<PAGE>

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

                                   FORM 10-QSB

(Mark One)

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

For the quarterly period ended June 30, 2003
                               -------------

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

For the transition period from ____________ to ____________

Commission file number 0-74220
                       -------

                          Whitewing Environmental Corp.
        (Exact name of small business issuer as specified in its charter)

            Delaware                                      95-4437350
            --------                                      ----------

(State or other jurisdiction of                (IRS Employer Identification No.)
   incorporation or organization)

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

                                 (201) 943-0800
--------------------------------------------------------------------------------
                           (Issuer's telephone number)

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [X] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 39,611,443

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]



<PAGE>

                         PART I -- FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

              Consolidated Balance Sheet at June 30, 2003 (unaudited)         3

              Consolidated Statements of Operations for the three months
              ended June 30, 2002 and 2003 and the six months ended
              June 30, 2002 and 2003 (unaudited)                              5

              Consolidated Statement of Stockholders' Equity for the
              six months ended June 30, 2003 (unaudited)                      6

              Consolidated Statements of Cash Flows for the six months
              ended June 30, 2002 and 2003 (unaudited)                        7

              Notes to Condensed Consolidated Financial Statements            9

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION      23

ITEM 3.       CONTROLS AND PROCEDURES                                        37

                          PART II -- OTHER INFORMATION                       37

                                       2



<PAGE>

                 WHITEWING ENVIRONMENTAL CORP. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)

                                  JUNE 30, 2003

                                     ASSETS

Current assets:
   Accounts receivable, net of allowance for doubtful
      accounts of $68,000                                            $  899,055
   Inventory                                                            477,558
   Note receivable, current portion                                      68,294
   Prepaid expenses and other current assets                            316,952
                                                                     -----------
          Total current assets                                        1,761,859
                                                                     -----------

Property and equipment, net                                           2,934,507
                                                                     -----------

Other assets:
   Intangible assets, net                                             1,123,289
   Note receivable, net of current portion                               35,446
   Other assets                                                         152,681
                                                                     -----------
          Total other assets                                          1,311,416
                                                                     -----------

          Total assets                                               $6,007,782
                                                                     ===========

                                   (CONTINUED)

                                       3



<PAGE>

                 WHITEWING ENVIRONMENTAL CORP. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)

                                  JUNE 30, 2003

                                   (CONCLUDED)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Cash overdraft                                                   $    71,325
   Lines of credit                                                    1,070,544
   Current maturities of bank loans and mortgage                        127,255
   Current maturities of obligations under capital leases               106,603
   Current maturities of loans payable - related parties                835,176
   Current maturities of loans payable                                  167,635
   Convertible notes payable                                            548,951
   Accounts payable and accrued expenses                              1,613,839
   Due to affiliate                                                      17,285
   Deferred revenue                                                      40,807
                                                                     -----------
         Total current liabilities                                    4,599,420

Noncurrent liabilities:
   Bank loans and mortgage, net of current maturities                   772,453
   Obligations under capital leases, net of current maturities          197,937
   Loans payable - related parties, net of current maturities           132,992
   Loans payable, net of current maturities                             263,178
                                                                     -----------
         Total liabilities                                            5,965,980
                                                                     -----------

Commitment and contingencies

Stockholders' equity:
   Preferred stock, $.001 par value, 500,000 shares
      authorized, no shares issued and outstanding                           --
   Common stock, $.001 par, 100,000,000 shares authorized,
      39,611,443 shares issued and outstanding                           39,611
   Additional paid-in capital                                         5,484,696
   Accumulated deficit                                               (5,482,505)
                                                                     -----------
         Total stockholders' equity                                      41,802
                                                                     -----------

Total liabilities and stockholders' equity                          $ 6,007,782
                                                                    ============

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                       4



<PAGE>
<TABLE>
                               WHITEWING ENVIRONMENTAL CORP. AND SUBSIDIARIES
                                   CONSOLIDATED STATEMENTS OF OPERATIONS
                                                (UNAUDITED)
<CAPTION>

                                                 For The Three                       For The Six
                                                 Months Ended                        Months Ended
                                        June 30, 2002     June 30, 2003     June 30, 2002     June 30, 2003
                                        -------------     -------------     -------------     -------------
<S>                                     <C>               <C>               <C>               <C>
Service revenue                         $    826,879      $    691,675      $  1,626,622      $  1,356,336
Product sales                                368,489           761,537           786,595         1,169,892
Rental income                                     --                --            27,938                --
                                        -------------     -------------     -------------     -------------
                                           1,195,368         1,453,212         2,441,155         2,526,228

Cost of goods and services sold              697,761         1,097,602         1,440,375         1,947,792
                                        -------------     -------------     -------------     -------------

Gross profit                                 497,607           355,610         1,000,780           578,436
                                        -------------     -------------     -------------     -------------

Operating expenses:
   Selling, general and
      administrative expense               1,748,470         1,181,324         2,399,236         2,009,496
   Gain on sale of property and
      equipment, held for sale                    --          (173,373)               --          (173,373)
   Bad debt expense                               --            64,000            17,500            81,464
   Depreciation and amortization              57,789           128,965           110,025           233,958
                                        -------------     -------------     -------------     -------------
Total operating expenses                   1,806,259         1,200,916         2,526,761         2,151,545
                                        -------------     -------------     -------------     -------------

Operating loss                            (1,308,652)         (845,306)       (1,525,981)       (1,573,109)
                                        -------------     -------------     -------------     -------------

Other expense:
   Interest expense                          (21,089)         (463,854)          (50,877)         (700,123)
   Equity in loss of affiliate               (13,243)             (329)          (13,778)          (48,182)
                                        -------------     -------------     -------------     -------------

                                             (34,332)         (464,183)          (64,655)         (748,305)
                                        -------------     -------------     -------------     -------------

Net loss                                $ (1,342,984)     $ (1,309,489)     $ (1,590,636)     $ (2,321,414)
                                        =============     =============     =============     =============

Basic/diluted loss per share            $       (.05)     $       (.03)     $       (.07)     $       (.06)
                                        =============     =============     =============     =============

Weighted average shares outstanding       28,319,163        38,798,256        22,983,668        36,517,520
                                        =============     =============     =============     =============

                 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

             THE ABOVE STATEMENTS GIVE RETROACTIVE EFFECT TO THE RECAPITALIZATION ON MAY 3, 2002.

                                                     5
</TABLE>



<PAGE>
<TABLE>
                                    WHITEWING ENVIRONMENTAL CORP. AND SUBSIDIARIES

                                    CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                                     (UNAUDITED)

                                        FOR THE SIX MONTHS ENDED JUNE 30, 2003
<CAPTION>

                                                Common Stock             Additional                         Total
                                        ----------------------------       Paid-In       Accumulated     Stockholders'
                                           Shares          Amount          Capital         Deficit          Equity
                                        ------------    ------------    ------------    ------------     ------------
<S>                                      <C>            <C>             <C>             <C>              <C>
Balance, January 1, 2003                 34,211,443     $    34,211     $ 3,675,446     $(3,161,091)     $   548,566

Convertible notes payable "in the
   money" conversion feature                     --              --         754,497              --          754,497

Issuance of warrants to convertible
   notes payable holders                         --              --         320,503              --          320,503

Issuance of options for
   advisory services                             --              --         122,570              --          122,570

Common stock issued for consulting
   services                               1,400,000           1,400         194,600              --          196,000

Issuance of shares for acquisition        2,000,000           2,000         258,000              --          260,000

Common stock issued for advisory
   services (increment for
   amended agreement)                     2,000,000           2,000         155,430              --          157,430

Options issued for services                      --              --           3,650              --            3,650

Net loss                                         --              --              --      (2,321,414)      (2,321,414)
                                        ------------    ------------    ------------    ------------     ------------

Balance, June 30, 2003                   39,611,443     $    39,611     $ 5,484,696     $(5,482,505)     $    41,802
                                        ============    ============    ============    ============     ============

                      THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                                          6
</TABLE>



<PAGE>
<TABLE>
                             WHITEWING ENVIRONMENTAL CORP. AND SUBSIDIARIES

                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (UNAUDITED)
<CAPTION>

                                                                                   For The Six
                                                                                   Months Ended
                                                                          ------------------------------
                                                                          June 30, 2002    June 30, 2003
                                                                          -------------    -------------
<S>                                                                       <C>              <C>
Cash flows from operating activities:
   Net loss                                                               $(1,590,636)     $(2,321,414)
   Adjustments to reconcile net loss to net cash
     used in operating activities:
       Depreciation and amortization                                          110,025          233,958
       Bad debt expense                                                        17,500           81,464
       Equity in loss of affiliate                                             13,778           48,182
       Noncash compensation                                                 1,138,113          330,650
       Noncash interest expense                                                    --          548,951
       Gain on sale of property and equipment, held for sale                       --         (173,373)
       Changes in operating assets and liabilities, net of effects of
          purchase of subsidiary:
             (Increase) decrease in operating assets:
                Accounts receivable                                          (257,077)         (67,375)
                Inventory                                                      (4,647)         (70,047)
                Prepaid expenses and other current assets                     (92,064)          (5,591)
                Other assets                                                  (13,716)          21,637
             Increase (decrease) in operating liabilities:
                Accounts payable and accrued expenses                         297,750          149,565
                Deferred revenue                                                8,289            3,512
                Security deposit                                              (15,000)              --
                                                                          ------------     ------------

Net cash used in operating activities                                        (387,685)      (1,219,881)
                                                                          ------------     ------------

Cash flows from investing activities:
   Collections on note receivable                                              10,696           32,891
   Net payment for purchase acquisition, net of cash acquired                 228,322          (46,166)
   Advances to affiliates                                                    (488,429)        (332,794)
   Net proceeds from sale of property and equipment, held for sale                 --          494,461
   Purchase of property and equipment                                        (107,797)         (18,632)
                                                                          ------------     ------------

Net cash (used in) provided by investing activities                          (357,208)         129,760
                                                                          ------------     ------------

                                              (CONTINUED)
</TABLE>
                                                   7



<PAGE>
<TABLE>
                             WHITEWING ENVIRONMENTAL CORP. AND SUBSIDIARIES

                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (UNAUDITED)

                                              (CONCLUDED)
<CAPTION>

                                                                                  For The Six
                                                                                  Months Ended
                                                                         ------------------------------
                                                                         June 30, 2002    June 30, 2003
                                                                         -------------    -------------
<S>                                                                      <C>              <C>
Cash flows from financing activities:
   Decrease in cash overdraft                                            $        --      $   (43,343)
   Net proceeds from issuance of common stock                                740,567            2,000
   Proceeds from lines of credit                                             174,000          390,109
   Repayment of bank loans and mortgage                                           --         (449,731)
   Proceeds from convertible loans payable                                        --        1,075,000
   Principal payments of obligations under capital leases                    (62,450)         (67,439)
   Principal payments on loans payable                                       (58,685)         (34,618)
   Proceeds from loans payable - related parties                                  --          306,000
   Principal payments on loans payable - related parties                     (38,453)         (77,957)
   Proceeds from exercise of stock options                                     2,250               --
   Proceeds from stockholders' loans                                          31,250               --
   Repayments of stockholders' loans                                         (29,000)              --
   Repayments of due to affiliates                                                --           (9,900)
                                                                         ------------     ------------

Net cash provided by financing activities                                    759,479        1,090,121
                                                                         ------------     ------------

Net increase in cash and cash equivalents                                     14,586               --

Cash and cash equivalents - beginning of period                               12,657               --
                                                                         ------------     ------------

Cash and cash equivalents - end of period                                $    27,243      $        --
                                                                         ============     ============
Supplemental disclosure of cash flow information:
   Income taxes paid                                                     $        --      $     1,010
                                                                         ============     ============

   Interest paid                                                         $    20,879      $   122,316
                                                                         ============     ============

Supplemental schedule of noncash investing and financing activities:

   The Company leased various equipment under capital
     lease obligations                                                   $    13,463      $    31,000
                                                                         ============     ============

   The Company financed the purchase of certain intangible assets        $   144,504      $        --
                                                                         ============     ============

   The Company issued 1,000,000 shares of
     common stock in connection with future services                     $   250,000      $        --
                                                                         ============     ============

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

   Net assets acquired in acquisition less payment for acquisition       $        --      $ 1,106,470
                                                                         ============     ============

               THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
                                                   8



<PAGE>

                 WHITEWING ENVIRONMENTAL CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

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%.

       The accompanying interim unaudited consolidated balance sheets,
       statements of operations, stockholders' equity and cash flows reflect all
       normal recurring adjustments that are, in the opinion of management,
       necessary for a fair presentation of the financial position of the
       Company at June 30, 2003 and the results of their operations for the
       three and six months periods ended June 30, 2002 and 2003.

       The accompanying interim consolidated financial statements have been
       prepared by the Company without audit, in accordance with the
       instructions for Form 10-QSB pursuant to the rules and regulations of the
       Securities and Exchange Commission ("SEC") and, therefore, do not include
       all information and notes normally provided in annual financial
       statements and should be read in conjunction with the audited financial
       statements and the notes thereto of Whitewing and ARS for the year ended
       December 31, 2002.

                                       9



<PAGE>

       Included in Form 8-K/A of Whitewing as filed on July 22, 2003 with
       the SEC are ARS's audited financial statements for the year ended
       December 31, 2002. In Form 10-KSB of Whitewing as filed on April 15,
       2003 are Whitewing's audited financial statements for the year ended
       December 31, 2002.

       The results of the operations for any interim period are not necessarily
       indicative of, nor are they comparable to, the results of operations for
       any other interim period or for the full fiscal year.

       Basis of Presentation:

       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, the
       Company has suffered recurring losses, negative cash flows from
       operations of approximately $1,220,000 during the six months ended June
       30, 2003, negative working capital of approximately $2,838,000 at June
       30, 2003, and an accumulated deficit of approximately $5,483,000 at June
       30, 2003. These factors raise substantial doubt about the Company's
       ability to continue as a going concern.

       Management is in the process of raising additional funds from a private
       placement (see Note 16) which is intended to generate working capital
       necessary 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.

       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.

       Inventory:

       Inventory is comprised of raw materials and finished goods and is
       recorded at cost, determined by the first-in, first-out method.

                                       10



<PAGE>

       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, amounting to approximately $170,000 and $356,000 for the three
       months ended June 30, 2002 and 2003, respectively, and $237,000 and
       $418,000, for the six months ended June 30, 2002 and 2003, respectively,
       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.

       Recent Accounting Pronouncements:

       In April 2003, the FASB issued SFAS No. 149 "Amendment of Statement 133
       on Derivative Instruments and Hedging Activities." The SFAS No. 149
       amends and clarifies financial accounting and reporting for derivative
       instruments, including certain derivative instruments embedded in other
       contracts (collectively referred to as derivatives) and for hedging
       activities under SFAS No. 133, "Accounting for Derivative Instruments and
       Hedging Activities". Subject to certain exception, this statement is
       effective for contracts entered into or modified after June 30, 2003 and
       for hedging relationships designated after June 30, 2003. All provisions
       of this Statement should be applied prospectively. The Company does not
       expect the adoption of SFAS No. 149 to have an impact on its consolidated
       financial statements.

       In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
       Financial Instruments with Characteristics of both Liabilities and
       Equity." The SFAS No. 150 improves the accounting for certain financial
       instruments that, under previous guidance, issuers could account for as
       equity and requires that those instruments be classified as liabilities
       in statements of financial position. In addition to its requirements for
       the classification and measurement of financial instruments in its scope,
       SFAS No. 150 also requires disclosures about alternative ways of settling
       the instruments and the capital structure of entities, all of whose
       shares are mandatorily redeemable. Most of the guidance in SFAS No. 150
       is effective for all financial instruments entered into or modified after
       May 31, 2003, and otherwise is effective at the beginning of the first
       interim period beginning after June 15, 2003. The Company does not expect
       the adoption of SFAS No. 150 to have an impact on its consolidated
       financial statements.

       Reclassification:

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

                                      11



<PAGE>

2.     ACQUISITION OF 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 9)                                    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 estimated 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
                                                                   =============

                                       12



<PAGE>

       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 pro forma information is presented to
       illustrate the effects of the acquisition on the historical operating
       results for the three and six months ended June 30, 2002 and 2003 as if
       the acquisition had occurred at the beginning of the respective periods.

<TABLE>
<CAPTION>
                                        For The Three                    For The Six
                                        Months Ended                     Months Ended
                              June 30, 2002   June 30, 2003    June 30, 2002   June 30, 2003
                               -------------  -------------    -------------   -------------
       <S>                     <C>            <C>              <C>             <C>
       Net revenue             $  1,495,778   $  1,590,399     $  3,055,421    $  2,943,677
       Net loss                  (1,367,495)      (879,233)      (1,622,899)     (2,524,994)
       Net loss per share              (.05)          (.02)            (.07)           (.07)
</TABLE>

3.     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, if raised. The Company will issue a
       warrant for 650,000 shares of common stock at an exercise price of $.08
       per share upon the first closing of a private placement in connection
       with raising funds for the Company (See Note 16).

       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). During the
       three months ended June 30, 2003, the Company expensed $155,430, which
       together with $122,570 expensed during the three months ended March 31,
       2003 under the original agreement, brought the total compensation expense
       recognized under the Agreement to $278,000.

                                       13



<PAGE>

4.     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 three and six months ended June 30,
       2003, the Company expensed $49,000. As of June 30, 2003, the remaining
       $147,000 was recorded in prepaid expenses.

5.     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, subsequent to
       September 30, 2003, the principal and interest may be converted into the
       Company's common stock at an initial conversion price of $.15 per share.
       If the noteholders choose to convert the principal and interest into the
       Company's common stock, a maximum of 7,166,667 and 576,187 common shares
       could be issued for principal and interest, respectively. 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.

                                       14



<PAGE>

       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
       and is being recognized on a straight-line basis as interest expense
       until the Notes become convertible (September 30, 2003).

       For the three months and six months ended June 30, 2003, interest expense
       recognized for the warrants was approximately $58,000 and $312,000,
       respectively, and interest expense recognized for the "in the money"
       conversion feature was $109,000 and $440,000, respectively.

       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 private placement. The principal amount will convert into
       7,188,000 shares of common stock. The Company and the holder of the
       remaining Note in the amount $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 balance if the Company receives gross proceeds from
       this offering in excess of $1,500,000. (See Note 16).

6.     INVENTORY:

       Inventory consists of the following:

                                                              June 30, 2003
                                                              -------------
                                                               (Unaudited)

            Raw materials                                     $     184,556
            Finished goods                                          293,002
                                                              --------------
                                                              $     477,558
                                                              ==============

                                       15



<PAGE>

7.     PROPERTY AND EQUIPMENT:

       Property and equipment at June 30, 2003 consists of the following:

<TABLE>
<CAPTION>
                                                                            Estimated
                                                                          Useful Lives              Depreciation
                                                June 30, 2003               In Years                    Method
                                                -------------             -------------              ------------
                                                 (Unaudited)
<S>                                             <C>                          <C>                    <C>
            Equipment                           $    2,769,972               5-10                   Straight-line
            Building and improvements                  864,977                 40                   Straight-line
            Land                                       223,800
                                                ---------------

                                                     3,858,749
            Accumulated depreciation
              and amortization                        (924,242)
                                                ---------------
                                                $    2,934,507
                                                ===============
</TABLE>

       At June 30, 2003, property and equipment under capital leases amounted to
       $304,713, net of accumulated depreciation of $168,797. Depreciation
       expense for the three months ended June 30, 2002 and 2003 was $51,650
       and $100,873, and for the six months ended June 30, 2002 and 2003 was
       $97,747 and $196,921, respectively.

8.     INTANGIBLE ASSETS:

       Intangible assets at June 30, 2003 consists of the following:

<TABLE>
<CAPTION>
                                                   June 30, 2003 (Unaudited)
                                     -----------------------------------------------------          Estimated
                                     Gross Carrying        Accumulated      Net Carrying         Useful Life In
                                         Amount           Amortization          Amount                 Years
                                     ---------------     -------------      --------------       --------------
<S>                                  <C>                 <C>                <C>                    <C>
       Intellectual property         $      194,505      $         --       $     194,505          Indefinite
                                     ---------------     -------------      --------------

       Customer lists and
          agreements                        431,781      $     99,589             332,192             15-20

       Formulae and other
          intangible assets
          (acquired in ARS
          acquisition)                      574,465             9,706             564,759              10

       Covenant not to compete               63,000            31,167              31,833               5
                                     ---------------     -------------      --------------
                                          1,069,246           140,462             928,784
                                     ---------------     -------------      --------------

       Total                         $    1,263,751      $    140,462       $   1,123,289
                                     ===============     =============      ==============
</TABLE>

       Amortization expense amounted to $6,139 and $28,092 for the three months
       ended June 30, 2002 and 2003 and $12,278 and $37,037 for the six months
       ended June 30, 2002 and 2003, respectively.

                                       16



<PAGE>

       Estimated aggregate amortization expense is as follows:

                  For The Years
                     Ended
                  December 31,
                  -------------
                      2003 (remaining six months)                  $    54,481
                      2004                                             104,066
                      2005                                              95,415
                      2006                                              88,074
                      2007                                              88,074
                      2008                                              88,074
                      Thereafter                                       410,600
                                                                   ------------

                                                                   $   928,784
                                                                   ============

9.     RELATED PARTY TRANSACTIONS:

       During the three and six months ended June 30, 2003, the Company
       purchased $39,434 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 six months ended June 30, 2003 and amounted
       to $201,000 and $55,000, respectively. Each of the loans bears interest
       at 8% and is due on demand. As of August 15, 2003, the loans from members
       of the Board of Directors and other officers of the Company amounted to
       approximately $345,000 and $87,000. Furthermore, two members of the
       Board of Directors entered into an agreement in August 2003 to convert
       $345,000 of such loans payable into 4,312,500 shares of common stock,
       upon the first closing of the private placement.

       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).

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

                                       17



<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 to 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.

10.    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% (5.5% at June 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 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.

       At June 30, 2003, outstanding balances on the lines of credit (including
       the ARS Revolving Line of Credit) were $1,070,544. As of June 30, 2003,
       no borrowings were available under the lines of credit. At June 30, 2003,
       the outstanding balance on the Equipment Loan was $278,379.

       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 June 30,
       2003). At June 30, 2003, the outstanding balance on the mortgage was
       $621,329. The Company and the President of the Company have guaranteed
       the mortgage.

                                       18



<PAGE>

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

                 Years Ended
                   June 30,
                 -----------
                                                   (Unaudited)

                    2004                           $  127,255
                    2005                              127,282
                    2006                              106,764
                    2007                               32,040
                    2008                               34,527
                    Thereafter                        471,840
                                                   -----------

                                                   $  899,708
                                                   ===========

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

11.    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 period. Diluted loss per share amounts
       incorporate the incremental shares issuable upon the assumed exercise of
       the Company's stock options, warrants and convertible securities. During
       the three months and six months ended June 30, 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 have
       been retroactively restated to reflect the recapitalization by including
       the number of equivalent shares received by TRS.

       As of June 30, 2003, 1,885,000 outstanding options, 2,150,000 outstanding
       warrants and 7,166,667 potential common shares from convertible notes
       payable were not included in the computations of diluted earnings per
       share for the three and six months ended June 30, 2003 because to do so
       would be anti-dilutive. Such instruments could potentially dilute future
       earnings per share. There were no outstanding options, warrants or
       potential common shares from convertible notes payable at June 30, 2002.

12.    COMMITMENTS AND CONTINGENCIES:

       Effective December 17, 2002, the New Jersey Department of Environmental
       Protection ("NJDEP") began regulating the recycling of antifreeze and the
       Company became obligated to obtain a Class D Recycling Permit for this
       process. The Company did not obtain the necessary permit and received two
       Notices of Violation ("NOV") from the NJDEP. In March 2003, the Company
       retained an environmental consulting firm to assist it in the application
       preparation process for this permit.

                                       19



<PAGE>

       On July 7, 2003, the Company received a NOV from the Pennsylvania
       Department of Environmental Protection to obtain a permit, which the
       Company submitted in March 2003.

       The Company is in the process of resolving a NOV from the Connecticut
       Department of Environmental Protection concerning its handling of
       solvents collected from its customers.

       The Company believes that the NOVs will not have a material impact on the
       financial position or operations of the Company.

13.    INCOME TAXES:

       The temporary differences that give rise to deferred tax assets are the
       direct write-off method for receivables, using accelerated methods of
       amortization and depreciation for property and equipment for tax
       purposes, and using statutory lives for intangibles for tax purposes. At
       June 30, 2003, the Company has computed a deferred tax asset in the
       amount of approximately $1,046,000, and has provided a 100% valuation
       allowance on the deferred tax asset due to the uncertainty regarding the
       realization of the future tax benefits.

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

       The valuation allowance increased during the three months ended June 30,
       2002 and 2003 by $204,000 and $42,000, respectively, and during the six
       months ended June 30, 2002 and 2003 by $297,000 and $408,000,
       respectively.

14.    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.

                                       20



<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 (which was not less than the fair value on the date of the
       grant). 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. The fair value of each option
       grant is estimated on the date of grant by use of the Black Scholes
       Option Pricing Model:

<TABLE>
<CAPTION>
                                                                  For The Three       For The Six
                                                                  Months Ended       Months Ended
                                                                  June 30, 2003      June 30, 2003
                                                                  -------------      -------------
                                                                  (Unaudited)        (Unaudited)
<S>                                                               <C>                <C>
       Net loss, as reported                                      $ (1,309,489)      $ (2,321,414)
       Less stock-based compensation expense
         determined under fair value method for
         all stock options, net of related income
         tax benefit                                                   (37,296)           (37,296)
                                                                  -------------      -------------

       Pro forma net loss                                         $ (1,346,785)      $ (2,358,710)
                                                                  =============      =============

       Basic and diluted loss per share, as reported              $       (.03)      $      (0.06)
       Basic and diluted loss per share, pro forma                $       (.03)      $      (0.06)

       There were no options outstanding at June 30, 2002.
</TABLE>

15.    SEGMENT REPORTING:

       The Company has two reportable business segments: Waste Recycling
       Products and Services and Absorbents. Prior to its acquisition of ARS on
       May 8, 2003, the Company only had one segment.

<TABLE>
<CAPTION>
                                                             Three Months      Six Months
                                                                Ended            Ended
                                                            June 30, 2003     June 30, 2003
                                                            -------------     -------------
                                                             (Unaudited)       (Unaudited)
<S>                                                         <C>               <C>
       Total revenue:
       Waste recycling products and services                $  1,168,606      $  2,241,622
       Absorbents                                                284,606           284,606
                                                            -------------     -------------

            Total                                           $  1,453,212      $  2,526,228
                                                            =============     =============
</TABLE>

                                       21



<PAGE>

<TABLE>
<CAPTION>
                                                             Three Months      Six Months
                                                                Ended            Ended
                                                            June 30, 2003     June 30, 2003
                                                            -------------     -------------
                                                             (Unaudited)       (Unaudited)
<S>                                                         <C>               <C>
       Net loss:
       Waste recycling products and service                 $   (659,294)     $ (1,589,997)
       Absorbents                                                (46,896)          (46,896)
       Corporate/other                                          (603,299)         (684,521)
                                                            -------------     -------------

            Total                                           $ (1,309,489)     $ (2,321,414)
                                                            =============     =============
       Assets:
       Waste recycling products and services                                  $  2,228,773
       Absorbents                                                                1,448,969
       Corporate/other                                                           2,330,040
                                                                              -------------

            Total                                                             $  6,007,782
                                                                              =============
</TABLE>

       In May 2003, the Company sold land and building in the waste recycling
       products and service segment for net proceeds of $494,461.

16.    SUBSEQUENT EVENTS:

       Private Placement:

       In July 2003, the Company entered into an agreement with Maxim Group,
       LLC, ("Maxim") to serve as placement agent on a private placement
       to be completed at the end of the third or beginning of the fourth
       quarter. Under the terms of the offering, the Company contemplates
       raising up to $2,000,000 of gross proceeds, which will be used for
       working capital. In addition, the Company entered into a one year
       advisory agreement with Maxim.

       Employment Agreements:

       In August 2003, the Company entered into employment agreements with two
       officers and a consultant. The agreements are effective upon the first
       closing of the private placement. On the effective date the consultant
       will become an officer of the Company. Each agreement is for a term of
       two years and includes an automatic one year extension unless either
       party terminates the agreement at least three months prior to the
       expiration of the term. The agreements contain a commitment for aggregate
       annual salaries of $440,000 and a performance bonus for each of the
       years. The employment agreement to the consultant provides for the
       issuance of an option to purchase 2,000,000 shares of common stock under
       the 2003 Stock Option Plan. The option will be for a term of 10 years and
       will vest one-half upon the effective date, and one-quarter on the first
       and second anniversaries.

                                       22



<PAGE>

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

         This Report on Form 10-QSB contains forward-looking statements by
Whitewing Environmental Corp. ("Whitewing") or ("The Company") concerning its
expectations about its financial results and other aspects of its business that
involve risks and uncertainties and may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Words such as may, should, anticipate, believe, plan, estimate, expect and
intend, and other similar expressions identify forward-looking statements. These
forward-looking statements may include statements about, for example, the
issuance of shares, the continued growth and success of the business, and the
ability to further develop and achieve commercial success for Whitewing's
business strategy. These statements are based on managements' current
expectations and are subject to a number of uncertainties and risks that could
cause actual results to differ materially from those described in the
forward-looking statements. Factors that may cause such a difference include the
risks described under "Risk Factors" in Whitewing's other filings with
the Securities and Exchange Commission. All forward-looking statements included
in this document are based on information available to Whitewing as of the date
of this document, and Whitewing assumes no obligation to update these cautionary
statements or any other forward-looking statements.

                                       23



<PAGE>

OVERVIEW

         Whitewing conducts business in two segments through two wholly owned
Subsidiaries - Total Recycling Services, Inc. ("TRS") and Advanced
Recovery Solutions ("ARS").  TRS provides services and products primarily
to the motor vehicle industry.  ARS currently manufactures industrial
absorbents.

         On May 3, 2002 Total Recycling Services, Inc. completed a
private placement through which it raised net proceeds of $722,067 in equity and
as a result of the private placement, $425,000 of loans payable were converted
into equity. Also, on May 3, 2002, TRS signed and executed a stock for stock
exchange agreement (the "Agreement") with Whitewing Environmental Corp. In
connection with the Agreement, Whitewing issued 28 million shares to the TRS
stockholders in exchange for all of the outstanding shares of TRS, totaling 1.4
million shares. On October 1, 2001 TRS granted an option to purchase 4,500,000
shares of common stock at an exercise price of $.0005 in consideration for
investment services and strategic business planning. In conjunction with the
closings of the private placement and Whitewing, the option was earned and
exercised. Because the former TRS stockholders own approximately 80% of the
merged company after the completion of the merger, TRS is considered to be the
accounting acquirer in the transaction. The transaction was accounted for as a
recapitalization of TRS because Whitewing, the Registrant, had no ongoing
business. As a result, the Registrant's business is now one that provides
services and sells products to the motor vehicle repair industry and
manufactures industrial absorbents. Services include the collection of
recyclable materials such as oil filters, waste oil, used antifreeze, and used
absorbents, and the sale of products including antifreeze, used oil, and
industrial absorbents.

         The consolidated financial statement information that accompanies this
report reflects the historical financial information of the predecessor entity,
prior to May 3, 2002, Total Recycling Services, Inc. and its Subsidiaries and
the consolidated results of operations of the Company subsequent to the
recapitalization.

         Whitewing began operations in 1992, in the business of collecting and
recycling used automotive oil filters. After establishing a foothold in the
industry, Whitewing began to acquire small, strategically located businesses and
developed technologies to expand the services offered to its customers. Today,
Whitewing is a leader in the recovery and recycling of used oil filters, used
antifreeze and it provides related services: principally parts washer and brake
washer sink rentals as well as providing absorbent supplies to the retail and
fleet automotive service and repair industry. Currently Whitewing has a presence
in a sixteen state area, with an active customer base of approximately 6,800.
Beginning in January 2002, Whitewing began collecting and selling used oil.

         Whitewing had negotiated to purchase some of the assets of Connecticut
Waste Oil, Inc. ("CWO") in two parts. Effective January 1, 2002, Whitewing
entered into an Equipment Lease and Operating Agreement with CWO in order to
assume business operations before the closing of the asset purchase agreement.

                                       24



<PAGE>

Under the agreement, the revenue from servicing CWO's customers was retained by
Whitewing, and Whitewing was obligated to pay related operating expenses. On
September 17, 2002, Whitewing completed part one of the purchase agreement which
entailed the purchase of assets related to Connecticut Waste Oil's oil
collection services, including vehicles, inventory, and customer lists. The
purchase price for part one was approximately $540,000. Whitewing paid CWO
$50,000 at closing and signed a $94,563 note payable, due in two installments of
$50,000 plus interest imputed at 7.5%. The first installment was due 180 days
after closing, but by mutual consent the payment was not made. A plan of
disbursement is being worked on with the seller. The second payment is due 180
days after Whitewing receives certain permits from the Connecticut Department of
Environmental Protection. Whitewing was due a net amount from CWO totaling
approximately $91,000 and assumed approximately $144,000 of loans and capital
leases. In addition, Whitewing and the former owners of CWO entered into
consulting agreements which, in accordance with FASB No. 141, were recorded as
part of the purchase price. The fair value of the obligation under the
consulting agreements is approximately $291,000, plus interest, imputed at 7.5%.
The agreements are payable in sixty monthly installments, commencing August 1,
2004. Part two is the purchase of the tank farm. Whitewing has negotiated to
complete this phase once Whitewing receives certain permits from the Connecticut
Department of Environmental Protection. The cost of the tank farm is $200,000
and will be financed by the seller, Connecticut Waste Oil.

REVENUES:

WHITEWING EARNS REVENUES FROM:

         OIL FILTER PROCESSING - Whitewing collects used oil filters from its
customers in company-owned 55-gallon steel drums. At Whitewing's processing
facilities, the filters are put through a process that removes the oil from the
filters. In the process, Whitewing recovers used oil and filter material (steel
and filter elements). The oil is added to Whitewing's used oil stream to be sent
to used oil customers. The recovered steel and filter elements are sold to mills
for recycling into new steel.

         USED ANTIFREEZE RECYCLING - Whitewing collects used automotive
antifreeze from its customers and uses a proprietary reverse osmosis system that
cleans the used material to a level of purity that allows it to be sold as fresh
antifreeze, but at a cost savings. As most motor vehicle repair facilities
dispose of used antifreeze as a waste, Whitewing believes the market potential
for cleaning and reprocessing used antifreeze is substantial and that it has
significant growth and profit potential. Whitewing sells its recycled antifreeze
under the brand names of "Total Cool", "T-Dex" and "Toycool", the latter two
being a long-life antifreeze.

                                       25



<PAGE>

         PARTS WASHER SINKS AND SERVICE - Parts washer sinks are square steel
sinks that sit atop a steel drum containing parts washer solvent (high flash
mineral spirits). The sink contains a pump that sends the solvent through a hose
with a nozzle or brush attachment allowing the technician to clean parts in the
sink. The spent solvent is drained into the drum and is re-circulated. Whitewing
leases parts washer sinks to motor vehicle repair facilities and contracts to
service both its leased sinks and customer owned sinks. Servicing is performed
at predetermined intervals ranging from 4 to 12 weeks (depending on use),
although some customer owned sinks are serviced on a "call for service" basis.
During the servicing process, Whitewing exchanges used solvent for clean solvent
by removing the sink and exchanging the drum of solvent. Whitewing then cleans
the sink, and with respect to leased sinks, performs any necessary maintenance
such as changing hoses, light bulbs, or pumps. Whitewing recycles the used
solvent.

         BRAKE WASHER SINKS AND SERVICE - Brake washer sinks are mobile, square
sinks that sit atop a steel drum containing an aqueous cleaning solution -
essentially soapy water. The drum sits on a caster assembly allowing the
technician to move the sink around the shop. The sink contains a pump that sends
the solution through a hose with a brush attachment. The technician rolls the
sink under the wheel of the vehicle he/she is servicing and uses the brush to
clean the brake parts. Whitewing leases brake washer sinks to motor vehicle
repair facilities and contracts to service them at predetermined intervals
ranging from 4 to 12 weeks, depending on use. During the servicing process,
Whitewing exchanges used aqueous cleaner for new cleaner by removing the sink
and exchanging the drum of cleaner. Whitewing then cleans the sink and performs
any necessary maintenance such as changing hoses or pumps. Whitewing disposes of
the used aqueous cleaner though a licensed wastewater treatment facility.

         WASTE OIL SERVICE - Whitewing collects waste oil and transports it to a
tank farm operated by a third party. The oil is tested to determine and identify
hazardous constituents. If the oil meets certain specifications (which are
described in the used oil regulations - 40 CFR ss. 279), it is considered
"on-spec used oil." It is then partially cleaned through heating and filtration
and is sold as fuel for industrial burners. If the oil does not meet those
specifications, it is sold to facilities that are licensed to burn oil with
those hazardous constituents. After a certain point of contamination, Whitewing
will have to pay to have the oil burned. On management's information and belief,
the oil collected is almost exclusively crankcase oil and, as such, the
instances of severely contaminated oil are rare. The market for this grade of
fuel is seasonal and therefore Whitewing collects and stores oil until it is
needed.

                                       26



<PAGE>

         LABORATORY SERVICE - Whitewing operates an analytical laboratory under
the name Connecticut Environmental Laboratory or CEL. The lab is used primarily
for analysis of used oils, wastewater, and other oil-contaminated wastes. The
lab is certified by the State of Connecticut Department of Public Health.

         OIL-WATER SEPARATOR SERVICE - Whitewing services in-ground settling
tanks that vehicle repair facilities often use to collect and separate oil and
sludge from floor drain water prior to releasing water to the sewer line.
Periodically these units need to be serviced by a vacuum truck to empty them of
oil and sludge. Depending on the location of the site, Whitewing either uses its
own equipment to perform the service or subcontracts this service through
properly licensed subcontractors.

         ENVIRONMENTAL PRODUCTS - Whitewing markets several products, including
its patented "Drain Mate" super funnel and its "Extractor Pro" liquid
extractors. These products are used by the waste recycling industry to collect
liquids for recycling or proper disposal. Currently, Whitewing assembles these
products at its New Jersey facility from subcontractor-manufactured components.

         ABSORBENT SUPPLY AND RECYCLING - Whitewing distributes a full line of
absorbents, including absorbent pads, loose material (including a private
labeled absorbent product called "TotalSorb"), and booms and pillows that are
used for emergency spill response, as well as for regular maintenance cleaning.
Advanced Recovery Solutions, Inc., a company owned 50% by Whitewing, also
produces many of these products. (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 (cash of
$50,000 and a promissory note of $173,122). In May, Whitewing acquired the
remaining 50% of the shares and now owns 100% of ARS). Whitewing charges
customers a fee to collect and dispose of the used absorbents, which are burned
as fuel at a waste to energy co-generation facility either directly or after
first being used to solidify sludge.

GROWTH STRATEGY:

TRS has embarked on a multi-pronged strategy, which will go into effect over the
coming months:

- Move its New Jersey facility into a larger nearby manufacturing and
distribution center.

- Significantly expand its reverse osmosis antifreeze recycling system.

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<PAGE>

- Maximize the volume of recycled antifreeze that it currently purchases from a
regional antifreeze recycler. This supplier has significantly more recycling
capacity than its customer base requires. As a consequence, TRS has been able to
contract for their excess capacity at very favorable pricing and terms. It is
anticipated that this supply contract and our present system will be able to
meet TRS's needs for the next 12 to 18 months, by which time TRS expects to be
in its new facility and to have its enlarged and upgraded system in operation.

- Through its environmental products department, aggressively market acid
neutralizing pads (manufactured by ARS) to the wireless telecommunication
industry. Preliminary telemarketing results have indicated that this is a
substantial, largely untapped market. Every cell tower in the country has back
up battery power and the telecommunication companies need to neutralize the
battery acid when those batteries leak.

- Implement an aggressive acquisition strategy for companies in the Waste Oil
business. Management has targeted appropriate facilities within its current
operating area and will, after further investigation and analysis, focus its
efforts on facilities with the best logistic fit.

ARS' growth will primarily be driven by exploiting its unique products and
technologies. Management believes that as a result of implementing these
strategies ARS will become a significant player in its marketplace. To achieve
this goal, ARS plans to implement the following:

- Expand its sales and marketing efforts with an eye towards becoming a national
presence. Recently ARS established sales offices in Seattle, WA and Minneapolis,
MN. Both of these offices are staffed with experienced salesmen with significant
books of business.

- Introduce a kitty litter manufactured from recycled residual short fiber
waste. This material is obtained from paper manufacturers who pay us to take a
waste that they currently have to dispose of in landfills. Management believes
that ARS will both market their kitty litter under their own label as well as
become the OEM manufacturer for several large, well established marketers.

- Expand its manufacturing facilities to accommodate its growing market demand.
The site of its Watertown, New York facility is sufficient to double its present
manufacturing plant.

- Complete the development of and then introduce its super absorbent substitute
for conventional sand bags. If this product is successful it will give emergency
response organizations a light weight alternative to conventional sand bag water
retention methods.

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<PAGE>

MARKETING STRATEGY:

         The overall goal of the Whitewing marketing plan is to become the
leading single source supplier of services and environmental products to the
motor vehicle repair industry within its current sixteen state marketing area
(from Maine to North Carolina and as far West as Ohio), and ultimately to expand
the Company's operations nationally. Management's strategy is to maximize
account density with acquisitions of similar and complimentary businesses in key
marketing areas and increase sales with cross-selling techniques throughout the
entire customer base. Management believes that Whitewing's mix of products and
services gives it a distinctive advantage in the market place.

To achieve these goals Whitewing plans include:

- Installation of a computerized GPS tracking system to be used with both our
existing customers as well as prospective customers to determine both current
and future needs and to provide superior customer service.

- Relocate its primary manufacturing and distribution facility from Ridgefield,
NJ to a nearby community that offers a larger building that is better suited to
TRS' needs.

- Recruiting and training in house sales assistants for customer service, sales
support and telemarketing.

- Hiring and training additional outside sales representatives to develop and
implement Whitewing's marketing strategy.

- Developing and implementing a direct mail and telemarketing program.

- Targeting specific trade shows to promote Whitewing services and to foster a
strong image in the industry.

- Upgrading the Whitewing website to increase sales of the environmental
products produced and marketed by our subsidiaries.

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<PAGE>

THE FOLLOWING IS THE RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2003 AS COMPARED TO THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30,
2002.

REVENUES:

         A comparison of revenues for the six and three months ended June 30,
2002 and 2003 is presented below.

                                     2002            2003          Change
                                 ------------   -------------   -----------
Six-months ended:
         Net revenues              2,441,155       2,526,228             3%

                                     2002            2003          Change
                                 ------------   -------------   -----------
Three-months ended:
         Net revenues              1,195,368       1,453,212            22%

         The increase in revenue for the six months ended June 30, 2003 was
primarily a result of the acquisition of ARS providing $285,000 of revenues
offset by 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. The following reflects the major revenue line
items approximate net increases/(decreases) for the six and three months ended
June 30, 2003 as compared to June 30, 2002.

                                      Six Months Ended    Three Months Ended
                                        June 30, 2003        June 30, 2003
                                      ----------------    ------------------
Waste Oil Products and
Related Services                            (121,000)                  -
Oil Filter Service                          (117,000)            (61,000)
Antifreeze Products                           40,000              15,000
Parts Washer Service                           9,000               3,000
Rental Income                                (28,000)                  -
Other Products and Services                   17,000              16,000
Absorbents                                   285,000             285,000

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<PAGE>

COST OF GOODS AND SERVICES SOLD:

         Cost of goods and services sold consist primarily of purchases and
materials, items for resale, and direct labor and related costs and
transportation costs associated with both of goods and services sold.

         A comparison of cost of goods and services sold for the six and three
months ended June 30, 2002 and 2003 is presented below.

                                      2002             2003           Change
                                  -------------    -------------    ----------
Six-months ended:
   Cost of goods and
       services sold                1,440,375        1,947,792             35%
 Percentage of revenues                 59%              77%

                                      2002             2003           Change
                                  -------------    -------------    ----------
Three-months ended:
    Cost of goods and
        services sold                697,761         1,097,602             57%
 Percentage of revenues                 58%             76%

         For the six and three months ended June 30, 2003, cost of goods and
services sold increased as a percentage of sales. This is primarily the result
of increases in labor and related costs, fuel costs and costs of materials and
products for resale and the decrease in sales volume. As costs have increased,
Whitewing has not increased its selling price in an effort to remain competitive
within the industry. During the fourth quarter of 2002, Whitewing instituted
price increases to selective customers and services in an effort to increase
margins. Management has also increased its efforts to analyze route efficiency,
which in turn will reduce labor, fuel and other trucking related costs. In
addition, management has continued its efforts in directing its sales force to
focus on cross-selling additional products and services to existing customers
and adding new customers within the current truck routes. In an effort to assist
the sales force in its crossing selling efforts, Whitewing has instituted a
telemarketing program to existing customers while also focusing on areas where
routing is inefficient. Recently, however, it has cut back on this effort in
order to conserve capital and focus on servicing the needs of its current
customer base.

         Management is continuing its efforts towards developing dispatching
software, which includes GPS tracking systems installed on all delivery
vehicles. This software will increase dispatching efficiency and provide an
additional management tool for more precise forecasting and direction for

                                       31



<PAGE>

telemarketing and the outside sales force. Management believes that the
aforementioned will reduce cost of goods and services sold as a percentage of
revenues. Management estimates this software will be fully operational by the
fourth quarter of 2003.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:

         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.

         A comparison of selling, general and administrative expenses for the
three months ended June 30, 2002 and 2003 is presented below.

                                          2002           2003           Change
                                     -------------   -------------   -----------

Six-months ended:
       Selling, general and
         administrative expenses       2,399,236       2,099,496           (13%)
       Percentage of revenues              98%            83%

                                         2002            2003           Change
                                     -------------   -------------   -----------
Three-months ended:
       Selling, general and
         administrative expenses       1,748,470       1,181,324           (32%)
       Percentage of revenues            146%             81%

         For the three and six months ended June 30, 2003, selling, general and
administrative expenses decreased significantly. The primary reason for the
decrease is the inclusion in the quarter ended June 30, 2002 of non-cash
compensation in the amount of $1,138,000 related to the options from a
Business Advisory Agreement. For the six months ended June 30, 2003 insurance
expense, professional fees, outside professional services, and rents increased
over June 30,2002 approximately $146,000, $109,000, $67,000 and $35,000,
respectively. The increase in insurance costs is a result of the insurance
industry's rate increases that affected most corporate renewals, Whitewing's
increase in staff, assets and revenues and the addition of Directors and
Officers Insurance. The entire insurance portfolio was renewed during the fourth
quarter of 2002. The increase in professional fees is a result of operating in
the public environment. Outside professional services were primarily incurred
by employing the former Chief Financial Officer as a consultant to
provide a smooth transition in the position of Chief Financial Officer. Rents
increased primarily as a result of the operation agreements with CWO and the new
administrative offices. In addition, noncash costs of $331,000 were expensed
to reflect costs associated with the Business Advisory Agreement, the Consulting
Agreements, and the Stock Options granted to two former employees.

                                       32



<PAGE>

         In September of 2002, Whitewing relocated its administrative offices.
In conjunction with the move, Whitewing modernized and increased the capacity of
its computer network and telephone system. Whitewing has incurred interest and
depreciation expense as a result of this modernization. In the long term,
management believes that the relocation of the offices and the upgrade in its
computer system will increase efficiency and reduce general and administrative
costs.

DEPRECIATION AND AMORTIZATION INCLUDING GOODWILL IMPAIRMENT:

         Depreciation consists of amounts relating to property and equipment
while amortization consists of amounts relating to intangible assets. Intangible
assets consist of intellectual property, non-competition and other agreements
and customer lists.

         A comparison of depreciation and amortization expense for the six and
three months ended June 30, 2002 and 2003 is presented below.

                                             2002          2003         Change
                                        ------------   ------------   ----------

Six-months ended:
         Depreciation and amortization     110,025       233,958            113%
         Percentage of revenues              5%            9%

                                            2002          2003          Change
                                        ------------   ------------   ----------

Three-months ended:
         Depreciation and amortization     57,789        128,965            123%
         Percentage of revenues              5%            9%

         While conducting business under the CWO operating agreement the assets
of CWO were only operated and maintained by Whitewing, and therefore Whitewing
did not incur depreciation nor amortization expense on the CWO property and
equipment. Beginning on September 17, 2002, the closing date with CWO, Whitewing
began to incur depreciation and amortization expense which amounts to about
$30,000 for each quarter. In September of 2002, Whitewing relocated its
administrative offices and purchased property and equipment in conjunction with
this relocation i.e. leasehold improvements, computers and office furniture and
equipment. The quarterly depreciation and amortization expenses from these
purchases is approximately $9,000. In addition, depreciation and amortization
expense have amounted to $26,000 for ARS.

                                       33



<PAGE>

INTEREST:

         A comparison of interest expense for the three and six months ended
June 30, 2002 and 2003 is presented below.

                                         2002           2003           Change
                                     ------------   ------------    -----------

Six-months ended:
         Interest                      50,877         700,123             1276%
         Percentage of revenues          2%             28%

Three-months ended:
         Interest                      21,089         463,854             2100%
         Percentage of revenues          2%             32%

         Interest expense has increased both as a percentage of revenues and
from quarter to quarter. The increases can be attributed to three major
activities. 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 the 2003 resulting in higher interest expense offset by lower
market rates. Lastly, interest charges have been recognized related to the
convertible promissory notes issued in March 2003, which is comprised of
approximately $109,000 and $440,000 related to the fair value of the warrants
and the "in the money" conversion feature, respectively.

INCOME TAXES:

         Whitewing has not completed income tax filings for the year ended
December 31, 2001, and intends to take the steps required to
complete the tax filings as soon as practicable.

                                       34



<PAGE>

LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION:

CASH OVERDRAFT:

         The cash overdraft at June 30, 2003 was $71,325 which is a decrease of
$43,343 from the cash overdraft balance at December 31, 2002.

         Net cash used in operating activities for the six months ended June 30,
2003 was $1,219,881. 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 six months ended June
30, 2003 was $129,760. The net cash provided was primarily from the proceeds of
the sale of a property in Pennsylvania which amounted to $494,461, offset by
Advances to Affiliates in the amount of $332,794.

         Net cash provided by financing activities for the six months ended June
30, 2003 was $1,090,121. The cash provided was primarily from the cash
received, $1,075,000, as a result of the issuance of promissory notes.
Additional cash was provided from the line of credit in the amount of $390,109
and from loans from related parties in the amount of $306,000. The mortgage on
the Pennsyvania 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 June 30, 2003 Whitewing had negative working capital of
approximately $2,838,000, negative cash flows from operations of approximately
$1,220,000. The accompanying financial statements do not include any adjustments
that might be necessary should Whitewing be unable to continue as a going
concern.

         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 June 30, 2003 was approximately $478,000. The
loan will be due and payable on September 30, 2003.

         During the first quarter of 2003, Whitewing issued promissory notes in
the amount of $1,075,000. At the noteholders' option, the principal and interest
may be converted into the Company's common stock at $.15 per share. Interest may

                                       35



<PAGE>

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 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.

         In August 2003, Management anticipates launching a private placement to
raise a minimum of $500,000 and a maximum of $2,000,000 gross proceeds. The
capital raised will be used to fund working capital and pay down $250,000 of
the convertible notes. At that time, it is anticipated that a majority of the
promissory noteholders will convert their holdings into Common Stock at $.08
per share.

WHITEWING HAS INCURRED LOSSES AND LOSSES MAY CONTINUE.

         Whitewing incurred net losses of approximately $1,309,000 and
$2,321,000 for the three and six months ended June 30, 2003. Whitewing is likely
to incur additional losses.

                                       36



<PAGE>

ITEM 3.  CONTROLS AND PROCEDURES

         Whitewing maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in its Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms and that
such information is accumulated and communicated to its management, including
the Chief Executive Officer and Principal Accounting Officer, as appropriate, to
allow for timely decisions regarding required disclosure. In designing and
evaluating the disclosure controls and procedures, management recognizes that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management is required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.

         As required by SEC Rule 13a-15(b), Whitewing carried out an evaluation,
under the supervision and with the participation of its management, including
the Chief Executive Officer and Principal Accounting Officer, of the
effectiveness of the design and operation of its disclosure controls and
procedures as of the end of the quarter covered by this report. Based on the
foregoing, the Chief Executive Officer and Principal Accounting Officer
concluded that its disclosure controls and procedures were effective at the
reasonable assurance level.

         There has been no change in Whitewing's internal controls over
financial reporting during its most recent fiscal quarter ended June 30, 2003
that has materially affected, or is reasonably likely to materially affect, the
internal controls over financial reporting.

                          PART II -- OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

Whitewing Environmental Corp., in the ordinary course of business has certain
on-going legal proceedings, none of which are considered material to the
financial statements.

Environmental:

The Company received notices of violation from the Departments of Environmental
Protection in 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.

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

                                       37



<PAGE>

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
relocates, a new permit will have to be secured. The Company anticipates that
that TRS will relocate to a new facility during the first quarter of 2004. TRS
currently occupies approximately one half of the building and its operations
already strained the capacity of the site.

On January 29, 2003, a short time after the effective date of the new
regulation, NJDEP issued a Notice of Violation to TRS for operating a Class D
Recycling facility without a permit. A Notice of Violation is a notice from a
governmental agency to an entity instructing them to take certain action in
order to achieve regulatory compliance. In March 2003, TRS retained Sailer
Environmental, Inc., an environmental consulting firm ("SEI"), to assist it in
the application preparation process.

 In April 2003, NJDEP issued a second Notice of Violation 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 finding a new
facility. In conjunction with SEI, 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 has agreed to enter into an
Administrative Consent Order with TRS which will allow for the continued
operation of the antifreeze recycling operation until the end of January 2004.
In addition, the Company has entered into an agreement with a third party
pursuant to which such third party will recycle antifreeze for the Company until
the Company's new antifreeze recycling facility is operational.

Harrisburg, Pennsylvania Facility:

TRS' Harrisburg, Pennsylvania facility currently operates as a new and recycled
product distribution facility. The facility cannot accept waste materials at
this time because the Pennsylvania Department of Environmental Protection
("PADEP") has not yet issued necessary permits. A Residual Waste Permit
application was submitted to PADEP for review and approval on March 20, 2003.
Upon approval of that application, TRS will be able to transfer waste to and
from this site. These operations will include transferring used oil filters,
waste solvent, and absorbent materials through the facility. Currently, these
operations are being conducted at TRS' Ridgefield, NJ facility.

                                       38



<PAGE>

TRS is currently addressing a July 7, 2003 Notice of Violation 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 is issued. The
Residual Waste Permit is expected to be issued during the first quarter of 2004.

Connecticut Transporter Permit

TRS is currently resolving a Notice of Violation 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 believes that
its operations were fully consistent with all state and federal laws and
regulations and that CTDEP's interpretation was not correct. However, SEI
recommended to management 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 appears
satisfied with the offer so we expect a formal resolution of the NOV in the next
few weeks.

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.

ENVIRONMENTAL REMEDIATION EXPOSURE - ALL FACILITIES:

While Whitewing's business may appear to include businesses that may be subject
to environmental hazards as discussed in SOP 96-1, as of June 30, 2002, no
amounts have been recognized for environmental remediation loss contingencies.
Subsequent to June 30, 2002, Whitewing's processing facility at 430 Victoria
Terrace was subject to an environmental study and several locations on the site
were determined to be "areas of concern." The incidents of contamination are
minor and the entire cost to remediate will be approximately $10,000 and has
been accrued for the period ended June 30, 2003.

                                       39



<PAGE>

ITEM 2. CHANGES IN SECURITIES.

         In March 2003, the Company borrowed $1,075,000 and issued to four (4)
investors in a private transaction (i) 8% convertible promissory notes ("the
Notes") in the aggregate principal amount of $1,075,000 due February 28, 2004
and (ii) warrants for a total of 2,150,000 shares of common stock exercisable at
$.15 per share during the period commencing on September 30, 2003 and ending on
September 30, 2006 (the "Private Placement Warrants"). Three of the investors,
Jack Kleinert, a proposed member of the Board of Directors, Norman Raben, the
Co-Chief Executive Officer, Executive Vice President, Secretary, and a director
of the Company, and Geoffrey Perry, the Chief Executive Officer and President of
ARS, loaned the Company the aggregate principal amount of $500,000, $25,000 and
$50,000, respectively. At the note holders' option, subsequent to September 30,
2003, the principal and interest may be converted into the Company's common
stock at an initial conversion price of $.15 per share. Each investor received a
warrant to purchase two share of the Company's common stock for each dollar
loaned to the Company. The Notes and the Private Placement 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
Private Placement Warrants, as soon as practicable. Holders of the Notes also
have certain piggyback registration rights.

         In August 2003, the Company and the Note holders 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 this offering. The Company and the holder of the remaining Note
in the aggregate principal amount $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 February 26, 2003, the Company entered into a Stock Purchase
Agreement with Geoffrey Perry and Carol Dancer (collectively, the "Sellers"),
pursuant to which the Company agreed to purchase, and the Sellers agreed to
sell, the shares of capital stock of ARS not owned by the Company (the
"Remaining ARS Shares"). On May 8, 2003, the Company and the Sellers closed the
transaction and in exchange for the Remaining ARS Shares the Company paid to the
Sellers a total purchase price of (i) 2,000,000 shares of Company Common Stock,
(ii) $50,000 in cash, and (iii) a promissory note in the aggregate principal
amount of $173,122 (the "Note"). The Note bears interest at a rate of 8% per
annum with equal monthly payments of principal and interest payable during the

                                       40



<PAGE>

period commencing on September 1, 2003 and ending on August 1, 2006. The Company
also entered into employment agreements with each of Mr. Perry and Ms. Dancer,
pursuant to which they will continue to serve as the President and Vice
President - Sales and Marketing of ARS, respectively. See "Management-Employment
and Consulting Agreements".

         On January 28, 2003, the Company entered into a twelve month Business
Advisory Agreement (the "Agreement") with Lomond International, Inc. (the
"Advisor"), pursuant to which the Advisor has agreed to assist the Company for a
period of one (1) year with strategic and financial transactions, including
mergers, acquisitions, joint ventures, and debt and equity offerings. As
consideration for these services the Company issued (i) options exercisable for
1,750,000 shares of Common Stock at an exercise price of $.001 per share (the
"Options"), and (ii) common stock purchase warrants equal to ten percent (10%)
of the number of shares issued in a transaction (as defined) introduced to the
Company by the Advisor (the "Advisor Warrants"). The Advisor Warrants will have
an exercise price equal to the fair market value of the Company's common stock
as of the date of closing of any such transaction and shall terminate four years
following the date of issuance. The Advisor shall also have the right to demand
that the Company file a registration statement with the SEC covering the resale
of the shares of Common Stock issuable upon exercise of the Advisor Warrant. On
April 1, 2003, the Company and the Advisor amended the Agreement pursuant to
which the Options were terminated and in lieu thereof the Company sold 2,000,000
shares of Common Stock to the Advisor at a price of $.001 per share. During the
three months ended June 30, 2003, the Company expensed $155,430, which together
with $122,570 expensed during the three months ended March 31, 2003 under the
original agreement, brought the total compensation expense recognized under the
Agreement to $278,000.

ITEM 3.  DEFAULT UPON SENIOR SECURITIES

             None

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

             None

ITEM 5.  OTHER INFORMATION.

             None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

              (a) Exhibits

                  31.  Certifications of the Company's Chief Executive Officer
                       and Principal Accounting Officer pursuant to Section 302
                       of the Sarbanes-Oxley Act of 2002.

                  32.  Certifications of the Company's Chief Executive Officer
                       and Principal Accounting Officer pursuant to Section 906
                       of the Sarbanes-Oxley Act of 2002.

              (b) Reports on Form 8-K

                  None

                                       41



<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/ Andrew V. Latham, Jr.
    -----------------------------------------
    Andrew V. Latham, Jr.
    President and Chief Executive Officer

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.

<TABLE>
<CAPTION>
Signature                           Capacity in which signed:                Date signed:
---------                           -------------------------                ------------
<S>                                 <C>                                      <C>
/s/ Joseph Bianco                   Director                                 August 27, 2003
Joseph Bianco

/s/ Andrew V. Latham, Jr.           Director, President                      August 27, 2003
Andrew V. Latham, Jr.                   and Chief Executive Officer

/s/ Bruce Raben                     Director                                 August 27, 2003
Bruce Raben

/s/ Norman Raben                    Director                                 August 27, 2003
Norman Raben

/s/ Barbara Kane-Burke              Principal Accounting and                 August 27, 2003
Barbara Kane-Burke                      Financial Officer
</TABLE>

                                       42