2002.  The  adoption of SFAS 146 did not  have a  material  impact  on the
     Company's consolidated financial statements.

     In November 2002, the FASB issued  interpretation  No. 45,  "Guarantor's
     Accounting and Disclosure Requirement for Guarantees,  Including  Indirect
     Guarantees and  indebtedness of Others." The  interpretation  elaborates on
     the  disclosures  to be made by a guarantor  in its  interim  and  annual
     financial statements about its obligations under certain guaranties that it
     has issued. The interpretation also clarifies that a guarantor is required
     to  recognize,  at the  inception of a guarantee,  a liability for the fair
     value of the obligation undertaken in issuing the guarantee.  The initial
     recognition and initial  measurements  provisions of the interpretation are
     applicable on a prospective  basis to guaranties  issued or modified  after
     December 31, 2002. The Company has made no material  guaranties  subject to
     the liability recognition and disclosure provisions of the interpretation.

                                       10

<PAGE>
     Item 2. Management's Discussion and Analysis of Financial Condition and
     Results of Operations

     Forward-looking statements - Statements contained in this Quarterly Report
     on 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 and generate cash
            flow from operations,
        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 July 2, 2002.

     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 following 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.

     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

                                       11
<PAGE>

     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 April 1, 2003. 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 is more likely than not that it
     will realize all or a portion of the deferred tax assets, the Company would
     record the estimated net realizable value of the deferred tax assets at
     that time and would then provide for income taxes at its combined federal
     and state effective rates.

     RESULTS OF OPERATIONS

     THIRTEEN WEEKS ENDED APRIL 1, 2003 AND APRIL 2, 2002

     Revenue

     Total revenues for the thirteen weeks ended April 1, 2003 decreased by
     $2,175,244, or 37%, to $3,648,548 from $5,823,792 for the thirteen weeks
     ended April 2, 2002. This decrease in revenues of $2,175,244 was primarily
     attributable to decreases of approximately $3,182,000 related to
     non-recurring remediation work performed in the vicinity of the World Trade
     Center, $221,000 related to emergency spills and soil remediation and
     $110,000 related to testing and consulting services, which was partially
     offset by increases of approximately $347,000 related to asbestos, lead and
     mold projects and $999,000 related to insurance reconstruction and spills.
     At the end of the thirteen weeks ended April 1, 2003, the Company began
     mobilization on a contract with Consolidated Edison which, when completed,
     is expected to produce total billings in excess of $1,500,000. The Company
     anticipates that this contract will take approximately four months to
     complete.

     Cost of Revenues

     Cost of revenues decreased $647,199 or 17% to $3,204,889 for the thirteen
     weeks ended April 1, 2003 as compared to $3,852,088 for the thirteen weeks
     ended April 2, 2002. Gross profit decreased $1,528,045 to $443,659, or 12%
     of total revenue, for the thirteen weeks ended April 1, 2003 from
     $1,971,704, or 34% of total revenue, for the thirteen weeks ended April 2,
     2002, due primarily to the absence of higher margin remediation work in the
     vicinity of the World Trade Center. Decreasing revenues and the absence of
     large projects causes the Company's margins to erode. To offset this
     condition, the Company reduced its direct labor force in February 2003.
     This reduction aggregated approximately $56,000 in the thirteen weeks ended
     April 1, 2003. The Company's cost of revenues consists primarily of labor
     and labor related costs, insurance, benefits, bonding and job related
     insurance, repairs, maintenance, equipment rental, materials and supplies,
     disposal costs and depreciation of capital equipment.

     Selling, General and Administrative Expenses

     Selling, general and administrative expenses increased by $137,027 or 10%
     to $1,463,083 for the thirteen weeks ended April 1, 2003 from $1,326,056
     for the thirteen weeks ended April 2, 2002 and constituted approximately
     40% and 23% of revenues in these periods, respectively. This increase was
     primarily attributable to increases in sales and marketing expenses of
     $60,000 and legal reserves relating to the settlement of litigation of
     $205,000, partially offset by decreases in the provision for doubtful
     accounts of $119,000.

     (Benefit) Expense 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
     $270,409 for the thirteen weeks ended April 1, 2003 compared to a benefit
     of $487,324 for the thirteen weeks ended April 2, 2002. This change was due
     to a decrease in the market price of the Company's common stock and an
     increase in the number of options outstanding which 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.

                                       12

<PAGE>

     Interest Expense

     Interest expense decreased by $15,105, or 48%, to $16,100 for the thirteen
     weeks ended April 1, 2003 from $31,205 for the thirteen weeks ended April
     2, 2002. The decrease in interest expense was primarily attributable to
     lower amounts of debt outstanding resulting from reductions in convertible
     debt of $2,780,000, of which $2,000,000 was converted by Spotless in
     November 2001, $680,000 was repaid to unrelated parties in March 2002 and
     $100,000 was repaid to a related party in the first six months of this
     year. Such decreases were offset by increased short-term borrowings from
     Spotless of $1,000,000.

     (Benefit) Provision for Income Taxes

     The (benefit) provision for income taxes increased by $708,783 to a benefit
     of $365,534 for the thirteen weeks ended April 1, 2003 from a provision of
     $343,249 for the thirteen weeks ended April 2, 2002. The increase was
     primarily attributable to the net loss for the thirteen weeks ended April
     1, 2003.

     Net (Loss) Income

     Net income decreased by $1,158,989 to a net loss of $399,465 for the
     thirteen weeks ended April 1, 2003 from net income of $759,524 for the
     thirteen weeks ended April 2, 2002. The decrease was the result of the
     factors discussed above.

     THIRTY-NINE WEEKS ENDED APRIL 1, 2003 AND APRIL 2, 2002

     Revenue

     Total revenues for the thirty-nine weeks ended April 1, 2003 decreased by
     $12,453,848, or 47%, to $14,105,571 from $26,559,419 for the thirty-nine
     weeks ended April 2, 2002. This decrease in revenues of $12,453,848 was
     primarily attributable to decreases of approximately $14,070,000 related to
     non-recurring remediation work performed in the vicinity of the World Trade
     Center, decreases in emergency spill and soil remediation projects of
     approximately $2,564,000 and decreases of approximately $300,000 of testing
     and consulting services. Such decreases were partially offset by increases
     in mold remediation revenues of approximately $2,000,000 and insurance
     reconstruction revenues of approximately $2,523,000.

     Cost of Revenues

     Cost of revenues decreased $5,534,420 or 33% to $11,314,559 for the
     thirty-nine weeks ended April 1, 2003 as compared to $16,848,979 for the
     thirty-nine weeks ended April 2, 2002. This decrease was primarily
     attributable to the labor and subcontractor costs which were required for
     the thirty-nine weeks ended April 2, 2002 period associated with
     non-recurring remediation work performed in the vicinity of the World Trade
     Center. Gross profit decreased $6,919,428 or 71% to $2,791,012, or 20% of
     total revenue, for the thirty-nine weeks ended April 1, 2003 from
     $9,710,440, or 37% of total revenue for the thirty-nine weeks ended April
     2, 2002. The decrease in gross profit was primarily attributable to the
     absence of World Trade Center related work, which produced higher margins
     for the thirty-nine weeks ended April 2, 2002. The Company's cost of
     revenues consists primarily of labor and labor related costs, insurance,
     benefits, bonding and job related insurance, repairs, maintenance,
     equipment rental, materials and supplies, disposal costs and depreciation
     of capital equipment.

     Selling, General and Administrative Expenses

     Selling, general and administrative expenses increased by $392,469 or 11%
     to $4,049,641 for the thirty-nine weeks ended April 1, 2003 from $3,657,172
     for the thirty-nine weeks ended April 2, 2002 and constituted approximately
     29% and 14% of revenues, respectively. The increase was primarily
     attributable to increases in sales and marketing expenses of approximately
     $311,000.

     (Benefit) Expense 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,

                                       13

<PAGE>


     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
     $432,974 for the thirty-nine weeks ended April 1, 2003 compared to an
     expense of $880,696 for the thirty-nine weeks ended April 2, 2002. This
     change was due to a decrease in the market price of the Company's common
     stock and an increase in the number of options outstanding which 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 decreased by $175,195, or 77%, to $51,290 for the
     thirty-nine weeks ended April 1, 2003 from $226,485 for the thirty-nine
     weeks ended April 2, 2002. The decrease in interest expense was primarily
     attributable to lower amounts of debt outstanding resulting from reductions
     in convertible debt of $2,780,000, of which $2,000,000 was converted by
     Spotless in November 2001, $680,000 was repaid to unrelated parties in
     March 2002 and $100,000 was repaid to a related party in the first six
     months of this year. Such decreases were partially offset by increased
     short-term borrowings from Spotless of $1,000,000.

     (Benefit) Provision for Income Taxes

     The (benefit) provision for income taxes increased by $2,800,165 to a
     benefit of $374,851 for the thirty-nine weeks ended April 1, 2003 as
     compared to a provision of $2,425,314 for the thirty-nine weeks ended April
     2, 2002. The increase was primarily attributable to the net loss for the
     thirty-nine weeks ended April 1, 2003.

     Net (Loss) Income

     Net income decreased by $3,010,452 to a net loss of ($478,669) for the
     thirty-nine weeks ended April 1, 2003 from net income of $2,531,783 for the
     thirty-nine weeks ended April 2, 2002. The decrease was the result of the
     factors discussed above.

     LIQUIDITY AND CAPITAL RESOURCES

     As of April 1, 2003, the Company had a cash balance of $58,575, working
     capital of $2,808,356 and stockholders' equity of $2,835,214. 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. Based on
     the Company's experience and for the reasons set forth below, in the
     opinion of management, the Company expects to have sufficient working
     capital to fund its operations on an ongoing basis, including for at least
     the next twelve months. However, economic, market and other conditions may
     affect the Company's cash flows and liquidity. In the event that the
     Company is unable to generate sufficient positive cash flow from
     operations, the Company may seek additional financing from Spotless,
     although Spotless is under no legal obligation to provide such funds. The
     Company currently has no credit facility for additional borrowing.

     During the thirty-nine weeks ended April 1, 2003, in order to address the
     Company's cash flow and operational concerns, including funding the payment
     of income taxes, the purchase of fixed assets, the delay in receipt of
     payment of large receivables and to fund net losses, the Company borrowed
     $1,825,000 from Spotless. During the thirty-nine weeks ended April 1, 2003,
     the Company repaid $825,000 to Spotless. All borrowings from Spotless bear
     interest at the London Interbank Offering Rate ("LIBOR") plus 1 percent
     (2.68%), are secured by all of the Company's assets and are payable on
     demand. As of April 1, 2003, the Company owed Spotless $1,200,000 on such
     short-term notes to fund working capital. Subsequent to April 1, 2003, the
     Company borrowed an additional $250,000 from Spotless so that as of April
     30, 2003, the Company owed Spotless $1,450,000. During the thirty-nine
     weeks ended April 1, 2003, the Company obtained financing of $391,831 from
     unrelated parties for purchases of vehicles and equipment.

     During the thirty-nine weeks ended April 1, 2003, the Company repaid
     $100,000 principal amount of 12% convertible notes to a director of the
     Company.

     The Company's future cash requirements are expected to depend on numerous
     factors, including, but not limited to: (i) its ability to obtain
     environmental or related construction contracts, (ii) its ability to
     generate positive cash flow from operations, and the extent thereof, (iii)
     its ability to raise additional capital or obtain additional financing to
     the

                                       14

<PAGE>


     extent necessary, and (iv) economic and industry conditions. The
     Company anticipates 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. The Company expects to generate
     positive cash flow from operations to meet its working capital needs on an
     ongoing basis, including for at least the next twelve months. There can be
     no assurance, however, that changes in the Company's plans or other events
     affecting the Company's operations will not result in accelerated or
     unexpected cash requirements, or that it will be successful in achieving
     sufficient positive cash flow from operations or obtaining additional
     financing to the extent necessary. The Company has taken several steps to
     improve its operating results and cash flows, including: (a) increasing its
     collection efforts with insurance companies to accelerate the flow of
     payments to the Company on reconstruction projects; (b) applying for
     advance payments to fund the purchase of materials and the payment of
     subcontractors and large staffs of employees on larger projects; (c)
     expanding its marketing efforts and staff to increase the Company's
     industry prominence, attract more bidding opportunities and projects and
     broaden the Company's customer base; (d) attempting to improve its gross
     margins and control its selling, general and administrative expenses.
     Management expects these efforts to improve its results of operations,
     including by producing a more steady flow of small to medium size projects
     and by increasing the Company's exposure to those customers that control
     larger, generally higher gross margin projects, though no assurance can be
     given that these actions will be successful. In the event these efforts do
     not result in sufficient positive cash flow from operations, the Company
     may be required to seek additional financing to meet its working capital
     needs, including possibly from Spotless. Management also continues to
     pursue additional funding sources.

     The table below summarizes aggregate maturities of future minimum lease
     payments under noncancelable operating leases and long-term debt as of
     April 1, 2003:
<TABLE>
<CAPTION>
                             Total          1 Year         2-3 Years       4-5 Years
    <S>                   <C>              <C>              <C>             <C>
    Operating Leases      $1,537,000       $355,000         $753,000        $429,000
    Long-term debt          $414,605       $172,180         $ 93,188        $149,237
</TABLE>


     CASH FLOW

     Net cash used by operating activities was $383,744 for the thirty-nine
     weeks ended April 1, 2003. Accounts receivable decreased by $874,261.
     Income taxes payable decreased $450,820 as a result of the decrease in
     taxable income and state and federal tax payments. Cash used for capital
     expenditures was $1,078,497 during the thirty-nine weeks ended April 1,
     2003, primarily to fund the purchase of commercial drying equipment.

     During the thirty-nine weeks ended April 1, 2003, in order to fund the net
     loss before the benefit from recoverable income taxes, the Company borrowed
     $1,825,000 from Spotless and then repaid $825,000 of such amount.
     Subsequent to April 1, 2003, the Company borrowed an additional $250,000
     from Spotless. All current borrowings from Spotless bear interest at LIBOR
     plus 1 percent (3.07% at April 1, 2003) and are secured by all of the
     Company's assets.

     INFLATION

     Inflation has not had a material impact on the Company's operations over
     the past three fiscal years or during the thirty-nine weeks ended April 1,
     2003.

     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.

     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

                                       15

<PAGE>

     Company's market risk as reported in the Company's Annual Report on Form
     10-K for the period ended July 2, 2002.

     Item 4.  Controls and Procedures

     Our principal executive and financial officers have concluded, based on
     their evaluation as of a date within 90 days before the filing of this
     10-Q, that our disclosure controls and procedures under Rule 13a-14 of the
     Securities Exchange Act of 1934 are effective to ensure that information we
     are required to disclose in the reports we file or submit 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 we are required to
     disclose in such reports is accumulated and communicated to management,
     including our principal executive and officers, as appropriate to allow
     timely decisions regarding required disclosure. Subsequent to our
     evaluation, there were no significant changes in internal controls or other
     factors that could significantly affect these internal controls.


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

     Item 1.      Legal Proceedings
                  -----------------

                  Reference is hereby made to Note 5 to the Consolidated
                  Financial Statements in Part I - Item 1 above and to Item 3 of
                  the Company's Annual Report on Form 10-K for the year ended
                  July 2, 2002 and to the references therein, for a discussion
                  of all material pending legal proceedings to which the Company
                  or any of its subsidiaries is party.

     Item 2.      Changes in Securities
                  ---------------------

                  Not applicable.

     Item 3.      Defaults upon Senior Securities
                  -------------------------------

                  Not applicable

     Item 4.      Submission of Matters to a Vote of Security Holders
                  ---------------------------------------------------

                  None

     Item 5.      Other Information
                  -----------------

                  None


     Item 6.      Exhibits and Reports on Form 8-K
                  --------------------------------

               a. Exhibits:
                  10.1  Stipulation of Settlement of action entitled NICOLAI
                        GRIB AND VLADISLAV KAZAROV V. TRADE-WINDS ENVIRONMENTAL
                        RESTORATION, INC. AND GULF INSURANCE
                  99.1  Certification of Chief Executive Officer pursuant to
                        18 U.S.C. Section 1350
                  99.2  Certification of Chief Financial Officer pursuant to
                        18 U.S.C. Section 1350

               b. Reports on Form 8-K

                      There were no reports on Form 8-K filed during the
                      thirteen week period ended April 1, 2003.

                                       16

<PAGE>


                                   SIGNATURES

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

     Dated: May 15, 2003
                                           WINDSWEPT ENVIRONMENTAL GROUP, INC.




                                           By:      /s/ Michael O'Reilly
                                              ----------------------------------
                                           MICHAEL O'REILLY,
                                           President and Chief Executive Officer
                                           Principal Executive Officer)





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




                                       17

<PAGE>

                                  CERTIFICATION
                                  -------------


     I, Michael O'Reilly, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Windswept
     Environmental Group, Inc.;

     2. Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

     3. Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

     4. The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is being
     prepared;

     b) evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and

     c) presented in this quarterly report our conclusions about the
     effectiveness of the disclosure controls and procedures based on our
     evaluation as of the Evaluation Date;

     5. The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

     b) any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

     6. The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.





     Date: May 15, 2003                            /s/ Michael O'Reilly
                                           -------------------------------------
                                                    Michael O'Reilly
                                           President and Chief Executive Officer

                                       18

<PAGE>


                                  CERTIFICATION
                                  -------------

     I, Charles L. Kelly Jr., certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Windswept
     Environmental Group, Inc.;

     2. Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

     3. Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

     4. The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is being
     prepared;

     b) evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and

     c) presented in this quarterly report our conclusions about the
     effectiveness of the disclosure controls and procedures based on our
     evaluation as of the Evaluation Date;

     5. The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

     b) any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

     6. The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



     Date:  May 15, 2003                           /s/ Charles L. Kelly, Jr.
                                             -----------------------------------
                                                      Charles L. Kelly Jr.
                                                    Chief Financial Officer


                                       19