SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                   FORM 10-QSB

[X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 For the quarterly period ended September 30, 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 0-9040

                               DRYCLEAN USA, Inc.
        (Exact name of small business issuer as specified in its charter)

            DELAWARE                                              11-2014231
(State of other jurisdiction of                                (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                    290 N.E. 68 Street, Miami, Florida 33138
                    (Address of principal executive offices)

                                 (305) 754-4551
                           (Issuer's telephone number)

                                 Not Applicable
                                  (Former name)

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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
                                                             ----       ----

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest  practicable  date:  Common  Stock,  $.025 par value per
share - 7,024,450 shares outstanding as of November 8, 2004.

Transitional Small Business Disclosure Format:       Yes               No  X
                                                         --------         ------




<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1.       Financial Statements

DRYCLEAN USA, Inc.
Condensed Consolidated Statements of Income


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                                                              For the three months ended
                                                                     September 30,
                                                               2004                  2003
                                                           (UNAUDITED)            (Unaudited)
------------------------------------------------------------------------------------------------
<S>                                                     <C>                     <C>
Net sales                                               $       4,045,173       $    3,115,281
Development fees, franchise and license fees,
      commissions and other income                                187,398              184,580
------------------------------------------------------------------------------------------------

             Total revenues                                     4,232,571            3,299,861

Cost of sales                                                   3,075,936            2,247,725
Selling, general and administrative expenses                      965,280              912,922
Research and development expenses                                   7,550                9,550
------------------------------------------------------------------------------------------------

                                                                4,048,766            3,170,197

Operating income                                                  183,805              129,664

Interest income                                                     3,758                8,935
------------------------------------------------------------------------------------------------

Earnings before income taxes                                      187,563              138,599
Provision for income taxes                                         75,025               55,440

------------------------------------------------------------------------------------------------
             Net earnings                               $         112,538       $       83,159
------------------------------------------------------------------------------------------------

Basic and diluted earnings per share (Note 2)           $             .02       $          .01
================================================================================================

Weighted average number of shares:
      of common stock outstanding (Note 2)
             Basic                                              7,019,232            6,996,450
             Diluted                                            7,031,385            6,996,450
================================================================================================
</TABLE>






                                       2
<PAGE>




DRYCLEAN USA, Inc
Condensed Consolidated Balance Sheets

ASSETS

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                                                           SEPTEMBER 30,          June 30,
                                                               2004                 2004
                                                           (UNAUDITED)
------------------------------------------------------------------------------------------------
<S>                                                     <C>                    <C>
Current Assets
      Cash and cash equivalents                         $      1,797,994       $      1,742,251
      Accounts and trade notes                                 1,623,654              1,600,087
         receivable, net
      Inventories                                              3,158,076              2,971,803
      Note receivable-current                                    157,143                157,143
      Lease receivables                                           12,176                 35,172
      Deferred income taxes                                       97,618                 97,618
      Other current assets                                       158,239                112,375
------------------------------------------------------------------------------------------------

           Total current assets                                7,004,900              6,716,449

Note receivable, less current portion                             28,572                 67,857

Lease receivables, due after one year                              7,000                 10,000

Equipment and improvements, net                                  219,273                217,200


Franchise, trademarks and other
    intangible assets, net                                       372,180                385,756
Deferred income taxes                                             26,859                 26,859
------------------------------------------------------------------------------------------------

                                                        $      7,658,784       $      7,424,121
================================================================================================
</TABLE>







                                       3
<PAGE>


DRYCLEAN USA, Inc.
Condensed Consolidated Balance Sheets

LIABILITIES AND
SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                                                           SEPTEMBER 30,         June 30,
                                                               2004                2004
                                                           (UNAUDITED)
-------------------------------------------------------------------------------------------------
<S>                                                     <C>                    <C>
Current Liabilities
      Accounts payable and accrued expenses             $     1,066,565        $     1,228,062
      Customer deposits and other                               768,639                550,042
      Income taxes payable                                       56,896                  1,871
      Dividends payable (Note 5)                                421,467                      -
-------------------------------------------------------------------------------------------------
           Total current liabilities                          2,313,567              1,779,975
-------------------------------------------------------------------------------------------------

Total liabilities                                             2,313,567              1,779,975

Shareholders' Equity
      Common stock, $.025 par value,
         15,000,000 shares authorized;
         7,055,500 and 7,045,500 shares
         issued and outstanding at
         September 30, 2004 and June 30,
         2004 respectively, including shares
         held in treasury                                       176,388                176,138
      Additional paid-in capital                              2,075,870              2,066,120
      Retained earnings                                       3,095,979              3,404,908
      Treasury stock, 31,050 shares
         at cost                                                 (3,020)                (3,020)
-------------------------------------------------------------------------------------------------

Total shareholders' equity                                    5,345,217              5,644,146
-------------------------------------------------------------------------------------------------

                                                        $     7,658,784        $     7,424,121
=================================================================================================
</TABLE>






                                       4
<PAGE>


DRYCLEAN USA, Inc.
Condensed Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                                         For the three months ended
                                                                                September 30,
                                                                         2004                   2003
                                                                      (UNAUDITED)            (Unaudited)
------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                    <C>
Operating activities:
   Net earnings                                                    $        112,538       $          83,159

   Adjustments to reconcile net earnings to net cash
    provided (used) by operating activities:
      Depreciation and amortization                                          29,064                  29,055
      Bad debt expense                                                          679                     714
      (Increase) decrease in operating assets:
          Accounts, notes and lease receivables                               1,750                  43,562
          Inventories                                                      (186,273)               (250,943)
          Other current assets                                              (45,864)                (37,840)
          Refundable income taxes                                                 -                  (6,635)
      Increase (decrease) in operating liabilities:
          Accounts payable and accrued expenses                            (161,501)                133,506
          Customer deposits and other                                       218,597                  47,796
          Income taxes payable                                               55,025                (112,925)
------------------------------------------------------------------------------------------------------------

Net cash provided (used) by operating activities                             24,015                 (70,551)
------------------------------------------------------------------------------------------------------------


Investing activities:
   Capital expenditures, net                                                (16,766)                 (2,675)
   Payments received on note receivable                                      39,285                  26,192
   Patent and trademark expenditures                                           (791)                 (1,985)
------------------------------------------------------------------------------------------------------------
Net cash provided by investing activities                                    21,728                  21,532

Financing activities:
   Proceeds from exercise of stock options                                   10,000                       -
------------------------------------------------------------------------------------------------------------

Net cash provided by financing activities                                    10,000                       -
------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                         55,743                 (49,019)
Cash and cash equivalents at beginning of period                          1,742,251               1,614,141
------------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of period                         $      1,797,994       $       1,565,122
===========================================================================================================

Supplemental disclosures of cash flow
   information
      Cash paid during the period for:
          Income taxes                                             $         20,000       $        175,000
          Dividends declared and not paid                          $        421,467                350,963

</TABLE>




                                       5
<PAGE>


                               DRYCLEAN USA, Inc.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
              ----------------------------------------------------

NOTE (1) - GENERAL: The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial statements and the
instructions to Form 10-QSB related to interim period financial statements.
Accordingly, these condensed consolidated financial statements do not include
certain information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. However, the
accompanying unaudited condensed consolidated financial statements contain all
adjustments (consisting only of normal recurring accruals) which, in the opinion
of management, are necessary in order to make the financial statements not
misleading. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year. For further
information, refer to the Company's financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-KSB for the year ended June
30, 2004. The June 30, 2004 balance sheet information, contained herein, was
derived from the audited consolidated financial statements included in the
Company's Annual Report on Form 10-KSB as of that date.

NOTE (2) - EARNINGS PER SHARE: Basic and diluted earnings per share for the
three months ended September 30, 2004 and 2003 are computed as follows:

                                          For the three months ended
                                                 September 30,
                                            2004               2003

Basic
-----
Net earnings                          $     112,538     $      83,159
Weighted average shares
   outstanding                            7,019,232         6,996,450
------------------------------------------------------------------------

Basic earnings per share              $         .02     $         .01
------------------------------------------------------------------------
Diluted
-------
Net earnings                               $112,232           $83,159
Weighted average shares
outstanding                               7,019,232         6,996,450
Plus incremental shares
   from assumed
   exercise of
   stock options                             12,193                 -
------------------------------------------------------------------------
Diluted weighted average                  7,031,385         6,996,450
   common shares
------------------------------------------------------------------------
Diluted earnings per
   share                              $         .02     $         .01
========================================================================

No stock options were excluded at September 30, 2004. There were 439,000 stock
options outstanding at September 30, 2003 that were excluded in the computations
of earnings per share because the exercise prices of the options were at least
the average market prices of the Company's common stock during these periods.



                                       6
<PAGE>

NOTE (3) - REVOLVING CREDIT LINE: On October 28, 2004, the Company received an
extension until October 30, 2005 of its existing $2,250,000 revolving line of
credit facility. In addition, on October 28, 2004, the Loan Agreement, dated as
of December 19, 2001, as amended, under which the revolving line of credit
facility was established, was amended to eliminate the borrowing base
restriction on borrowings under the revolving credit facility, thereby enabling
the Company to borrow up to the full $2,250,000 amount available under that
facility regardless of the Company's levels of accounts receivable and
inventories. The Company's obligations under the facility continue to be
guaranteed by the Company's subsidiaries and collateralized by substantially all
of the Company's and its subsidiaries' assets.

NOTE (4) - STOCK OPTIONS: The Company accounts for its stock-based compensation
plans under Accounting Principles Board ("APB") Opinion No. 25, Accounting for
Stock Issued to Employees. The pro forma information below is based on
provisions of Statement of Financial Accounting Standard ("FAS") No. 123,
Accounting for Stock-Based Compensation, as amended by FAS 148, Accounting for
Stock-Based Compensation-Transition and Disclosure, issued in December 2002:

                                                      For the three months
                                                       ended September 30,
                                                      2004             2003
--------------------------------------------------------------------------------
Net earnings, as reported                        $    112,538    $     83,159
Less: Fair value of employee stock
compensation                                                -         (10,783)
--------------------------------------------------------------------------------
Pro forma net earnings                           $    112,538    $     72,376


Earnings per common share:
Net earnings as reported - Basic
   and diluted                                   $        .02    $        .01
Net earnings, pro forma - Basic
   and diluted                                   $        .02    $        .01

There were no options granted during the three months ended September 30, 2004.
In August 2004, a director exercised an option to purchase 10,000 shares of the
Company's common stock at an exercise price of $1.00 per share.

NOTE (5) - CASH DIVIDENDS: On September 27, 2004, the Company's Board of
Directors declared a $.06 per share cash dividend ( an aggregate of
approximately $421,467) which was paid on November 1, 2004 to shareholders of
record on October 15, 2004

NOTE (6) SEGMENT INFORMATION: The Company's reportable segments are strategic
businesses that offer different products and services. They are managed
separately because each business requires different marketing strategies. The
Company primarily evaluates the operating performance of its segments based on
the categories noted in the table below. The Company has no sales between
segments.




                                       7
<PAGE>


Financial information for the Company's business segments is as follows:

<TABLE>
<CAPTION>
                                                              For the three months ended
                                                                    September 30,
---------------------------------------------------------------------------------------------
                                                            2004                   2003
                                                         (UNAUDITED)            (Unaudited)
---------------------------------------------------------------------------------------------
<S>                                                   <C>                 <C>
Revenues:
    Commercial and industrial laundry and dry
      cleaning equipment                              $     4,135,146     $        3,183,320
    License and franchise operations                           97,425                116,541

---------------------------------------------------------------------------------------------
Total revenues                                        $     4,232,571     $        3,299,861
---------------------------------------------------------------------------------------------

Operating income (loss):
    Commercial and industrial laundry and dry
      cleaning equipment                              $       167,402     $           76,731
    License and franchise operations                           79,558                 93,120
    Corporate                                                 (63,155)               (40,187)
---------------------------------------------------------------------------------------------
Total operating income (loss)                         $       183,805     $          129,664
---------------------------------------------------------------------------------------------

                                                           September 30,         June 30,
                                                               2004                2004
                                                            (Unaudited)
Identifiable assets:
    Commercial and industrial laundry and dry
      cleaning equipment                              $      6,517,132    $        6,325,915
    License and franchise operations                           733,073               655,744
    Corporate                                                  408,579               442,462
---------------------------------------------------------------------------------------------
Total assets                                          $      7,658,784    $        7,424,121
</TABLE>



                                       8
<PAGE>


NEW ACCOUNTING PRONOUNCEMENTS
-----------------------------

During May 2003, the FASB issued SFAS 150," Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity", effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
effective at the beginning of the first interim period beginning after June 15,
2003. This Statement establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities
and equity. It requires that an issuer classify a freestanding financial
instrument that is within its scope as a liability (or an asset in some
circumstances). Many of those instruments were previously classified as equity
or in a separate category between debt and equity in a balance sheet. Some of
the provisions of this Statement are consistent with the current definition of
liabilities in FASB Concepts Statement No. 6, "Elements of Financial
Statements". The Company does not participate in such transactions.

In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 clarifies the application
of Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 applies immediately to variable interest
entities ("VIE's") created after January 31, 2003, and to VIE's in which an
enterprise obtains an interest after that date. On October 9, 2003, the FASB
issued FASB Staff Position No. FIN 46-6 "Effective Date of FASB Interpretation
No. 46 Consolidation of Variable Interest Entities," which defers the
implementation date for public entities that hold an interest in a variable
interest entity or potential variable interest entity from the first fiscal year
or interim period beginning after June 15, 2003 to the end of the first interim
or annual period ending after December 15, 2003. This deferral applies only if
(i) the variable interest entity was created before February 1, 2003 and (ii)
the public entity has not issued financial statements reporting that variable
interest entity in accordance with FIN 46, other than disclosures required by
paragraph 26 of FIN 46. The adoption of FIN 46 did not have a material impact on
the Company's financial position, liquidity or results of operations.




                                       9
<PAGE>


ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

OVERVIEW
--------

As previously reported, in June 2004, the Company obtained an expansion of the
territory in which it acts as a distributor for certain laundry products to
cover most of Florida as another distributor ceased operations and added two
experienced sales engineers in June 2004 to adequately cover the expanded
territory and to expand sales of the other products marketed by the Company in
that geographic area.

The first quarter of fiscal 2005 was the first full quarter that the Company
operated under the conditions of the expanded sales territory with increased
sales staff with representation in Orlando, Jacksonville and Tampa Bay, Florida,
in addition to its previous territory of southeastern Florida. The results were
optimistic with sales increasing by 29.8% over the same period of last year.
Despite a reduced gross profit margin, the Company increased its net income by
35.3% over the first quarter of fiscal 2004. Except for an increase in salaries
due to the additional staff, selling, general and administrative expenses
remained essentially flat as costs were kept under control, resulting in an
improvement of overall selling, general and administrative expenses as a
percentage of total revenues.

As a consequence of the expansion, the Company services a greater number of
customers who have placed increased sales orders resulting in an increase in
customer deposits of $386,637 and increased inventories of $330,195 at September
30, 2004 compared to September 30, 2003. It is expected that inventory levels
will be maintained and possibly increased, depending on sales conditions. Cash
on hand should be adequate to fund this increase, as well as pay a $.06 per
share dividend (an aggregate of $421,467) on November 1, 2004 to shareholders of
record on October 15, 2004.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

During the first quarter of fiscal 2005, cash increased by $55,743 compared to a
decrease in cash of $49,019 for the same period of fiscal 2004. The following
summarizes the Company's Consolidated Statement of Cash Flows.

                                            Three Months Ended September 30,
                                              2004                   2003
------------------------------------------------------------------------------
Net cash provided (used) by:
     Operating activities                    $24,015               $(70,551)
     Investing activities                     21,728                 21,532
     Financing activities                     10,000                      -

Operating activities for the three months ended September 30, 2004 provided cash
of $24,015, which was contributed principally by the Company's net earnings of
$112,538 and the non-cash expenses for depreciation and amortization of $29,064.
Changes in operating assets and liabilities since June 30, 2004 used cash of
$118,266 mostly to fund an increase in inventories of $186,273 and a reduction
in accounts payable and accrued expenses of $161,501. An increase in customer
deposits of $218,597 and an increase in income taxes payable of $55,025 offset
this usage of cash. The increase in inventory was needed to service the expanded
sales territory. As a consequence of this expanded territory the Company
acquired many new customers who placed sales orders thereby increasing customer
deposits and sales during the period.



                                       10
<PAGE>

Operating activities for the three months ended September 30, 2003 used net cash
of $70,551. The Company's net earnings ($83,159), together with non-cash
expenses for depreciation and amortization ($29,055) and a provision for bad
debt ($714) produced an aggregate of $112,928 of cash. However, changes in
operating assets and liabilities used cash of $183,479, mostly to support
increases in inventories ($250,943), other assets ($37,840) and refundable
income taxes ($6,635) and as a result of a decrease in income taxes payable
($112,925). The inventory increase was to take advantage of higher discounts
from the Company's vendors and an increase in incoming order activity. Partially
offsetting these uses of cash was cash provided by a decrease in accounts, trade
notes and lease receivables ($43,562) and an increase in accounts payable and
accrued expenses ($133,506) and customer deposits ($47,796).

Investing activities for the first quarter of fiscal 2005 provided cash of
$21,728 mainly as a result of payments ($39,285) received on a note from the
sale of the Company's telecommunications segment, which was partially offset by
expenditures for capital equipment ($16,766) and patent and trademark work
($791). Cash of $21,532 was provided during the first quarter of fiscal 2004 as
a result of payments received on the note ($26,192), offset, in part, by capital
equipment purchases ($2,675) and patent work spending ($1,985). The difference
in note payments between the two periods of $13,093 was attributed to a July
2003 payment which was received a month earlier in June 2003.

For the three months ended September 30, 2004, financing activities provided the
Company with cash of $10,000 received from the exercise of a stock option to
purchase 10,000 shares of the Company's common stock at an exercise price of
$1.00 per share by a director of the Company.

On September 27, 2004, the Company's Board of Directors declared a $.06 per
share annual dividend (an aggregate of $421,467) payable on November 1, 2004 to
shareholders of record on October 15, 2004.

On October 28, 2004, the Company received an extension until October 30, 2005 of
its existing $2,250,000 revolving line of credit facility. In addition, on
October 28, 2004, the Loan Agreement, dated as of December 19, 2001, as amended,
under which the revolving line of credit facility was established, was amended
to eliminate the borrowing base restriction on borrowings under the revolving
credit facility, thereby enabling the Company to borrow up to the full
$2,250,000 amount available under that facility regardless of the Company's
levels of accounts receivable and inventories. The Company's obligations under
the facility continue to be guaranteed by the Company's subsidiaries and
collateralized by substantially all of the Company's and its subsidiaries'
assets.

The Company believes that its present cash position and cash it expects to
generate from operations and cash borrowings available under its $2,250,000 line
of credit will be sufficient to meet its operational needs.

OFF-BALANCE SHEET FINANCING
---------------------------

The Company has no off-balance sheet financing arrangements within the meaning
of item 303(c) of Regulation S-B.



                                       11
<PAGE>

RESULTS OF OPERATIONS
---------------------

<TABLE>
<CAPTION>
                                                        Three Months Ended September 30,
                                                            2004                 2003
---------------------------------------------------------------------------------------------------------
<S>                                                     <C>                 <C>                     <C>
Net sales                                               $     4,045,173     $      3,115,281       +29.8%
Development fees, franchise and
     license fees, commissions and
     other income                                               187,398              184,580      +  3.1%
---------------------------------------------------------------------------------------------------------
Total revenues                                          $     4,232,571     $      3,299,861       +28.3%
</TABLE>

Revenues for the three month period ended September 30, 2004 increased by
$932,710 (28.3%) over the same period of fiscal 2004. The increase in revenues
was mostly in the commercial laundry and dry cleaning segment, which had a sales
increase of $929,892 (29.8%). Sales increases were experienced in all product
lines and was mostly attributable to the expanded laundry products territory and
increased sales staff. The Company had increased parts sales of 17.7% and
increased laundry sales equipment of 33.7%. In addition, boiler and dry cleaning
equipment sales increased 179.1% and 2.4% respectively. Development, franchise
and license fees also increased, by $2,818 (3.1%), in the first quarter of
fiscal 2005 over the same period of last year. However, franchise and royalty
fees continued to be affected by the unstable economy of South America. This
category of revenues also include the Development and Brokerage divisions which
contribute less than 1% of the Company's total revenues.

<TABLE>
<CAPTION>
                                                             Three Months Ended September 30,
                                                                 2004                 2003
------------------------------------------------------------------------------------------------
<S>                                                              <C>                  <C>
As a percentage of sales:
     Cost of sales                                               76.0%                72.2%
As a percentage of revenues:
     Selling, general and administrative expenses                22.8%                27.7%
     Research and development                                      .2%                  .3%
     Total expenses                                              95.7%                96.1%
</TABLE>

The increase in cost of goods sold as a percentage of sales was due to larger
bulk sales which carry smaller margins and a strategically planned sales
campaign to increase the Company's market share in the new territory.

Selling, general and administrative expenses increased by $52,358 (5.7%).
However, as a percentage of revenues, these expenses decreased to 22.8% for the
three month period ended September 30, 2004 compared to the 27.7% during the
same period of fiscal 2004. The dollar increase in expense was primarily due to
the additional salary expense for a new executive officer and sales staff. The
improvement in this category of expenses as a percentage of sales was due to the
significant increase in sales.

Research and development expenses decreased by $2,000 (20.9%) during the first
quarter of fiscal 2005 when compared to the first quarter of fiscal 2004. These
expenses relate to the on-going research on the Green-Jet (R) and Multi-Jet(TM)
technologies and their application to smaller machines for the dry cleaning
market and the hotel industry.



                                       12
<PAGE>

The overall expenses of the Company, including costs of goods sold, were 95.7%
of total revenues for the first quarter of fiscal 2005, compared to 96.1% for
the same period of fiscal 2004, reflecting relatively stable overall costs
spread over increased sales.

Interest income decreased by $5,177 (57.9%) for the first quarter of fiscal 2004
compared to the same period of fiscal 2003 due to the lower outstanding note
receivable balance due to principal payments of a note received by the Company
as part of the consideration for the sale of the Company's telecommunications
segment in July 2002.

The effective tax rate used for both periods was 40%.

INFLATION
---------

Inflation has not had a significant effect on the Company's operations during
any of the reported periods.

TRANSACTIONS WITH RELATED PARTIES
---------------------------------

The Company leases 27,000 square feet of warehouse and office space from William
K. Steiner, a principal stockholder, Chairman of the Board of Directors and a
director of the Company, under a lease, which expires in October 2005. Annual
rental under this lease is approximately $83,200. The Company believes that the
terms of the lease are comparable to terms that would be obtained from an
unaffiliated third party for similar property in a similar locale.

CRITICAL ACCOUNTING POLICIES
----------------------------

The accounting policies that the Company has identified as critical to its
business operations and to an understanding of the Company's results of
operations are described in detail in the Company's Annual Report on Form 10-KSB
for the fiscal year ended June 30, 2004. In many cases, the accounting treatment
of a particular transaction is specifically dictated by accounting principles
generally accepted in the United States of America, with no need for
management's judgment in their application. In other cases, preparation of the
Company's unaudited condensed consolidated financial statements for interim
periods requires us to make estimates and assumptions that effect the reported
amount of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reported period. There can be no assurance that
the actual results will not differ from those estimates.

NEW ACCOUNTING PRONOUNCEMENTS
-----------------------------

During May 2003, the FASB issued SFAS 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity", effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
effective at the beginning of the first interim period beginning after June 15,
2003. This Statement establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities
and equity. It requires that an issuer classify a freestanding financial
instrument that is within its scope as a liability (or an asset in some
circumstances). Many of those instruments were previously classified as equity
or in a separate category between debt and equity in a balance sheet. Some of
the provisions of this Statement are consistent with the current definition of


                                       13
<PAGE>

liabilities in FASB Concepts Statement No. 6, "Elements of Financial
Statements". The Company does not participate in such transactions.

In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 clarifies the application
of Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 applies immediately to variable interest
entities ("VIE's") created after January 31, 2003, and to VIE's in which an
enterprise obtains an interest after that date. On October 9, 2003, the FASB
issued FASB Staff Position No. FIN 46-6 "Effective Date of FASB Interpretation
No. 46 Consolidation of Variable Interest Entities," which defers the
implementation date for public entities that hold an interest in a variable
interest entity or potential variable interest entity from the first fiscal year
or interim period beginning after June 15, 2003 to the end of the first interim
or annual period ending after December 15, 2003. This deferral applies only if
(i) the variable interest entity was created before February 1, 2003 and (ii)
the public entity has not issued financial statements reporting that variable
interest entity in accordance with FIN 46, other than disclosures required by
paragraph 26 of FIN 46. The adoption of FIN 46 did not have a material impact on
the Company's financial position, liquidity or results of operations.

FORWARD LOOKING STATEMENTS
--------------------------

Certain statements in this Report are "forward looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. When used in
this Report, words such as "may," "should," "seek," "believe," "expect,"
anticipate," "estimate," "project," "intend," "strategy" and similar expressions
are intended to identify forward looking statements regarding events, conditions
and financial trends that may affect the Company's future plans, operations,
business strategies, operating results and financial position. Forward-looking
statements are subject to a number of known and unknown risks and uncertainties
that may cause actual results, trends, performance or achievements of the
Company, or industry trends and results, to differ materially from the future
results, trends, performance or achievements expressed or implied by such
forward-looking statements. Such risks and uncertainties include, among others:
general economic and business conditions in the United States and other
countries in which the Company's customers and suppliers are located; industry
conditions and trends; technology changes; competition and other factors which
may affect prices which the Company may charge for its products and its profit
margins; the availability and cost of the equipment purchased by the Company;
relative values of the United States currency to currencies in the countries in
which the Company's customers, suppliers and competitors are located; changes
in, or the failure to comply with, government regulation, principally
environmental regulations; and the Company's ability to successfully introduce,
market and sell at acceptable profit margins its new Green Jet(R)
dry-wetcleaning(TM) machine and Multi-Jet(TM) dry cleaning machine; the
Company's ability to implement changes in its business strategies and
development plans; and the availability, terms and deployment of debt and equity
capital if needed for expansion. These and certain other factors are discussed
in this Report and from time to time in other Company reports filed with the
Securities and Exchange Commission. The Company does not assume an obligation to
update the factors discussed in this Report or such other reports.



                                       14
<PAGE>

ITEM 3.       CONTROLS AND PROCEDURES

As of the end of the period covered by this report, management of the Company,
with the participation of the Company's President and principal executive
officer and the Company's principal financial officer, evaluated the
effectiveness of the Company's "disclosure controls and procedures," as defined
in Rule 13a-15(e) under the Securities Exchange Act of 1934. Based on that
evaluation, these officers concluded that, as of the date of their evaluation,
the Company's disclosure controls and procedures were effective to provide
reasonable assurance that information required to be disclosed in the Company's
periodic filings under the Securities Exchange Act of 1934 is accumulated and
communicated to our management, including those officers, to allow timely
decisions regarding required disclosure.

During the period covered by this Report, there were no changes in the Company's
internal control over financial reporting that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over
financial reporting.

                           PART II. OTHER INFORMATION

ITEM 6.       EXHIBITS

31.01          Certification of principal executive officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002 promulgated under the
               Securities Exchange Act of 1934.

31.02          Certification of principal financial officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002 promulgated under the
               Securities Exchange Act of 1934.

32.01          Certification of Principal Executive Officer pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002.

32.02          Certification of Principal Financial Officer pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002.

                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Date:  November 10, 2004

                                          DRYCLEAN USA, Inc.

                                      By: /s/ Venerando J. Indelicato
                                          --------------------------------------
                                          Venerando J. Indelicato,
                                          Treasurer and Chief Financial Officer




                                       15
<PAGE>


                                  EXHIBIT INDEX


31.01          Certification of principal executive officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002 promulgated under the
               Securities Exchange Act of 1934.

31.02          Certification of principal financial officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002 promulgated under the
               Securities Exchange Act of 1934.

32.01          Certification of Principal Executive Officer pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002.

32.02          Certification of Principal Financial Officer pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002.