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                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                   For the Fiscal Year Ended December 31, 2003

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

              For the Transition Period from        to

                          Commission File No. 000-27420

                          WHITEWING ENVIRONMENTAL CORP.
                 (Name of small business issuer in its charter)

                Delaware                                       95-4437350
    (State or other jurisdiction of                        (I.R.S. Employer
    incorporation or organization)                       Identification Number)

730 Grand Avenue, Ridgefield, New Jersey                         07657
(Address of principal executive offices)                       (Zip Code)

                    Issuer's Telephone Number: (201) 943-0800

         Securities registered under Section 12(b) of the Exchange Act:

                                      None

         Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, $.001 par value
                                (Title of Class)

    Check whether the issuer (1) filed all reports required to be filed by
Section 12 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 [ ] No [X]

    Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and disclosure will not be
contained to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB.  [X]

    The issuer's revenue for the year ended December 31, 2003 was $1,649,647.

    The aggregate market value of the voting stock held by non-affiliates as of
June 15, 2004, computed by reference to the price at which the stock was sold,
or the average closing bid and asked quotations of such stock, was $2,086,3330.

DOCUMENTS INCORPORATED BY REFERENCE:  None

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                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----
Part I
     Item 1  -  Description of Business                                       3
     Item 2  -  Description of Property                                      14
     Item 3  -  Legal Proceedings                                            15
     Item 4  -  Submission of Matters to Vote of
                Security Holders                                             16

Part II
     Item 5  -  Market for Registrant's Common Equity
                And Related Stockholder's Matters                            16
     Item 6  -  Management's Discussion and Analysis of
                Financial Conditions and Results of Operations               17
     Item 7  -  Financial Statements                                         21
     Item 8  -  Change in and Disagreements with Accountants
                On Accounting and Financial Disclosure                       21
     Item 8A -  Controls and Procedures                                      22

Part III
     Item 9  -  Directors, Executive Officers, Promoters and
                Control Persons; Compliance with Section 16(a)
                Of the Exchange Act                                          22
     Item 10 -  Executive Compensation                                       24
     Item 11 -  Security Ownership of Certain Beneficial
                Owners and Management                                        27
     Item 12 -  Certain Relationships and Related Transactions               28
     Item 13 -  Exhibits and Reports on Form 8-K                             29
     Item 14 -  Principal Accountant Fees and Services                       30

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                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
                -------------------------------------------------

         Certain statements contained in this Annual Report on Form 10-KSB
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
All statements included in this Annual Report, other than statements of
historical facts, regarding our strategy, future operations, financial position,
estimated revenues, projected costs, prospects, plans and objectives are
forward-looking statements. When used in this Annual Report, the words "will,"
"believe," "anticipate," "intend," "estimate," "expect," "project" and similar
expressions are intended to identify forward-looking statements, although not
all forward-looking statements contain these identifying words. We cannot
guarantee future results, levels of activity, performance or achievements, and
you should not place undue reliance on our forward-looking statements. Our
actual results could differ materially from those anticipated in these
forward-looking statements as a result of various factors, including the risks
described in Part I - Risk Factors, and elsewhere in this Annual Report. Our
forward-looking statements do not reflect the potential impact of any future
acquisitions, mergers, dispositions, joint ventures or strategic investments. In
addition, any forward-looking statements represent our expectation only as of
the day this Annual Report was first filed with the SEC and should not be relied
on as representing our expectations as of any subsequent date. While we may
elect to update forward-looking statements at some point in the future, we
specifically disclaim any obligation to do so, even if our expectations change.

                                     PART I

Item 1.  Description of Business.

Business Development and Recent Events:
---------------------------------------

         Whitewing Environmental Corp. ("Whitewing"), a Delaware Corporation,
through its predecessor, Total Filter Recycling, Inc., a New Jersey Corporation,
began operations in 1992 in the business of collecting and recycling used
automotive oil filters.

         As of January 1, 2003, the Company had a 50% investment in ARS, which
was accounted for under the equity method. ARS manufactures and distributes
industrial absorbents.

         On February 26, 2003 the Company signed a Stock Purchase Agreement with
two shareholders of ARS (Geoffrey Perry and Carol Dancer) to purchase the
remaining 50% for 2,000,000 shares of the Company's common stock and $223,122 in
the form of cash ($50,000) and a promissory note ($173,122). The sellers' shares
of ARS are in escrow and will be released to the Company as payments are made.
The Company purchased the remaining 50% of ARS to expand its current production
capabilities and aggressively develop product lines that it has researched and
developed. The results of operations of ARS have been included in the
consolidated financial statements from the date of acquisition. The sellers
entered into employment agreements with the Company.

         On April 9, 2004, Carol Dancer, Advanced Recovery Solutions' (ARS) Vice
President of Sales and Marketing, resigned her position with ARS but agreed to
stay on during a period of transition, which the Company treated as the creation
of an at-will employment arrangement. On June 4, 2004, Dancer resigned from that
position and the Company accepted her resignation and removed her from the Board
of Directors of ARS.

         On June 4, 2004, the employment of Geoffrey Perry, President of ARS,
was terminated for cause. He was also removed from the Board of Directors of
ARS. The Board of Directors of ARS has not, as of yet, elected a new President.
The Company will close the ARS Foxboro Massachusetts office on or about June 15,
2004. The Company is also closing its Kent, Washington warehouse. The Company
retained a commercial realtor to find a sub-tenant or assignee for the Foxboro
Massachusetts office and is negotiating a termination agreement with the
landlord for the Kent Washington warehouse. The outstanding rent obligation will
be accrued on the books of the Company.

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         In March of 2004 Whitewing discontinued business operations of its
subsidiary, Total Recycling Services, Inc. f/k/a Total Filter Recycling, Inc.,
and began the process of selling those assets with proceeds applied to the
obligations due to senior creditors. On June 4, 2004, the Company completed the
removal of all of the property of Total Recycling Services, Inc. from its
primary facility at 430 Victoria Terrace in Ridgefield, New Jersey.

         In May of 2004, the Company received payment for the sale of its parts
washer sink inventory and customer list with the proceeds applied first to fully
liquidate amounts due on capital leases to the companies that leased the
equipment ($30,795.95). The sale price is related to the number of customers
that contract for service with the buyer, so the final proceeds are not yet
calculable. All proceeds will be applied to the Company's primary line of
credit.

Current Business of Whitewing:
------------------------------

PRINCIPAL PRODUCTS OR SERVICES AND THEIR MARKETS:
-------------------------------------------------

         Whitewing is a manufacturer of industrial absorbent products from waste
generated in the paper manufacturing and absorbent industries, primarily
residual short fiber from paper production and scrap polypropylene. These items
are made into various absorbents including loose particulate, booms, pillows,
socks, and pads.

         Beginning in January of 2004, Whitewing became a distributor for System
One Technologies, Inc. (System One) - a manufacturer of self-cleaning parts
washer sinks and paint gun cleaners ("System One Products"). Founded in 1990,
SystemOne Technologies designs, manufactures, sells and supports a full range of
self contained, recycling industrial parts washing products for use in the
automotive, aviation, marine and general industrial markets. System One has been
awarded eleven patents for its products which incorporate innovative,
proprietary resource recovery and waste minimization technologies. System One is
headquartered in Miami, Florida. Whitewing was granted primary distribution
rights for these products in the states of Delaware, New Jersey, New York,
Connecticut and Pennsylvania (from Harrisburg east). Management anticipates
expanding sales to other products and equipment in the near future.

         Until March of 2004, Whitewing was also in the business of recovering
and recycling used oil filters and used antifreeze and it provided related
services, principally in parts washer and brake washer sink rentals and
absorbent supplies, in the retail and fleet automotive service and repair
industry. These business lines were discontinued in March of 2004 and certain of
the assets of this division are being sold with proceeds applied to obligations
due to senior creditors. Other assets and liabilities of this business line
remain on the balance sheet. By June 4, 2004, the Company completed the removal
of all of the property of Total Recycling Services, Inc. from its primary
facility at 430 Victoria Terrace in Ridgefield, New Jersey and from its
facilities in Middleboro, Massachusetts and Harrisburg, Pennsylvania.

DISTRIBUTION METHODS:
---------------------

         Whitewing sells its absorbent products directly to industrial users and
to distributors who market those products to industrial users. Product is
shipped via common carrier to distributors or direct to customers.

         Whitewing distributes and services System One Products with company
owned vans.

         With respect to absorbent products sales, Whitewing embarked on a
multi-faceted marketing plan, which includes:

         - the recent hiring of a new National Sales Manager who will market
           Whitewing products to the nation's largest distributors while
           continuing development of sales efforts targeted to specific
           applications,
         - continuing to refine the content and distribution of its catalog;
         - targeting specific trade shows to promote sales of its products and

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           services and to foster a unique image in the industry;
         - upgrading its website to facilitate internet sales and order entry.

         With respect to System One Products, Whitewing established a sales
force to visit current users of traditional parts washer sinks and introduce
them to System One Products. Whitewing intends to develop and implement a direct
mail and telemarketing program. Whitewing also negotiated strategic sales and
marketing relationships with wholesalers who service the motor vehicle service
industry. Their wholesalers sales forces will be selling Whitewing products to
their customers on a commission basis.

COMPETITION:
-----------

         Whitewing's principal competitors in the absorbent industry are New Pig
and International Absorbents Inc.

         For its System One Products, the primary competitors are a number of
companies that lease, sell and service traditional parts washer sinks, the
largest of which is Safety-Kleen.

RAW MATERIALS/PRINCIPAL SUPPLIERS:
---------------------------------

         Whitewing contracts with its main supplier of its raw materials for
absorbent products lines. Because the raw material is waste in the hands of the
supplier, Whitewing is paid a disposal fee for removing the material. The
material used for most fill products (socks, booms, and pillows) is waste
generated by a wide variety of polypropylene manufacturers.

         Whitewing obtains all of its System One Products from System One
Technologies, Inc. in Miami, Florida. (STEK.OB)

DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS:
-----------------------------------------

         Approximately Ninety five (95%) percent of Whitewing's absorbent
customers are large distribution companies. The balance of its customers are
direct users.

         Whitewing enters into lease, sale, and/or service contracts with each
of its customers for System One Products. Approximately seventy five (75%)
percent of Whitewing's customers are small businesses with the balance of the
customers being large firms in both automotive repair businesses and fleet
operations.

INTELLECTUAL PROPERTY:
---------------------

         Whitewing owns, among other things, a specialized process to fill
absorbent socks and booms, chemical formulas for acid and base neutralizers, pet
bedding, cat litter, hydrophobic absorbents and a variety of other products.
Although many of these systems or their elements may be patentable, Whitewing
does not have patents and has not made patent applications to cover these
systems.

GOVERNMENT REGULATION:
---------------------

         OVERVIEW. Whitewing's current business activities do not require
special permitting and are not addressed by specific government regulation.

         With respect to operations of TRS, which were discontinued in March of
2004, State and federal governmental regulations govern, among other things: the
handling of waste oil collected by Whitewing; Whitewing's transportation of
waste oil; the operation of the facilities at which Whitewing stores and
processes the waste oil and filters it collects; and the ultimate disposal of
waste Whitewing removes from the oil and of the filters it collects. Whitewing
discontinued these operations in March of 2004, however regulations continue to
apply to closure procedures.

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         Various permits are generally required by federal and state
environmental agencies for TRS's transportation, accumulation and oil processing
facilities. Most of these permits must be renewed periodically. Zoning, land use
and siting restrictions also apply to these facilities. Regulations also govern
matters such as the disposal of residual wastes, operating procedures, storm
water and waste-water discharges, fire protection, worker and community
right-to-know and emergency response plans. Air and water pollution regulations
govern certain operations at TRS's facilities. Safety standards under the
Occupational Safety and Health Act are also applicable. Governmental regulations
also apply to the operation of vehicles used by TRS to transport the oil it
collects and distributes, including licensing requirements for the vehicles and
the drivers, vehicle safety requirements, vehicle weight limitations, shipment
manifesting and vehicle placarding requirements. Governmental authorities have
the power to enforce compliance and violators are subject to civil and criminal
penalties. TRS believes it is in compliance with these laws and regulations.

         TRS had a compliance committee comprised of three individuals who
consulted with environmental and safety professionals. The committee's
responsibility was to continuously improve the procedures and practices to be
followed by TRS, to comply with various federal, state and local laws and
regulations involving the protection of the environment and worker health and
safety, and to monitor compliance. This committee was eliminated due to the
closure of TRS.

         HAZARDOUS AND SOLID WASTE REQUIREMENTS. TRS's discontinued services
involved the collection, transportation, storage, processing, recycling and
disposal of automotive waste materials. Many of these materials are regulated in
the United States as "solid wastes" under the Resource Conservation and Recovery
Act of 1976 ("RCRA"). In addition to being regulated as solid wastes, some of
these materials are further regulated as "hazardous wastes". Accordingly, TRS is
subject to federal and state regulations governing hazardous and solid wastes.
RCRA established a national program, which classified various substances as
"hazardous wastes," established requirements for storage, treatment and disposal
of hazardous wastes, and imposed requirements for facilities used to store,
treat or dispose of such wastes. RCRA was amended in 1984 by the Hazardous and
Solid Waste Amendments ("HSWA") which expanded the scope of RCRA to include
businesses which generate smaller quantities of waste materials (so-called
"small quantity generators"), expanded the substances classified as hazardous
wastes by RCRA and prohibited direct disposal of those wastes in landfills
(thereby, in effect, requiring that the wastes be recycled, treated, or
destroyed).

         Hazardous and solid waste regulations impose requirements which must be
met by facilities used to store, treat and dispose of these wastes. Operators of
waste storage, disposal and treatment facilities, such as TRS, must obtain a
RCRA permit from federal or authorized state governmental authorities to operate
those facilities. States may also require a solid waste permit. TRS possessed
waste transporter permits in all states where it had operations.

         ENFORCEMENT ACTIONS. Whitewing fully intends to comply with all
environmental regulations and other governmental requirements. Whitewing has
instituted several programs to ensure compliance, including suspending site
operations if appropriate corrective actions are not taken to remedy potential
defects. Whitewing conducts regular audits of its facilities to assess
compliance with federal and state environmental and safety laws and regulations.
Any potential deficiencies are identified and a corrective action plan is
prepared and implemented to eliminate the potential defect.

         The Company received notices of violation from the Departments of
Environmental Protection in Massachusetts, Connecticut, New Jersey, and
Pennsylvania. A Notice of Violation (NOV) is essentially a notice to an entity
to take action to achieve regulatory compliance based on the issuing government
agency's interpretation of the regulations. In Management's experience, NOVs are
not uncommon in highly regulated businesses such as the business Whitewing
operates. Moreover, due to the complexity of the regulatory structure, it is not
uncommon for there to be confusion among different jurisdictions regulating the
same activity. The NOVs discussed below reflect confusion and misunderstanding
which Whitewing is resolving through discussions and compromise with each of the
entities.

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Ridgefield, New Jersey Facility:

         Since 1997 used antifreeze has been processed at TRS' facility to
produce recycled antifreeze, which is then sold to TRS' customers. The process
involves settling, processing through a propriety reverse osmosis system and the
addition of anti-corrosion compounds. This process was not historically
regulated by the NJDEP.

         Effective December 17, 2002, the NJDEP began regulating the recycling
of antifreeze and TRS became obligated to obtain a Class D Recycling Permit for
this process. A Class D permit is site specific so in the event that TRS
relocated, a new permit would have to be secured. The Company anticipated that
TRS would relocate to a new facility during the first quarter of 2004. TRS
occupied approximately one half of the building and its operations were already
straining the capacity of the site.

         On January 29, 2003, a short time after the effective date of the new
regulation, NJDEP issued a NOV to TRS for operating a Class D Recycling facility
without a permit. In March 2003, TRS retained Sailer Environmental, Inc., an
environmental consulting firm to assist it in the application preparation
process.

         In April 2003, NJDEP issued a second NOV to TRS for operating a Class D
Recycling facility without a permit. At the same time, the landlord of the
Ridgefield facility notified TRS that it has elected to sell the building to a
third party. Management immediately began the process of trying to find a new
facility. In conjunction with Sailer Environmental, the Company requested a
meeting with the NJDEP to discuss the situation and possible solutions.

         TRS met with NJDEP on July 1, 2003 to explain that it was in the
process of locating a new facility and that it was impractical to continue the
permitting process for the existing facility because the facility would be
vacated before the permit could be issued. As a result, NJDEP agreed to enter
into an Administrative Consent Order with TRS which allowed for the continued
operation of the antifreeze recycling operation until the end of January 2004.
Because a new site was not found by that time, TRS discontinued antifreeze
recycling and instead entered into an agreement with a third party to provide
the Company's recycle antifreeze until the Company's new antifreeze recycling
facility was operational. In March of 2004, Whitewing discontinued the entire
business operations of TRS.

Harrisburg, Pennsylvania Facility:

         TRS' Harrisburg, Pennsylvania facility operated as a new and recycled
product distribution facility. The facility discontinued collection of waste
materials because its permit application was in the review process with the
Pennsylvania Department of Environmental Protection ("PADEP"). A Residual Waste
Permit application was submitted to PADEP for review and approval on March 20,
2003. Upon approval of that application, TRS would be able to transfer waste to
and from this site. These operations were conducted at TRS' Ridgefield, New
Jersey facility until Whitewing discontinued all TRS operations in March of
2004.

         TRS is currently addressing a July 7, 2003 NOV issued by the PADEP,
which essentially requires TRS to obtain the permit that TRS applied for in
March of 2003. The corrective actions include not managing residual waste
materials at the facility until the Residual Waste Permit was issued. Because
all operations were discontinued, the permit application was not filed.

Connecticut Transporter Permit:

         TRS was in the process of resolving a NOV issued by the Connecticut
Department of Environmental Protection (CTDEP) primarily concerning its handling
of solvents collected from its customers. Since 1998 these solvents were shipped
to TRS' Ridgefield, New Jersey facility where they were used as a product in
accordance with NJDEP's approval to do so as described above. CTDEP had a
different interpretation of the regulations than NJDEP or USEPA and declared
that the solvent must be treated as a regulated waste. TRS firmly believed that
its operations were fully consistent with all state and federal laws and

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regulations and that CTDEP's interpretation was not correct. However, Management
determined that the best course of action was to follow the guidance suggested
by the CTDEP to quickly resolve this issue. Management developed a plan to
accommodate CTDEP without a material and adverse effect on the business, and
submitted a formal offer to resolve the issue. CTDEP appeared satisfied with the
offer and did not pursue any further action.

Massachusetts Operations:

         The Massachusetts Department of Environmental Protection (MADEP)
performed an inspection of TRS's Massachusetts facility and operations in
January of 2004 which resulted in the issuance of a Notice of Noncompliance in
February of 2004, which primarily addressed the failure of Whitewing to ensure
that its customers properly drain oil filters before placing them in drums for
collection. In a meeting held in March of 2004, MADEP was informed that TRS
operations were discontinued. In April of 2004, Whitewing concluded a settlement
with the MADEP and entered an Administrative Consent Order which set a schedule
for facility closure and required payment of penalty of $20,000.00 in five
installments of $4,000.00 commencing May 15, 2004 and concluding September 3,
2004.

         Based on its knowledge of past and pending cases in the industry,
Whitewing believes it is unlikely that Whitewing's actual liability on those
cases now pending in the industry will be materially adverse to its financial
condition. Notwithstanding Management's assessment of current and future
environmental exposure, the Company and its subsidiaries may incur substantial
environmental liabilities.

         POTENTIAL ENVIRONMENTAL LIABILITIES. Based on its past experience and
its knowledge of pending cases, Whitewing believes it is unlikely that
Whitewing's actual liability on cases now pending will be materially adverse to
its financial condition. It should be noted, however, that many environmental
laws are written and enforced in a way in which the potential liability can be
substantial, and it is always possible that Whitewing's actual liability in any
particular case or claim will prove to be larger than the amount anticipated and
accrued.

Employees:
---------

         As of May 1, 2004, Whitewing employed 36 persons including 6 executive
and administrative employees who perform services for both operating divisions.
The absorbent division employs 3 sales, 4 management and 15-20
warehouse/technician employees. The distribution division employs 1 supervisor,
3 technician/sales and 3 warehouse/support employees.

         Whitewing's employees are not represented by a union or collective
bargaining organization. Management considers its relations with Whitewing's
employees to be generally good.

RISK FACTORS
------------

         IN ADDITION TO OTHER INFORMATION IN THIS ANNUAL REPORT ON FORM 10-KSB,
THE FOLLOWING IMPORTANT FACTORS SHOULD BE CAREFULLY CONSIDERED IN EVALUATING
WHITEWING AND ITS BUSINESS BECAUSE SUCH FACTORS CURRENTLY HAVE A SIGNIFICANT
IMPACT ON WHITEWING'S BUSINESS, PROSPECTS, FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.

Risks related to our business
-----------------------------

We Currently Have A Going Concern Opinion From Our Independent Auditors. The
Company received a going concern opinion on its financial statements for fiscal
year ended December 31, 2002 and for the fiscal year ended December 31, 2003. A
going concern opinion means that there is substantial doubt on the part of the
Company's independent auditors that the Company can continue as a going concern
in that the Company does not have sufficient cash and liquid assets to cover its
operating capital requirements for the next twelve-month period and if
sufficient cash cannot be obtained the Company would have to substantially alter

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its operations or may be forced to discontinue operations. The going concern
opinion from our auditors may limit our ability to access certain types of
financing, or may prevent us from obtaining financing on acceptable terms.

Insufficient Shares of Common Stock for Conversion of Outstanding Derivative
Securities. The Company's certificate of incorporation does not currently
authorize a sufficient number of shares of the Company's Common Stock to enable
the holders of certain Debentures offered in a private offering ("Debentures"),
to convert the Debentures into Common Stock or for the Company to raise
additional equity capital. In order to amend the Company's certificate of
incorporation, the stockholders of the Company must approve such amendment. The
Company expects to have a stockholder's meeting during the third quarter of 2004
and intends to take the appropriate action in order to effectuate the amendment.
There can be no assurance that the Company will successfully amend it
certificate of incorporation.

Potential Liability Relating To Discontinuation of Company's TRS Business. The
Company has recently implemented a corporate reorganization, which included the
discontinuation and sale of some of the Company's business operations. As a
result of these actions, the Company may continue to be liable for the
liabilities of these operations, which could have a material adverse effect on
the Company's long-range business or financial condition. The Company may be
responsible for outstanding accounts payable in excess of $1,000,000.00, may
incur employment and sales tax liabilities in excess of $150,000.00, may be
liable for environmental penalties from the Departments of Environmental
Protection in New Jersey, Pennsylvania, Connecticut and Massachusetts related to
closure operations and past violations. The closure of TRS will have a
substantial negative impact on revenue. The Company anticipates that its assets
will be written down because of the liquidation of assets for less than their
value as stated on the Company books.

New Management. As a result of the corporate restructuring the Company hired
Michael Risley as its new President and Chief Executive Officer to oversee the
management of the Company's operations. Mr. Risley resigned those positions and
remained as a consultant until the Company is better funded. Joseph J. Bianco
assumed the offices of President and Chief Executive Officer. Andrew V. Latham,
Jr. (Executive Vice President and Chief Technology Officer) resigned his offices
and is negotiating a consulting agreement with the Company. Kevin DeLeon,
formerly the President and Chief Executive Officer, is also negotiating a
separation agreement. Norman Raben assumed the offices of Treasurer and Chief
Financial Officer in addition to being the Company's Executive Vice President
and Secretary. There can be no assurance that the Company's new management will
be successful in implementing the Company's business plan. Management believes
that the Company's continued success is dependent on its ability to attract and
or retain highly skilled personnel. However, there can be no assurance that the
Company will be able to retain or recruit such highly skilled personnel. The
Company does not currently have key-man life insurance policies with respect to
any of its executive officers.

Stock Option Granted To Michael Risley Will Have A Negative Impact To The
Company Profit And Loss Calculation. Michael Risley was issued options to
purchase a number of shares equal to 12% of the issued and outstanding shares of
the Common Stock of the Company on a fully diluted basis at an exercise price of
$.01 per share. The amount is calculated upon vesting, which will occur 1/2 on
or about June 30, 2004 and 1/2 on or about June 30, 2005. All options vest upon
a Change of Control of the Company (as defined in the Risley agreement). The
options expire on March 18, 2011 or three years from termination, whichever is
sooner. The exercise of said options will negatively impact the Company's profit
and loss statement.

We May Not Achieve Profitability; We Anticipate Continued Losses; Current
Liabilities Exceed Current Assets; Working Capital Deficiency. For the year
ended December 31, 2003, we reported a net loss of ($6,222,328), negative cash
flows from operations of approximately ($3,661,000) and we had an accumulated
deficit of approximately ($10,170,000). For the years ended December 31, 2001
and 2002 we reported a net loss of ($281,022) and ($2,659,665), respectively. If
we ever do achieve profitability, we cannot assure you that we can sustain or
increase profitability. If revenues grow slower than we anticipate, or if
operating expenses exceed our expectations or cannot be adjusted accordingly,

                                       9
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our business, results of operations and financial condition will be materially
and adversely effected. Furthermore, as of December 31, 2003, we had total
current assets of $1,988,058 and total current liabilities of $4,178,197. One
measure of insolvency is when assets are less than liabilities. As a result of
the working capital deficiency, the Company has become increasingly delinquent
in payments to its creditors. No assurance can be given that the Company will
improve its financial condition nor will be able to make its interest payments
on its outstanding debt. Figures for the quarter ended March 31, 2004, may vary
significantly, particularly due to the closure of TRS. We expect to report
significant losses for the first quarter of 2004, in part do to the closure of
TRS.

Development Stage Company. As a result of a recently implemented corporate
reorganization that included the discontinuation and sale of some of the
Company's business operations, which accounted for 70% of the Company's revenue,
the present line of business operated by the Company is in the development stage
and has not generated significant revenues from operations. Potential investors
should be aware of the problems, delays, expenses and difficulties encountered
by any company in the development stage. The Company will be subject to numerous
risks, expenses, problems and difficulties typically encountered in establishing
a new business, including unanticipated problems and additional costs relating
to development and testing of products, commencement of manufacturing and
production.

We May Have Difficulty Raising Needed Capital in the Future, Which Could
Significantly Harm Our Business. The Company has incurred significant
indebtedness in order to continue its operations. Therefore, we will require
additional financing in order to support further expansion, develop new or
enhanced services or products, respond to competitive pressures, acquire
complementary businesses or technologies or take advantage of unanticipated
opportunities. The ability of Whitewing to arrange such financing in the future
will depend in part upon the prevailing capital market conditions, as well as
the business performance of Whitewing. There can be no assurance that Whitewing
will be successful in its efforts to arrange additional financing on terms
satisfactory to Whitewing. If additional financing is raised by the issuance of
shares from our treasury, control of Whitewing may change and shareholders may
suffer additional dilution. If adequate funds are not available, or are not
available on acceptable terms, we may not be able to take advantage of
opportunities, or otherwise respond to competitive pressures and remain in
business.

We Defaulted On Our Obligation To Register Shares. In September of 2003 we
conducted a private placement consisting of convertible preferred shares and
warrants. At that time the Company accepted the obligation to exert reasonable
efforts to have a registration statement declared effective by the SEC by March
31, 2004. As of the date of this Annual Report, we have not filed a registration
statement. Because it may subsequently be determined that the Company did not
exert reasonable effort to have the Commission declare such registration
statement effective by March 31, 2004, the dividend rate on preferred shares may
increase by 2% for each whole calendar month during which such registration
statement is not declared effective by the Commission; provided however, that in
no event shall the dividend rate exceed 20%.

Failing To Comply With Environmental Regulations Could Adversely Affect Our
Business. Although the Company is discontinuing its recycling and waste
operation, these operations will continue to present significant risks for the
Company. The closure of processing facilities and the transportation, handling,
recycling and management of used oil, oil filters and antifreeze, and the
disposal and treatment of wastes necessarily involves significant risks,
including the possibility of damages to person or property caused by the escape
of these materials into the environment, and the possibility of fines, penalties
and other enforcement actions by governmental agencies. These risks may also
include potentially large civil and criminal liabilities for failure to hold
appropriate permits, and liability to customers and third parties for damages
arising from the release of materials into the environment. The Company strives
to conduct its closure plans and operations in compliance with applicable laws
and regulations, including environmental rules and regulations. This effort
requires programs to promote compliance, such as training employees and
customers, purchasing health and safety equipment, and in some cases hiring
outside consultants and lawyers. Even with these programs, management believes
that in the process of a closure and in the ordinary course of doing business,

                                       10
<PAGE>

companies in the environmental services and recycling industry have a
substantial risk of being subject to governmental enforcement proceedings based
upon misunderstanding of their operations or inadvertent errors in those
operations. Such proceedings must be defended against, and may result in
settlements, fines or other expenses, including the upgrading of facilities or
modification of work practices, even if the Company is innocent on the merits.
Failure by the Company to comply with environmental regulations, or the cost of
complying with such regulations, may have a material adverse effect on the
financial condition, results of operations or prospects of the Company.

Potential Liabilities Involving Customers And Third Parties. In performing
services for our customers, the Company potentially could be liable for breach
of contract, personal injury, property damage (including environmental
impairment), and negligence, including claims for lack of timely performance or
for failure to deliver the service promised (including improper or negligent
performance, failure to meet specifications, and breaches of express or implied
warranties). The damages available to a claimant, should it prevail in its
claims, are potentially large and could include consequential damages. Recycling
companies, in connection with work performed for customers, also potentially
face liabilities to third parties from various claims including claims for
property damage or personal injury stemming from a release of substances into
the environment. Claims for damage to third parties could arise in a number of
ways, including: through a sudden and accidental release or discharge of
contaminants or pollutants during transportation of materials or the performance
of services; through the inability, despite reasonable care, of a spill
prevention or remedial plan to contain or correct an ongoing seepage or release
of pollutants; or through the inadvertent exacerbation of an existing
contamination problem. Personal injury claims could arise contemporaneously with
performance of our services or long after completion of projects as a result of
alleged exposure to toxic or other dangerous substances. In addition, increasing
numbers of claimants assert that companies performing recycling should be
adjudged strictly liable for damages even though their services were performed
using reasonable care, on the grounds that such services involved "abnormally
dangerous activities."

We Face Intense Competition That Could Negatively Effect Our Results Of
Operations And Prospects. The absorbent manufacture and distribution market is
characterized by intense competition. We compete against established
manufacturers and distributors. In addition, companies are developing or may, in
the future, engage in the development of products competitive with our products.
We expect that technological developments will occur and that competition is
likely to intensify as new technologies are employed. Some of our competitors
possess substantially greater financial, marketing, technical and other
resources than us. There can be no assurance that we will have the ability to
compete successfully. With respect to the sale and service of self-cleaning
parts washer sinks, the market (motor vehicle repair and service shops) standard
is a more simple sink that merely collects dirty solvent. We have no assurance
that shop owners will be willing to change from a simple, well-known device to a
more expensive and complex device.

Insufficient Liability Insurance Coverage May Negatively Affect Our Business. We
may be exposed to potential liability claims by customers, government agencies,
and other third parties. We presently maintain commercial general liability
policy and pollution liability insurance coverage. There can be no assurance
that we will be able to renew such insurance or, if renew, that any such
insurance will be sufficient to cover all possible liabilities to which we may
be exposed. In the event of a successful suit against us, insufficiency of
insurance coverage could have a material adverse effect on our results of
operations, financial condition and prospects.

We May Not Be Able To Comply In A Timely Manner With All Of The Recently Enacted
Or Proposed Corporate Governance Provisions. Beginning with the enactment of the
Sarbanes-Oxley Act of 2002 in July 2002, a significant number of new corporate
governance requirements have been adopted or proposed. We believe that we
currently comply with all of the requirements that have become effective thus
far, and with many of the requirements that will become effective in the future.
Although we currently expect to comply with all current and future requirements,
we may not be successful in complying with these requirements at all times in
the future. In addition, certain of these requirements will require us to make
changes to our corporate governance practices. For example, one Nasdaq proposal

                                       11
<PAGE>

(which may become applicable to companies listed on the OTC Bulletin Board)
under review by the Commission will require that a majority of our Board of
Directors be composed of independent directors by our 2004 Annual Meeting of
Stockholders. Currently, none of the members of our Board of Directors are
considered to be independent. We may not be able to attract a sufficient number
of directors in the future to satisfy this requirement, if enacted and if it
becomes applicable to our Company.

Factors Relating to Acquisitions of Other Businesses

The Company May Be Unable To Secure Necessary Financing. In order to acquire
similar or complimentary businesses, the Company may be required to secure
additional financing which may not be available on terms and conditions
satisfactory to the Company. Additional debt financing may increase the level of
annual interest expense and ratio of debt to stockholders' equity, which will
increase the risk that unexpected events may have an adverse effect on the
Company's financial condition and results of operations.

We May Be Unable To Successfully Retain Important Employees. The integration of
the operations of acquired businesses into the Company has required and will
continue to require significant effort by key employees of the Company.
Accordingly, if the Company were not able to retain key employees during the
integration period, this could adversely affect such integration and therefore
the Company's operations and cash flows.

We May Fail To Retain Key Customers. Subsequent to any acquisition, a portion of
these customers of an acquired business in our industry may seek to place some
business with other vendors so that such customers can continue to maintain more
than one source of supply for recycling services. This could cause the results
from operations and cash flows of the Company to be less than anticipated based
upon the prior separate operations of the Company and acquired businesses.

Factors Related To Our Stock

Penny Stock Regulations May Impose Certain Restrictions On Marketability Of Our
Securities. The Commission has adopted regulations which generally define a
"penny stock" to be any equity security that has a market price (as defined) of
less than $5.00 per share or an exercise price of less than $5.00 per share,
subject to certain exceptions. As a result, our Common Stock is subject to rules
that impose additional sales practice requirements on broker-dealers who sell
such securities to persons other than established customers and accredited
investors (generally those with assets in excess of $1,000,000 or annual income
exceeding $200,000, or $300,000 together with their spouse). For transactions
covered by these rules, the broker-dealer must make a special suitability
determination for the purchase of such securities and have received the
purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction, of a risk disclosure
document mandated by the Commission relating to the penny stock market. The
broker-dealer must also disclose the commission payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market maker, the broker-dealer
must disclose this fact and the broker-dealer's presumed control over the
market. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell our securities and may affect the
ability of investors to sell our securities in the secondary market and the
price at which such purchasers can sell any such securities. Investors should be
aware that, according to the Commission, the market for penny stocks has
suffered in recent years from patterns of fraud and abuse. Such patterns
include:

o        control of the market for the security by one or a few broker-dealers
         that are often related to the promoter or issuer;
o        manipulation of prices through prearranged matching of purchases and
         sales and false and misleading press releases;
o        "boiler room" practices involving high pressure sales tactics and
         unrealistic price projections by inexperienced sales persons;

                                       12
<PAGE>

o        excessive and undisclosed bid-ask differentials and markups by selling
         broker-dealers; and
o        the wholesale dumping of the same securities by promoters and
         broker-dealers after prices have been manipulated to a desired level,
         along with the inevitable collapse of those prices with consequent
         investor losses.

Our management is aware of the abuses that have occurred historically in the
penny stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our Common Stock.

Additional Authorized Shares Of Common Stock And Preferred Stock Available For
Issuance May Adversely Affect The Market. We are authorized to issue 100,000,000
shares of our Common Stock. As of June 15, 2004, there were 56,150,634 shares of
our Common Stock issued and outstanding. However, the total number of shares of
Common Stock issued and outstanding does not include the exercise of options or
warrants or the conversion of convertible securities. As of June 15, 2004, we
have reserved up to 49,788,326 shares of our Common Stock for issuance upon
exercise of outstanding stock options, warrants, note conversions and debenture
conversions, and approximately 22,412,600 shares are presently issuable upon the
conversion of the convertible preferred stock. Of the reserved shares, a total
of 7,000,000 shares of Common Stock have been reserved under the Company's 2003
Stock Option Plan. As of June 15, 2004, there were 4,710,000 options issued
under the Stock Option Plan.

Exercise of the outstanding convertible securities will reduce the percentage of
Common Stock held by the public stockholders. Further, the terms on which we
could obtain additional capital during the life of the convertible securities
may be adversely affected, and it should be expected that the holders of the
convertible securities would exercise them at a time when we would be able to
obtain equity capital on terms more favorable than those provided for by such
convertible securities. As a result, any issuance of additional shares of Common
Stock may cause our current shareholders to suffer significant dilution, which
may adversely affect the market.

In addition to the above-referenced shares of Common Stock that may be issued
without shareholder approval, we have shares of authorized "blank check"
preferred stock, the terms of which may be fixed by our Board of Directors. We
presently have no issued and outstanding shares of preferred stock other than
the Series A Convertible Preferred Stock and while we have no present plans to
issue any other shares of preferred stock, our Board of Directors has the
authority, without shareholder approval, to create and issue one or more series
of such preferred stock and to determine the voting, dividend and other rights
of holders of such preferred stock. The issuance of any of such series of
additional preferred stock could have an adverse effect on the holders of Common
Stock.

Shares Eligible For Future Sale May Adversely Affect The Market. Of the
56,150,634 shares of Common Stock held by our present stockholders,
approximately 5,300,000 shares may be available for public sale by means of
ordinary brokerage transactions in the open market pursuant to Rule 144,
promulgated under the Act, subject to certain limitations. In general, under
Rule 144, a person (or persons whose shares are aggregated) who has satisfied a
one year holding period may, under certain circumstances, sell within any
three-month period a number of securities that does not exceed 1% of the then
outstanding shares of Common Stock. Rule 144 also permits, under certain
circumstances, the sale of securities, without any limitation, by a person who
is not an affiliate of Whitewing and who has satisfied a two-year holding
period. Sales of Common Stock pursuant to Rule 144 or under a registration
statement filed with the Commission may have an adverse effect on the market
price of our securities.

The Limited Trading Activity May Cause Possible Volatility In Our Stock Price.
There has only been a limited public market for our securities and there can be
no assurance that an active trading market in our securities will develop, and
if developed, maintained. The OTC Bulletin Board is an unorganized,
inter-dealer, over-the-counter market which provides significantly less
liquidity than The Nasdaq Stock Market, and quotes for stocks included on the
OTC Bulletin Board are not listed in the financial sections of newspapers as are

                                       13
<PAGE>

those for The NASDAQ Stock Market. In addition, the stock market in recent years
has experienced extreme price and volume fluctuations that have particularly
affected the market prices of many smaller companies. The trading price of our
Common Stock is expected to be subject to significant fluctuations in response
to variations in quarterly operating results, changes in analysts' earnings
estimates, announcements of innovations by us or our competitors, general
conditions in the industry in which we operate and other factors. These
fluctuations, as well as general economic and market conditions, may have a
material or adverse effect on the market price of our Common Stock.

We Have No History of Paying Dividends. We have never paid any cash dividends on
our Common Stock and do not anticipate paying any cash dividends on our Common
Stock in the foreseeable future. We plan to retain any future earnings to
finance growth. If we determine that we will pay dividends to the holders of our
Common Stock, there is no assurance or guarantee that such dividends will be
paid on a timely basis. Currently, under the terms of the Series A Preferred
Stock, we are prohibited from declaring dividends on our Common Stock.

The Prices of Common Stock of Recycling and Environmental Service Companies
Historically Have Been Subject to Significant Fluctuation and the Price of Our
Common Shares May Be Volatile, Which May Result in Litigation That Could Be
Costly and Divert Our Resources. The trading price of our Common Stock in the
past has been, and in the future may be, highly volatile. The trading price
could be subject to wide fluctuations in response to quarter-to-quarter
variations in our operating results, announcements of technological innovations
or new products by us or our competitors, changes in financial estimates by
securities analysts or other events or factors. Further, the financial markets
have experienced significant price and volume fluctuations that particularly
have affected the market prices of equity securities of many recycling and
environmental service companies. When the market price of a company's stock
drops significantly, shareholders often institute securities class action
lawsuits against that company. A lawsuit against us could cause us to incur
substantial costs and could divert the time and attention of our management and
other resources.

Item 2.  Description of Property.

Facilities:
-----------

         1. Watertown, New York - Owned - 31,256 square foot building on 6.76
acres used for manufacturing and converting absorbent products. Subject to a
mortgage in the amount of $641,250. The building is less than 10 years old. The
depreciable basis is approximately $671,000. The method of depreciation is 40
year straight-line.

         2. Garfield, New Jersey - Leased - Approximately 7,865 square feet of
office and warehouse space. Whitewing expects to move its corporate offices to
this building by the end of the second quarter of 2004, which will also serve as
the warehouse for System One Products.

         3. Ridgefield, New Jersey - Leased - Approximately 5,500 square foot
office space houses Whitewing's main executive and administrative offices.
Whitewing is currently negotiating a sublease and expects to move executive and
administrative operations to the Garfield location by the end of the second
quarter of 2004.

         4. Kent, Washington - Leased - Approximately 10,000 square feet of
warehouse and office space for Whitewing absorbent sales on the west coast of
the United States. Whitewing is currently negotiating a termination of this
lease.

         5. Ridgefield, New Jersey - Leased - Approximately 15,000 square foot
office and warehouse space used for processing oil filters, re-manufacturing
antifreeze and assembled products. The facility also acted as a distribution
point for Whitewing products and as a regional trucking terminal. The lease on
this facility ended in January of 2004. The Company arranged for the use of the
space on a month to month basis. In March of 2004, TRS operations were
discontinued and the Company began closure procedures. Whitewing expects
complete closure to take place in the third quarter of 2004.

         6. Middleboro, Massachusetts - Leased - Approximately 3,500 square foot
space used for trucking and oil filter processing. The space was vacated as part
of the discontinuation of TRS business operations and complete closure is to
take place before the third quarter of 2004. Because it was a month-to-month
tenancy, the Company expects no liability for rent.

                                       14
<PAGE>

         7. Harrisburg, Pennsylvania - Leased - Approximately 6,000 square foot
space used for product assembly, drum maintenance, and as a regional trucking
terminal. The space was vacated as part of the discontinuation of TRS business
operations and complete closure is to take place before the third quarter of
2004. Because the lease runs to December, 2005, TRS may be liable for rent
should the building not be re-leased.

         8. Meriden, Connecticut - Leased by Total Recycling Services of
Connecticut, Inc. (TRS-CT), a wholly owned subsidiary of TRS.- Approximately
1,000 square foot space used for a laboratory for testing various waste. The
space was vacated as part of the discontinuation of TRS business operations and
complete closure is to take place before the third quarter of 2004. Because the
lease runs to July, 2007, TRS-CT may be liable for rent should the building not
be re-leased.

         9. Wallingford, Connecticut - Leased by TRS-CT - Approximately 2,300
square foot space used for offices for the Connecticut operations, trucking,
storage space, and truck maintenance garage. The space was vacated as part of
the discontinuation of TRS business operations and complete closure is to take
place before the third quarter of 2004. Because the lease runs to July, 2007,
TRS-CT may be liable for rent should the building not be re-leased.

         10. Foxborough, Massachusetts - Leased by ARS, a 50% owned subsidiary -
Approximately 2,400 square foot space used for offices for ARS operations and a
garage for storage of certain spill clean up/absorbent products. All storage was
moved to the Watertown facility and administrative functions were moved to the
Ridgefield headquarter offices during the second quarter of 2004. This office
will be closed before the third quarter of 2004. Because the lease runs to
December, 2005, ARS may be liable for rent should the building not be re-leased.

         11. Etters, Pennsylvania - Owned - Approximately total of 17,300 square
foot for 2 buildings on 5.87 acres previously used as a trucking terminal.
Property was sold on May 16, 2003.


Item 3. Legal Proceedings.

         At the date of this report, except as noted above under the caption
"Enforcement Action", Whitewing is not engaged in any material regulatory
actions.

         At the date of this report, Whitewing is engaged in the following legal
proceedings:

Burlington Motor Carriers, Inc. Robert S. Koor v. Total Filter Recycling,Inc. US
Bankruptcy Court for the Southern District of Indiana. Case Nos: 01-10409-AJM-7
- Approximately $30,000.00 claim by trustee in bankruptcy against TRS to reclaim
rent payments to TRS for rent payments considered to be preferential payments.
The case is pending. Management intends to answer the complaint and believes
that the actual amount of rent payment subject to preferential payment claims is
$10,000.00.

Cintas Corporation v. Total Recycling Services, Inc. Superior Court of New
Jersey, Law Division Bergen County - Complaint served on June 14, 2004. $25,000
claim against TRS for the balance of a uniform clean service contract that was
cancelled when TRS discontinued business operations. Management intends to
answer the complaint and dispute the claim.

Environmental Products and Services, Inc. v. Total Recycling Services, Inc.
Court of Common Pleas, Dauphin County, Pennsylvania. - approximately $53,000.00
claim against TRS for Environmental services related to the clean up of the
Harrisburg Pennsylvania facility. Judgment will be entered shortly. Management
does not believe that a successful defense can be made.

Estate of Joseph Minetto v. Total Filter Recycling, Inc. and Andrew Latham -
Superior Court Of New Jersey, Law Division, Bergen County. Docket No.
BER-L-9180-03. Approximately $23,000.00 claim against TRS for payments due on a
non-disclosure agreement. Motion for Summary Judgment pending.

Hazleton Oil Salvage, Inc. v. Total Recycling Services. Court of Common Pleas,
Luzerne County, Pennsylvania. Docket No. CV-313-03 and CV-314-03 - Approximately
$16,000.00 claim against TRS for liquid waste removal from the Harrisburg,
Pennsylvania facility. Judgments entered. Management did not believe that a
successful defense could be made.

                                       15
<PAGE>

NE Environmental Services, Inc. v. Total Recycling Services, Inc. - State of
Rhode Island, Providence Superior Court, Civil Action File No. 04-2179 -
Approximately $82,000.00 claim for antifreeze purchases. Management is
negotiating a settlement of the claim, but does not believe that a successful
defense can be made.

USL First Source, Inc. v. Total Filter Recycling, Inc. - Superior Court of New
Jersey, Law Division, Bergen County, Docket No. L-00953-03 - Approximately
$50,000.00 claim (including a claim for legal fees, interest and costs)against
TRS on a prior settlement regarding solvent distillation services. Judgment will
be entered shortly. Management initially defended the case but after discovery
determined that a successful defense could not be made and that continued
litigation would result in additional legal fees assessed.

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

None.


                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

Recent Market Prices

Market for the Shares:
----------------------

         Whitewing's common stock quoted on the OTC Bulletin Board under the
trading symbol of "WWLI". The high and low bid quotations for Whitewing's common
stock each quarter for the past two fiscal years and the first quarter of 2004
are as follows:

<TABLE>
Common Stock                               2002            2003            2004
                                      High     Low     High    Low     High    Low

<S>                                  <C>      <C>     <C>     <C>     <C>     <C>
First Quarter ended March 31,        $0.38    $0.15   $0.28   $0.15   $0.16   $0.09
Second Quarter ended June 30,        $0.76    $0.32   $0.20   $0.07
Third Quarter ended September 30,    $0.45    $0.17   $0.30   $0.05
Fourth Quarter ended December 31,    $0.21    $0.17   $0.24   $0.11

</TABLE>

         On June 9, 2004, the closing bid and asked quotations for the Common
Stock, as reported on the OTCBB, were $ 0.085 and $0.10, respectively, per
share.

         These quotations are inter-dealer quotations without retail markup,
markdown or commissions and may not represent actual transactions.

Number of stockholders:
-----------------------

         At the date of this Annual Report, Whitewing has approximately 160
common stockholders, based upon information provided by its transfer agent,
Depository Trust Company reports, and internal records.

Issuances of Capital Stock in Fourth Quarter of 2003:
-----------------------------------------------------

         On September 10, 2003, the Company, and its exclusive placement agent,
Maxim Group, LLC ("Maxim"), commenced a private offering of up to 250,000 units
(the "Units"), at a price of $8.00 per Unit, with each Unit consisting of 1
share (the "Shares")of the Company's newly designated Series A Convertible
Preferred Stock, par value $.001 per share (the "Series A Convertible Preferred
Stock"), and 40 Class A Common Stock Purchase Warrants (the "Warrants"). The
offering (the "Offering"), was to accredited investors ("Investors") only, on a
"best efforts, all or none" basis with respect to the first 62,500 Units, and on

                                       16
<PAGE>

a "best efforts" basis with respect to the remaining 187,500 Units. The Offering
was being made pursuant to an exemption from the registration requirements of
the Securities Act of 1933, as amended, and closed, under extension from the
Company and Maxim, on December 5, 2003. As of September 30, 2003 (the "First
Closing Date"), the Company closed on the sale of the first 98,063 Units
consisting of 98,063 shares of Series A Convertible Preferred Stock and
3,922,500 Warrants generating gross proceeds of approximately $784,500.

         On the first closing date, the Company issued unit purchase options to
two individuals and two entities totaling 9,806 units at a purchase price of
$10.00 per unit. Each unit consists of one (1) share of the Company's Series A
Convertible Preferred Stock, par value $.001 per share and forty (40) Class A
Common Stock Purchase Warrants.

         On the first closing Norman Raben, Geoffrey Perry, and John C. Kleinert
converted loans into common stock at $.08 per share. Principal and interest
totaling $603,493.15 was converted to 7,543,664 shares of common stock. In
addition, Joseph J. Bianco and Bruce Rabin converted loans into common stock at
$0.08 per share. Principal and interest totaling $352,442.19 was converted to
4,405,527 shares of common stock.

         Between October 10, 2003 and December 5, 2003, the Company conducted
closings on the sale of 126,063 Units consisting of 126,063 shares of Series A
Convertible Preferred Stock and 5,042,500 Warrants generating gross proceeds of
approximately $1,008,500.00. December 5, 2003 was the final closing and the
offering was closed immediately thereafter. In conjunction with these closings,
the Company issued unit purchase options to one individual and two entities
totaling 12,607 units at a purchase price of $10.00 per unit. Each unit consists
of one (1) share of the Company's Series A Convertible Preferred Stock, par
value $.001 per share and forty (40) Class A Common Stock Purchase Warrants.


Dividends:
----------

         Whitewing can legally pay dividends on its common stock only out of
current and retained earnings and surplus. The board of directors has the
exclusive authority and discretion to declare common stock dividends. Whitewing
has not declared or paid any common stock dividends and does not expect to pay
any in the foreseeable future. The board is expected to consider earnings,
capital requirements and financial condition, as well as other factors, which
the board believes are relevant, before it approves any dividends. Currently,
under the terms of the Series A Preferred Stock, the Company is prohibited from
declaring dividends on its Common Stock.


Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

The following discussion of the Company's financial condition and results of
operations should be read in conjunction with the Financial Statements and Notes
thereto appearing elsewhere in this document.

Statements in this "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and elsewhere in this document as well as statements
made in press releases and oral statements that may be made by the Company or by
officers, directors or employees of the Company acting on the Company's behalf
that are not statements of historical or current fact constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other unknown factors that could cause the
actual results of the Company to be materially different from the historical
results or from any future results expressed or implied by such forward-looking
statements. In addition to statements which explicitly describe such risks and
uncertainties, readers are urged to consider statements labeled with the terms
"believes", "belief", "expects", "intends", "anticipates" or "plans" to be
uncertain forward-looking statements. The forward-looking statements contained
herein are also subject generally to other risks and uncertainties that are
described from time to time in the Company's reports and registration statements
filed with the Securities and Exchange Commission.

                                       17
<PAGE>

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

FISCAL YEAR 2003 VS FISCAL YEAR 2002
------------------------------------

Total revenues for the year ended December 31, 2003 was $1,649,647. The increase
in sales was due to the consolidation of ARS into Whitewing following the May
2003 acquisition.

Gross profit as a percentage of saleswas 17% in the year ended December 31,
2003. There were no sales, cost of sales or gross profit from continuing
operations in the year ended December 31, 2002.

Selling, general and administrative expenses consist primarily of compensation
and related costs for managerial, selling and administrative personnel, fees for
professional services, rent, insurance and other general corporate expenses.
Operating expenses increased by $1,005,959 to $1,189,220 in 2003 from $183,261
in 2002. During both the year ended December 31, 2002 and December 31, 2003,
noncash compensation in the amounts of $1,138,113 and $604,335, respectively,
were incurred for business advisory and consulting services and stock options
granted to non-employees in 2003. Costs (excluding depreciation and
amortization) of $534,911 for the operating costs of ARS have been included as a
result of the May 2003 completion of the acquisition of ARS. During the period
ending December 31, 2003, increased depreciation and amortization costs over the
previous year were incurred costs for the CWO acquisition, the inclusion of ARS
as a consolidating entity and the acquisition of ARS. Lastly, warrants were
expensed in the amount $754,497 in connection with the conversion of certain
convertible notes payable for 7,543,664 shares of common stock.

Losses from operations for 2003 were $(913,326) an increased loss of $(729,064)
from $(183,261) in 2002.

Net loss was $(6,222,328), an increased loss of $(3,562,663) from $(2,659,665)
in 2002. Interest expense for the period ending December 31, 2003 was
(1,615,867). Interest expense can be attributed to four major factors. Firstly,
during the first quarter of 2002, Whitewing generated revenue as a result of the
CWO operating agreement. Under this agreement, Whitewing did not incur interest
expense on the assets used to generate the related revenue until September 2002
when the asset purchase was completed. Secondly, capital leases, bank debt, and
stockholder loans increased significantly in 2003 resulting in higher interest
expense offset by lower market rates. Thirdly, interest charges have been
recognized related to the convertible promissory notes issued in March 2003,
which is comprised of approximately $320,503 and $754,497 related to the fair
value of the warrants and the "in the money" conversion feature, respectively.
Lastly, two members of the Board of Directors entered into an agreement to
convert $352,442 of loans payable and interest into shares of common stock at
$.08 per share. As of December 31, 2003, the loan and interest had been
converted into 4,405,527 shares of common stock. The market value of the common
stock on the date of conversion was $.20. The difference in the market value per
share and the conversion rate per share was recorded as interest expense, which
amounted to $528,663.

Included in the net loss available to common shareholders is a provision for the
preferred dividend. The preferred stock issued on December 31, 2003 includes an
"in the money" conversion feature that allows the holders to convert to common
stock at $.08 per share of common stock. The discount arising from the "in the
money" conversion feature was $786,261. The preferred stock is convertible on
date of issuance; therefore, the "in the money" conversion feature has been
fully recognized as a dividend at December 31, 2003.

Discontinued Operations - Waste Recycling Products and Services
---------------------------------------------------------------

In March of 2004 Whitewing discontinued business operations of its
subsidiary, Total Recycling Services, Inc. f/k/a Total Filter Recycling, Inc.,
and began the process of selling those assets with proceeds applied to the
obligations due to senior creditors.

                                       18
<PAGE>

Total revenues for the year ended December 31, 2003 increased by $604,214 or
16% to $4,444,017 as compared to $3,839,803 from the comparable period of 2002.
The decrease in sales was due to the harsh winter conditions which prevented
drivers from getting out to service customers, coupled with lower volumes
generated by Whitewing's customers from their customers. Some of the lost sales
had a ripple effect on later sales and operations, as the effect of the lost
revenues severely affected cash flow and therefore the ability to fund inventory
and other operating costs.

Gross profit decreased by $543,131 to $626,855 in 2003 compared with $1,169,986
in 2002. Since much of the cost of sales is fixed, loss of sales equates to a
direct shortfall in profit. In addition, manufacturing is capacity constrained;
in 2003, in order to supply product, Whitewing had to buy material from an
outside vendor which increased cost of goods sold. Repairs to trucks and truck
rentals while Whitewing's trucks were being repaired also contributed to the
cost increase above 2002 levels.

Operating expenses increased by $216,508 or 8% to $2,830,522 as compared with
$2,614,014 in 2002. The increased costs can be attributed to a number of
factors. An environmental reserve for $50,000 was accrued for in 2003. Insurance
costs increased by $113,000 as a result of the insurance industry's rate
increases that affected most corporate renewals. The entire insurance portfolio
was renewed during the third quarter of 2003. Depreciation and amortization on
assets acquired as part of the CWO acquisition amounted to $81,000. In addition,
some corporate costs related to professional fees for accounting services and
consulting costs have been carried at Waste Recycling Products and Services and
represent increases over 2002 levels in the amount of $226,000. Lastly, an
impairment loss in the amount of $622,409 for the carrying amount of customer
lists and agreements was recognized.

Losses from operations for 2003 were $(2,203,668), an increase of $(759,640)
from $(1,444,028) in 2002.

Net losses were $(3,768,905), an increase of $(2,278,455) from $(1,490,450) in
2002. In addition to the losses from operations as described above, additional
interest above 2002 levels was recognized on the additional borrowings related
to the loans from Officer in the amount of $498,000 and $262,000.

LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION:

The Company received a going concern opinion on its financial statements for
fiscal year ended December 31, 2002 and for the fiscal year ended December 31,
2003. A going concern opinion means that there is substantial doubt on the part
of the Company's independent auditors that the Company can continue as a going
concern in that the Company does not have sufficient cash and liquid assets to
cover its operating capital requirements for the next twelve-month period and if
sufficient cash cannot be obtained the Company would have to substantially alter
its operations or may be forced to discontinue operations.

CASH:

         The cash overdraft balance at December 31, 2003 was $29,196.

         Net cash used in operating activities for the year ended December 31,
2003 was $(3,660,783). This was primarily a result of Whitewing's net loss for
the period and increases in accounts receivable, inventory and accounts payable.

         Net cash provided by investing activities for the year ended December
31, 2003 was $510,430. The net cash provided was primarily from the proceeds of
the sale of a property in Pennsylvania which amounted to $494,461, offset by
purchases of property and equipment for $60,317. In addition, the payment for
acquisitions of $46,166 also contributed.

         Net cash provided by financing activities for the year ended December
31, 2003 was $3,150,353. The cash provided was primarily from the cash received,
$1,075,000, as a result of the issuance of promissory notes, the issuance of
preferred stock and a loan from two Board members which was later converted to
common stock. Additional cash was provided from the line of credit in the amount
of $681,880 and from loans from proceeds from sales of preferred stock of
$1,376,400. The mortgage on the Pennsylvania property and the term loan were
paid off following the sale of the property. The balance of the cash was used
for repayments of loans and obligations under capital leases and repayments of
loans to related parties.

LIQUIDITY AND CAPITAL RESOURCES:

         Certain conditions indicate Whitewing may be unable to continue as a
going concern. At December 31, 2003 Whitewing had negative working capital of
approximately $2,190,000, negative cash flows from operations of approximately
$3,661,000 an accumulated deficit of approximately $10,170,,000 and
stockholders' deficiency of approximately $871,000. The accompanying financial
statements do not include any adjustments that might be necessary should
Whitewing be unable to continue as a going concern. If additional capital is not
obtained, the Company may have to curtail operations.

                                       19
<PAGE>

         Certain stockholders, who are Board members, personally borrowed
$500,000 from the bank in 2002 (bearing an interest rate of the bank's prime
rate plus 1.5%, but not less than 6.25%) which was provided to Whitewing on an
as needed basis. The balance on December 31, 2003 was approximately $498,000.
The loan, as extended, will be due and payable on September 30, 2004. As part of
the sale of the preferred stock, the Company has agreed to a covenant by which
indebtedness in the amount of $500,000 owed to two Directors by the Company will
not be repaid, restructured or otherwise modified until the earlier of: (i)
September 30, 2006, (ii) the date on which all of the preferred stock has been
redeemed by the Company or converted into shares of common stock, or (iii) the
date on which the Company has maintained a consolidated debt coverage ratio for
any two consecutive fiscal quarters after December 31, 2003.

         In March of 2004 the Company closed TRS, which was responsible for 70%
of the Company's revenue. The Company plans to replace the revenue by focusing
attention on ARS, its absorbent division, and through the growth of its
distribution business, which was started in January of 2004.

         Since December 31, 2003, the Company raised $394,840 (net of closing
costs and expenses) from the sale of Debentures, $293,000 from loans from
Officers and Directors, and $169,500 from loans from third-parties.

         During the first quarter of 2003, Whitewing issued promissory notes in
the amount of $1,075,000 to four noteholders. At the noteholders' option, the
principal and interest may be converted into the Company's common stock at $.15
per share. Interest may be paid in the form of the Company's common stock using
a conversion rate of $.15 per share. In addition, for each dollar of the loan,
the noteholders received a warrant to purchase two shares of the Company's
common stock at $.15 per share. The warrants may be exercised between September
30, 2003 and September 30, 2006. The Notes include anti-dilution provisions and
have registration rights which require the Company to file with the Securities
and Exchange Commission as soon as practicable. The Notes also have piggy back
registration rights. The convertible notes contain a beneficial conversion
feature due to the per share conversion price of the Notes being below market on
the date of issuance. The proceeds were used to complete the acquisition of ARS
and to reduce outstanding accounts payables and liabilities.

         In August 2003, the Company and the noteholders amended their
agreement. The conversion price of the Notes was reduced from $.15 per share to
$.08 per share and each of Messrs. Kleinert, Raben and Perry agreed to amend the
Notes so that they automatically convert into shares of common stock upon the
first closing of the preferred stock private placement. As of December 31, 2003,
the first closing of the preferred stock private placement was completed.
Principal in the amount of $575,000 was converted to 7,187,500 shares; interest
in the amount of $28,493 was converted to 356,164 shares, for a total of
7,543,664 shares. The Company and the holder of the remaining Note in the
aggregate principal amount of $500,000 have agreed to reduce the conversion
price from $.15 per share to $.08 per share. In addition, such Note holder has
also waived the right to redeem the Note in the event that the Company receives
gross proceeds from sales of its securities Of at least $500,000 in exchange for
the Company's agreement to repay $250,000 in satisfaction of a portion of the
outstanding principal amount and all accrued and unpaid dividends if the Company
receives gross proceeds from this offering in excess of $1,500,000.

         On August 12, 2003, the Company executed a note to memorialize several
loans from Bruce Raben and Joseph Bianco, totaling $125,000 and $220,000,
respectively. On August 29, 2003, the parties agreed to amend the note so that
they automatically convert into shares of common stock upon the first closing of
the preferred stock private placement at the rate of $0.08 per share. As of
September 30, 2003, the loan and interest had been converted into 6,563,699
shares of common stock. The market value of the common stock on the date of
conversion was $.20. The difference in the market value per share and the
conversion rate per share was recorded as interest expense, which amounted to
$528,663.

         In May 2003, Management sold the land and building which is not used in
operations to raise funds. Further, Management intends to raise funds for
acquisitions and working capital needs necessary to sustain the Company through
the next twelve months.

                                       20
<PAGE>

         On September 10, 2003, the Company, and its exclusive placement agent,
Maxim Group, LLC ("Maxim"), commenced a private offering of up to 250,000 units
(the "Units"), at a price of $8.00 per Unit, with each Unit consisting of 1
share (the "Shares")of the Company's newly designated Series A Convertible
Preferred Stock, par value $.001 per share (the "Series A Convertible Preferred
Stock"), and 40 Class A Common Stock Purchase Warrants (the "Warrants"). The
offering (the "Offering"), was to accredited investors ("Investors") only, on a
"best efforts, all or none" basis with respect to the first 62,500 Units, and on
a "best efforts" basis with respect to the remaining 187,500 Units. The Offering
is being made pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended, and is intended to close on November 21,
2003, unless extended by the Company and Maxim. As of September 30, 2003 (the
"First Closing Date"), the Company closed on the sale of the first 98,063 Units
consisting of 98,063 shares of Series A Convertible Preferred Stock and
3,922,500 Warrants generating gross proceeds of approximately $784,500.

         On the first closing date, the Company issued unit purchase options to
two individuals and two entities totaling 9,806 units at a purchase price of
$10.00 per unit. Each unit consists of one (1) share of the Company's Series A
Convertible Preferred Stock, par value $.001 per share and forty (40) Class A
Common Stock Purchase Warrants.

         On the first closing Norman Raben, Geoffrey Perry, and John C. Kleinert
converted their loans into common stock at $.08 per share. Principal and
interest totaling $603,493.15 was converted to 7,543,664 shares of common stock.
In addition, Joseph J. Bianco and Bruce Raben converted loans into common stock
at $0.08 per share. Principal and interest totaling $352,442.19 was converted to
4,405,527 shares of common stock.

         Between October 10, 2003 and December 5, 2003, the Company conducted
closings on the sale of 126,063 Units consisting of 126,063 shares of Series A
Convertible Preferred Stock and 5,042,500 Warrants generating gross proceeds of
approximately $1,008,500.00. December 5, 2003 was the final closing and the
offering was closed immediately thereafter. In conjunction with these closings,
the Company issued unit purchase options to one individual and two entities
totaling 12,607 units at a purchase price of $10.00 per unit. Each unit consists
of one (1) share of the Company's Series A Convertible Preferred Stock, par
value $.001 per share and forty (40) Class A Common Stock Purchase Warrants.


Item 7.  Financial Statements.

         The financial statements and supplemental data required by this Item
are filed as exhibits hereto, as listed in the Index to Financial Statements
included under Item 13(c) of Part IV below, and are incorporated herein by this
reference.

Item 8.  Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.

Change In Accountants:
-----------------------

         Effective March 24, 2004, the Board of Directors of Whitewing approved
the engagement of Goldstein & Ganz, CPA's PC ("Goldstein & Ganz") as the
Company's independent accountants to audit the Company's financial statements
for the fiscal year ended December 31, 2003, when Weiser LLP ("Weiser")declined
to stand for re-election because of a fee dispute.

         The reports of Weiser on the Company's financial statements as of and
for the fiscal year ended December 31, 2002 or any subsequent interim period
through the date preceding Weiser's declination to stand for re-election did not
contain an adverse opinion or a disclaimer of opinion, and was not qualified or
modified as to uncertainty, audit scope, or accounting principles, except that
the report did contain a statement of uncertainty relative to going concern for
the year ended December 31, 2002 and subsequent interim periods.

         During the Company's fiscal year ended December 31, 2002 and in the
interim period from January 1, 2003 through the date preceding Weiser's
declination to stand for re-election, there were no disagreements between the
Company and Weiser LLP concerning any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Weiser LLP, would have
caused it to make reference to the subject matter of the disagreements in
connection with its reports.

                                       21
<PAGE>

         No "reportable events" (as defined in Item 304(a)(1)(v) of Regulation
S-K) occurred during the fiscal year ended December 31, 2002 and any subsequent
interim period preceding Weiser's declination to stand for re-election.

         The Company did not consult with Goldstein & Ganz during the Company's
fiscal year ended December 31, 2002 and subsequent interim period through the
date that Goldstein & Ganz was engaged, on the application of accounting
principles to a specified transaction, either completed or proposed; the type of
audit opinion that might be rendered by Goldstein & Ganz on the Company's
financial statements; any accounting, auditing or financial reporting issue; or
any matter that was either the subject of a disagreement between the Company and
the prior auditor (as defined in Item 304(a)(i)(iv) of Regulation S-K and its
related instructions) or a reportable event (as described in Item 304(a)(i)(v)
of Regulation S-K).

ITEM 8A: Controls and Procedures

         Our Chief Executive Officer and Chief Financial Officer (collectively,
the "Certifying Officers") are responsible for establishing and maintaining
disclosure controls and procedures for the Company. Such officers have concluded
(based on their evaluation of these controls and procedures as of a date within
90 days of the filing of this report) that the Company's disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in this report is accumulated and communicated to the Company's
management, including its principal executive officers as appropriate, to allow
timely decisions regarding required disclosure. The Certifying Officers also
have indicated that there were no significant changes in the Company's internal
controls or other factors that could significantly affect such controls
subsequent to the date of their evaluation, and there were no corrective actions
with regard to significant deficiencies and material weaknesses.


                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.

         The directors and executive officers of Whitewing as of May 20, 2004
are as follows:

                                                                      Director
Name                   Age      All positions with Whitewing           Since
----                   ---      ----------------------------           -----
Joseph Bianco           53      Chairman of the Board of Directors     2002
                                President & Chief Executive Officer
Norman Raben            73      Director, Executive Vice President,    2002
                                   Chief Financial Officer, Chief
                                   Operating Officer, and Secretary
Bruce Raben             50      Director                               2002
John C. Kleinert        45      Director                               2003
Thomas A. Cattani       43      Vice President, Assistant Secretary
                                   and General Counsel

         The board that resigned in connection with Whitewing's acquisition of
Total Filter Recycling, Inc. has the right to appoint a board member but thus
far has not taken action.

         The holders of Whitewing's common shares elect each director. Each
outstanding common share has one vote. If the election is held at the annual
meeting of stockholders, the vote required for election is a simple majority of
the total votes cast for and withheld from voting for each director, assuming a
quorum of at least one-half of all outstanding common shares is present in
person or represented by proxy. If the election is by written consent instead of
at an annual meeting, as permitted by Delaware corporation law, the vote
required for election is a simple majority of the total outstanding common
shares. Whitewing's Certificate of Incorporation currently provides for a Board
of Directors divided into two classes of directors serving staggered terms, with


                                       22
<PAGE>

one-half of the total number of authorized directors (currently five) to be
elected annually to serve a two-year term. The current board of directors serves
as a result of the Stock Exchange Agreement under which Whitewing acquired Total
Filter on May 3, 2002. The term of office of Mr. Bianco expires in 2004 and the
term of office of Messrs. B. Raben, N. Raben, and a vacant seat expired in 2003,
but Messrs B. Raben and N. Raben continue to serve until such time as they are
re-elected or replaced at next shareholders meeting, which is expected to take
place in the third quarter of 2004. Directors are currently uncompensated.
Whitewing's board of directors elects or appoints its officers, as provided in
the bylaws, subject to any employment agreements.

         Whitewing is authorized by Delaware corporation law and its bylaws to
indemnify its directors and officers against damages, which qualify, in the
opinion of the disinterested members of the board, for indemnification.
Whitewing is authorized to purchase liability insurance to cover this
indemnification. The Securities and Exchange Commission has informed Whitewing
that it is against public policy for Whitewing to indemnify its directors and
officers for liabilities arising under the Securities Act and that claims for
indemnification for this type of liability is unenforceable.

         Whitewing's Board of Directors has established an audit committee
comprised of two directors which are to meet periodically to consult with
Whitewing's independent auditors concerning their engagement and audit plan, and
concerning the auditor's report and management letter and, with the assistance
of the independent auditors, to monitor the adequacy of Whitewing's internal
accounting controls.

         Whitewing's Board of Directors previously established a compensation
committee comprised of two outside directors. In June 2002, the committee was
expanded to include all members of Whitewing's Board of Directors. In July 2002,
the committee met to review and determine the compensation of Whitewing's
executive officers and all employees, to begin development of Whitewing's Stock
Option Plan, to adopt compensation policies and practices, and to nominate the
individuals to be proposed by the Board of Directors for election as directors
of Whitewing.

         Joseph J. Bianco has been the Chairman of the Board and a Director
since May 2002 and the President and Chief Executive Officer since April 2,
2004. Mr. Bianco graduated from Yale Law School in 1975, where he was an editor
of the Law Journal. Subsequently, he became Associate Dean at Cardozo School of
Law at Yeshiva University. During that period, he was author of two books and
various scholarly articles. In 1982, Mr. Bianco left the academic world and
bought Lotus Performance Cars, Inc., which was sold, to General Motors in 1987.
Mr. Bianco began at that time to invest for his own account, and in 1990,
founded Alliance Entertainment Corporation, where he was CEO from the outset. In
1996, Mr. Bianco sold control of NYSE-Listed Alliance, then the leading
independent distributor of music in the world, and resumed his private investing
activities. In 1998, an investor group led by Mr. Bianco bought the first of
several magazine distributors that were consolidated into the Interlink
Companies, of which Mr. Bianco was Chairman. Interlink, by then the leading
distributor of magazines to booksellers and other retailers was sold in 2001 to
the Source-Interlink Companies. From 1997 to 2000 Mr. Bianco was also Chairman
of Cognitive Arts, Inc., a leading creator of educational software, which was
purchased from Northwestern University. In 2003, Mr. Bianco, founded Sheridan
Square Acquisitions, and currently is the Chairman. Recent acquisitions include
Artemis Records and Musicrama, an independent music distributor. Mr. Bianco also
serves on the Board of several other private corporations as well as two
non-profit organizations.

         John C. Kleinert is a member of the Company's Board of Directors,
including its Audit and Compensation Committees. Mr. Kleinert is a former
Partner of Goldman Sachs & Co., the global investment banking firm. Mr. Kleinert
earned a Bachelor of Science degree in Chemical Engineering from Princeton
University in 1981. From 1982 through 1997, he worked in various capacities at
Goldman Sachs & Co. in New York. In 1994 he was elected General Partner of the
firm. Since retiring from Goldman Sachs, Mr. Kleinert has invested for his own
account and pursued several business ventures.

         Bruce Raben has been a Director of Whitewing since May 2002. Mr. Raben
is the founder and partner of Hudson Capital Advisors, LLC, which was formed in
the first quarter of 2004. From 1996 through 2003, Mr. Raben was with CIBC World
Markets serving as managing director from 1996 to 2002 and as a consultant


                                       23
<PAGE>

thereafter. Prior to joining CIBC-World Markets, he was a founder, Managing
Director and co-head of the Corporate Finance Department of Jefferies & Co. Mr.
Raben has served as a Director of various public and private companies, and
currently serves on the Boards of Fresh Direct, and Equity Marketing, Inc. Mr.
Raben is an investor in many private companies and, until May 2001, was
Co-Chairman and a member of the Board of Directors of The InterLink Companies,
Inc. He earned an MBA degree from the Columbia Business School and an AB from
Vassar College. Mr. Raben is Norman Raben's son.

         Norman Raben has been a Director and the Executive Vice President and
Secretary, of Whitewing since May 2002 and its Chief Financial Officer and Chief
Operating Officer since March of 2004. Until December 31, 2001, Mr. Raben was a
Senior Vice President of the Source Interlink Companies, Inc., a NASDAQ listed
company. He acted as a consultant to Source Interlink until May 31, 2002 In
1998, an investor group led by Mr. Bianco bought the first of several magazine
distributors that were consolidated into the Interlink Companies. Interlink, by
then the leading distributor of magazines to booksellers and other retailers was
sold in 2001 to the Source-Interlink Companies. Mr. Raben has over twenty-five
years experience in magazine publishing, printing, direct marketing and
distribution. He attended George Washington University. Mr. Raben is Bruce
Raben's father.

         Thomas A. Cattani, Esq. has been Whitewing's Vice President, Asst.
Secretary, and General Counsel since May 2002. Mr. Cattani was in private
practice as a sole practitioner from April 1994 until July 2000, at which time
he joined Whitewing. In private practice, Mr. Cattani concentrated on the legal
needs of small and medium sized businesses. Mr. Cattani is licensed to practice
before all courts in the State of New Jersey, United States District Court, and
the United States Tax Court. He prepares the majority of the Whitewing's
contracts and retains and manages the relationships with outside counsel, as
required. He is responsible for all regulatory compliance, licensing, permitting
and all legal matters including acquisitions, contracts, collections and
corporate formalities. He also supervises the Human Resources Department. Mr.
Cattani earned a J.D. Degree from Rutgers University School of Law in 1988. He
was the recipient of a Tax Honors Certificate.

Item 10.  Executive Compensation - Employment and Consulting Agreements.

         The following table summarizes the annual compensation paid by
Whitewing during fiscal years ended December 31, 2001, 2002 and 2003 to the
President and Chief Executive Officers of Whitewing. One other executive officer
of Whitewing received an annual salary and bonus exceeding $100,000 during the
year ended December 31, 2002 and is listed below.

                               Annual Compensation
---------------------  -------------------------------------
Name &                                    Other
Principal              Fiscal   Salary &  Annual
Position               Year     Bonuses   Compensation
--------               ------   -------   ------------

Cynthia Kolke          2001       90,000     2,330*
 (Chief Executive      2002        None
  Officer) 2003 None

Andrew T. Libby, Jr.   2001        None
(Chief Executive       2002        None
  Officer) 2003 None

Andrew V. Latham, Jr.  2001       69,231
(Chief Executive       2002      134,034
  Officer)             2003      117,461

Norman Raben           2001        None
(Executive Vice-       2002      133,235
  President/Secretary  2003       89,423

*Includes payments of $2,331 in 2001 of accrued vacation.

                                       24
<PAGE>

         Whitewing leased and paid the insurance on an automobile on Ms. Kolke's
behalf at a cost of $5,798 in 2001. There are no further obligations under this
lease as Ms. Kolke resigned as President on November 28, 2001.

         Ms. Kolke served as Whitewing's chief executive officer until November
30, 2001. Mr. Libby served as Whitewing's chief executive officer from November
30, 2001 to May 3, 2002. Mr. Latham has served as the chief executive officer of
Total Filter beginning at inception in 1992 and became the chief executive
officer of Whitewing on May 3, 2002 as a result of Whitewing's acquisition of
Total Filter. None of the named officers have received restricted stock awards,
LTIP payouts, or other long term compensation.

         In August 2003, the Company entered into a two (2) year employment
agreement with Kevin A. DeLeon, pursuant to which Mr. DeLeon agreed to serve as
the Company's President and Chief Executive Officer commencing on First Closing
Date as well as such other positions as reasonably requested by the Board of
Directors (the "DeLeon Agreement"). Accordingly, effective September 30, 2003,
Mr. DeLeon served as the Company's Chief Executive Officer and as a member of
the Company's Board of Directors. The term of the DeLeon Agreement was subject
to automatic extension for one (1) year unless either party terminated the
agreement at least 3 months prior to the end of the applicable term. The Company
agreed to pay Mr. DeLeon an annual salary of $150,000 subject to increases, in
the discretion of the Board of Directors, following the closing of an
acquisition of a similar or complimentary business. The DeLeon Agreement
provided that Mr. DeLeon receive an annual cash bonus as of each December 31st
during the term of the DeLeon Agreement out of a bonus pool segregated for
senior executives (the "Bonus Pool"). The Bonus Pool was to be equal to 7.5% of
the Company's earnings before the payment of interest and taxes and before
deductions for depreciation and amortization for the Company's most recent
fiscal year ended December 31. In addition, Mr. DeLeon was issued options to
purchase 2,000,000 shares of the Company's Common Stock under the Company's 2003
Stock Option Plan. The options were to vest one half on the First Closing Date,
and one quarter on each of the first anniversary and second anniversary thereof
at an exercise price equal to the fair market value of the Common Stock on the
First Closing Date or $.20 per share. The Company also agreed to reimburse Mr.
DeLeon for reasonable out-of-pocket expenses incurred in connection with the
performance of his duties (including up to $750 per month for an automobile
allowance) and to provide him with a $1 million term life insurance policy,
assuming such policy could be obtained at reasonable and customary rates. In the
event that Mr. DeLeon's employment was terminated other than for death,
disability (as defined in the DeLeon Agreement), for Cause (as defined in the
DeLeon Agreement) or due to Mr. DeLeon's resignation, the Company was required
to pay Mr. DeLeon's base salary for the remainder of the applicable term of the
DeLeon Agreement. During the term of employment and for the twelve month period
thereafter, Mr. DeLeon agreed not to compete with the Company's business in the
State of New Jersey nor solicit the Company's employees or customers. The DeLeon
Agreement contains other customary provisions.

         In March 2004, the positions held by Mr. DeLeon were assumed by Michael
Risley, Who was hired by the company due to his experience in managing a public
company. The company is negotiating a settlement with Mr. DeLeon.

         In August 2003, the Company entered into a two (2) year employment
agreement with Andrew V. Latham, pursuant to which Mr. Latham agreed to serve as
the Company's Executive Vice President and Chief Technology Officer commencing
on the First Closing Date as well as such other positions as reasonably
requested by the Board of Directors (the "Latham Agreement"). The term of the
Latham Agreement was subject to automatic extension for one (1) year unless
either party terminated the agreement at least 3 months prior to the end of the
applicable term. The Company agreed to pay Mr. Latham an annual salary of
$145,000 subject to increases, in the discretion of the Board of Directors,
following the closing of an acquisition of a similar or complimentary business.
The Latham Agreement provided that Mr. Latham receive an annual cash bonus as of
December 31st during the term of the Latham Agreement out of the Bonus Pool. Mr.
Latham was issued options to purchase 150,000 shares of the Company's Common
Stock under the Company's 2003 Stock Option Plan. The options were to vest two
thirds on the date of grant and one third on the first anniversary thereof at an
exercise price of $.08 per share. The Company also agreed to reimburse Mr.
Latham for reasonable out-of-pocket expenses incurred in connection with the
performance of his duties (including up to $750 per month for an automobile
allowance) and to provide him with a $1 million term life insurance policy,
assuming such policy could be obtained at reasonable and customary rates. In the
event that Mr. Latham's employment was terminated other than for death,


                                       25
<PAGE>

disability (as defined in the Latham Agreement), for Cause (as defined in the
Latham Agreement) or due to Mr. Latham's resignation, the Company was required
to pay Mr. Latham's base salary for the remainder of the applicable term of the
Latham Agreement. During the term of employment and for the twelve month period
thereafter, Mr. Latham agreed not to compete with the Company's business in the
State of New Jersey nor solicit the Company's employees or customers. The Latham
Agreement contained other customary provisions and replace and supercede the
existing employment agreement between the Company and Mr. Latham.

         On March 18, 2004, Andrew V. Latham, Jr. resigned his positions as
Executive Vice President, Chief Technology Officer, and Director of the Company
and all offices in subsidiary companies. The Company is currently negotiating a
consulting agreement with Mr. Latham to serve as a technical adviser.

         In August 2003, the Company entered into a two (2) year employment
agreement with Norman Raben, pursuant to which Mr. Raben would serve as the
Company's Executive Vice President and Secretary as well as such other positions
as reasonably requested by the Board of Directors (the "Raben Agreement"). The
term of the Raben Agreement is subject to automatic extension for one (1) year
unless either party terminates the agreement at least 3 months prior to the end
of the applicable term. The Company agreed to pay Mr. Raben an annual salary of
$145,000 subject to increases, in the discretion of the Board of Directors,
following the closing of an acquisition of a similar or complimentary business.
The Raben Agreement provides that Mr. Raben receive an annual cash bonus as of
December 31st during the term of the Raben Agreement out of the Bonus Pool. Mr.
Raben was issued options to purchase 500,000 shares of the Company's Common
Stock under the Company's 2003 Stock Option Plan. The options are to vest two
thirds on the date of grant and one third on the first anniversary thereof at an
exercise price of $.08 per share. The Company also agreed to reimburse Mr. Raben
for reasonable out-of-pocket expenses incurred in connection with the
performance of his duties (including up to $750 per month for an automobile
allowance) and to provide him with a $1 million term life insurance policy,
assuming such policy could be obtained at reasonable and customary rates. In the
event that Mr. Raben's employment is terminated other than for death, Disability
(as defined in the Raben Agreement), for Cause (as defined in the Raben
Agreement) or due to Mr. Raben's resignation, the Company is required to pay Mr.
Raben's base salary for the remainder of the applicable term of the Raben
Agreement. During the term of employment and for the twelve month period
thereafter, Mr. Raben has agreed not to compete with the Company's business in
the State of New Jersey nor solicit the Company's employees or customers. The
Raben Agreement contains other customary provisions and replaced and superceded
the existing employment agreement between the Company and Mr. Raben.

         On March 18, 2004, Norman Raben assumed the additional positions of
Chief Operating Officer and Chief Financial Officer of the Company. He will
remain Executive Vice President and Secretary. The Company is currently
negotiating a revised employment agreement with Mr. Raben to reflect the change
in corporate responsibility.

         On March 18, 2004, the Company entered into a three (3) year employment
agreement with Michael Risley, pursuant to which Mr. Risley agreed to serve as
the Company's President and Chief Executive Officer commencing on March 18 2004
as well as such other positions as reasonably requested by the Board of
Directors (the "Risley Agreement"). Accordingly, effective March 18 2004, Mr.
Risley served as the Company's Chief Executive Officer and as a member of the
Company's Board of Directors. The term of the Risley Agreement is subject to
automatic extension for two one-year terms at Mr. Risley's option and thereafter
automatic extensions for successive one year terms unless either party
terminated the agreement at least 3 months prior to the end of the applicable
term. The Company agreed to pay Mr. Risley an annual base salary of $156,000
with increases to $186,000 on January 1, 2005 and $206,000 on January 1, 2006.
The salary is subject to increases, in the discretion of the Board of Directors,
following the completion of any acquisition during the employment period, or
other agreed milestones. The Risley Agreement provided that Mr. Risley receive,
during the term set forth in the Risley Agreement, an annual cash bonus each
year, commencing December 31, 2004, out of a bonus pool segregated for senior
executives (the "Bonus Pool"). Other senior executives may be added to the pool,
but as of the date of the contract the pool consisted of Mr. Risley and Mr.
Raben. The Bonus Pool was to be equal to 10% of the Company's earnings before
the payment of interest and taxes and before deductions for depreciation and
amortization for each fiscal year. In addition, Mr. Risley was issued options to
purchase a number of shares equal to 18% of the issued and outstanding shares of
the common stock of the Company on a fully diluted basis at an exercise price of
$.01 per share. The amount is calculated upon vesting, which was to occur 1/3 on
signing and 1/3 on each anniversary of signing for two years. All options were
to vest upon a Change of Control of the Company (as defined in the Risley
agreement). The options were to expire on March 18, 2011 or three years from
termination, whichever was sooner. The Company also agreed to reimburse Mr.
Risley for reasonable out-of-pocket expenses incurred in connection with the
performance of his duties including automobile expenses allowance of $5,000.00
plus $900.00 per month unless an alternate executive automobile policy is in
place. In the event that Mr. Risley's employment is terminated other than for
death, Disability (as defined in the Risley Agreement), for Cause (as defined in


                                       26
<PAGE>

the Risley Agreement), the Company is required to pay Mr. Risley's base salary
for the remainder of the applicable term of the Risley Agreement. In the event
that Mr. Risley resigns, the Company is required to pay all benefits for a
period of three (3) years and an amount equal to three (3) times annual base
salary payable in bi-weekly installments. During the term of employment and for
the twelve month period thereafter, Mr. Risley agreed not to compete with the
Company's business in the State of New Jersey nor solicit the Company's
employees or customers. The Risley Agreement contains other customary
provisions.

         On April 2, 2004, Michael Risley resigned as President and Chief
Executive Officer and Director of the Company and Joseph Bianco, the Board's
Chairman, assumed the offices of President and Chief Executive Officer. Mr.
Risley decided to return to his prior position with the Company, which was as a
consultant, until the Company is better funded, at which time he expects to
resume his positions as President, Chief Executive Officer, and Director. During
his tenure as a consultant, Mr. Risley will be compensated at the same rate as
he was under his employment agreement, however his option package was amended to
provide options equal to 12% of the issued and outstanding shares, on a fully
diluted basis, at a purchase price of $0.01 per share. The number of options are
calculated upon date of vesting. The first 6% of the options are vest upon the
final closing of the private offering of Convertible Debentures and the second
6% are calculated at a certain date one year thereafter. All of these options
expire on a certain date 7 years after the date of vesting.

         During the fiscal year ended December 31, 2003, neither Whitewing's
Chief Executive Officer nor the other executive officers named in the above
Summary Compensation Table exercised any options.

         There were no options/SARS granted during the last fiscal year to
Whitewing's executive officers named in the above Summary Compensation Table.

Limitation of Directors' and Officers' Liability and Indemnification

         Whitewing's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a Delaware corporation will not be personally liable for
monetary damages for breach of the fiduciary duties as directors except for
liability as a result of their duty of loyalty to the company for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, unlawful payments of dividends or stock transactions,
unauthorized distributions of assets, loan of corporate assets to an officer or
director, unauthorized purchase of shares, commencing business before obtaining
minimum capital, or any transaction from which a director derived an improper
benefit. Such limitations do not affect the availability of equitable remedies
such as injunctive relief or rescission. In addition, Whitewing's Bylaws provide
that Whitewing must indemnify its officers and directors, and may indemnify its
employees and other agents, to the fullest extent permitted by Delaware law. At
present, there is no pending litigation or proceeding involving any director,
officer, employee, or agent of Whitewing where indemnification will be required
or permitted. Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to officers, directors or
persons controlling Whitewing pursuant to the foregoing provisions, Whitewing
has been informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933, as amended, and is therefore unenforceable.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.

         The following table sets forth information known to Whitewing regarding
beneficial ownership of Whitewing's common stock by:

                                       27
<PAGE>

o    Whitewing's directors and officers, individually;
o    Whitewing's directors and officers, as a group; and
o    Other persons who own more than five percent of Whitewing's common stock.

Whitewing believes the named persons have sole investment and voting power over
the shares.

Individuals owning greater than 5%
----------------------------------

Name                                        Number of Shares     Percentage
----                                        ----------------     ----------
Andrew Latham     (1)                          11,210,000            17.1
Frances M. Latham (1)                          11,210,000            17.1
Michael Risley     (2)                          9,150,543            14.0
Total shares owned by Individuals             ------------          ------
owning greater than 5% (3 persons)             20,360,543            31.1

(1) Andrew Latham is the spouse of Frances Latham. 11,000,000 held in the name
of Frances Latham. 150,000 options held by Andrew Latham. 100,000 options are
held by Frances Latham. 60,000 vested in May of 2004 and 40,000 will vest in May
of 2005. Options are exercisable at $0.08 per share and expire on May 7, 2013.
(2) Options to purchase shares of the Company's common stock which, pursuant to
a consulting agreement dated April 6, 2004. Options are exercisable at $0.01 per
share and expire in August of 2011. These Options are subject to vesting. For a
description of such options, see Item 10 "Executive Compensation - Employment
and Consulting Agreements."

Directors and Executive Officers
--------------------------------

Name                                        Number of Shares     Percentage
----                                        ----------------     ----------
Joseph Bianco    (1)                           6,163,726            10.4
Jack Kleinert                                  7,613,699            12.9
Norman Raben     (2)                           9,640,054            16.1
Bruce Raben      (2)                           9,640,054            16.1
Total shares owned by                         -----------          ------
Directors and Officers (4 persons)            23,417,479            39.4

(1) 200,000 of the shares are held by Joseph Bianco SEP IRA Bear Stern
Custodian.
(2) Norman Raben is the father of Bruce Raben. 1,278,253 shares held by Norman
Raben. 4,741,801 shares held by Bruce Raben. 3,620,000 option/warrants held by
Norman Raben. No option/warrants held by Bruce Raben.

There were no equity securities issued with respect to compensation plans by
Whitewing.


Item 12.  Certain Relationship and Related Transactions

         On October 1, 2001, Total Recycling Services, Inc. ("TRS") granted an
option to purchase 4.5 million shares of Common Stock at an exercise price of
$.01 per share to Joseph Bianco and Bruce Raben, commencing in 2002, Chairman of
the Board and Director of Whitewing, respectively. At the date of grant, neither
Joseph Bianco nor Bruce Raben were directors or officers of Whitewing or TRS.
The options were granted in consideration of their locating a public company
resulting in an effective merger. On May 3, 2002, in conjunction with the
closing of the purchase of Whitewing, the option was exercised and 4.5 million
shares of Common Stock were issued.

         On July 31, 2002, Whitewing and a shareholder, Andrew V. Latham, Jr.
guaranteed a promissory note between ARS and a lender in the amount of $641,250.
Whitewing unconditionally guarantees payment of all amounts owing under the
note. The guarantee remains in effect until the note is paid in full.

                                       28
<PAGE>

         On January 1, 2002, the Company purchased intellectual property
consisting of various formulae, equipment designs, mechanical device adaptations
and other intellectual property for $194,504 from a stockholder of Advanced
Recovery Solutions, Inc. ("ARS") a 50% owned company. The Company paid $50,000
cash and the other $144,504 was in the form of a note. The note is to be repaid
in monthly installments of $8,333 including interest imputed at 4.75% per annum
through July 2003. The balance at December 31, 2003 amounted to $28,568.

         Two of the Company's directors entered into an unsecured commercial
note ("Director's Note") of up to $500,000 with a bank. Simultaneously, the
Company entered into an unsecured subordinate promissory note with the directors
bearing identical terms and conditions to the Director's Note, which matures on
September 30, 2004 and bears interest at the rate of 1.5% over prime but not
less than 6.25% (6.75% at December 31, 2002). The note is secured by the
Company's note receivable. The note is subordinated to the line of credit
borrowings from the same bank. The note agreement provides that when the Company
sells its property, the sale proceeds are to first pay the mortgage and then to
pay off the note. The Company guaranteed the note from the bank to the
directors. The balance at December 31, 2003 amounted to approximately $498,000.

         In connection with the acquisition of an additional interest in
Advanced Recovery Solutions, Inc., the Company executed notes payable to
Geoffrey Perry and Carol Dancer, which aggregated to approximately $227,000 at
December 31, 2003. These loans consist of installment notes amounting to
approximately $158,000 payable through 2006 and demand notes of approximately
$69,000.

         On September 30, 2003 three officers/directors converted their holdings
into common stock at $.08 per share. Principal and interest totaling $603,493.15
was converted to 7,543,664 shares of common stock. In addition, two directors
converted loans into common stock at $0.08 per share. Principal and interest
totaling $352,442.19 was converted to 4,405,527 shares of common stock.

Item 13.  Exhibits and Reports on Form 8-K.

    (a)    Exhibits. The following exhibits are either filed herewith or
           incorporated herein by reference:
            3.1   Certificate of Incorporation*
            3.2   Bylaws*
            3.3   Reincorporation Agreement*
           10.1   Stock Purchase Agreement, dated as of February 26, 2003
                  (incorporated by reference from Whitewing's Current report on
                  form 8K filed on May 14, 2003)
           10.2   Placement Agency Agreement, dated as of September 10, 2003 as
                  amended, between the Company and Maxim (incorporated by
                  reference from Whitewing's Current report on form 8K filed on
                  October 9, 2003)
           10.3   Employment Agreement of Andrew V. Latham Jr.
                  (incorporated by reference from Whitewing's Current report on
                  form 8K filed on October 9, 2003)
           10.4   Employment Agreement of Kevin DeLeon
                  (incorporated by reference from Whitewing's Current report on
                  form 8K filed on October 9, 2003)
           10.5   Employment Agreement of Norman Raben
                  (incorporated by reference from Whitewing's Current report on
                  form 8K filed on October 9, 2003)
           10.6   Employment Agreement of Michael Risley
                  (incorporated by reference from Whitewing's Current report on
                  form 8K filed on April 1, 2004)
           10.7   Consulting Agreement of Michael Risley dated as of April 6,
                  2004
            3.4   Certificate of Designation of Rights, Preferences, and
                  Limitations of Series A Convertible Preferred Stock of
                  Whitewing Environmental Corp. (incorporated by reference from
                  Whitewing's Current report on form 8K filed on October 10,
                  2003)
           21.1   List of Subsidiaries
           31.1   Certifications of Chief Executive Officer Pursuant to Section
                  302 of the Sarbanes Oxley Act of 2002
           31.2   Certification of Chief Financial Officer Pursuant to Section
                  302 of the Sarbanes Oxley Act of 2002
           32.1   Certifications Of Chief Executive Officer Pursuant To 18
                  U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of
                  Sarbanes-Oxley Act Of 2002
           32.2   Certifications Of Chief Financial Officer Pursuant To 18
                  U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of
                  Sarbanes-Oxley Act Of 2002


                                       29
<PAGE>

*    Incorporated by reference from Whitewing's Registration Statement on Form
     S-1 (33-97156) which became effective under the Securities Act of 1933, as
     amended, on February 9, 1996.

    (b)    Reports on Form 8-K

           Current report on form 8K filed on October 10, 2003 with respect to
           items 5, 7 & 9.


Item 14. Principal Accountant Fees and Services.

During 2003 and 2002, there were no billings by Weiser LLP to the Company for
non Audit-Related Fees and Tax Fees. Additionally, they did not provide any
services to the Company related to financial information systems design and
implementation.

The aggregate fees billed by Weiser LLP to the Company for the years ended
December 31, 2003 and 2002 are as follows:

                                                      2003     2002
                                                      ----     ----

                  Audit Fees (1)...............     $369,575 $215,540
                  All Other Fees ..............         -        -
                                                     -------  -------
                  Total Fees for Services Provided  $369,575 $215,540
                                                     =======  =======

(1) Audit services included (a) the annual audit (including required quarterly
reviews) and other procedures required to be performed by the independent
auditor to be able to form an opinion on the Company's consolidated financial
statements, and (b) services that only the independent auditor reasonably can
provide, such as services associated with SEC registration statements, periodic
reports and other documents filed with the SEC or related thereto.



                                       30
<PAGE>

                                                                Page

Report of Independent Registered Public Accounting Firm         F-1 - F-2

Balance Sheet as of December 31, 2003                           F-3

Statements of Operations for the years ended
   December 31, 2002 and 2003                                   F-4

Statements of Shareholders' Equity for the years ended
   December 31, 2002 and 2003                                   F-5

Statements of Cash Flows for the years ended
   December 31, 2002 and 2003                                   F-7

Notes to Financial Statements                                   F-8 - F-24

<PAGE>


                   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Whitewing Environmental Corp.

We have audited the accompanying consolidated balance sheet of Whitewing
Environmental Corp. and subsidiaries (the "Company") as of December 31, 2003 and
the related consolidated statements of operations, stockholders' equity, and
cash flows for the year ended December 31, 2003. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits. The financial statements of Whitewing
Environmental Corp. and subsidiaries at December 31, 2002, were audited by other
auditors whose report dated March 21, 2003, expressed a qualified opinion on
those statements due to the substantial doubt about the Company's ability to
continue as a going concern.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 2003, and the results of its operations and its cash flows for the
year ended December 31, 2003, in conformity with U.S. generally accepted
accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has suffered recurring losses,
negative cash flows from operations, a net working capital deficiency including
a cash overdraft, and an accumulated deficit. These factors raise substantial
doubt about its ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.


                                            Goldstein & Ganz, PC

New York, N.Y.
June 11, 2004


                                       F-1

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Whitewing Environmental Corp. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Whitewing
Environmental Corp. and Subsidiaries (the "Company") (name changed from
Whitewing Labs, Inc. on May 14, 2002) as of December 31, 2002, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years ended December 31, 2001 and 2002. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Whitewing
Environmental Corp. and Subsidiaries (formerly Whitewing Labs, Inc.) as of
December 31, 2002, and the results of their operations and their cash flows for
the years ended December 31, 2001 and 2002, in conformity with accounting
principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has suffered recurring losses,
negative cash flows from operations, a net working capital deficiency including
a cash overdraft, and an accumulated deficit. These factors raise substantial
doubt about its ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

As discussed in Note 1 to the consolidated financial statements, on January 1,
2002, the Company adopted the provisions of Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets".

                                   Weiser LLP

New York, N.Y.
March 21, 2003

                                       F-2
<PAGE>

                 WHITEWING ENVIRONMENTAL CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2003


                                     ASSETS

Current assets:
    Accounts receivable, net of allowance for
      doubtful accounts of $90,173                               $      225,694
    Inventory                                                           334,917
    Prepaid expenses and other current assets                           293,247
    Assets held for sale                                                100,000
    Assets of discontinued operations                                 1,034,200
                                                                 ---------------
           Total current assets                                       1,988,058
                                                                 ---------------

Property and equipment, net                                           1,452,441

Other assets:
    Intangible assets                                                   574,465
    Other assets                                                         24,983
                                                                 ---------------
           Total assets                                          $    4,039,947
                                                                 ===============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Cash overdraft                                                $       29,196
   Lines of credit                                                      354,380
   Current maturities of bank loans and mortgage                        133,170
   Current maturities of loans payable - related parties                227,368
   Current maturities of loans payable                                  180,148
   Convertible notes payable                                            500,000
   Accounts payable and accrued expenses                                510,259
   Liabilities of discontinued operations                             2,243,676
                                                                 ---------------
         Total current liabilities                                    4,178,197

Noncurrent liabilities:
   Bank loans and mortgage, net of current maturities                   702,179
   Obligations under capital leases, net of current maturities           22,865
   Loans payable, net of current maturities                               8,135
                                                                 ---------------
         Total liabilities                                            4,911,376
                                                                 ---------------

Commitment and contingencies

Stockholders' deficiency:
   Preferred stock, $.001 par value, 500,000 shares authorized
      Series A convertible preferred stock, 400,000 shares
        authorized, 224,126 shares issued and outstanding
        ($16 per share liquidation preference - Note 2)                     224
   Common stock, $.001 par, 100,000,000 shares authorized,
       51,560,634 shares issued and outstanding                          51,561
   Additional paid-in capital
       Attributable to Preferred Stock                                2,162,437
       Attributable to Common Stock                                   7,084,029
   Accumulated deficit                                              (10,169,680)
                                                                 ---------------
         Total stockholders' deficiency                                (871,429)
                                                                 ---------------

         Total liabilities and stockholders' deficiency          $    4,039,947
                                                                 ===============

                 See notes to consolidated financial statements.

                                       F-3
<PAGE>

                 WHITEWING ENVIRONMENTAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                For The Years Ended December 31,
                                                 -------------------------------
                                                     2002               2003
                                                 -------------     -------------

Product sales                                    $         --      $  1,649,647
Rental income                                              --                --
                                                 -------------     -------------
                                                           --         1,649,647

Cost of goods and services sold                            --         1,372,752
                                                 -------------     -------------

Gross profit                                               --           276,895
                                                 -------------     -------------

Operating expenses:
    Selling, general and administrative
       expenses                                       183,108           977,359
    Bad debt expense                                       --            90,173
    Depreciation and amortization                         153           121,689
                                                 -------------     -------------
Total operating expenses                              183,261         1,189,221
                                                 -------------     -------------

Loss before other income and expenses
  and loss from discontinued operations              (183,261)         (912,326)
                                                 -------------     -------------

Other income (expense):
    Other income                                        5,922             5,807
    Interest expense                                       --        (1,615,867)
                                                 -------------     -------------
       Total other income (expense)                     5,922        (1,610,060)
                                                 -------------     -------------
Loss from operations                                 (177,339)       (2,522,386)
Discontinued operation:
   Loss from operations of discontinued
   TRS, (including loss on disposal of
   $2,549,299 in 2003)                             (2,482,326)       (3,699,942)
                                                 -------------     -------------
Net Loss                                           (2,659,665)       (6,222,328)
Preferred stock dividend (including
   beneficial conversion feature)                          --          (786,261)
                                                 -------------     -------------
Net loss available for common
   Stockholders                                  $ (2,659,665)     $ (7,008,589)
                                                 =============     =============

Per Share Data:
Basic/diluted loss (after provision
   for preferred stock dividend)                 $       (.09)     $       (.17)
                                                 =============     =============

Weighted average shares outstanding                28,630,684        41,112,173
                                                 =============     =============

                 See notes to consolidated financial statements.

                                       F-4

<PAGE>

<TABLE>
                                           WHITEWING ENVIRONMENTAL CORP. AND SUBSIDIARIES

                                    CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY/(DEFICIENCY)

                                           FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2003

                                                                                                                Additional1
                                                       Commom                      Preferred                  Paid-in Capital
                                              Shares            Amount        Shares        Amount        Commom        Preferred
                                           -----------------------------------------------------------------------------------------
<S>                                          <C>              <C>             <C>              <C>      <C>             <C>
Balance, December 31, 2001                    17,600,000      $  17,600            --             --    $   788,627              --
Common stock issed for services                  200,000            200            --             --          6,363              --
Common stock issued for future services        1,000,000          1,000            --             --        249,000              --
Rescission of common stock issued for
     future services                          (1,000,000)        (1,000)           --             --       (240,450)             --
Common stock to be distributed for
     non-compete agreement                       150,000            150            --             --         32,850              --
Common stock sold for cash                     3,200,000          3,200            --             --        718,867              --
Option granted to two individuals                     --             --            --             --      1,123,000              --
Exercise of options                            4,500,000          4,500            --             --         (2,250)             --
Conversion of loans payable to common
     stock                                     1,700,000          1,700            --             --        423,300              --
Recapitalization                               6,861,443          6,861            --             --        576,139              --
Recognition of compensation expense                   --             --            --             --             --              --
Net loss                                              --             --            --             --             --              --
                                          ------------------------------------------------------------------------------------------
Balance, December 31, 2002                    34,211,443      $  34,211            --             --    $ 3,675,446              --
                                          ==========================================================================================
Convertible notes payable
    "in the money" conversion feature                 --             --            --             --        754,497              --
Issuance of warrants to convertible
     notes payable holders                            --             --            --             --        320,503              --
Issuance of options for
     advisory services                                --             --            --             --        122,570              --
Issuance of common stock issued
     for consulting services                   1,400,000          1,400            --             --        194,600              --
Issuance of shares for acquisition             2,000,000          2,000            --             --        258,000              --
Common stock issued for advisory
     services (increment for amended
     agreement)                                2,000,000          2,000            --             --        155,430              --
Options issued for services                           --             --            --             --          3,650              --
Sale of Series A convertible preferred
     stock, net of expenses                           --             --       224,126            224             --       1,376,176
Series A  convertible preferred stock
     "in the money" conversion feature                --             --            --             --             --         786,261
Issuance of warrants
     for advisory services                            --             --            --             --        126,685              --
Issuance of common stock upon
     conversion of convertible notes
     payable                                   7,543,664          7,544            --             --        595,949              --
Issuance of common stock upon
    conversion of loans payable-
     related parties                           4,405,527          4,406            --             --        876,699              --
Net Loss                                              --             --            --             --             --              --
                                          ------------------------------------------------------------------------------------------
Balance, December 31, 2003                    51,560,634      $  51,561       224,126          $ 224    $ 7,084,029     $ 2,162,437
                                          ==========================================================================================

(continued on next page)

See notes to consolidated financial statements.

                                                               F-5
<PAGE>

                                          WHITEWING ENVIRONMENTAL CORP. AND SUBSIDIARIES

                                   CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY/(DEFICIENCY)

                                    FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2003 (continued)

                                                                                                                   Total S/H
                                                 Accumulated       Unearned            Treasury Stock                Equity
                                                   Deficit       Compensation        Shares       Amount           (Deficiency)
                                          --------------------------------------------------------------------------------------
Balance, December 31, 2001                      $   (501,426)             --         200,000     $ (12,000)         $  292,801
Common stock issed for services                           --              --              --            --               6,563
Common stock issued for future services                   --        (250,000)             --            --                  --
Rescission of common stock issued for
     future services                                      --         241,450              --            --                  --
Common stock to be distributed for
     non-compete agreement                                --              --              --            --              33,000
Common stock sold for cash                                --              --              --            --             722,067
Option granted to two individuals                         --              --              --            --           1,123,000
Exercise of options                                       --              --              --            --               2,250
Conversion of loans payable to common
     stock                                                --              --              --            --             425,000
Recapitalization                                          --              --        (200,000)       12,000             595,000
Recognition of compensation expense                       --           8,550              --            --               8,550
Net loss                                          (2,659,665)             --              --            --          (2,659,665)
                                          --------------------------------------------------------------------------------------
Balance, December 31, 2002                      $ (3,161,091)             --              --            --          $  548,566
                                          ======================================================================================

Convertible notes payable
    "in the money" conversion feature                     --              --              --            --             754,497
Issuance of warrants to convertible
     notes payable holders                                --              --              --            --             320,503
Issuance of options for
     advisory services                                    --              --              --            --             122,570
Issuance of common stock issued
     for consulting services                              --              --              --            --             196,000
Issuance of shares for acquisition                        --              --              --            --             260,000
Common stock issued for advisory
     services (increment for amended
     agreement)                                           --              --              --            --             157,430
Options issued for services                               --              --              --            --               3,650
Sale of Series A convertible preferred
     stock, net of expenses                               --              --              --            --           1,376,400
Series A  convertible preferred stock
     "in the money" conversion feature              (786,261)             --              --            --                  --
Issuance of warrants
     for advisory services                                --              --              --            --             126,685
Issuance of common stock upon
     conversion of convertible notes
     payable                                              --              --              --            --             603,493
Issuance of common stock upon
    conversion of loans payalbe-
     related parties                                      --              --              --            --             881,105
Net Loss                                          (6,222,328)             --              --            --          (6,222,328)
                                          --------------------------------------------------------------------------------------
Balance, December 31, 2003                     $ (10,169,680)        $    --              --       $    --          $ (871,429)
                                          ======================================================================================

</TABLE>
See notes to consolidated financial statements.

                                                               F-6
<PAGE>

<TABLE>
                           WHITEWING ENVIRONMENTAL CORP. AND SUBSIDIARIES
                                   (FORMERLY WHITEWING LABS, INC.)

                                CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
                                                                      For The Years Ended
                                                                 ---------------------------
                                                                 December 31,   December 31,
                                                                    2002            2003
                                                                 ------------   ------------
<S>                                                              <C>            <C>
Cash flows from operating activities:
    Net loss                                                     $(2,659,665)    (6,222,328)
    Adjustments to reconcile net loss to
      net cash provided by (used in) operating activities:
        Depreciation and amortization                                270,641        421,745
        Bad debt expense                                              37,974        172,976
        Equity in loss of affiliate                                   44,519         48,182
        Non-cash compensation                                      1,138,113        604,335
        Non-cash note receivable write-down                               --         14,179
        Non-cash interest expense                                         --      1,603,663
        Gain on sale of property and equipment, held for sale         (2,917)      (173,373)
        Impairment loss - intangible assets                           85,390        622,409
        Changes in assets and liabilities, net of effects of
          purchase of net assets:
             (Increase) decrease in operating assets:
               Accounts receivable                                  (255,943)      (180,365)
               Inventory                                              10,771        (58,351)
               Prepaid expenses and other current assets             (20,907)      (392,239)
               Other assets                                          (48,626)        41,689
             Increase (decrease) in operating liabilities:
               Accounts payable and accrued expenses                 657,036       (138,168)
               Deferred revenue                                        2,825        (25,137)
               Security deposit                                      (15,000)            --
                                                                 ------------   ------------
Net cash used in operating activities                               (755,789)    (3,660,783)
                                                                 ------------   ------------
Cash flows from investing activities:
    Collections on note receivable                                    42,596        122,452
    Proceeds (payments) for acquisitions, net of cash acquired       228,322        (46,166)
    Proceeds from sale of property and equipment held for sale        20,969        494,461
    Purchase of property and equipment                              (408,343)       (60,317)
    Proceeds from sale of short term investments                     200,000             --
    Repayments of due from affiliate                                 226,254             --
    Advances to affiliate                                           (572,824)            --
    Payments for purchase of net assets                              (50,000)            --
                                                                 ------------   ------------
Net cash provided by (used in) investing activities                 (313,026)       510,430
                                                                 ------------   ------------
Cash flows from financing activities:
    Increase in cash overdraft                                       114,667         49,262
    Net proceeds from sales of common stock                          722,067          2,000
    Net proceeds from sales of preferred stock                            --      1,376,400
    Proceeds from (payments on) line of credit, net                  (25,403)       681,880
    Proceeds from bank loan and mortgage                             151,500        142,569
    Repayments of bank loan and mortgage                              (5,049)      (276,645)
    Proceeds from convertible loans payable                               --      1,075,000
    Principal payments of convertible loans payable                       --        (48,153)
    Principal payments of obligations under capital leases          (145,757)       (69,777)
    Proceeds from loans payable - related parties                    467,031         97,932
    Principal payments on loans payable - related parties           (148,694)            --
    Proceeds from loans payable                                           --        340,000
    Principal payments on loans payable                             (103,639)      (192,928)
    Proceeds from due to affiliate                                   116,750             --
    Repayments of due to affiliate                                   (89,565)       (27,187)
    Proceeds from exercise of stock options                            2,250             --
                                                                 ------------   ------------
Net cash provided by financing activities                          1,056,158      3,150,353
                                                                 ------------   ------------
Net decrease in cash and cash equivalents                            (12,657)            --
Cash and cash equivalents - beginning of year                         12,657             --
                                                                 ------------   ------------
Cash and cash equivalents - end of year                          $        --    $        --
                                                                 ============   ============

                           See notes to consolidated financial statements.
</TABLE>
                                                F-7

<PAGE>

                 WHITEWING ENVIRONMENTAL CORP. AND SUBSIDIARIES
                         (FORMERLY WHITEWING LABS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION:

Organization:

Whitewing Environmental Corp. ("Whitewing") was incorporated in 1993 under the
laws of the state of Delaware. The consolidated entity, collectively referred to
as the "Company", includes Whitewing, Total Recycling Services, Inc. ("TRS") and
Advanced Recovery Solutions, Inc. d/b/a Complete Spill Solutions ("ARS"). TRS
includes four wholly-owned subsidiaries: EMP, Inc. ("EMP"), Total Recycling
Services of Connecticut, Inc. d/b/a Total Recycling Services ("TRS of CT"),
Etters Realty, Inc. and ARS Properties, Inc. All significant intercompany
balances and transactions have been eliminated.

On May 3, 2002, TRS executed a stock for stock exchange agreement with the
Company, which was accounted for as a recapitalization. The accompanying
consolidated financial statements reflect the historical results of the
predecessor entity, Total Recycling Services, Inc. and Subsidiaries, and the
consolidated results of operations of the Company subsequent to the
recapitalization date of May 3, 2002.

The common stock and per share information in the consolidated financial
statements and related notes have been retroactively adjusted to give effect to
the recapitalization on May 3, 2002.

On May 8, 2003, Whitewing purchased 50% of ARS which, together with the 50% of
ARS it owned at the time, brought the Company's ownership of ARS to 100%.

In March 2004 the Company entered into an agreement to sell certain assets of
Total Recycling Services of Connecticut, Inc., a wholly owned subsidiary of
Total Recycling Services, Inc. In conjunction with the sale, the Company's
management decided to cease the operations of Total Recycling Services, Inc.
These financial statements reflect the retroactive treatment of these decisions
as discontinued operations. As such, all non-reconcilable remaining assets have
been written-off and the net operations of these divisions have been reported
separately on the financial statement.

Basis of Preparation:

The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which contemplate continuation of the Company as a going concern. As
shown in the consolidated financial statements, at December 31, 2003 and for the
year then ended, the Company has suffered recurring losses, negative cash flows
from operations of approximately $(3,661,000), negative working capital of
approximately $(2,190,000), an accumulated deficit of approximately
$(10,170,000) and a stockholders' deficiency of approximately $871,000. These
factors raise substantial doubt about the Company's ability to continue as a
going concern.

Management intends to raise additional funds for working capital purposes to
sustain the Company through the next twelve months and positively impact
revenues. The accompanying consolidated financial statements do not include any
adjustments that might be necessary should the Company be unable to continue as
a going concern.

                                       F-8

<PAGE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Use of Estimates:

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the period. Actual results
could differ from those estimates.

Revenue Recognition:

Revenue from the sale of products is recognized when delivered. Revenue from
services is recognized over the period services are rendered.

Cash and Cash Equivalents:

The Company considers all highly liquid investments with maturities at the time
acquired of three months or less to be cash equivalents.

Inventory:

The Company writes down its inventories for obsolete goods equal to the
difference between the carrying cost of the inventory and the estimated market
value. Accordingly, the Company wrote-down its inventory by approximately
$116,000 in the fourth quarter of 2003.A significant sudden increase in the
demand for the Company's products could result in a short-term increase in the
cost of inventory purchased while a significant decrease in demand could result
in an increase in the amount of excess inventory quantities on-hand.
Additionally, the Company's estimates of future product demand may prove to be
inaccurate, in which case the Company may have understated or overstated the
write-down required for obsolete inventory. In the future, if the Company's
inventory is determined to be overvalued, it would be required to recognize such
costs in its cost of goods sold at the time of such determination. Likewise, if
the company does not properly estimate the lower of cost or market of its
inventory and it is therefore determined to be undervalued, it may have
over-reported its cost of goods sold in previous periods and would be required
to recognize such additional operating income at the time of sale. Therefore,
although the Company makes every effort to ensure the accuracy of its forecasts
of future product demand, any significant unanticipated changes in demand could
have a significant impact on the value of the Company`s inventory and its
reported operating results.

Cost of Goods and Services Sold:

Cost of goods and services sold includes cost of expenses related to both
service revenue and product sales. For the recycling business segment, in
addition to the cost of products sold that were purchased from external vendors,
such costs include those relating to trucks, drivers and other associated costs.
To the extent that such latter costs are generally expended simultaneously in
the furtherance of revenues, the Company has not sought to segregate such
amounts from those costs relating to the underlying sources of revenues.

Shipping and Handling:

Shipping and handling costs related to sales of product are expensed as incurred
and are recorded in cost of goods sold.

Property and Equipment:

Property and equipment are carried at cost and are being depreciated under
either the straight line or double declining balance methods over the estimated
useful lives of the related assets, ranging from three to forty years.
Expenditures for maintenance, repairs and betterments that do not substantially
prolong the useful life of an asset are charged to operations as incurred.
Additions and betterments that substantially extend the useful life of an asset
are capitalized.

                                       F-9

<PAGE>

Impairment of Long-Lived Assets:

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." This statement supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of." The statement retains the previously existing accounting
requirements related to the recognition and measurement of the impairment of
long-lived assets to be held and used while expanding the measurement
requirements of long-lived assets to be disposed of by sale to include
discontinued operations. It also expands the previously existing reporting
requirements for discontinued operations to include a component of an entity
that either has been disposed of or is classified as held for sale. The Company
adopted SFAS No. 144 on January 1, 2002. Adoption of this statement did not have
a material impact on the Company's financial position or results of operations.

Intangible Assets:

Prior to January 1, 2002, the Company amortized goodwill and intangible assets
using the straight-line method over periods of up to 40 years. On January 1,
2002, the Company adopted the provisions of Statement of Financial Standards No.
142 (SFAS 142) "Goodwill and Other Intangible Assets." SFAS 142 requires that
goodwill and intangible assets having indefinite lives no longer be amortized,
but instead be tested for impairment at least annually. Intangible assets
determined to have definite lives are amortized over their remaining useful
lives. Adoption of this statement did not have a material impact on the
Company's financial position or results of operations.

Income Taxes:

The Company uses the asset and liability method to calculate deferred tax assets
and liabilities. Deferred taxes are recognized based on the differences between
financial reporting and income tax bases of assets and liabilities using enacted
income tax rates. Deferred tax assets and liabilities are measured using enacted
tax rates in effect for the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.

Advertising:

The Company expenses advertising costs as incurred. Advertising expense for the
years ended December 31, 2002 and 2003 was $16,827 and $14,763, respectively.

Stock Based Compensation:

The Corporation uses the intrinsic-value method of accounting for stock-based
awards granted to employees.

Net Loss Per Share:

Basic loss per share amounts are computed by dividing the net loss available to
common stockholders by the weighted average number of common shares outstanding
during the year. Diluted loss per share amounts incorporate the incremental
shares issuable upon the assumed exercise of the Company's stock options and
convertible securities. During the years ended December 31, 2002 and 2003, such
incremental amounts were excluded from the calculation since their effect would
be anti-dilutive (see below). Basic and diluted loss per share has been restated
for periods prior to the recapitalization referred to in Note 3 to include the
number of equivalent shares received by TRS.

Fair Value of Financial Instruments:

The carrying amount of accounts receivable, notes receivable, due to bank,
accounts payable and accrued expenses, bank loan and mortgage, loans payable,
and obligations under capital leases approximate their respective fair values
due to the relatively short periods to maturity of the instruments. It is
impracticable to determine the fair value of due to/from affiliates and loans
payable - related party due to the related party nature.

                                      F-10
<PAGE>

Recent Accounting Pronouncements:

In April 2002, the FASB issued Statement of Financial Accounting Standards No.
145, "Rescission of FASB Statement No. 4, 44 and 64, Amendment of FASB Statement
No. 13, and Technical Corrections," ("SFAS 145"). SFAS 145, which is effective
for fiscal years beginning after May 15, 2002, provides guidance for income
statement classification of gains and losses on extinguishment of debt and
accounting for certain lease modifications that have economic effects that are
similar to sale-leaseback transactions. The Company does not believe that the
adoption of this statement will impact its financial position, results of
operations, or cash flows.

In June 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 146 ("SFAS 146"), "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS 146 nullifies the guidance of
the Emerging Issues Task Force (EITF) Issues 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 that a
liability for a cost that is associated with an exit or disposal activity be
recognized when the liability is incurred. SFAS 146 also establishes that fair
value is the objective for the initial measurement of the liability. The
provisions of SFAS 146 are required for exit or disposal activities that are
initiated after December 31, 2002. The provisions of SFAS 146 are not expected
to have a material impact on the Company's consolidated financial statements.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of SFAS 123". This
statement amends SFAS No. 123, "Accounting for Stock-Based Compensation," to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, this statement 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. The Company has chosen to
continue to account for stock-based compensation using the intrinsic value
method prescribed in APB Opinion No. 25 and related interpretations.
Accordingly, compensation expense for stock options is measured as the excess,
if any, of the estimate of the market value of the Company's stock at the date
of the grant over the amount an employee must pay to acquire the stock. The
Company has adopted the annual disclosure provisions of SFAS No. 148.

FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of Others," was
issued in November 2002. This interpretation clarifies the requirements of a
guarantor's disclosures in its interim and annual financial statements about its
obligations under certain guarantees that it has issued and which remain
outstanding. The interpretation also clarifies the requirements related to the
recognition of a liability for the fair value of the obligation undertaken by
the guarantor at the inception of the guarantee, including its ongoing
obligation to stand ready to perform over the term of the guarantee in the event
that the specified triggering events or conditions occur. The disclosure
requirements are currently effective with the recognition and initial
measurement provisions applying to prospective guarantees issued or modified
after December 31, 2002. These provisions are not expected to have a material
impact on the Company's financial statements.

In May 2003, the FASB issued Statement of Financial Accounting Standards No. 150
("SFAS 150"), "Accounting for Certain Financial Instruments with Characteristics
of Both Liabilities and Equity". SFAS 150 requires that certain freestanding
financial instruments be reported as liabilities in the balance sheet. Depending
on the type of financial instrument, it will be accounted for at either fair
value or the preset value of future cash flows determined at each balance sheet
date with the change in that value reported as interest expense in the income
statement. Prior to the application of SFAS 150, either those financial
instruments wre not required to tbe recognized, or if recognized, were reported
in the balance sheet as equity and changes in the value of those instruments
were normally not recognized in net income. The Company is currently evaluating
the effect of SFAS 150; however the Company has not assessed the impact, if any,
this standard may have on its Convertible Preferred Stock, Convertible
Promissory Notes, its financial position and results of operations.

                                      F-11
<PAGE>

Reclassification:

Certain amounts have been reclassified in the 2002 consolidated financial
statements to conform to the presentation used in the 2003 consolidated
financial statements.


3. SALE OF SERIES A CONVERTIBLE PREFERRED STOCK:

On September 10, 2003, the Company and its placement agent commenced a private
offering of up to 250,000 units ("units") at a price of $8.00 per unit. Each
unit consists of 1 share of the Company's newly designated Series A convertible
preferred stock ("preferred stock") and 40 class A common stock purchase
warrants ("warrants"). As of December 31, 2003, the Company sold 224,126 units,
consisting of 224,126 shares of Series A convertible preferred stock and
8,965,040 warrants for gross proceeds of $1,793,000 and net cash proceeds of
$1,376,400, (net of expenses of $416,600). The warrants were valued at $303,480
based on the allocated proceeds. The preferred stock include an "in the money"
conversion feature that allows the holders to convert to common stock at $.08
per share of common stock. The discount arising from the "in the money"
conversion feature was $786,261. The preferred stock is convertible on date of
issuance; therefore, the "in the money" conversion feature has been fully
recognized as a dividend at December 31, 2003. The Company has authorized
450,000 shares of Series A convertible preferred stock.

The holders of the preferred stock are entitled to receive an annual cumulative
dividend equal to 11% of the unit price ($8) payable annually on December 31, in
share of common stock, or at the election of the Company in cash for the years
ended December 31, 2004 and 2005. The holders may elect to receive the dividend
in cash or shares of common stock. If the dividends are paid in common stock,
each preferred stockholder will be entitled to receive 11 shares of common
stock, subject to adjustment. As of December 31, 2003, no dividend has been
recognized because the sale of the units occurred from September through
December of 2003.

The Company was required to have an effective registration statement by March
31, 2004 covering the underlying common stock. The effective date may be waived
or extended to a future date upon the written consent of not less than fifty
percent of the preferred stockholders. If the Company does not have a
registration statement that is effective by March 31, 2004, then the dividend
rate will increase 2% per month until the registration statement is declared
effective, not to exceed 20%. The dividend rate will be re-adjusted to 11% once
the registration statement is declared effective. As of the date of this Report,
the Company did not file a registration statement. The Company and the preferred
shareholders are negotiating a resolution to the issue.

The preferred stock is initially convertible into 100 shares of common stock at
an initial conversion ratio of the issuance price ($8) divided by the conversion
price ($.08), adjusted for anti-dilution. The preferred stockholders have
liquidation rights equal to the greater of $16 per share plus accrued and unpaid
dividends (adjusted) or the amount each preferred stockholder would be entitled
to receive had they converted the shares to common stock.

The preferred stockholders have the right to vote on an "as converted" basis on
all matters submitted to vote. In addition, the Company is required to obtain
the prior approval of at least fifty percent of the preferred stockholders,
voting as a separate class for certain matters.

The Company has the option to redeem the preferred stock at $.08 per share as
long as the common stock has been trading at or above $.75 per share for no less
than 30 consecutive trading days with the minimum average trading volume
exceeding 75,000 shares per day.


                                      F-12
<PAGE>


Each warrant entitles the holder to purchase one share of common stock at an
exercise price of $.15 per share on the first anniversary of the sale and
expires on the fourth anniversary of the sale. The warrants may be redeemed
under the same terms as the common stock at a price of $.08 per warrant. The
warrants contain certain anti-dilution provisions.

The placement agent received a fee of 10% of the gross proceeds ($78,450) and
was issued a unit purchase option exercisable for a number of units equal to 10%
of the units sold (9,806 units). The units purchase option is exercisable at $10
per unit and expires on the fifth anniversary of the sale. The unit purchase
option has been valued at $76,501 using the Black-Scholes Option Pricing Model.
If any warrants are exercised, the placement agent, will receive a cash fee
equal to 5% of the funds received by the Company. There is a lockup provision
for the Company's executive officers, directors and stockholders owning 10% or
more of the outstanding common stock for a period of 1 year following the
termination of the offering.

4. RECAPITALIZATION OF TRS AND PRIVATE PLACEMENT:

Recapitalization of TRS:

On May 3, 2002, TRS signed and executed a stock for stock exchange agreement
(the "Agreement") with Whitewing. In connection with the Agreement, all of the
outstanding shares of TRS (1,400,000 shares) were exchanged for 28,000,000
shares of Whitewing's common stock. Immediately prior to the Agreement,
Whitewing had 7,061,443 shares of common stock issued and outstanding.

The transaction was accounted for as a recapitalization of TRS because Whitewing
had no ongoing business. Whitewing is the acquiring entity for legal purposes
and TRS is the surviving entity for accounting purposes. Accordingly, the
accompanying consolidated financial statements reflect the historical results of
the predecessor entity, prior to May 3, 2002, Total Recycling Services, Inc. and
Subsidiaries, and the consolidated results of operations of the Company
subsequent to the recapitalization.

The common stock was valued at approximately $595,000, which is comprised of the
estimated fair value of the net assets of Whitewing, which consisted of cash,
short-term investments, and a note receivable.

On October 1, 2001, an option to purchase 4,500,000 shares of TRS common stock
at an exercise price of $.0005 was given to two individuals, who became
directors in 2002, in connection with the recapitalization. No accounting
recognition was given to the option until the recapitalization, since exercise
of the options was contingent upon consummating the recapitalization. The fair
value of the stock option was $1,123,000 ($.25 per share) as determined by
reference to an option-pricing model. Since this transaction has been recorded
as a recapitalization of TRS, the fair value of the option has been charged to
operations as of May 3, 2002. To determine the fair value of these options, the
following assumptions were used: expected volatility of 0%, risk-free interest
rate of 2.43%, and expected life of approximately seven months.

The Company had a commitment to file a registration statement, as soon as
practicable, but not more than ninety days after the closing of the
recapitalization, August 1, 2002, covering 3,875,000 shares of common stock held
by three stockholders of the Company. The registration statement was not filed
by August 1, 2002. On August 19, 2002, the Company was notified of the default
and as specified in the agreement, had 10 days to cure the default. The
registration statement was filed on August 28, 2002. The Company believes the
default has been cured. On April 8, 2003, the Company obtained a waiver of the
default from one stockholder covering 3,468,000 shares of common stock.


Private Placement:

On May 3, 2002, TRS completed a private placement of 3,200,000 shares of its
common stock. The shares were offered to accredited investors in units of
100,000 shares each at a price of $.25 per share for aggregate gross proceeds of
$800,000 and net proceeds of $722,067.

Each investor who purchased units in the Private Placement agreed that upon the
closing of the Private Placement, each share of common stock that the investor
subscribed for would be exchanged for 20 shares of the Company's common stock,
in accordance with the exchange agreement.

                                      F-13

<PAGE>


5. ACQUISITIONS

ADVANCED RECOVERY SOLUTIONS, INC.

The Company had a 50% investment in ARS, which was accounted for under the
equity method. ARS manufactures and distributes industrial absorbents.

On February 26, 2003 the Company signed a Stock Purchase Agreement with the
shareholders of ARS to purchase the remaining 50% for 2,000,000 shares of the
Company's common stock and $223,122 in the form of cash ($50,000) and a
promissory note ($173,122). The 2,000,000 shares of the Company's common stock
were valued at $260,000, based on a six-day average closing price of the
Company's common stock on April 15, 2003, the date of announcement. The sellers'
shares of ARS are in escrow and will be released to the Company as payments are
made. The purchase price has been allocated to ARS's tangible and intangible
assets based on their estimated fair values on May 8, 2003, the date of
acquisition. The Company purchased the remaining 50% of ARS to expand its
current production capabilities and aggressively develop product lines that it
has researched and developed. The results of operations of ARS have been
included in the consolidated financial statements from the date of acquisition.

The sellers have entered into employment agreements with the Company which
include performance bonuses. If the performance bonuses are met, the purchase
price will increase at such time.

The total estimated purchase price of the acquisition is as follows:

    Cash                                         $     50,000
    Loan payable (See Note 10)                        173,122
    Common stock                                      260,000
    Amount due from ARS payable to TRS                669,514
                                                 ------------
                                                 $  1,152,636
                                                 ============

Under the purchase method of accounting, the total purchase price as shown in
the table above is allocated to ARS's net assets based on their estimated fair
values as of the date of acquisition as follows:

    Cash                                         $      3,834
    Accounts receivable                               256,087
    Inventory                                         202,578
    Prepaid expenses and other current assets          59,800
    Property and equipment                          1,477,396
    Intangibles (includes formulae)                   574,465
    Other assets                                       29,201
    Line of credit                                   (205,838)
    Bank loans and mortgage                          (924,488)
    Obligation under capital lease                    (28,460)
    Loans payable                                     (15,690)
    Accounts payable and accrued expenses            (276,249)
                                                 -------------
                                                 $  1,152,636
                                                 =============

The allocation of the purchase price is preliminary. Management intends to hire
an independent valuation specialist in order to assist management in determining
the fair values and useful lives of the intangible and long-lived assets.

The following supplemental unaudited pro forma information is presented to
illustrate the effects of the acquisition on the historical operating results
for the years ended December 31, 2002 and 2003 as if the acquisition had
occurred at the beginning of the respective periods.

                                      F-14
<PAGE>


                                       For The Years
                                           Ended
                             December 31, 2002   December 31, 2003
                                 (Unaudited)         (Unaudited)
                             ------------------  ------------------

       Net revenue             $  1,225,381        $  2,067,096
       Net loss                  (2,686,123)         (6,462,339)
       Net loss per share              (.09)               (.16)

ACQUISITION OF CONNECTICUT WASTE OIL, INC.

As of January 1, 2002, the Company had entered into an Equipment and Lease and
Operating Agreement with Connecticut Waste Oil, Inc. ("CWO") in order to assume
business operations of CWO before the closing of the asset purchase agreement.
Under the agreement, the revenue from servicing CWO's customers was retained by
the Company and the Company was obligated to pay related operating expenses.
From January 1, 2002 through September 17, 2002, the results of CWO's operations
are recorded in the books and records of the Company under the operating
agreement.

On September 17, 2002, the Company purchased certain net assets of the waste oil
operations of CWO including trucks and equipment, leases, and customer lists.
The Company acquired CWO because of its strategic location and to provide entry
into the waste oil and related businesses that would provide synergistic
relationships with its own business.

The purchase price of $539,702 included the following:

o        The Company paid $50,000 at the closing and signed a $100,000 note
         payable due in two payments of $50,000, reflecting interest imputed at
         7.50% (net $94,563). The first payment is due upon the earlier of 180
         days after closing or upon the receipt of a permit from the Connecticut
         Department of Environmental Protection ("CTDEP"). The second payment is
         payable within 180 days after receipt of the permits from the CTDEP.
o        Net amount due from CWO of $91,170, under the operating agreement.
o        The fair value of the obligation under the consulting agreements to be
         paid to the former owners of CWO in the amount of $400,000, reflecting
         interest imputed at 7.50% (net $291,061). The agreements are payable in
         sixty monthly installments commencing August 1, 2004.
o        The Company paid legal expenses of $12,908.

Under the purchase method of accounting, the total purchase price was allocated
to CWO's net tangible and intangible assets based on their estimated fair values
as of the date of the acquisition.

Purchase price allocation:

            Equipment                               $      562,931
            Assumed loans and capital leases              (143,910)
            Customer lists                                 120,681
                                                   ----------------
                                                    $      539,702
                                                   ================

The estimated fair value of the assets acquired and liabilities assumed are
based on an estimated valuation by management and the purchase price allocation
is subject to final adjustment. The Company has engaged an independent third
party to determine the fair value and the allocation of the purchase price to
the assets acquired and liabilities assumed. As of the date of this report ,
such valuation was not yet received.

6. AGREEMENTS:

BUSINESS ADVISORY AGREEMENT:

On January 28, 2003, the Company entered into a twelve month Business Advisory
Agreement (the "Agreement") for services in connection with raising funds for
the Company. Furthermore, the Agreement provides for the issuance of a warrant
to purchase shares with a market value of 10% of the aggregate gross
consideration. On September 30, 2003, the Company issued a warrant, in

                                      F-15
<PAGE>

connection with the conversion of certain convertible notes payable, for 650,000
shares of common stock at an exercise price of $.08 per share, which expires on
September 30, 2007. The warrant was valued at $126,685, using the Black-Scholes
Option Pricing Model and was charged to expense.

The Agreement included options to purchase 1,750,000 shares of the Company's
common stock at $.001 as an inducement for entering into the Agreement.
Compensation expense of $122,570 was recognized in the three months ended March
31, 2003. On April 1, 2003, the Company and the advisor amended the Agreement
pursuant to which the options were cancelled and the Company sold 2,000,000
shares of common stock to the advisor at a price of $.001 per share.

The fair value of the stock award was $278,000, which is the fair value of the
stock ($.14 per share) less proceeds received ($2,000). The Company expensed
$155,430, which together with $122,570 expensed under the original agreement,
brought the total compensation expense recognized under the Agreement to
$278,000.

CONSULTING AGREEMENTS:

As of April 1, 2003, the Company entered into consulting agreements with 8
individuals, each of whom is to provide either business development, marketing,
or legal services to the Company through March 31, 2004. As consideration for
these services, the Company issued an aggregate of 1,400,000 shares of common
stock. The fair value of the shares of common stock at the measurement date
(April 1, 2003) was $196,000 ($.14 per share of common stock). During the year
ended December 31, 2003, the Company expensed $147,000. AS of December 31, 2003,
the remaining $49,000 was recorded in prepaid expenses.


7. PROPERTY AND EQUIPMENT:

Major classifications of property, plant, and equipment from continuing
operations, net of accumulated depreciation of $114,227 are as follows:

                                                        December 31, 2003
                                                        -----------------

                   Land and building                       $  922,546
                   Equipment                                  443,921
                   Construction in Progress                    62,846
                   Other                                       23,128
                                                           ----------
                   Total                                   $1,452,441
                                                           ==========

Depreciation expense from continuing operations for the years ended December 31,
2002 and 2003 was $153 and $121,689 respectively.

As of December 31, 2003, the carrying net book value of TRS and TRS of CT's
property, plant, and equipment was $901,234 and $386,691 respectively. In 2004
management decided to cease the operations of these two subsidiaries (See Note
25). As a result, the value of the net assets of these subsidiaries were reduced
to their net realizable value at December 31, 2003. This adjustment resulted in
a charge to expense in the consolidated statement of operations. The net
realizable value of these assets was classified as Assets Held for Sale.

At December 31, 2002, the Company listed for sale, land and a building that were
not used in operations. During 2003 the Company sold the property for net
proceeds of $494,461. The land and building were reflected at their carrying
amount of $321,088, net of accumulated depreciation of $15,626. The sale
resulted in a gain of $173,373.

                                      F-16
<PAGE>

8. INVENTORY:

Inventories, which consist principally of finished goods, are stated at the
lower of cost or market. Cost is determined using the first-in, first-out
method. The company reviews its inventory for obsolescence and provides for
obsolescence when warranted.

At December 31, 2003, Inventory consists of the following:

                  Raw materials                          $      10,788
                  Work in progress                             127,533
                  Finished goods                               326,344
                                                        --------------
                  Inventory                              $     464,665
                                                        ==============

9. NOTE RECEIVABLE:

At December 31, 2002 the Company had a note receivable from a third party due in
monthly payments of principal and interest (at 5%) in the amount of $5,994. In
July of 2003 the principal balance and accrued interest due under the note was
approximately $98,200. Due to an agreement between the Company and the third
party in July of 2003, $84,000 was received by the Company for full and final
settlement of all amounts due under the note. The remaining balance of the note
of approximately $14,200 was written off.

10. GOODWILL

Goodwill represents the excess of the cost over the fair value of net assets
relating to the acquisition of ARS and ARS formulae. As a result of the
acquisition Goodwill was recognized in the amount of $574,465. In June 2001, the
Financial Accounting Standards Board issued SFAS 142, "GOODWILL AND OTHER
INTANGIBLE ASSETS", and requires goodwill and other intangible assets that have
indefinite useful lives to no longer be amortized, but instead be assessed for
impairment at least annually by applying a fair-value based test.

As of December 31, 2003 the Company's management determined there was no
impairment to the carrying value of the Company's goodwill which amounted to
$574,465.

At December 31, 2003 the Company determined, based on estimated cash flow of
TRS, the carrying amount of customer lists and agreements, which is assigned to
the waste recycling products and service, exceeds its fair value by $622,409.
Accordingly, an impairment of that amount was recognized and is separately
included in the statement of operations.

11. LINE OF CREDIT, MORTGAGE PAYABLE AND EQUIPMENT LOAN:

On March 26, 2002, ARS entered into a Loan and Security Agreement with a bank,
which was subsequently amended in October 2002. The Loan and Security Agreement
consists of a Revolving Line of Credit of $500,000 due March 1, 2004 and an
Equipment Loan of $300,000, with a term of three years. The Revolving Line of
Credit bears interest at the bank's prime rate plus 1.25% (5.25% at September
30, 2003) per annum and the Equipment Loan bears interest at 7.5% per annum.
Monthly principal payments of $8,307 are due on the Equipment Loan beginning
April 1, 2003 until March 1, 2006. The Loan and Security Agreement is
collateralized by substantially all assets (other than real estate) of ARS. The
borrowings under the Revolving Line of Credit are subject to the availability of
80% of eligible accounts receivables and 40% of eligible inventory of ARS. The
Company, the former Chief Technology Officer (President of the Company) and the
President of ARS have guaranteed the facility. The President of ARS's guarantee
is limited to $125,000. The Company unconditionally guarantees payment of all
amounts owing under the facility. The guarantee remains in effect until the
facility is paid in full.

                                      F-17
<PAGE>

At December 31, 2003, outstanding balances on the lines of credit (including the
ARS Revolving Line of Credit) were $915,284. As of December 31, 2003, no
borrowings were available under the lines of credit. At December 31, 2003, the
outstanding balance on the Equipment Loan was $226,572.

In addition, on July 31, 2002, ARS entered into a $641,250 mortgage on the
commercial property located in Watertown, New York that matures on August 1,
2017 with a financial institution. The mortgage note is collateralized by the
land and building. Principal and interest payments of $5,944 are due monthly.
The mortgage note bears interest at a variable rate (adjusted every three years)
of prime plus 2.75% (7.5% at December 31, 2003). At December 31, 2003, the
outstanding balance on the mortgage was $608,777. The Company and the Chief
Technology Officer (former President of the Company) have guaranteed the
mortgage.

Principal payments on the above equipment loan and mortgage are as follows:

                 Years Ended
                 December 31,
                -------------

                    2004                           $  126,273
                    2005                              127,802
                    2006                               82,403
                    2007                               32,644
                    2008                               35,178
                    Thereafter                        431,049
                                                   -----------

                                                   $  835,349
                                                   ===========

The mortgage on the Pennsylvania property and the term loan were paid off when
the building and land were sold on May 21, 2003.

12. LOANS PAYABLE:

Loans payable at December 31, 2003 consisted primarily of demand loans to
various individuals amounting to approximately $250,000. The remaining balance
of Loans Payable corresponds to an installment equipment loan with an
outstanding balance at December 31, 2003 of approximately $12,000, which matures
in 2006.

13. OBLIGATIONS UNDER CAPITAL LEASES:

At December 31, 2003, future minimum lease payments required under various
capital equipment leases are as follows:

           2004                                              $      187,928
           2005                                                      84,683
           2006                                                      26,452
           2007                                                      18,564
                                                              --------------
                                                                    317,627
           Less amount representing interest at
             Rates varying from 10.56% to 31.51%                    (55,130)
                                                              --------------

           Net present value of minimum lease obligations           262,497
           Less current maturities                                 (154,014)
                                                              --------------

           Obligations under capital leases, net
              of current maturities                           $     108,483
                                                              ==============

14. LOANS PAYABLE - RELATED PARTIES:

As of December 31, 2003, loans payable-related parties consists of the
following:

                                      F-18
<PAGE>

On January 1, 2002, the Company purchased intellectual property consisting of
various formulae, equipment designs, mechanical device adaptations and other
intellectual property for $194,504 from a stockholder of Advanced Recovery
Solutions, Inc. ("ARS") a 50% owned company. The Company paid $50,000 cash and
the other $144,504 was in the form of a note. The note is to be repaid in
monthly installments of $8,333 including interest imputed at 4.75% per annum
through July 2003. The balance at December 31, 2003 amounted to $28,568.

Two of the Company's directors entered into an unsecured commercial note
("Director's Note") of up to $500,000 with a bank. Simultaneously, the Company
entered into an unsecured subordinate promissory note with the directors bearing
identical terms and conditions to the Director's Note, which matures on
September 30, 2003 and bears interest at the rate of 1.5% over prime but not
less than 6.25% (6.75% at December 31, 2002). The note is secured by the
Company's note receivable. The note is subordinated to the line of credit
borrowings from the same bank. The note agreement provides that when the Company
sells its property, the sale proceeds are to first pay the mortgage and then to
pay off the note. The Company guaranteed the note from the bank to the
directors. The balance at December 31, 2003 amounted to approximately $498,000.

In connection with the acquisition of an additional interest in Advanced
Recovery Solutions, Inc. (See Note 5), the Company has loans to various
shareholders, which aggregates to approximately $227,000 at December 31, 2003.
These loans consist of installment notes amounting to approximately $158,000
payable through 2006 and demand notes of approximately $69,000.

15. CONVERTIBLE NOTES PAYABLE:

In March 2003, the Company, in a private transaction, received $1,075,000 in
exchange for (i) 8% convertible promissory notes (the "Notes") in the aggregate
principal amount of $1,075,000 due February 28, 2004 and (ii) warrants
exercisable for a total of 2,150,000 shares of common stock at $.15 per share
during the period commencing on September 30, 2003 and ending on September 30,
2006. The warrants had a fair value of $320,503 at the date of issuance,
creating a discount which is being recognized over the term of the Notes. At the
noteholders' option, the principal and interest may be converted into the
Company's common stock at an initial conversion price of $.15 per share. Each
noteholder received a warrant to purchase two shares of the Company's common
stock for each dollar loaned to the Company. The Notes and the warrants include
anti-dilution provisions and have certain registration rights, which require the
Company to file a Registration Statement with the SEC with respect to the shares
of common stock issuable upon conversion of the Notes and exercise of the
warrants, as soon as practicable. Holders of the Notes also have certain
piggyback registration rights. Holders of the Notes may require the Company to
redeem the Notes in the event the Company receives gross proceeds from the
public or a private sale of its securities of at least $3,000,000. However, one
Note in the aggregate principal amount of $500,000 requires redemption of such
Note in the event the Company receives gross proceeds from such sales of its
securities of at least $500,000. The Company has reserved 2,150,000 shares of
common stock for issuance upon exercise of the warrants.

The Notes include an "in the money" conversion feature that allows the holders
to convert to common stock at $.15 per share of common stock. The discount
arising from the "in the money" conversion feature was $754,497. As of December
31, 2003, the notes have become convertible; the "in the money" conversion
feature has been fully recognized as interest expense.

As of December 31, 2003, interest expense recognized for the warrants and for
the "in the money" conversion feature was $1,075,000.

In August 2003, the Company and the Note holders amended the Notes so that the
conversion price of the Notes was reduced from $.15 per share to $.08 per share.
Three holders with Notes aggregating $575,000 agreed to amend the Notes so that
the principal and interest automatically convert into shares of common stock
upon the first closing of the Company's preferred stock private placement. As of
September 30,2003, the first closing of the preferred stock private placement

                                      F-19
<PAGE>

was completed. Principal in the amount of $575,000 was converted to 7,187,500
shares; interest in the amount of $28,493 was converted to 356,164 shares, for a
total of 7,543,664 shares. The Company and the holder of the remaining Note in
the amount of $500,000 have also agreed to reduce the conversion price from $.15
per share to $.08 per share. In addition, such Note holder has also waived the
right to redeem the Note in the event that the Company receives gross proceeds
from sales of its securities of at least $500,000, in exchange for the Company's
agreement to repay $250,000 on the Note if the Company receives gross proceeds
in excess of $1,500,000. (See Note 3).

16. STOCKHOLDERS' EQUITY:

In January 2002, TRS issued 200,000 shares of common stock to an employee for
services. Compensation expense of $6,563 was recorded. The expense was measured
by the estimated fair value of the common stock ($.0328 per share).

On April 24, 2002, in consideration for his future services, an employee
received 1,000,000 shares of the Company's common stock at a fair value of $.25
per share. The fair value of $250,000 was recorded as unearned compensation and
was being expensed over the vesting period. On August 23, 2002, the Company
terminated the employee and rescinded the agreement. The original agreement was
terminated and the shares issued were cancelled and returned to the Company.
Additionally, the Company entered into a covenant not to compete agreement for a
term of three years with the former employee. As consideration, the former
employee will receive 150,000 shares of the Company's common stock with a fair
value of $33,000 ($.22 per share). The Company has not distributed the 150,000
shares of its common stock to the former employee. The former employee is
entitled to the full rights and rewards of common stockholders.

On May 3, 2002, the option granted in the recapitalization was exercised and
4,500,000 shares of common stock were issued (See Note 3).

Also, on May 3, 2002, three loans in the amount of $425,000 were converted into
1,700,000 shares of common stock, which had a fair value of $.25 per share.

On January 28, 2003, the Company entered into a twelve month Business Advisory
Agreement (the "Agreement") for services in connection with raising funds for
the Company. The agreement, as amended, provided for the issuance of common
stock, options and warrants (See Note 6).

On February 26, 2003 the Company signed a Stock Purchase Agreement with the
shareholders of ARS to purchase the remaining 50% for 2,000,000 shares of the
Company's common stock and $223,122 (See Note 5).

In March 2003, the Company, in a private transaction, received $1,075,000 in
exchange for (i) 8% convertible promissory notes (the "Notes") in the aggregate
principal amount of $1,075,000 due February 28, 2004 and (ii) warrants
exercisable for a total of 2,150,000 shares of common stock at $.15 per share
during the period commencing on September 30, 2003 and ending on September 30,
2006 (See Note 15).

As of April 1, 2003, the Company entered into consulting agreements with 8
individuals, each of whom is to provide either business development, marketing,
or legal services to the Company through March 31, 2004. As consideration for
these services, the Company issued an aggregate of 1,400,000 shares of common
stock (See Note 6).

On September 10, 2003, the Company and its placement agent commenced a private
offering of up to 250,000 units ("units") at a price of $8.00 per unit. Each
unit consists of 1 share of the Company's newly designated Series A convertible
preferred stock ("preferred stock") and 40 class A common stock purchase
warrants ("warrants"). As of December 31, 2003, the Company sold 224,126 units,
consisting of 224,126 shares of Series A convertible preferred stock and
8,965,040 warrants for gross proceeds of $1,793,000 and net cash proceeds of
$1,376,400, (net of expenses of $416,600) (See Note 3).

                                      F-20
<PAGE>

17. INCOME TAXES:

At December 31, 2003 the Company had net operating loss carryforwards for
federal and state income tax purposes of approximately $7,907,000, which will
expire beginning in 2019 through 2021.

Deferred tax attributes resulting from differences between financial accounting
amounts and tax bases of assets and liabilities at December 31, 2003 follow:

       Current assets:
           Allowance for doubtful accounts        $   83,000
           Valuation allowance                       (83,000)
                                                  -----------
       Net current deferred tax asset             $       --
                                                  ===========

       Noncurrent assets and liabilities:
           Depreciation and amortization          $ (200,000)
           Net operating loss carryforward         3,277,000
                                                  -----------
                                                   3,077,000
           Valuation allowance                    (3,077,000)
                                                  -----------
       Net noncurrent deferred tax  asset         $       --
                                                  ===========

No benefit for taxes has been provided in the statement of operations because
the Company does not have the ability to carryback the loss due to the fact that
the Company has not been profitable.

The Company has not completed income tax filings for the years ended December
31, 2001 through 2003 and intends to take the steps required to complete the tax
filings as soon as practicable.

The valuation allowance increased during the year ended December 31, 2003 by
approximately $2,491,000.

18. RELATED PARTY TRANSACTIONS:

During the year ended December 31, 2003, the Company purchased $0 and $64,516 of
goods for resale from ARS prior to the date of acquisition.

Loans from members of the Board of Directors and other officers of the Company
were made during the year ended December 31, 2003 and amounted to $396,000 and
$76,000, respectively. Each of the loans bears interest at 8% and is due on
demand. In August 2003, two members of the Board of Directors entered into an
agreement to convert $345,000 of such loans payable and interest into shares of
common stock at $.08 per share. As of December 31, 2003, the loan and interest
had been converted into 4,405,427 shares of common stock. The market value of
the common stock on the date of conversion was $.20. The difference in the
market value per share and the conversion rate per share was recorded as
interest expense, which amounted to $528,663. Portions of the loans from other
officers were paid in the amounts of $33,000 and $72,000 in September 2003 and
October 2003, respectively.

On May 6, 2003, ARS entered into a Note and Security Agreement with a director
for $50,000, bearing interest at 8% per annum. The term is for five months with
monthly payments of $5,000, plus 50% of the net profit, as defined, for each of
the months in the term. The Note and Security Agreement is collateralized by
equipment, inventory and real property (second to the mortgage and equipment
loan lenders). As of December 31, 2003, this loan had not been paid, and the
principal balance was $45,000.

Included in due to affiliate at December 31, 2003 is $17,285 due to TRS Stock
Acquisition LLP, a company owned by certain stockholders. As of September 30,
2003, the Company has guaranteed $20,267 of liabilities due from TRS Stock
Acquisition LLP to certain parties.

                                      F-21

<PAGE>

On January 24, 2003, a Loan and Security Agreement was amended to include an
overadvance facility of $200,000. The amendment includes a $200,000 guarantee
from two directors for the term of the Loan and Security Agreement.

In May 2003, the Company entered into a loan payable of $173,122 (bearing
interest at 7.5% per annum) to the former owners of ARS, who now are
shareholders of the Company. Monthly payments commence on September 1, 2003 in
the amount of $5,556, which includes principal and interest for 36 months. As of
December 31, 2003, the balance of the loan payable including interest for the
month was approximately $158,000.00.

As part of the sale of the preferred stock, the Company has agreed to a covenant
by which indebtedness in the amount of $500,000 owed to two Directors by the
Company will not be repaid, restructured or otherwise modified until the earlier
of: (i) September 30, 2006, (ii) the date on which all of the preferred stock
has been redeemed by the Company or converted into shares of common stock, or
(iii) the date on which the Company has maintained a consolidated debt coverage
ratio for any two consecutive fiscal quarters after September 30, 2003.

19. CONCENTRATIONS AND SIGNIFICANT CUSTOMER:

The Company has one customer that represented 22.4% and 17.1% of revenues for
the years ended December 31, 2002 and 2003, respectively. This customer also
accounted for 21.9% of accounts receivable at December 31, 2003. Due to the
closure of TRS (See Note 25) there is no significance in the future to this
customer upon the Company's financial condition.

20. COMMITMENT AND CONTINGENCIES:

       Operating Leases:

The Company leases commercial space, vehicles and equipment under noncancelable
operating leases that expire on various dates. Rent expense under these leases
for the years ended December 31, 2002 and 2003 was $389,664 and $501,355,
respectively.

As of December 31, 2003, the future aggregate minimum lease payments under these
operating leases are as follows:

         Years Ending December 31,
         -------------------------
                         2004                      $     144,723
                         2005                            118,599
                         2006                             85,328
                         2007                              5,268
                                                   --------------

                                                   $     353,918
                                                   ==============

21. 401(K) PROFIT-SHARING PLAN:

The Company has a 401(k) plan that is available to all eligible employees. The
plan is an employee deferral plan only; no contributions are required or
currently permitted by the employer.

22. 2003 STOCK OPTION PLAN:

On May 7, 2003, the Board of Directors of the Company adopted the 2003 Stock
Option Plan ("Plan"). Shares issuable under the Plan may be either treasury
shares or authorized but unissued shares. The number of shares available for
issuance will be subject to adjustment to prevent dilution in the event of stock
splits, stock dividends or other changes in the capitalization of the Company.
The maximum number of shares of common stock with respect to which awards may be
granted pursuant to the Plan is initially 7,000,000 shares. The Company has
reserved 7,000,000 shares of common stock for issuance upon the exercise of
these options. The Plan will be administered by the Compensation Committee,
which was appointed by the Board of Directors. The Compensation Committee will
determine the persons to whom awards will be granted, the type of award and, if
applicable, the number of shares to be covered by the award. The exercise price
of any incentive stock option or nonqualified option granted under the Plan may
not be less than 100% of the fair market value of the shares of common stock of
the Company at the time of the grant, except as defined in the Plan with respect
to a 10% stockholder. Unless terminated earlier by an action of the Board of
Directors, the Plan will terminate May 7, 2013.

                                      F-22
<PAGE>


On May 8, 2003, the Company granted 50,000 stock options, pursuant to its 2003
Stock Option Plan, to two former employees at an exercise price of $.08 per
share. The fair value of these options was calculated to be $3,650 ($.073 per
share) using the Black-Scholes Option Pricing Model.

On May 8, 2003, the Company granted 1,835,000 stock options, pursuant to its
2003 Stock Option Plan, to key employees at an exercise price of $.08 per share
(which was not less than the fair value on the date of grant). The stock options
expire in ten years. On September 30, 2003, the Company issued an option to
purchase 2,000,000 shares of common stock under the 2003 Stock Option Plan to an
employee at an exercise price of $.20 per share (which was not less than the
fair value on the date on grant). The option is for a term of 10 years and will
vest one-half upon the date of grant, and one-quarter on the first and second
anniversaries. During the year ended December 31, 2003, 175,000 stock options
were cancelled. The fair value of each option grant is estimated on the date
grant by use of the Black-Scholes Option Pricing Model:

<TABLE>
                                                                          For The Years Ended
                                                                           December 31, 2003
                                                                           ------------------
                                                                              (Unaudited)
<S>                                                                         <C>
       Net loss available to common stockholders                            $ (7,008,589)
       Less stock-based compensation expense
         determined under fair value method for
         all stock options, net of related income
         tax benefit                                                            (223,130)
                                                                            -------------

       Pro forma net loss available to common stockholders                  $ (7,231,719)
                                                                            =============

       Basic and diluted loss per share, as reported                        $      (0.17)
       Basic and diluted loss per share, pro forma                          $      (0.18)

       At December 31, 2003 there were 3,710,000 options outstanding and
unexercised.

</TABLE>

23. SUPPLEMENTAL CASH FLOW INFORMATION:

The following are supplemental disclosure of cash flow information:

    Income taxes paid                       $     3,147       $     1,010
                                            ============      ============
    Interest paid                           $   114,387       $   199,400
                                            ============      ============

The following schedule provides the significant noncash investing and financing
activities during the past two years:

                                                  For The Years Ended
                                         December 31, 2002    December 31, 2003
                                         ------------------  ------------------
  Leasing of equipment under capital
  lease obligations                         $   165,096       $    31,000
                                            ============      ============

  Net assets acquired in acquisition
  less cash payments                        $        --       $ 1,106,470
                                            ============      ============

                                      F-23

<PAGE>

  Common stock issued (7,187,500
  shares) upon the conversion of
  convertible notes payable
  (excluding interest)                      $        --       $   575,000
                                            ============      ============

  Common stock issued (4,312,500
  shares) upon the conversion of
  loans payable-related parties
  (excluding interest)                      $        --       $   345,000
                                            ============      ============

  Financing the purchase of certain
  intangible assets                         $   144,504
                                            ============

  Common stock issued (150,000
  shares) in connection with a
  non-compete agreement                     $   33,000
                                            ===========

  Conversion of $425,000 notes
  payable to 1,700,000 shares of
  common stock                              $  425,000
                                            ===========

  Net noncash assets acquired
  in the recapitalization                   $  366,678
                                            ===========

24. SEGMENT REPORTING:

During the year ended December 31, 2003, the Company had two reportable business
segments: Waste Recycling Products and Services and Absorbents. Prior to its
acquisition of ARS on May 8, 2003, the Company had only one segment. In March
2004, the Company entered into an agreement to sell certain assets of Total
Recycling Services of Connecticut, Inc., a wholly owned subsidiary of Total
Recycling Services, Inc. In conjunction with this sale, the Company's management
decided to cease the operations of Total Recycling Services, Inc. and, thereby,
discontinue its waste recycling business. These financial statements reflect the
retroactive treatment of these decisions as discontinued operations. As such,
the financials have been prepared reflecting one reportable business segment.

25. SUBSEQUENT EVENTS:

WHITEWING DISTRIBUTION CORP.

Beginning in January of 2004, the Company began operating a new division under
the name Whitewing Distribution Corp. (WDC) WDC is a distributor for System One
Technologies, Inc. (System One) - a manufacturer of self-cleaning parts washer
sinks and paint gun cleaners ("System One Products"). Founded in 1990, SystemOne
Technologies designs, manufactures, sells and supports a full range of self
contained, recycling industrial parts washing products for use in the
automotive, aviation, marine and general industrial markets. System One has been
awarded eleven patents for its products which incorporate innovative,
proprietary resource recovery and waste minimization technologies. System One is
headquartered in Miami, Florida. Whitewing was granted primary distribution
rights for these products in the states of Delaware, New Jersey, New York,
Connecticut and Pennsylvania (from Harrisburg east).

CHANGES IN MANAGEMENT

On March 18, 2004, the Company entered into a three (3) year employment
agreement with Michael Risley, pursuant to which Mr. Risley agreed to serve as
the Company's President and Chief Executive Officer commencing on March 18, 2004
as well as such other positions as reasonably requested by the Board of
Directors. Mr. Risley was hired by the company due to his experience in managing
a public company, assuming the positions formerly held by Kevin DeLeon. The
company is presently negotiating a settlement with Mr. DeLeon for his
separation.

                                      F-24

<PAGE>

On April 2, 2004, Michael Risley resigned as President and Chief Executive
Officer and Director of the Company. Mr. Risley decided to return to his prior
position with the Company, as a consultant, until the Company is more adequately
funded, at which time he expects to return as President, Chief Executive
Officer, and Director. During his tenure as a consultant, Mr. Risley will be
compensated at the same rate as he was under his employment agreement. Joseph
Bianco, Chairman of the Board of Directors, assumed the offices of President and
Chief Executive Officer until Mr. Risley's return.

On March 18, 2004, Norman Raben assumed the additional positions of Chief
Operating Officer and Chief Financial Officer of the Company. He will remain
Executive Vice President and Secretary.

On March 18, 2004, Andrew V. Latham, Jr. resigned his positions as Executive
Vice President, Chief Technology Officer, and Director of the Company and all
offices in subsidiary companies. The Company is currently negotiating a
consulting agreement with Mr. Latham to serve as a technical adviser.

CHANGES REGARDING ARS

As of January 1, 2003, the Company had a 50% investment in ARS, which was
accounted for under the equity method. ARS manufactures and distributes
industrial absorbents.

On February 26, 2003 the Company signed a Stock Purchase Agreement with two
shareholders of ARS (Geoffrey Perry and Carol Dancer) to purchase the remaining
50% for 2,000,000 shares of the Company's common stock and $223,122 in the form
of cash ($50,000) and a promissory note ($173,122). The sellers' shares of ARS
are in escrow and will be released to the Company as payments are made. The
Company purchased the remaining 50% of ARS to expand its current production
capabilities and aggressively develop product lines that it has researched and
developed. The results of operations of ARS have been included in the
consolidated financial statements from the date of acquisition. The sellers
entered into employment agreements with the Company.

On April 9, 2004, Carol Dancer, Advanced Recovery Solutions' (ARS) Vice
President of Sales and Marketing, resigned her position with ARS but agreed to
stay on during a period of transition, which the Company treated as the creation
of an at-will employment arrangement. On June 4, 2004, Dancer resigned from that
position and the Company accepted her resignation and removed her from the Board
of Directors of ARS.

On June 4, 2004, the employment of Geoffrey Perry, President of ARS, was
terminated for cause. He was also removed from the Board of Directors of ARS.
The Board of Directors of ARS has not, as of yet, elected a new President. The
Company will close the ARS Foxboro Massachusetts office on or about June 15,
2004, at an annual savings of over $250,000.00. The Company is also closing its
Kent, Washington warehouse at an annual savings of over $156,000.00. The Company
retained a commercial realtor to find a sub-tenant or assignee for the Foxboro
Massachusetts office and is negotiating a termination agreement with the
landlord for the Kent Washington warehouse. The outstanding rent obligation will
be accrued on the books of the Company.

DISCONTINUED OPERATIONS OF TRS

On March 19, 2004, Whitewing made the decision to discontinue operations of
Total Recycling Services, Inc. (TRS), its wholly owned subsidiary.

Through the fall of 2003 TRS was planning to relocate into a larger
manufacturing and distribution center and to significantly expand its reverse
osmosis antifreeze recycling system. This internal growth strategy was to be
buttressed by an aggressive acquisition strategy. In November and December 2003
this concept had to be reevaluated. The Departments of Environmental Protection
in the States of Connecticut, New Jersey, and Pennsylvania changed their
positions on a variety of regulatory issues that negatively impacted both TRS
and the prospective landlords with whom they were negotiating. This regulatory
repositioning will also materially impact the way recycling companies do
business and what their profitability and their future value will be.

                                      F-25

<PAGE>

Although these issues caused the Company to reevaluate its business model, the
final decision to discontinue operations resulted from an inability to find a
new facility to replace the current facility. The lease on TRS's primary
facility expired in January of 2004. Beginning in April of 2003, the Company
made great efforts to find an appropriate facility. The fear of environmental
exposure caused every landlord to impose financial demands that were far in
excess of an amount that the Company could justify for this business.

AGREEMENTS

On March 5, 2004, the Company entered a consulting agreement with an NASD
Broker/dealer to provide investment banking advise. For prior services, the
Company agreed to issue 4,590,000 shares of Common Stock and a Warrant to
purchase 4,608,000 shares of Common Stock at $.16 per share exercisable from
February 10, 2004 to February 10, 2009.

On April 8, 2004, the Company entered into a placement agency agreement with an
NASD broker/dealer as its exclusive placement agent, to commence a private
offering of Convertible Debentures (the "Debentures"). The Company agreed to:
(i) pay such broker/dealer a cash fee equal to eight percent (8%) of the gross
proceeds of the offering plus reimbursement of expenses incurred by it in
connection with the Offering; and (ii) issue to the placement agent a unit
purchase warrants exercisable for a number of shares of Common Stock equal to
ten percent (10%) of the number of shares of Common Stock issuable upon a
potential voluntary conversion of all of the Debentures sold in such offering,
as compensation for its services. In April of 2004 the Company closed on
$500,000, at which time certain loans from related parties totaling $455,903
were converted, dollar for dollar, into the Debentures.

OPTIONS/WARRANTS/NOTES

On February 11, 2004, the Company issued a convertible note to an individual in
return for a loan of $50,000.00. The note bears interest at the rate of 10% per
annum payable semi-annually. The note is convertible to common stock of the
Company at $0.08 per share.

In April of 2004, the Company issued 592,800 common stock purchase warrants to
three individuals. The Warrants are exercisable at $0.05 for a period of five
(5) years.

In April of 2004, the Company agreed to issued options equal to 12% of the
issued and outstanding shares, on a fully diluted basis, to a consultant
(Michael Risley) at a purchase price of $0.01 per share. The number of options
are calculated upon date of vesting. The first 6% of the options are vest upon
the final closing of the private offering of Convertible Debentures and the
second 6% are calculated at a certain date one year thereafter. All of these
options expire on a certain date 7 years after the date of vesting.

On May 1, 2004, the Company issued 2,000,000 options under the Employee Stock
Option Plan to Norman Raben. The options are exercisable at $0.06 per share, are
fully vested, and expire on May 1, 2009.

Since December 31, 2003, the Company raised $394,840 (net of closing costs and
expenses) from the sale of Debentures, $293,000 from loans from Officers and
Directors, and $169,500 from loans from third-parties.


                                      F-26

<PAGE>


                                   SIGNATURES

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

WHITEWING ENVIRONMENTAL CORP.

By: /s/ Joseph J. Bianco
    -----------------------------------------
    Name:  Joseph J. Bianco
    Title: President and Principal Executive Officer
    Date: June 15, 2004


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

Signature                    Capacity in which signed:           Date signed:
---------                    -------------------------           ------------

/s/ Joseph Bianco            Director, President                 June 15, 2004
Joseph Bianco                and Principal Executive Officer

/s/ Bruce Raben              Director                            June 15, 2004
Bruce Raben

/s/ Norman Raben             Director, Executive Vice President  June 15, 2004
Norman Raben                 and Principal Financial Officer

/s/ John C. Kleinert         Director                            June 15, 2004
John C. Kleinert



                                      F-27