**SECURITIES AND EXCHANGE COMMISSION       Washington, D.C. 20549**

**Form 10-KSB/A**

**[X]      Annual Report under Section 13 or 15(d) of the Securities       Exchange Act of 1934       For the fiscal year ended December 31, 2002       or       [  ]      Transitional Report under Section 13 or 15(d) of the       Securities Exchange Act of 1934**

| 000-26095              |
|------------------------|
|                        |
| Commission file number |

| **ENVIROKARE TECH INC.**                                          |
|-------------------------------------------------------------------|
|                                                                   |
| (Exact name of small business issuer as specified in its charter) |

| **Nevada**               |   | **88-0412549**                       |
|--------------------------|--------|--------------------------------------|
|                          |   |                                      |
| (State of incorporation) |   | (IRS Employer Identification Number) |

| **641 Lexington Avenue****, 14th Floor,******New York****, NY  10022**** |
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|                                                                               |
| (Address of principal executive office)                                       |

| **(212) 634-6333**          |
|-----------------------------|
|                             |
| (Issuer's telephone number) |

**Securities registered under Section 12(b) of the Exchange Act: NONE       Securities registered under to Section 12(g) of the Exchange Act:**

| **Common Stock (Par Value - $0.001)** |
|---------------------------------------|
|                                       |
| (Title of Class)                      |

            Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES [X]  NO [  ]

            Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X]

            State issuer's revenues for its most recent fiscal year:  The issuer is a development stage company and has no revenues to report at this time.

            The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of March 4, 2003 is $4,257,355.

(ISSUERS INVOLVED IN BANKRUPTCY       PROCEEDINGS DURING THE PRECEDING FIVE YEARS)

            Check whether the issuer has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.  YES [  ]  NO [  ]

NOT APPLICABLE

APPLICABLE ONLY TO CORPORATE REGISTRANTS

            The number of shares outstanding of the issuer's Common Stock, $.001 par value, as of March 4, 2003 was 31,376,144

DOCUMENTS INCORPORATED BY REFERENCE

NOT APPLICABLE

Transitional Small Business Disclosure Format (check one): YES [  ]   NO [X]

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| **TABLE OF CONTENTS**
**Part I**
Item 1.             Description of Business             Item 2.             Description of Property             Item 3.             Legal Proceedings             Item 4.             Submission of Matters to a Vote of Security Holders                         
**Part II**
Item 5.             Market for Common Equity and Related Stockholder Matters             Item 6.             Plan of Operation             Item 7.             Financial Statements             Item 8.             Changes in and Disagreements with Accountants on Accounting                                     and Financial Disclosure
**Part III**
Item 9.             Directors, Executive Officers, Promoters and Control Persons;                                     Compliance with Section 16(a) of the Exchange Act             Item 10.           Executive Compensation             Item 11.           Security Ownership of Certain Beneficial Owners and Management             Item 12.           Certain Relationships and Related Transactions             Item 13.           Exhibits and Reports on Form 8-K             Item 14.           Controls and Procedures |
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#### PART I

#### Item 1. Description of Business

               This Form 10-KSB contains some statements that the Company believes are "forward-looking statements."  Forward-looking statements include statements about future business plans and strategies of the Company, statements about the future of plastic processing technologies, statements about the future of the materials handling industry, statements about prospects for other products that may be developed by the Company or sublicensees, and most other statements that are not historical in nature.  Because forward-looking statements involve risks and uncertainties, there are factors, including those discussed below, that could cause actual results to be materially different from any future results, performance or achievements expressed or implied.  The Company has attempted to identify the major factors that could cause differences between actual and planned or expected results, but there can be no assurance that the Company has identified all of those factors.  Accordingly, readers should not place undue reliance on forward-looking statements.  Also, the Company has no obligation to publicly update forward-looking statements it makes in this Form 10-KSB.

Development and Business of the Company

               Envirokare Tech, Inc., ("Envirokare" or the "Company") was incorporated under the laws of the State of Nevada on June 15, 1998.  As of the fiscal year ("Fiscal Year") ended, December 31, 2002, the executive offices of the Company were located at 5850 T. G. Lee Blvd., Suite 535, Orlando, FL  32822.  The Company's telephone number was (407) 856-8882.  During the first quarter of 2001, the Company leased additional office space at 2255 Glades Road, Suite 112E, Boca Raton, FL 33431.  The Company is currently in the process of searching for a subleasee for its Boca Raton, FL office.

               The Company is currently in the development stage and has not yet generated any operating revenues. The Company is a technology-based company positioned to develop and market environmentally responsible products containing recycled materials, polymers and fibers. The Company is currently developing numerous industrial and commercial products on behalf of clients and in its own behalf, through a licensing agreement with Thermoplastic Composite Designs, Inc. ("TCD") See " -- License and Merger Agreements with TCD," below. TCD, located in Florida, has invented and developed a unique composite plastics processing technology, the Thermoplastic Flowforming process (variously referred to herein as "TPF Process", the "Process" or "TPF technology"), which is discussed under " -- TPF Process," below. Principal products currently in development on behalf of the Company and its clients are discussed below under " -- Products; Product Development."

              The Company's license agreement with TCD enables the Company to commercially exploit the TPF Process by marketing composite materials products made through the TPF Process that are currently in development, developing and marketing other products containing composite materials made through the TPF Process within various market sectors and industries, and sublicensing the TPF Process. Products developed by the Company will be manufactured by the Company or by sublicensees. In November 1999, the Company engaged TCD to design and supply a system to manufacture a pallet (the "Pallet", or sometimes referred to herein as the "E Pallet") and other contemplated materials handling products and to assist in making Pallet design modifications to meet product specifications provided by the Company. As a result of the Company acquiring licensing rights to the TPF Process during 2001, the Company expanded its original business plan to focus on and include sublicensing the TPF Process to numerous prospective clients that currently operate in a number of industries. The Company also has engaged TCD to assist in the development of a number of products and to manufacture product prototypes, in quantities required for testing and analysis, on an as-needed basis, on behalf of the Company, its product development clients and prospective sublicensees.

               On December 21, 2000, the Company, Electroship Acquisition Corp., a New York Corporation and a wholly-owned subsidiary of Envirokare ("EAC"), and Electroship (N.Y.) Inc., a New York corporation ("Electroship") consummated the merger of Electroship with and into EAC with EAC continuing as the surviving corporation (the "Merger"). The consideration received by Electroship Partners, the former shareholder of Electroship, in the Merger consisted of 2,500,000 shares of the common stock, par value $.001 per share of Envirokare.  Electroship Partners has since dissolved and distributed its assets, including such shares, among its former partners.  Electroship was engaged in the business of developing wireless tracking technology for the shipping industry.              

               The primary asset that the Company acquired in this merger was a patent application relating to wireless tracking capabilities that was provisionally filed by Electroship with the United States Patent and Trade Office ("USPTO") and that expired subsequent to consummation of the merger. The Company made application to the USPTO to provisionally refile the patent during the third quarter of 2002.  The Company anticipates that patents that may be issued as result of its provisional filing will provide the Company with, among other potential wireless product developments, the ability to develop materials handling products that will have wireless tracking capability.

Anticipated Revenue Sources; Marketing and Distribution

               The Company's current operating strategy is based on developing products to be manufactured through the TPF Process, as well as marketing the TPF technology to potential sublicensees of the Company. This strategy is consistent with the Company's focus on developing environmentally responsible products, for the TPF Process, among other features, is capable of reusing its own production scrap and does not result in the emission of volatile organic contaminants ("VOCs"). As products are developed and readied for market, the Company intends to enter into arrangements to bring such products to market either through production by sublicensees or by the Company's own production facilities, in conjunction with TCD's production facility development assistance.

                 The Company is actively engaged in marketing the TPF technology to numerous potential clients. Management has entered into product/technology development agreements with prospective clients to develop composite materials products on behalf of such clients. Management anticipates additional product/technology agreements will be developed with prospective clients during 2003 and thereafter. Products co-developed by the Company would have a specific application within a client's existing markets or within new or expanded markets that may open as a result of opportunities presented by such products. Upon the completion of the development of a specific product, the Company anticipates that it would enter into product manufacturing and marketing agreements with the client under which the client would be granted a sublicense to produce the jointly developed product, or Envirokare would produce the product in its own manufacturing facility for sale to the client.  Envirokare is currently holding discussions with prospective clients and recently entered into its first product/technology development agreement with Schaefer Systems International, Inc. ("SSI"). See " --Product Development and Purchase Agreement with SSI," below. The Company also entered into a product/technology development agreement with Aluma-Form, Inc. during January 2003.

               In addition to marketing the TPF technology in an effort to develop products on behalf of potential clients, the Company continues to develop its own products. The Company has developed a second generation Pallet, which incorporates significant refinements in both design and composite construction, relative to the first generation Pallet (see below for a discussion of the Pallet development). A pallet is a portable platform for handling, storing, or moving materials and packages and is used in, for example, warehouses, factories and vehicles. The Company has also developed a first generation beam structure (the "Beam") that is anticipated to have application within, among other industries, the marine and modular housing industries. The Beam is capable of carrying specific weight, or load, capacities and provides the basis for interconnectivity between other components within a constructed system.

              The Company had originally planned to have licensees begin producing the Pallet in 2000, but decided to conduct additional tests, which delayed the production start date. The introduction of significantly improved substrate technology, afforded by the TPF technology, caused the Company to rethink its initial Pallet production start dates, as well as production and marketing strategy. Consequently, the Pallet required additional product development and testing specific to improving product substrate composition, prior to initiating the launch of production operations by the Company or its sublicensees.

               The Company's testing program has included in-depth analysis of substrate compounds and process modifications and has led to the refinement of the initial prototypes of the Pallet. The Company expects to have potential customer's evaluations some time during the last half of 2003. Company management anticipates that the Company, or its sublicensees, will commence commercial production of the Pallet or other products either in development or contemplated for development, once appropriate production facilities are acquired and commissioned for production, currently anticipated to occur sometime in 2003.

License and Merger Agreements with TCD

                On March 30, 2001, the Company, through its wholly-owned subsidiary, Envirokare Composite Corp. ("ECC"), entered into a licensing agreement with TCD that, subject to certain limitations, allows the Company to commercially exploit the TPF Process for itself and on behalf of Company licensees. The agreement provides the Company with the ability to utilize the TPF technology to design, develop, manufacture, market, license and sublicense a wide range of large structural parts, including the Company's proprietary Pallet, manufactured through the joint efforts of the Company and TCD, or the Company's sublicensees, for industries which may include agriculture, aerospace, automotive, construction, marine, medical, military, transportation and waste management. The Company paid TCD a one time license fee of $525,000 under the agreement.

                Additionally, Envirokare and ECC also entered into a merger agreement with TCD, which provides that TCD will merge with ECC if Envirokare's shares achieve an average of the closing bid asked prices at or above five dollars per share at any point in time during the thirty-month period following the agreement date, with Envirokare paying merger consideration to TCD in the amount of 3,000,000 shares of its common stock. In the event that Envirokare's shares have not traded at such specified level of five dollars per share by the end of the thirty-month period, then ECC and Envirokare have the option to effect the merger of TCD with ECC by Envirokare's paying to TCD's shareholders a $15,000,000 consideration, either in shares of Envirokare or in a combination of cash and shares, with the cash payment to be no greater than $7,500,000. The date of such payment would be no later than March 30, 2004..

Product Development and Purchase Agreement with Schaefer Systems International, Inc.

               On August 6, 2002, the Company entered into a product development and purchase agreement with SSI, pursuant to which the Company has been contracted to develop a proprietary product for SSI. The agreement provides for a development phase and a production phase. For the development phase, the agreement specifies that the Company will design and develop the product, including molds, and produce a quantity of prototypes for field testing, field trials and related approvals. This new product is expected to be significantly lighter and stronger than currently available competitive products. Payments to the Company for successful completion of product development will aggregate $185,500, with an additional $300,000 to be payable if SSI elects to develop an additional, similar product with different dimensions. The Company is to deliver product prototypes to SSI no later than six months after the agreement date. An initial payment of $61,215 was made by SSI to the Company to facilitate the development of the proprietary product.

               During the fourth quarter of the Fiscal Year, this Agreement expired without delivery by the Company. A new Product Development Agreement was signed between the Company and SSI after the end of the fiscal year on March 28, 2003. This Agreement provides for the development the same products; for the credit of the previous payment to the Company and for the payment of the balance of the development fee as follows: 47% upon completion of first parts off of the product and verification of performance and 20% within 30 days after Development Completion. SSI continued its right to order additional development for an additional payment of $300,000. This Agreement provides for 26 weeks from the effective date within which to complete successful development or for the initial payment to be returned.

Letter Agreement with New Age Shelters Ltd.

               The Company and New Age Shelters Ltd. ("New Age") entered into a non-binding letter of agreement, dated October 1, 2002, expressing the intent of the parties to combine their businesses through a merger of New Age into a wholly-owned subsidiary of the Company. New Age is a building systems manufacturing company, which manufactures patented modular products that have a variety of applications including use for warehousing, greenhouses, food storage, residential, military field stations and camps, emergency shelters and temporary schools and hospitals. Terms of the letter agreement provide that, subject to conditions including due diligence review, obtaining necessary approvals, and negotiation and execution of a definitive merger agreement, New Age would merge with and into a wholly-owned subsidiary of Envirokare, with the subsidiary to be the surviving company in the merger and to continue the business of New Age. Merger consideration would be in the form of Envirokare common stock issued to New Age shareholders, with 1,000,000 shares to be issued upon completion of the merger, and additional shares to be issued in 2006 based on net profits of New Age during the 2003-2005 period. The Company filed a Form 8-K with the Commission, dated October 18, 2002, containing a press release relating to this matter.

TPF Process

               The TPF process is a proprietary process developed by TCD that enables the manufacture of large structural parts using long-fiber reinforced thermoplastic resins.  The Process utilizes recycled or virgin resins and is designed to reuse its own production scrap, thereby eliminating production waste by-products.  TPF Process patents are pending.

               Historically, advanced composite materials were utilized almost exclusively by the military and aerospace industries where such usage was normally restricted to the manufacture of small parts due to the inordinate cost of hand application, i.e., the process of manually applying layers of composite materials to a mold or shape.  Management believes that the TPF Process provides a cost-effective alternative for the in-line production of many larger, long-fiber reinforced plastic parts at very low processing costs.  The Process has key advantages over many manufacturing processes currently in use such as compression molding, injection molding and rotational molding.  One such advantage is in the cost savings that may be realized in the reduced labor required to create larger parts made using the TPF Process.  The cost required to assemble multiple smaller components to generate a complete larger part, which often occurs in current production environments, is higher than with the TPF Process.  Material costs will typically also be lower when using the Process, because of its use of recycled material, reuse of its own production scrap and in-line compounding, which is the process of mixing raw material components as an actual part of the production process.

               The TPF Process has potential application in a broad range of industries including: agriculture, automotive, material handling, transportation, marine, medical, waste management and aerospace.  Management believes that TPF composite products will be a natural choice to replace many wood, aluminum, steel, other metal alloys, concrete, other plastic and fiberglass products, by providing products that have corrosion resistance, are lighter and cost less to manufacture.  As a thermoplastic process, TPF also has an additional advantage in that it does not emit any VOCs.  The processing of thermoset composites, for example, does emit VOCs.

               The Company believes that its specialization in the field of thermoplastic composites will give it a competitive advantage in the future.  Until recently, thermoplastic composites were not considered commercially viable substitutes for thermoset composites, wood, aluminum, steel, and other metal alloys.  However, the key TPF technology innovation of long-fiber reinforced thermoplastic composites has dramatically increased the mechanical and physical properties of this category of composite products and has made such composites a viable commercial alternative to traditional materials.

               During the second quarter of 2002, the Company engaged the Metis Design Corporation, Inc. ("Metis Design"), formerly Horizon Defense and Aerospace Solutions, Inc., to conduct a review of the TPF technology.  Metis Design, based in Cambridge, Massachusetts, is an advanced technology firm specializing in composites consulting, damage monitoring and structural concept design and analysis.

               In September 2002, Metis Design presented the Company's management with final findings regarding the TPF technology.  In its report, Metis Design noted that, as the utilization of advanced thermoplastic composite materials has extended into market segments such as military and aerospace, commercial manufacturers are increasingly demanding lower cost, quicker and more flexible reinforced thermoplastic processing techniques.  Metis Design found that the TPF Process has significant potential to address this need.  In addition, Metis Design reported that the TPF Process could represent a solution to a long-standing need in the long-fiber reinforced composite manufacturing process - the TPF Process enables manufacturers to mass-produce at high rates and labor efficiencies compared to many current production techniques, while retaining accuracy and the ability to utilize low molding pressures.  The report also noted that the TPF Process provides economic advantages over other thermoplastic composite molding methods through reduced labor, material, tooling and machine costs.

               Metis conducted narrow coupon tensile tests on composite material samples produced from the TPF Process.  These tests are an American Standards and Testing Measures (ASTM) standard for extracting straight mechanical properties of a material.  The test results demonstrated that the material properties exhibited in the product, as formed by the TPF Process, are comparable to those from products formed through traditional processes, and are similar to those properties published by commercially available materials.

Products; Product Development

               *The Pallet*

               The Company anticipates that one of its first products to be commercialized will be the E Pallet, made through the TPF Process (as discussed above).  The E Pallet can be comprised of long-fiber reinforced recycled material and is 100% recyclable.

               Market comparisons and testing indicate that the E Pallet compares favorably with available plastic pallets both on composition and design criteria.  The Pallet is manufactured from plastic, which presents a preferable alternative to pallets made from wood and from non-wood materials such as metal and wood derivatives.  Plastic is becoming an increasing preferred pallet manufacturing material because it is more durable than wood.  Key advantages of the Company's E Pallet include superior strength and durability, environmental benefits (no lumber required, 100% recyclable, no fungicides/bacterial spraying required, no land fill dumping, and less energy to manufacture), increased safety (no splintering of wood or hazardous nails/bolts), ease of use (four way entry), longer life cycle, and lower cost per pallet-round-trip.  The Pallet is also designed to resist damage caused from use and to handle large loads when evenly loaded.

               Since inception, the Company has been actively engaged in the development of the Pallet.  The Company entered the pallet manufacturing business in December 1998, with the acquisition of assets including equipment, early-stage rubber mold technology and patent rights potentially applicable to the development of rubber mold technology for creating a pallet made of recycled materials.  The Company substantially improved on this purchased technology and developed, after more than two years of research and working with TCD, a molded Pallet composed of thermoplastic composite.  The Company believes the acquired early-stage rubber mold technology to be of marginal commercial value.  The Company is focusing its efforts on further developing the Pallet, Beam and other contemplated products that will be developed and manufactured using the TPF Process.  The Company believes that the finished Pallet and Beam will meet the requirements of many end users.

               The Company has been involved in extensive testing and development of the Pallet.  The Company's development focus has been to ensure that the Pallet meets or exceeds current market standards and that the Pallet will be superior in performance and will be cost-effective to produce and sell.  In particular, the Company's development efforts have focused on the safety, structural integrity, reliability, and cost-effectiveness of the Pallet, involving in-depth analysis of compound variables and production methods. 

               In 1999, the Company and TCD entered into a product/technology development contract. TCD undertook to assist the Company in optimizing earlier versions of the Pallet design.  The contract required TCD to deliver a pallet that would meet design specifications including specified size and weight requirements and a customized composition matrix.  The contract also provided that TCD would supply an engineered mold for the Company's first production facility.  The Company's payments to TCD under this contract for the development of a first generation Pallet mold totaled $50,800 in 1999 and $83,000 in 2000.

               Commencing in May 2000, additional Pallet testing and evaluation was conducted by the Pallet and Container Research Laboratory of Virginia Polytechnic Institute and State University, located in Blacksburg, Virginia.  This laboratory is recognized for its work in the area of testing and analysis of products designed for use in the materials handling industry.  Based on the initial test results, the Company and its product design contractor, TCD, made design adjustments to the Pallet.  Further Pallet testing and evaluation through 2001 resulted in further design adjustments.  As a result of the design adjustments and modifications, the first generation mold was deemed to be of no commercial value.  The Company built a second generation mold during 2001, at a cost of $43,000, incorporating design modifications based on technical information derived from tests of the previous mold.  Pallets produced from this mold were tested and evaluated at the Pallet and Container Research Laboratory during the second quarter of 2002.  The study of the second mold evaluated the strength, stiffness and durability of the Pallet as a general purpose pallet with a 2,800 pound weight capacity set as the standard.

               The study findings included the following: 

               · The Pallet could safely support a 2,800 pound, uniformly distributed load in warehouse storage racks as well as on conveyors;

               · The Pallet was found to be highly resistant to damage caused by rough handling, based on the drop test protocol carried out, which involved dropping empty Pallets from various heights after the Pallets were chilled to a temperature of -13 degrees Fahrenheit; and

               · Because the Pallet's performance was found to significantly exceed requirements for a 2,800-pound uniform load standard, the study recommended that the Company consider reducing the Pallet's glass loading (i.e. the percentage of glass fiber used in the composite), or refining its design, to further reduce Pallet weight and cost.

               Based on the results of testing conducted on the second generation E Pallet, the Company commenced redesign of certain features of the Pallet during the second quarter of 2002.  The Company engaged Metis Design to optimize this Pallet redesign.  Through this engagement, design element modifications were developed and proposed for certain aspects of the Pallet design.  The Pallet design modifications, as proposed by Metis Design, allow for a significant weight reduction of the Pallet thus making the Pallet more cost-effective and easier to handle, while structural features attributed to prior versions of the Pallet are not anticipated to be materially affected.  The Company is presently negotiating product development agreements with prospective partners pursuant to which the next generation Pallet prototypes will be produced and which, following appropriate testing approvals and due diligence on Pallet prototypes, will lead to a comprehensive production agreement for Pallet manufacture.

               Once redesign work is completed by Metis Design, the Company will conduct further tests on the Pallet, with testing designed to provide information as to the longevity of the Pallet, as compared to pallets made from non-TPF processes, including pallets made from other materials.  Information provided from this additional engineering analysis will further the development of marketing strategies for the Company.  There can be no assurance that this additional engineering will not delay the Company's plans for the commercialization of the Pallet.

               In addition to the second-generation Pallet discussed above, the Company is also developing a Pallet incorporating wireless tracking capabilities, based on technology acquired in the Company's 2000 merger with Electroship (N.Y.) Inc.  Design work commenced on initial wireless Pallet prototypes during the first quarter of 2001.  The Company believes that initial Pallet designs that incorporate wireless tracking capabilities will prove marketable to many prospective customers.  Company plans for additional development of this wireless Pallet technology are scheduled for late 2002.  The primary asset that the Company acquired in the Electroship merger was a provisional patent application that was filed by Electroship with the United States Patent and Trade Office ("USPTO"), which expired after filing without the Company filing a regular patent application with priority from the original provisional application.  The Company made application to the USPTO to provisionally refile the patent during the third quarter of 2002.

Schaefer Systems International, Inc. Components

               The Company is presently engaged in developing proprietary parts for SSI - see "Product Development and Purchase Agreement with Schaefer Systems International, Inc.", above. The Company is in the process of having molds manufactured, which will produce part prototypes for SSI. Delivery of the molds is anticipated to occur during the second quarter of 2003, and the Company anticipates that prototype parts will be available for field testing, field trials and related approvals during the second quarter of 2003.

Competition

               The Company currently faces significant competition with respect products it develops, including the Pallet, and this competition may increase as new competitors enter the market. The Company's growth strategy is substantially dependent upon its ability to develop, market and distribute the TPF Technology and its products successfully, and on the ability of its product development customers to successfully market and distribute TPF products developed on their behalf. Other companies, including those with substantially greater financial, marketing and sales resources, compete with the Company, and, in contrast with the Company, have the advantage of marketing existing established products with existing production and distribution facilities. There can be no assurance that the Company will be able to successfully develop and market and distribute products on acceptable terms, or at all. Failure of the Company to develop and market the TPF technology and its products successfully could have a material adverse effect on the Company's business, financial condition or results of operations.

                The Company's growth strategy may be substantially dependent upon its ability to expand into new markets. Accordingly, the ability of the Company to compete may be dependent upon the ability of the Company to continually enhance and improve its technology and products. There can be no assurance that competitors will not develop technologies or products that render the products of the Company obsolete or less marketable. The Company may be required to adapt to technological changes in the industry and develop products to satisfy evolving industry or customer requirements, any of which could require the expenditure of significant funds and resources, and the Company might not have a source or commitment for any such funds and resources. The Company might be required to refine and improve its products or products developed on behalf of clients. Continued refinement and improvement efforts remain subject to the risks inherent in product development, including unanticipated technical or other problems, which could result in material delays in product commercialization or significantly increased costs.

Compliance with Environmental Laws; Other Regulatory Compliance

               The TPF Process does not emit any VOCs, which are present in many thermoset composites. The Company will not have expenditures related to the cost of compliance with applicable environmental laws, rules or regulations.

Employees

               The Company currently has three employees.  The Company's current policy is to utilize consultants for marketing, accounting and engineering services on an as-needed basis and these consultants accommodate the Company's current needs in handling all aspects of its operations.  The Company currently retains consultants in the areas of marketing and administration.  Contracts are entered into as required with respect to consultants who provide engineering and technical support for Company products in development.

Patents

               The Company has been assigned the rights to an invention for a Composite Pallet design.  Composite Pallet components include recycled plastics.  A patent application was filed on March 15, 2000.  The Company was assigned the patent rights to the invention and this application (and any related rights) during the second quarter of 2000.  The application was abandoned during February 2002; the USPTO asserted patentability was barred by prior art pallet designs.  The Company is evaluating its patent filing options, which include refiling a new, more comprehensive patent application that would include both product design and product manufacturing and processing specifics and more clearly distinguish prior art.

               The Company also acquired rights in an invention and related provisional patent application entitled Apparatus and Method for Facilitating Shipping and Commerce, in connection with the merger with Electroship that was completed December 21, 2000.  The application expired.  The Company refiled this application provisionally during October 2002 and is presently evaluating options to develop aspects of electronic technology, as it relates to shipping and commerce applications as contemplated by the provisional filing.

               The Company's success will depend in part on its ability to obtain patent protection for its products, both in the United States and abroad.  There can be no assurance that any particular patent will be granted or that patents issued to the Company will provide the protection contemplated.  Patents can be challenged, invalidated or circumvented.  It is also possible that competitors will develop similar products simultaneously.  The Company cannot be certain that it is the first to make the inventions to be covered by the patent applications it intends to file.  Litigation, interference proceedings or other governmental proceedings that the Company may become involved in with respect to its proprietary technologies or the proprietary technology of others could result in substantial cost to the Company and the Company may not have the required resources to pursue such litigation or proceedings or to protect its patent rights. An adverse outcome in litigation with respect to the validity of any of the Company's patents could subject it to significant liabilities to third parties, require disputed rights to be licensed from third parties or require the Company to cease using a product or technology.  The Company may not be able to license any such patent rights on acceptable terms, successfully challenge third party patent rights or meet its obligations under those licenses that it does enter into.

               The Company also relies upon trade secrets, proprietary know-how and continuing technological innovation to remain competitive.  Third parties may independently develop such know-how or otherwise obtain access to the Company's technology to the Company's disadvantage.

**Item 2.****Description of Property**

               During the Fiscal Year ended, the Company leased corporate office space located at 5850 T. G. Lee Blvd., Suite 535, Orlando, FL  32822.  The leased premises consist of 1600 square feet and are insured under public liability insurance.  The Company entered into a 36-month lease whose term began September 16, 2002, at an initial monthly rental of $2595.  The Company's total lease payments for its Orlando office space for the fiscal year ended December 31, 2002 was $9,755.  The Company's total lease payments for the fiscal years ending December 31, 2003, 2004 and 2005 will be $31,557, $32,819 and $22,455, respectively.

               The Company leased corporate office space located at 2470 Chandler Avenue, Suite 5, Las Vegas, Nevada 89120.  The leased premises consists of 600 square feet and is insured under public liability insurance.  The Company entered into a 36-month lease whose term began October 1, 1998, at an initial monthly rental of $700.  The lease period was extended for a three month period beginning October 1, 2001, extended for a twelve month period beginning January 1, 2002 and further extended for a four month period beginning January 1, 2003.   The Company's total lease payments for its Las Vegas office space for the fiscal years ended December 31, 1999, 2000, 2001 and 2002 were $8,062, $9,276, $9600, and $10,056, respectively.  The Company's total lease payments for the fiscal year ending December 31, 2003 will be $3,352.

                The Company entered into a lease for office space in Boca Raton, Florida on February 7, 2001 for sixty months. Lease payments are currently $2,795 per month. A portion of this office space is being subleased, although there is no written sublease agreement at this time. The Company made lease payments for the Boca Raton, Florida office totaling $13,000 during the year ended December 31, 2002.

#### Item 3. Legal Proceedings

               The Company is a named defendant in an action filed by Mr. Real Morel in May 2000 in the Supreme Court of British Columbia, Canada. In this action, Mr. Morel alleges non-payment by the Company of amounts due pursuant to the aforementioned demand promissory notes.  After consultation with British Columbia legal counsel and a review of the circumstances surrounding the issuance of the notes, the Company has resolved to dispute this liability.  Management of the Company believes that the outcome will not have a material adverse effect on the financial position of the Company.  Although no further action has been taken with respect to this dispute, the Company intends to proceed to seek a dismissal of this matter through the Supreme Court of British Columbia, and pursue this matter during the first quarter of 2006.  Company management believes that it will prevail in this matter and that the outcome of the action will not have a material adverse affect on the Company's operations. Since the creation of the promissory notes as previously described, the Company has accrued interest on the notes.  As of December 31, 2002, the accrued interest balance on these promissory notes is $25,337, which amount is recorded in the Company's Balance Sheet under the accrued interest account.

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

               The following matters were submitted to a vote of shareholders at the Company's annual meeting of shareholders, held on December 14, 2002, with the vote tabulations* as indicated below:

               Voters elected three incumbent directors for one-year terms. The vote tabulation for individual directors was:                
| Directors          |   | Shares For |   | Shares Withheld |
|--------------------|--------|------------|--------|-----------------|
|                    |   |            |   |                 |
| Steve Pappas       |   | 15,533,400 |   | --              |
| Jonathan Edelstein |   | 15,533,400 |   | --              |
| Leo Kapakos        |   | 15,533,400 |   | --              |

               Voters approved the selection of Williams & Webster, P.S., as auditors for the Company for the fiscal year ending December 31, 2002, by a vote of 15,533,400 for and 0 against. There were no abstentions or broker non-votes.

               * Numbers represent the aggregate voting power of all votes cast with holder's of the Company's common stock casting one vote per share.

----

**PART II**

**Item 5****. Market for Common Equity and Related Stockholder Matters**

               The Company's common shares trade from time to time, under the symbol ENVK, on the OTC Bulletin Board Electronic Quotation System maintained by the National Association of Securities Dealers, Inc. The Company's common shares commenced trading on the OTC Bulletin Board on December 1, 1999. From January 1, 2002, to March 31, 2002 (the first quarter), the high closing price of the Company's common stock was $0.18 and the low closing price was $0.10. From April 1, 2002 to June 30, 2002 (the second quarter), the high closing price of the Company's common stock was $0.15 and the low closing price was $0.08. From July 1, 2002 to September 30, 2002 (the third quarter), the high closing price of the Company's common stock was $0.32 and the low closing price was $0.09. From October 1, 2002 to December 31, 2002 (the fourth quarter) the high closing price of the Company's common stock was $0.31 and the low closing price was $0.17. During the quarter commencing January 1, 2003, through February 28, 2003, the high closing price was $0.25 and the low closing price was $0.16. These OTC quotations reflect inter-dealer quotations, without retail mark-up, mark-down or commission, and may not necessarily represent actual transactions.

               As of February 28, 2003, there were 92 holders of record of the Company's common stock.

               There have been no cash dividends declared on the Company's common stock in the last two fiscal years. Dividends are declared at the sole discretion of the Company's Board of Directors.

Unregistered Sales of Securities during the Last Three Fiscal Years

               There have been no sales of unregistered securities within the last three fiscal years which would be required to be disclosed pursuant to Item 701 of Regulation S-B and not previously reported, except for the following:

               During the first quarter of 2003, the Company completed a financing that raised $198,000 from current warrant holders in connection with an offering to amend outstanding warrants issued in equity private placement transactions during 2001 and 2002. The offering was undertaken to improve the Company's cash position on terms approximating those that would have been required for a new equity private placement. The warrants, prior to the amended warrant offering, had an exercise period of two years from the date of issue and exercise prices of $0.50 per share (as to warrants issued on June 15, 2001; exercisable for 1,000,000 shares of common stock), $0.25 per share (as to warrants issued between March 1 and June 27, 2002; exercisable for 3,000,000 shares of common stock) and $0.50 per share (as to warrants issued between August 14 and November 26, 2002; exercisable for 2,000,000 shares of common stock). The warrant holders were offered the opportunity to amend their currently outstanding warrants to lower the exercise price to $0.15 per share, so long as such warrants were exercised on or before February 14, 2003. Holders elected to amend warrants with concurrent exercise as to an aggregate 1,320,000 shares of common stock, generating $198,000 in cash for the Company. Those holders who elected to amend their warrants were granted additional warrants, exercisable over a two year period, for the same number of shares of Company common stock that were issued on exercise of the amended warrants. Exercise prices for the new warrants were $0.75 per share (as to warrants issued in a 2001 equity private placement; exercisable for 720,000 shares of common stock) and $0.65 per share (as to warrants issued in a 2002 equity private placement; exercisable for 600,000 shares of common stock).

               During the fourth quarter of 2002, the Company completed a private placement of units priced at $0.15 per unit, each unit consisting of one share of the Company's common stock and a warrant to purchase one share of the Company's common stock, at an exercise price of $0.50 per share, exercisable for two years from the date of subscription.  The Company has raised $300,000 in this offering.  The securities are being offered and sold in reliance upon the exemption from registration provided by Rule 506 promulgated under Section 4(2) of the Securities Act of 1933 (the "Securities Act").

               During the second quarter of 2002, the Company completed a private placement of units priced at $0.10 per unit, each unit consisting of one share of the Company's common stock and a warrant to purchase one share of the Company's common stock, at an exercise price of $0.25 per share, exercisable for two years from the date of subscription.  The Company raised $300,000 in this offering.  The securities were offered and sold in reliance upon the exemption from registration provided by Rule 506 promulgated under Section 4(2) of the Securities Act.

               During the first quarter of 2002, the Company issued 700,000 shares of its common stock, with an aggregate value of $112,000, as payment for services provided by consultants.  The securities were issued in reliance upon the exemption from registration provided for under Section 4(2) of the Securities Act.

#### Item 6. Plan of Operation

Overview

              The Company is currently in the development stage and has not yet generated any operating revenues. The Company is a technology-based company positioned to develop and market environmentally responsible products containing recycled materials, polymers and fibers. The Company is currently developing numerous industrial and commercial products, through a licensing agreement with TCD See " -- License and Merger Agreements with TCD," above. TCD, located in Florida, has invented and developed a unique composite plastics processing technology, the TPF Process, and discussed under " -- TPF Process," above. Principal products currently in development on behalf of the Company and its clients are discussed above under " -- Products; Product Development."

               The Company's license agreement with TCD enables the Company to commercially exploit the TCD-developed TPF Process by marketing composite materials products currently in development, developing and marketing other products containing composite materials within various market sectors and industries, and sublicensing the TPF Process. Products developed by the Company will be manufactured by the Company or by sublicensees. The Company has engaged TCD to produce products in development, on its own behalf and on behalf of its clients who are engaged in product development programs with the Company. TCD will manufacture prototype products in quantities required for testing and analysis, on an as-needed basis.

               The Company is actively engaged in marketing the TPF technology to numerous potential clients. Management anticipates that Envirokare will enter into product/technology development agreements with prospective clients to develop composite materials products on behalf of such clients. Developed products would have a specific application within a client's existing markets or within new or expanded market areas that may open as a result of opportunities presented by products developed in conjunction with the Company. Upon the completion of the development of a specific product, the Company anticipates that it would enter into product manufacturing and marketing agreements with the client or license the TPF technology under which the client would be granted the right to produce the jointly developed product, or Envirokare would produce the product in its own manufacturing facility for sale to the client. Envirokare is currently holding discussions with prospective clients and recently entered into its first product/technology development agreement with SSI. See "Product Development and Purchase Agreement with Schaefer Systems International, Inc., and "Alumaform Company" above.

                In addition to marketing the TPF technology through developing of products on behalf of potential clients, the Company continues to develop products on its own behalf. The Company is continuing to develop its second generation Pallet. Description of Business -- Products; Product Development". In fiscal 2003, the Company will also continue to work on its product development efforts under its agreement with SSI and Alumaform. See " --Product Development and Purchase Agreement with Schaefer Systems International, Inc.," above.

               The Company expects to have potential customers evaluate these products through in-use testing some time during fiscal 2003. Company management anticipates that the Company, or its sublicensees, will commence commercial production of TPF products either in development or contemplated for development, once appropriate production facilities are procured and commissioned for production, currently anticipated to occur sometime in 2003.

Liquidity and Capital Resources

               The Company is not yet generating revenues.  For the period ended December 31, 2002, the Company had a net loss of $1,468,415.  The Company's net loss accumulated for the period from June 15, 1998 (inception) to December 31, 2002 was $4,280,506.  The Company anticipates that it will begin to generate revenue during 2003, upon the anticipated start of commercial sales of its products by the Company or its sublicensees.  At December 31, 2002, the Company had current assets of $9,506, net of deposits and retainers.  During the period ended December 31, 2002, the Company's cash resources decreased by $43,967.  At December 31, 2002, the Company had current liabilities of $1,471,464.  At December 31, 2002, current liabilities exceeded current assets by $1,461,958.  Other than as discussed above, the Company is not aware of any trends, demands, commitments or uncertainties, other than those affecting business and the economy in general, that could result in the Company's liquidity decreasing or increasing in a material way within the next 12 months.

               To date, the Company has raised capital through private placements of common stock, convertible preferred stock and units consisting of promissory notes and warrants. The Company has budgeted pre-production and other production-related expenditures for the twelve months through December 31, 2004 at $720,000. Additionally, the Company has $1,025,000 in short term debt, which comes due prior to December 31, 2004. The Company plans to raise additional funds in the next several months to cover its proposed expenditures and the repayment of its short term debt. These funds may be raised through additional equity financings, as well as through borrowings, rescheduling of the outstanding short term debt or other resources. There can be no assurances, however, that the Company will be able to raise the required funds to meet its budgeted expenditures and debt obligations.

                During 2002, the Company raised a total of $600,000 in two private placement financings. See "Item 5. Market for Common Equity and Related Stockholder Matters -- Unregistered Sales of Securities during the Last Three Fiscal Years" for a discussion of the Company's recent securities issuances. With the capital it has raised to date, and the additional funds it plans to raise in the next several months, the Company believes that it will be able to continue with its development and marketing plans and meet its obligations including cash requirements for at least the next twelve months, to December 31, 2004. During the twelve months ending December 31, 2004, the Company anticipates that it will continue its current research and development activities, on selected products for which the TPF process is particularly suited. If adequate funds are not available, the Company may have to curtail operations significantly.

               The Company is currently assessing the merits and feasibility of purchasing its own plant and equipment for production of products currently in development. If this study indicates that a Company-acquired production facility is warranted, the Company would anticipate developing a construction plan during the first half of 2003. In the event that the Company decides to acquire its own production facility, the Company will have to raise substantial funds in addition to those funds already raised. There can be no assurance that additional funding will be available to the Company under favorable terms.

**Item 7. Financial Statements**

Index to Consolidated Financial Statements**Envirokare Tech, Inc.****December 31, 2002**

**TABLE OF CONTENTS**
| INDEPENDENT AUDITOR'S REPORT                                               

FINANCIAL STATEMENTS

            Consolidated Balance Sheets                                                        

            Consolidated Statements of Operations and Comprehensive Loss  

            Consolidated Statement of Stockholders' Equity                            

            Consolidated Statements of Cash Flows                                        

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS               | F-2

 

F-3

F-4

F-5

F-7

F-8 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|

----

The Board of Directors       Envirokare Tech, Inc.       Orlando, FL

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying consolidated balance sheets of Envirokare Tech, Inc. (a Nevada corporation and a development stage company) as of December 31, 2002 and 2001, and the related consolidated statements of operations, stockholders' equity and cash flows for the years then ended, and for the period from June 15, 1998 (inception) to December 31, 2002.  These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Envirokare Tech, Inc. as of December 31, 2002 and 2001, and the results of its operations, stockholders' equity and its cash flows for the years then ended, and for the period from June 15, 1998 (inception) to December 31, 2002 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company's significant operating losses raise substantial doubt about its ability to continue as a going concern.  Management's plans regarding those matters also are described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 12 to the financial statements, an error resulting in the incorrect reporting of intangible assets and related amortization and impairment as well as the reclassification of stock warrants granted from interest expense to a discount on debt was discovered by management during the 2005 fiscal year.  Accordingly, the financial statements for the year ended December 31, 2002 and 2001 have been restated to correct this error. 

/s/ Williams & Webster, P.S.

Williams & Webster, P.S.

Certified Public Accountants       Spokane, Washington

January 30, 2003, except for Note 14 which is dated January 18, 2006.

----

| **ENVIROKARE TECH, INC.**                                                                                             |
|-----------------------------------------------------------------------------------------------------------------------|
| **(A Development Stage Company)**                                                                                     |
| **CONSOLIDATED BALANCE SHEETS**                                                                                       |
|                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                  |   |   |   |   |   |   | **December 31,** |   |   | **December 31,** |
|                                                                                                                  |   |   |   |   |   |   | **2002** |   |   | **2001** |
|                                                                                                                  |   |   |   |   |   |   | **(restated)** |   |   | **(restated)** |
|                                                                                                                  |   |   |   |   |   |   |  |   |   |  |
| ** A S S E T S**                                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                                                  | CURRENT ASSETS |   |   |   |   |   |   |   |
|                                                                                                                  |   | Cash |   |   | $ |                   9,506 |   | $ | 118,927 |
|                                                                                                                  |   | Deposits and retainers |   |   |   |                 53,942 |   |   |                        -   |
|                                                                                                                  |   |   |   |   |   |   |  |   |   |  |
|                                                                                                                  |   |   | TOTAL CURRENT ASSETS |   |   |   |                 63,448 |   |   |               118,927 |
|                                                                                                                  |   |   |   |   |   |   |  |   |   |  |
|                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                  | PROPERTY AND EQUIPMENT |   |   |   |   |   |   |   |
|                                                                                                                  |   | Furniture and fixtures |   |   |   |                   8,144 |   |   | 1,893 |
|                                                                                                                  |   | Office equipment |   |   |   |                   9,009 |   |   | 7,999 |
|                                                                                                                  |   | Molds |   |   |   |                 59,000 |   |   | 43,000 |
|                                                                                                                  |   |   | Less accumulated depreciation |   |   |                 (6,884) |   |   | (4,829) |
|                                                                                                                  |   |   |   |   |   |   |  |   |   |  |
|                                                                                                                  |   |   | TOTAL PROPERTY AND EQUIPMENT |   |   |                 69,269 |   |   |                 48,063 |
|                                                                                                                  |   |   |   |   |   |   |  |   |   |  |
|                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                  | OTHER ASSETS |   |   |   |   |   |   |   |
|                                                                                                                  |   | Deposits and retainers |   |   |   |                   8,412 |   |   | 22,223 |
|                                                                                                                  |   | License agreement (net) |   |   |   |               157,500 |   |   |               367,500 |
|                                                                                                                  |   | Patent acquisition costs and technology rights (net) |   |   |            1,732,469 |   |   | 1,855,224 |
|                                                                                                                  |   |   |   |   |   |   |  |   |   |  |
|                                                                                                                  |   |   | TOTAL OTHER ASSETS |   |   |   |            1,898,381 |   |   |            2,244,947 |
|                                                                                                                  |   |   |   |   |   |   |  |   |   |  |
|                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                  |   | **TOTAL ASSETS** |   |   | $ |            2,031,098 |   | $ |            2,411,937 |
|                                                                                                                  |   |   |   |   |   |   |  |   |   |  |
|                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **L I A B I L I T I E S   &   S T O C K H O L D E R S '   E Q U I T Y  ** |   |   |   |   |   |   |
|                                                                                                                  | CURRENT LIABILITIES |   |   |   |   |   |   |   |
|                                                                                                                  |   | Accounts payable |   |   | $ |               114,145 |   | $ |               100,759 |
|                                                                                                                  |   | Accounts payable - related party |   |   |   |                        -   |   |   |                 20,921 |
|                                                                                                                  |   | Customer deposit |   |   |   |                 61,215 |   |   |                        -   |
|                                                                                                                  |   | Notes payable |   |   |   |                 61,965 |   |   |                 61,965 |
|                                                                                                                  |   | Accrued interest |   |   |   |                 25,337 |   |   |                 19,186 |
|                                                                                                                  |   | Notes payable to stockholders, net of discount |   |   |               915,179 |   |   |                          - |
|                                                                                                                  |   | Accrued interest to stockholders |   |   |   |               183,802 |   |   |                          - |
|                                                                                                                  |   |   |   |   |   |   |  |   |   |  |
|                                                                                                                  |   |   | TOTAL CURRENT LIABILITIES |   |   |            1,361,643 |   |   |               202,831 |
|                                                                                                                  |   |   |   |   |   |   |  |   |   |  |
|                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                  | LONG-TERM LIABILITIES |   |   |   |   |   |   |   |
|                                                                                                                  |   | Notes payable to stockholders, net of discount |   |   |                        -   |   |   |               805,358 |
|                                                                                                                  |   | Accrued interest to stockholders |   |   |   |                        -   |   |   |                 30,051 |
|                                                                                                                  |   |   |   |   |   |   |  |   |   |  |
|                                                                                                                  |   |   | TOTAL LONG-TERM LIABILITIES |   |   |                        -   |   |   |               835,409 |
|                                                                                                                  |   |   |   |   |   |   |  |   |   |  |
|                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                  | COMMITMENTS AND CONTINGENCIES |   |   |                        -   |   |   |                        -   |
|                                                                                                                  |   |   |   |   |   |   |  |   |   |  |
|                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                  | STOCKHOLDERS' EQUITY |   |   |   |   |   |   |   |
|                                                                                                                  |   | Convertible preferred stock, 10,000,000 shares authorized, |   |   |   |   |   |   |
|                                                                                                                  |   |   | $0.001 par value; 0 shares issued and outstanding |   |   |                        -   |   |   |                        -   |
|                                                                                                                  |   | Common stock, 200,000,000 shares authorized, |   |   |   |   |   |   |
|                                                                                                                  |   |   | $0.001 par value; 30,056,144 and 24,356,144 shares |   |   |   |   |   |   |
|                                                                                                                  |   |   | issued and outstanding, respectively |   |   | 30,056 |   |   |                 24,356 |
|                                                                                                                  |   | Additional paid-in capital |   |   |   | 4,273,090 |   |   |            3,320,790 |
|                                                                                                                  |   | Stock options and warrants |   |   |   | 646,815 |   |   |               840,642 |
|                                                                                                                  |   | Accumulated deficit during development stage |   |   | (4,280,506) |   |   |          (2,812,091) |
|                                                                                                                  |   |   |   |   |   |   |  |   |   |  |
|                                                                                                                  |   | TOTAL STOCKHOLDERS' EQUITY |   |   | 669,455 |   |   |            1,373,697 |
|                                                                                                                  |   |   |   |   |   |   |  |   |   |  |
|                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                  |   | **TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY** |   | $ | 2,031,098 |   | $ | 2,411,937 |
|                                                                                                                  |   |   |   |   |   |   |  |   |   |  |
|                                                                                                                  |   |   |   |   |   |   |   |   |   |   |

The accompanying  notes are an integral part of these consolidated financial  statements.

----

| **ENVIROKARE TECH, INC.**                                          |
|--------------------------------------------------------------------|
| **(A Development Stage Company)**                                  |
| **CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME** |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   | **Period from** |
|                                                               |   |   |   |   |   |   |   |   |   |   | **June 15,1998** |
|                                                               |   |   |   |   | **Year Ended** |   |   | **Year Ended** |   |   | **(Inception) to** |
|                                                               |   |   |   |   | **December 31,** |   |   | **December 31,** |   |   | **December 31,** |
|                                                               |   |   |   |   | **2002** |   |   | **2001** |   |   | **2002** |
|                                                               |   |   |   |   | **(restated)** |   |   | **(restated)** |   |   | **(restated)** |
|                                                               |   |   |   |   |  |   |   |  |   |   |  |
| REVENUES                                                           |   | $ |                                  -   |   |  $ |                                   -   |   |  $ |                                    -   |
|                                                               |   |   |   |   |  |   |   |  |   |   |  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |
| E X P E N S E S                                                    |   |   |   |   |   |   |   |   |   |
|                                                               | Consulting fees - related parties |   |   |                        152,000 |   |   |                         267,752 |   |   |                          794,455 |
|                                                               | Other consulting fees |   |   |                        305,773 |   |   |                         220,500 |   |   |                       1,045,438 |
|                                                               | Rent |   |   |                          32,851 |   |   |                           26,913 |   |   |                            82,859 |
|                                                               | General and administrative |   |   |                        157,356 |   |   |                         121,961 |   |   |                          505,420 |
|                                                               | Depreciation and amortization |   |   |                        325,290 |   |   |                         272,547 |   |   |                          600,854 |
|                                                               | Professional fees |   |   |                        176,169 |   |   |                         217,068 |   |   |                          556,881 |
|                                                               | Research and development |   |   |                          46,005 |   |   |                           82,269 |   |   |                          226,943 |
|                                                               | Wages, salaries, and payroll taxes |   |   |                                  -   |   |   |                           14,377 |   |   |                          131,879 |
|                                                               |   |   |   |   |  |   |   |  |   |   |  |
|                                                               |   | TOTAL EXPENSES |   |   |                     1,195,443 |   |   |                      1,223,387 |   |   |                       3,944,729 |
|                                                               |   |   |   |   |  |   |   |  |   |   |  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |
| LOSS FROM OPERATIONS                                               |   |   |                   (1,195,443) |   |   |                    (1,223,387) |   |   |                      (3,944,729) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |
| OTHER EXPENSE                                                      |   |   |   |   |   |   |   |   |   |
|                                                               | Interest expense |   |   |                      (272,972) |   |   |                         (49,775) |   |   |                         (335,777) |
|                                                               |   |   |   |   |  |   |   |  |   |   |  |
|                                                               |   | TOTAL OTHER EXPENSE |   |   |                      (272,972) |   |   |                         (49,775) |   |   |                         (335,777) |
|                                                               |   |   |   |   |  |   |   |  |   |   |  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |
| LOSS BEFORE INCOME TAXES                                           |   |   |                   (1,468,415) |   |   |                    (1,273,162) |   |   |                      (4,280,506) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |
| INCOME TAXES                                                       |   |   |                                  -   |   |   |                                   -   |   |   |                                    -   |
|                                                               |   |   |   |   |  |   |   |  |   |   |  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS                                                           |   |   |                   (1,468,415) |   |   |                    (1,273,162) |   |   |                      (4,280,506) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |
| OTHER COMPREHENSIVE INCOME                                         |   |   |   |   |   |   |   |   |   |
|                                                               | Foreign currency translation gain |   |   |                                  -   |   |   |                             4,048 |   |   |                                    -   |
|                                                               |   |   |   |   |  |   |   |  |   |   |  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE LOSS                                                 |   | $ |                   (1,468,415) |   | $ |                    (1,269,114) |   | $ |                      (4,280,506) |
|                                                               |   |   |   |   |  |   |   |  |   |   |  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | BASIC AND DILUTED NET LOSS |   |   |   |   |   |   |   |   |   |
|                                                               | PER COMMON SHARE |   | $ | (0.05) |   | $ | (0.08) |   |   |   |
|                                                               |   |   |   |   |  |   |   |  |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | WEIGHTED AVERAGE NUMBER |   |   |   |   |   |   |   |   |   |
|                                                               | OF BASIC AND DILUTED COMMON |   |   |   |   |   |   |   |   |   |
|                                                               | STOCK SHARES OUTSTANDING |   |   |                   27,337,240 |   |   |                    15,756,510 |   |   |   |
|                                                               |   |   |   |   |  |   |   |  |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |

The accompanying  notes are an integral part of these consolidated financial  statements.

F-4

----

| **ENVIROKARE TECH, INC.**                                |
|----------------------------------------------------------|
| **(A Development Stage Company)**                        |
| **CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY**       |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                     |   |   |   | ** Preferred Stock** |   | ** Common Stock** |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                     |   |   |   |  |   |  |   |   | ** Additional** |   |   | ** Stock Options** |   |   |   |   |   |   |   |   |   |   |   | ** Other** |   |   | ** Total ** |
|                                                     |   |   |   | ** Number** |   |   |   | ** Number** |   |   |   |   | **Paid-in** |   |   | **and** |   |   |   | **Subscriptions** |   |   |   | ** Accumulated** |   |   |   | ** Comprehensive** |   |   | ** Stockholders'** |
|                                                     |   |   |   | ** of Shares** |   | **Amount** |   | ** of Shares** |   | **Amount** |   |   | **Capital** |   |   | **Warrants** |   |   |   | **Receivable** |   |   |   | ** Deficit** |   |   |   | ** Income** |   | ** Equity** |
|                                                     |   |   |   |  |   |   |  |   |  |   |   |  |   |   |  |   |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |   |  |
| Issuance of common stock in June, 1998                   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                     | for cash at $0.001 per share |   |   |     -   |  | $ |    -   |  |    10,000,000 |  | $ |      10,000 |  | $ |   -   |  | $ |   -   |  |  | $ |     -   |  |  | $ |     -   |  |  |  $ | -   |  |  | $ | 10,000 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Net loss for period ended December 31, 1998              |   |   |     -   |  |  |    -   |  |      -   |  |  | -   |  |  |   -   |  |  |   -   |  |  |  |     -   |  |  |  |       (34,427) |  |  |  | -   |  |  |  |       (34,427) |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Balance, December 31, 1998                               |   |   |     -   |  |  |    -   |  | 10,000,000 |  |  | 10,000 |  |  |  -   |  |  |   -   |  |  |  |     -   |  |  |  | (34,427) |  |  |  | -   |  |  |  |       (24,427) |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Issuance of common stock at an average of $0.45          |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                     | per share for cash |   |   |     -   |  |  |    -   |  | 746,140 |  |  | 746 |  |  | 334,053 |  |  |   -   |  |  |  | (105,000) |  |  |  |     -   |  |  |  | -   |  |  |  | 229,799 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Issuance of  preferred stock at $0.50 per share     |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                     | for cash |   |   | 500,000 |  |  | 500 |  |       -   |  |  | -   |  |  | 249,500 |  |  |   -   |  |  |  |     -   |  |  |  |     -   |  |  |  | -   |  |  |  | 250,000 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Issuance of stock options for services                   |   |   |     -   |  |  |    -   |  |       -   |  |  | -   |  |  |   -   |  |  | 552,000 |  |  |  |     -   |  |  |  |     -   |  |  |  | -   |  |  |  | 552,000 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Contribution of capital by shareholders in the form      |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                     | of foregone payment of accounts payable |   |   |     -   |  |  |    -   |  |      -   |  |  | -   |  |  |   1,847 |  |  |   -   |  |  |  |     -   |  |  |  |     -   |  |  |  | -   |  |  |  | 1,847 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Net loss for year ended December 31, 1999                |   |   |     -   |  |  |    -   |  |       -   |  |  | -   |  |  |   -   |  |  |  -   |  |  |  |     -   |  |  |  | (893,173) |  |  |  | -   |  |  |  | (893,173) |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Foreign currency translation loss                        |   |   |    -   |  |  |    -   |  |       -   |  |  | -   |  |  |   -   |  |  |   -   |  |  |  |     -   |  |  |  |     -   |  |  |  |       (1,202) |  |  |  | (1,202) |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Balance, December 31, 1999                               |   |   | 500,000 |  |  | 500 |  | 10,746,140 |  |  | 10,746 |  |  | 585,400 |  |  | 552,000 |  |  |  | (105,000) |  |  |  | (927,600) |  |  |  | (1,202) |  |  |  | 114,844 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Cash received for subscriptions receivable               |   |   |     -   |  |  |    -   |  |       -   |  |  | -   |  |  |   -   |  |  |   -   |  |  |  | 105,000 |  |  |  |     -   |  |  |  | -   |  |  |  | 105,000 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Issuance of common stock at an average of $0.66          |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                     | per share for cash |   |   |    -   |  |  |    -   |  | 543,338 |  |  | 543 |  |  | 356,957 |  |  |   -   |  |  |  |     -   |  |  |  |     -   |  |  |  | -   |  |  |  | 357,500 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Expiration of stock options                              |   |   |     -   |  |  |    -   |  |       -   |  |  | -   |  |  |     120,000 |  |  |    (120,000) |  |  |  |    -   |  |  |  |     -   |  |  |  | -   |  |  |  |    -   |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Issuance of stock options for services                   |   |   |    -   |  |  |    -   |  |       -   |  |  | -   |  |  |   -   |  |  |     121,000 |  |  |  |     -   |  |  |  |     -   |  |  |  | -   |  |  |  | 121,000 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Stock options exercised at $0.58 per share               |   |   |     -   |  |  |    -   |  | 100,000 |  |  | 100 |  |  | 81,400 |  |  |      (24,000) |  |  |  |     -   |  |  |  |     -   |  |  |  | -   |  |  |  | 57,500 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Stock issued for acquisition of Electroship Acquisition  |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                     | Corporation, a wholly-owned subsidiary, at |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                     | $0.77 per share |   |   |    -   |  |  |    -   |  | 2,500,000 |  |  | 2,500 |  |  | 1,922,500 |  |  |   -   |  |  |  |     -   |  |  |  |     -   |  |  |  | -   |  |  |  | 1,925,000 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Net loss for the year ended December 31, 2000            |   |   |     -   |  |  |    -   |  |       -   |  |  | -   |  |  |   -   |  |  |  -   |  |  |  |     -   |  |  |  |     (611,329) |  |  |  | -   |  |  |  | (611,329) |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Foreign currency translation loss                        |   |   |     -   |  |  |    -   |  |       -   |  |  | -   |  |  |   -   |  |  |   -   |  |  |  |     -   |  |  |  |    -   |  |  |  | (2,846) |  |  |  | (2,846) |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Balance, December 31, 2000                               |   |   | 500,000 |  |  | 500 |  | 13,889,478 |  |  | 13,889 |  |  | 3,066,257 |  |  | 529,000 |  |  |  |     -   |  |  |  | (1,538,929) |  |  |  | (4,048) |  |  |  | 2,066,669 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Expiration of stock options                              |   |   |     -   |  |  |    -   |  |       -   |  |  | -   |  |  |     132,000 |  |  |    (132,000) |  |  |  |     -   |  |  |  |     -   |  |  |  | -   |  |  |  |    -   |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Issuance of stock options for services                   |   |   |     -   |  |  |    -   |  |      -   |  |  | -   |  |  |   -   |  |  |     164,000 |  |  |  |     -   |  |  |  |     -   |  |  |  | -   |  |  |  | 164,000 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Issuance of common stock at $0.14 per share for cash     |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                     | with attached warrants at $0.06 per share for cash |   |   |    -   |  |  |    -   |  |      1,000,000 |  |  | 1,000 |  |  |     139,000 |  |  |       60,000 |  |  |  |     -   |  |  |  |     -   |  |  |  | -   |  |  |  | 200,000 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Warrants attached to debt issuance                       |   |   |  |  |  |    -   |  |       -   |  |  | -   |  |  |   -   |  |  |     219,642 |  |  |  |     -   |  |  |  |     -   |  |  |  | -   |  |  |  |      219,642 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Conversion of preferred stock into common stock          |   |   |      (500,000) |  |  |      (500) |  |    10,000,000 |  |  |      10,000 |  |  |       (9,500) |  |  |   -   |  |  |  |     -   |  |  |  |     -   |  |  |  | -   |  |  |  |    -   |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Common stock repurchase at $0.02 per share               |   |   |     -   |  |  |    -   |  |      (533,334) |  |  |   (533) |  |  |       (6,967) |  |  |   -   |  |  |  |     -   |  |  |  |     -   |  |  |  | -   |  |  |  |   (7,500) |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Foreign currency translation gain                        |   |   |     -   |  |  |    -   |  |       -   |  |  | -   |  |  |   -   |  |  |  -   |  |  |  |     -   |  |  |  |     -   |  |  |  | 4,048 |  |  |  |    4,048 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Net loss for the year ended December 31, 2001 (restated) |   |   |     -   |  |  |    -   |  |       -   |  |  | -   |  |  |   -   |  |  |   -   |  |  |  |     -   |  |  |  | (1,273,162) |  |  |  |  |  |  |  | (1,273,162) |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Balance, December 31, 2001 (restated)                    |   |   |     -   |  | $ |    -   |  |    24,356,144 |  | $ |      24,356 |  | $ | 3,320,790 |  | $ |     840,642 |  |  | $ |     -   |  |  | $ | (2,812,091) |  |  | $ | -   |  |  | $ |   1,373,697 |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                     |   |   |   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

The accompanying  notes are an integral part of these consolidated financial  statements.

F-5

----

| **ENVIROKARE TECH, INC.**                                             |
|-----------------------------------------------------------------------|
| **(A Development Stage Company)**                                     |
| **CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY**                    |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | ** Common Stock** |  |  |  |  |  |  |  |  |  |  |  |
|                                                                  |   |  |  |  | **Additional** |  |  | **Stock Options** |  |  |  |  |  | **Total** |
|                                                                  |   | ** Number** |  |  |  |  | **Paid-in** |  |  | **and** |  |  | ** Accumulated** |  |  | ** Stockholders'** |
|                                                                  |   | ** of Shares** |  |  | **Amount** |  |  | **Capital** |  |  | **Warrants** |  |  | ** Deficit** |  |  | ** Equity** |
|                                                                  |   |  |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2001                                            |   |          24,356,144 |   | $ |       24,356 |   | $ |        3,320,790 |   | $ |                    840,642 |   | $ |              (2,812,091) |   | $ |                1,373,697 |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock for services                                 |   |               700,000 |   |   |            700 |   |   |           111,300 |   |   |                             -   |   |   |                             -   |   |   |                   112,000 |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock at an average of $0.06 per share for         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| cash with attached warrants at an average of $0.04 per share for cash |   |            3,000,000 |   |   |         3,000 |   |   |           168,950 |   |   |                    128,050 |   |   |                             -   |   |   |                   300,000 |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock at an average of $0.10 per share for         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| cash with attached warrants at an average of $0.05 per share for cash |   |            2,000,000 |   |   |         2,000 |   |   |           196,050 |   |   |                    101,950 |   |   |                             -   |   |   |                   300,000 |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of stock options for services                                |   |                         -   |   |   |               -   |   |   |                    -   |   |   |                      52,173 |   |   |                             -   |   |   |                     52,173 |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expiration of stock options                                           |   |                         -   |   |   |               -   |   |   |           476,000 |   |   |                  (476,000) |   |   |                             -   |   |   |                            -   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss for the year ended December 31, 2002 (restated)              |   |                         -   |   |   |               -   |   |   |                    -   |   |   |                             -   |   |   |              (1,468,415) |   |   |              (1,468,415) |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |
| Balance, December 31, 2002 (restated)                                 |   | 30,056,144 |   | $ | 30,056 |   | $ | 4,273,090 |   | $ | 646,815 |   | $ | (4,280,506) |   | $ | 669,455 |
|                                                                  |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |

The accompanying  notes are an integral part of these consolidated financial  statements.

F-6

----

| **ENVIROKARE TECH, INC.**                 |
|-------------------------------------------|
| **(A Development Stage Company)**         |
| **CONSOLIDATED STATEMENTS OF CASH FLOWS** |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   | **Period from** |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   | **June 15,1998** |
|                                      |   |   |   |   |   |   | **Year Ended** |   |   | **Year Ended** |   |   | **(Inception) to** |
|                                      |   |   |   |   |   |   | **December 31,** |   |   | **December 31,** |   |   | **December 31,** |
|                                      |   |   |   |   |   |   | **2002** |   |   | **2001** |   |   | **2002** |
|                                      |   |   |   |   |   |   | **(restated)** |   |   | **(restated)** |   |   | **(restated)** |
|                                      |   |   |   |   |   |   |  |   |   |  |   |   |  |
| CASH FLOWS FROM OPERATING ACTIVITIES:     |   |   |   |   |   |   |   |   |   |
|                                      | Net loss |   |   |   |  $ |                  (1,468,415) |   |  $ |                  (1,273,162) |   | $ |                   (4,280,506) |
|                                      | Adjustments to reconcile net loss |   |   |   |   |   |   |   |   |   |
|                                      |   | to net cash used by operating activities: |   |   |   |   |   |   |   |   |   |
|                                      | Depreciation and amortization |   |   |                       325,290 |   |   |                       272,547 |   |   |                        600,854 |
|                                      | Discount on debt |   |   |                       109,821 |   |   |                                -   |   |   |                        109,821 |
|                                      | Intangible asset expensed |   |   |                           9,520 |   |   |                                -   |   |   |                            9,520 |
|                                      | Impairment of molds |   |   |                                -   |   |   |                         27,000 |   |   |                          27,000 |
|                                      | Stock options issued for consulting fees |   |   |                         52,173 |   |   |                       164,000 |   |   |                        889,173 |
|                                      | Common stock issued for consulting fees |   |   |                       112,000 |   |   |                                -   |   |   |                        112,000 |
|                                      | Consulting fees due to related party applied to receivable |   |   |                                -   |   |   |                           6,438 |   |   |                                 -   |
|                                      | Customer deposit |   |   |                         61,215 |   |   |                                -    |   |   |                          61,215 |
|                                      | Increase (decrease) in accounts payable |   |   |                         (7,536) |   |   |                       121,680 |   |   |                        114,145 |
|                                      | Increase in accrued interest payable |   |   |                       159,902 |   |   |                         36,248 |   |   |                        209,139 |
|                                      |   |   |   |   |   |   |  |   |   |  |   |   |  |
|                                      | Net cash used by operating activities |   |   |                     (646,031) |   |   |                     (645,249) |   |   |                   (2,147,639) |
|                                      |   |   |   |   |   |   |  |   |   |  |   |   |  |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:     |   |   |   |   |   |   |   |   |   |
|                                      | Deposits and retainers |   |   |                       (40,129) |   |   |                         59,337 |   |   |                        (62,353) |
|                                      | Purchase of molds |   |   |                       (16,000) |   |   |                                -   |   |   |                        (86,000) |
|                                      | Payments of license agreement |   |   |                                -   |   |   |                     (525,000) |   |   |                      (525,000) |
|                                      | Patent costs |   |   |   |                                -   |   |   |                         (1,733) |   |   |                        (10,129) |
|                                      | Purchase of equipment |   |   |                         (7,262) |   |   |                         (1,338) |   |   |                        (15,307) |
|                                      |   |   |   |   |   |   |  |   |   |  |   |   |  |
|                                      | Net cash used in investing activities |   |   |                       (63,391) |   |   |                     (468,734) |   |   |                      (698,789) |
|                                      |   |   |   |   |   |   |  |   |   |  |   |   |  |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:     |   |   |   |   |   |   |   |   |   |
|                                      | Proceeds from sale of preferred stock |   |   |                                -   |   |   |                                -   |   |   |                        250,000 |
|                                      | Proceeds from sale of common stock units |   |   |                       600,000 |   |   |                       200,000 |   |   |                     1,559,799 |
|                                      | Repurchase of common stock |   |   |                                -   |   |   |                         (7,500) |   |   |                          (7,500) |
|                                      | Proceeds from issuance of notes payable to related parties |   |   |                                -   |   |   |                    1,025,000 |   |   |                     1,053,635 |
|                                      |   |   |   |   |   |   |  |   |   |  |   |   |  |
|                                      | Net cash provided by financing activities |   |   |                       600,000 |   |   |                    1,217,500 |   |   |                     2,855,934 |
|                                      |   |   |   |   |   |   |  |   |   |  |   |   |  |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Increase (decrease) in cash               |   |   |                     (109,421) |   |   |                       103,517 |   |   |                            9,506 |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment   |   |   |                                -   |   |   |                           4,048 |   |   |                                 -   |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash, beginning of period                 |   |   |                       118,927 |   |   |                         11,362 |   |   |                                 -   |
|                                      |   |   |   |   |   |   |  |   |   |  |   |   |  |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash, end of period                       |   | $ |                           9,506 |   | $ |                       118,927 |   | $ |                            9,506 |
|                                      |   |   |   |   |   |   |  |   |   |  |   |   |  |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL CASH FLOW INFORMATION:       |   |   |   |   |   |   |   |   |   |
|                                      | Interest paid |   |   | $ |                           3,249 |   | $ |                         13,413 |   | $ |                          14,989 |
|                                      |   |   |   |   |   |   |  |   |   |  |   |   |  |
|                                      | Income taxes paid |   | $ |                                -   |   | $ |                                -   |   | $ |                                 -   |
|                                      |   |   |   |   |   |   |  |   |   |  |   |   |  |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NON-CASH TRANSACTIONS:                    |   |   |   |   |   |   |   |   |   |
|                                      | Common stock issued for acquisition of subsidiary |   | $ |                                -   |   | $ |                                -   |   | $ |                     1,925,000 |
|                                      | Note issued for purchase of property, equipment, |   |   |   |   |   |   |   |   |   |
|                                      |   |  and operating expenses |   | $ |                                -   |   | $ |                                -   |   | $ |                            3,635 |
|                                      | Note issued for pending patent to related party |   | $ |                                -   |   | $ |                                -   |   | $ |                          33,330 |
|                                      | Note issued for deposit for stock |   | $ |                                -   |   | $ |                                -   |   | $ |                        100,000 |
|                                      | Stock options issued for consulting fees |   | $ |                         52,173 |   | $ |                       164,000 |   | $ |                        889,173 |
|                                      | Common stock issued for consulting fees |   | $ |                       112,000 |   | $ |                                -   |   | $ |                        112,000 |
|                                      | Stockholder's contribution for equipment |   | $ |                                -   |   | $ |                                -   |   | $ |                            1,847 |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      |

The accompanying  notes are an integral part of these consolidated financial  statements.

F-7

----

**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

**NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS**

Envirokare Tech, Inc. (hereinafter, "the Company" or "Envirokare") was incorporated in June 1998 under the laws of the State of Nevada.  In December 1998, the Company acquired assets of a business engaged in developing a rubber mold technology and patent rights potentially applicable to future development of a pallet made of recycled materials.  The Company believes the early-stage rubber mold technology to be of marginal commercial value.

During 2001, the Company acquired, via license agreement, extensive rights to a proprietary thermoplastic processing technology, the Thermoplastic Flowforming process (variously referred to herein as "TPF Process", the "Process" or "TPF technology"). See Note 3.  The licensing agreement provides the Company with the ability to utilize the TPF technology to design, develop, manufacture, market, license and sublicense a wide range of large structural parts, including the Company's proprietary pallet.  The pallet is now composed of long-fiber reinforced thermoplastic composite and will be manufactured using the acquired TPF technology. 

The Company's current operating strategy is based on developing products to be manufactured by the TPF Process, as well as marketing the TPF technology to potential sublicensees of the Company.  The Company maintains offices in Orlando, Florida and Las Vegas, Nevada.  The Company has elected a fiscal year-end of December 31. 

The Company includes the assets and investment in Electroship Acquisition Corporation and Envirokare Composite Corp., wholly-owned non-operating subsidiaries, in these financial statements.  See Notes 3 and 6.

The Company is in the development stage and, as of December 31, 2002, had realized no revenues from its planned operations.

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

This summary of significant accounting policies of Envirokare is presented to assist in understanding the Company's financial statements.  The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity.  These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

**F-8**

----

**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

As shown in the accompanying financial statements, the Company has incurred an accumulated deficit of $4,280,506, which includes a net loss of $1,468,415 for the year ended December 31, 2002, and has a working capital deficit and no revenues.  The Company, being a development stage enterprise, is currently marketing the TPF technology which will, if successful, mitigate these factors which raise substantial doubt about the Company's ability to continue as a going concern.  Management plans to fund operations from sales of its debt and equity in the near-term and from product sales, product development agreements and proceeds realized from licensing the TPF technology on an ongoing basis.

The Company has historically raised equity capital through the sale of its common and preferred stock.  The Company has also raised debt capital through private placement offerings. Management has proceeded as planned in the ongoing development of numerous products, including a proprietary pallet composed of long-fiber reinforced thermoplastic composite.  Management is also marketing the TPF technology to various potential clients with the intent of establishing product development agreements, with the agreements to include provisions for manufacturing and marketing successfully developed products.  The Company received a deposit for product development during the second half of 2002 and management anticipates that the Company will realize licensing fee revenues in the near future.  See Note 10.   

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in its present form.

Accounting Method

The Company's financial statements are prepared using the accrual method of accounting.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Employees of the Company are entitled to paid vacation, paid sick days and personal days off depending on job classification, length of service, and other factors.  The Company's policy is to recognize the cost of compensated absences when actually paid to employees.  If this accrual amount could be currently estimated, it would not be recognized, as the amount would be deemed immaterial at this time.

The Company has been in the development stage since its formation in June 1998.  It is primarily engaged in the marketing of the TPF technology.  

Derivative Instruments

The Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities –

**F-9**

----

**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

Deferral of the Effective Date of SFAS No. 133", and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities", which is effective for the Company as of January 1, 2001.  These statements establish accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities.  They require that an entity recognize all derivatives as either assets or liabilities in the consolidated balance sheet and measure those instruments at fair value.

If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction.  For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.

Historically, the Company has not entered into derivative contracts to hedge existing risks or for speculative purposes.** **

At December 31, 2002, the Company has not engaged in any transactions that would be considered derivative instruments or hedging activities.

Fair Value of Financial Instruments

The carrying amounts for cash, accounts payable, notes payable and accrued liabilities approximate their fair value.

Loss per share was computed by dividing the net loss by the weighted average number of shares outstanding during the period.  The weighted average number of shares was calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding.  Basic and diluted shares outstanding are the same, as the inclusion of common stock equivalents would be anti-dilutive.  As of December 31, 2002, the Company had stock options and warrants outstanding, equivalent to 9,775,000 common stock shares, which are considered to be anti-dilutive.

The Company's financial statements include the accounts of the Company and its wholly-owned subsidiaries.  All material intercompany transactions and accounts have been eliminated in the financial statements. 

**F-10**

----

**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

Provision for Taxes

Income taxes are provided based upon the liability method of accounting pursuant to SFAS No. 109 "Accounting for Income Taxes" ("SFAS No. 109").  Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year end.  A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the "more likely than not" standard imposed by SFAS No. 109 to allow recognition of such an asset.

At December 31, 2002, the Company had net deferred tax assets of approximately $884,000 principally arising from net operating loss carryforwards for income tax purposes.  As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset has been established at December 31, 2002.

At December 31, 2002, the Company has net operating loss carryforwards of approximately $2,600,000, which expire in the years 2018 through 2022.  The net operating loss carryforwards do not include expenses that are not deductible for tax purposes, such as compensation expense, in the amount of approximately $1,200,000 attributable to options, warrants and restricted stock issued to employees and consultants. 

Advertising

The Company expenses advertising costs as incurred.

Comprehensive Income and Loss

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income" ("SFAS No. 130").  SFAS 130 establishes standards for reporting and displaying comprehensive income, its components and accumulated balances.  The adoption of SFAS 130, related to comprehensive income, is disclosed in the accompanying financial statements.

Accounting Pronouncements

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," ("SFAS No. 148").  SFAS 148 amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. In addition, it also amends the disclosure provisions of SFAS 123 to require prominent disclosure about the effects on reported results of an entity's accounting policy decisions with respect to stock-based employee compensation. The provisions of the statement are effective for financial statements for fiscal years ending after December 15, 2002.  Prior to the issuance of SFAS No. 148, the Company adopted the fair value based method of accounting for stock-based employee compensation.  Thus, the Company's financial reporting will not be significantly effected by SFAS 148.

**F-11**

----

**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees" ("FIN 45") which elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued.  It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee.  FIN 45 does not prescribe a specific approach for subsequently measuring the guarantor's recognized liability over the term of the related guarantee.  It also incorporates, without change, the guidance in FASB Interpretation No. 34, Disclosure of Indirect Guarantees of Indebtedness of Others, which is being superseded.  FIN 45 has had no impact on the Company's financial position or results of operations as the Company has not entered into any of the aforementioned transactions.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS No. 146").  SFAS No. 146 addresses significant issues regarding the recognition, measurement, and reporting of costs associated with exit and disposal activities, including restructuring activities.  SFAS No. 146 also addresses recognition of certain costs related to terminating a contract that is not a capital lease, costs to consolidate facilities or relocate employees, and termination benefits provided to employees that are involuntarily terminated under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract.  SFAS No. 146 was issued in June 2002 and its adoption has had no impact on the Company's financial position or results of operations. 

In April 2002, the FASB issued SFAS No. 145, "Rescission of SFAS Statements No. 4, and 64, Amendment of SFAS No. 13, and Technical Corrections" ("SFAS No. 145"), which updates, clarifies and simplifies existing accounting pronouncements.  SFAS No. 4, which required all gains and losses from the extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related tax effect was rescinded, and as a result, SFAS No. 64, which amended SFAS No. 4, was rescinded as it was no longer necessary.  SFAS No. 145 amended SFAS No. 13 to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications which have economic effects similar to those of sale-leaseback transactions.  The pronouncement will not affect the Company as it has not entered into any of the aforementioned transactions.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"), which replaces SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."  This standard establishes a single accounting model for long-lived assets to be disposed of by sale, including discontinued operations.  SFAS No. 144 requires that these long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or discontinued operations.  This statement is effective beginning for fiscal years after December 15, 2001, with earlier application encouraged.  The Company adopted SFAS No. 144 and does not believe any adjustments are needed to the carrying value of its assets at December 31, 2002.

**F-12**

----

**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

In October 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations" ("SFAS No. 143").  SFAS No. 143 establishes guidelines related to the retirement of tangible long-lived assets of the Company and the associated retirement costs.  This statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made.  The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived assets.  This statement is effective for financial statements issued for the fiscal years beginning after June 15, 2002 and with earlier application encouraged.  The Company adopted SFAS No. 143 and does not believe that the adoption will have an impact on the financial statements of the Company at December 31, 2002.

Research and Development Costs

Costs of research and development are expensed as incurred.

The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses.  Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements.

Concentration of Risk

The Company maintains its cash account in one commercial bank in the United States.  At times, the Company's cash balance is above the Federal Deposit Insurance Corporation's (FDIC) limit of insurability. 

**NOTE 3 – INTANGIBLE ASSETS**

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, "Business Combinations" (hereinafter "SFAS No. 141") and Statement of Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets" (hereinafter "SFAS No. 142"). SFAS No. 141 provides for the elimination of the pooling-of-interest method of accounting for business combinations with an acquisition date of July 1, 2001 or later. SFAS No. 142 prohibits the amortization of goodwill and other intangible assets with indefinite lives and requires periodic reassessment of the underlying value of such assets for impairment. SFAS No. 142 is effective for fiscal years beginning after December 15, 2001.  The Company adopted SFAS No. 142. Application of the nonamortization provision of SFAS No. 142 is expected to result in no change to the Company's reported results of operations.

Intangible assets are tested for impairment on an annual basis. At December 31, 2002, the Company had determined that no impairment existed on the carrying value of its intangible assets, as more fully described below.

**F-13**

----

**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

License Agreement

In March 2001, the Company obtained the rights to its Thermoplastic Flow forming process ("TPF technology") in exchange for cash consideration of $525,000.  The licensing agreement provides the Company with the ability to utilize the TPF technology to design, develop, manufacture, market, license and sublicense a wide range of large structural parts, including the Company's proprietary pallet.  The license agreement expires in 2003.

During 2003, the Company agreed to extend the license agreement term to March 10, 2005. No additional consideration was required for the term extension.  During 2005, the Company determined that an appropriate accounting treatment related to the license agreement would have been to amortize the value of the license agreement over its initial term.  Accordingly, the Company has amended its financial statements for the periods ended December 31, 2001, 2002 and 2003, to reflect the full amortization of the license value.  This amortization increased the Company's accumulated deficit for 2001 and 2002 by $157,500 and $210,000, respectively. 

Accumulated amortization for the years ended December 31, 2001 and 2002 is $157,500 and $367,500, respectively.

Patent Acquisition Costs and Technology Rights

On December 1, 2000, the Company acquired technology rights in exchange for common stock shares in the Company through its wholly-owned subsidiary, Electroship Acquisition Corporation.  See Note 7.  The acquired technology rights relate to an application stage patent for an invention that is expected to facilitate shipping commerce and/or for processing information regarding shipping services in a network environment.  This acquisition was valued using the trading price of the Company's common stock at the date of acquisition. 

The Company has amended its financial statements for the years ended December 31, 2001 and 2002, to provide for amortization of this patent.  The effects of the amortization for the respective years results in an increased charge to amortization expense in the amount of $113,235.  This amortization increased the Company's accumulated deficit for the years ended December 31, 2001 and 2002 by $113,235, respectively.

Accumulated amortization for the years ended December 31, 2001 and 2002 is $113,235 and $226,470, respectively.

In December 1998, the Company acquired technology rights from Mr. Real Morel and his affiliated companies of International Pallet Control Systems Inc. and The Pallet Company. During the years ended December 31, 2001, and 2000, attorney fees of $1,733, and $7,787, respectively, were added to patent costs.  The Company was unsuccessful in obtaining patents, with respect to patent filings made pursuant to the acquired early-stage rubber mold technology and the Company believes the technology rights acquired from Mr. Morel and his affiliated companies to be of marginal commercial value.  Accordingly, the Company charged these patent costs to operations during the quarter ended June 30, 2002.

**F-14**

----

**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

**NOTE 4 – PROPERTY AND EQUIPMENT**

Property and equipment are stated at cost.  Depreciation is provided using the straight line method over the estimated useful lives of the assets, which range from five to seven years. The following is a summary of property, equipment and accumulated depreciation.
|                                 |   |   | December 31,             2002 |   |   | December 31,             2001 |
|--------------------------------------|--------|--------|-------------------------------|--------|--------|-------------------------------|
|                                 |   |   |                               |   |   |                               |
| Furniture and Fixtures               |   | $      | 8,144                         |   | $      | 1,893                         |
| Less:  Accumulated Depreciation |   |   | 1,358                         |   |   | 899                           |
|                                 |   |   |                               |   |   |                               |
| Net Furniture & Fixtures         |   | $      | 6,786                         |   | $      | 994                           |
|                                 |   |   |                               |   |   |                               |
|                                 |   |   |                          |   |   |                          |
| Office Equipment                     |   | $      | 9,009                         |   | $      | 7,999                         |
| Less:  Accumulated Depreciation |   |   | 5,526                         |   |   | 3,930                         |
|                                 |   |   |                               |   |   |                               |
| Net Office Equipment                 |   | $      | 3,483                         |   | $      | 4,069                         |
|                                 |   |   |                               |   |   |                               |
|                                 |   |   |                          |   |   |                          |
| Molds                                |   | $      | 59,000                        |   | $      | 43,000                        |
|                                 |   |   |                               |   |   |                               |

The Company, in the development of its pallet product, has acquired two sets of molds.  The first generation mold, developed at a cost of $70,000, was determined to be of no commercial value and was expensed to research and development on September 30, 2001.  The second generation molds, acquired at a cost of $43,000, are currently used by the Company for research and development.  When completed and placed in service, the molds will be depreciated over their expected useful lives.  In the event that the second generation molds are deemed to be of no commercial value, their carrying cost will be expensed to research and development at the time in which that determination may be made. 

The Company, in the development of prototype construction products, has acquired a mold at a cost of $16,000 that will produce a Beam.  This mold is currently carried at cost as the Company is continuing its research and development using this mold.  When completed and placed in service, the mold will be depreciated over its expected useful life.  

**NOTE 5 – SHORT-TERM DEBT**

Notes Payable

Other notes payable in the amount of $61,965, which consist of unsecured notes bearing interest at 10% per annum, originated between August 18, 1998 and December 16, 1998, are payable to Mr. Real Morel and due on demand. 

The Company is a named defendant in an action filed by Mr. Real Morel in May 2000 in the Supreme Court of British Columbia, Canada.  In this action, Mr. Morel alleges non-payment by the Company of amounts due pursuant to the aforementioned demand promissory notes.  After consultation with British Columbia legal counsel and a ****review of the circumstances surrounding the issuance of the notes, the Company has resolved to dispute this liability.  Management of the Company believes that the outcome will not have a material adverse effect on the financial position of the Company. 

**F-15**

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**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

**NOTE 6 – NOTES PAYABLE TO SHAREHOLDERS**

During 2001, $1,025,000 was raised in a private debt offering.  Three warrants were attached to each dollar of debt, with an exercise price of $0.195 per share.  These warrants were fully exercisable for up to two years from the dates of issuance.  These warrants were valued at $0.07 per share, for a total of $219,642, using the valuation assumptions of 4% interest and a volatility of 91.25%. 

The warrant value was treated as a finance expense and immediately charged to earnings for the year ended December 31, 2001.   The Company has subsequently determined that the warrant value should have been more appropriately recorded as a discount on the related debt and amortized over the two year life of the debt.  Accordingly, interest expense has been recognized in the amount of $109,821, for the year ended December 31, 2002.  The change in accounting treatment as previously described, required the Company to amend and restate its financial statements for the years ended December 31, 2001, 2002 and 2003, to reflect the amortization of the discount on debt.  See Note 9.

The affect of this restatement reduced the Company's December 31, 2001 accumulated deficit by $219,642 and for the year ended December 31, 2002, the affect of this restatement increased the accumulated deficit by $109,821.

**NOTE 7 – COMMON STOCK**

During the second two quarters of 2002, the Company sold 2,000,000 "units" for aggregate cash consideration of $300,000.  The units, which consisted of 2,000,000 shares of common stock with one warrant attached to each common share, were issued at $0.15 per unit.  Each warrant is exercisable at $0.50 per share for two years from the dates of issuance.  See Note 9.

During the first two quarters of 2002, the Company sold 3,000,000 "units" for aggregate cash consideration of $300,000.  The units, which consisted of 3,000,000 shares of common stock with one warrant attached to each common share, were issued at $0.10 per unit.  Each warrant is exercisable at $0.25 per share for two years from the dates of issuance.  See Note 9.

During the first quarter of 2002, the Company issued 700,000 shares of its common stock, with an aggregate value of $112,000, as payment for services provided by consultants. 

During June 2001, 1,000,000 units of the Company, consisting of 1,000,000 shares of common stock with one warrant attached to each common share, were issued at $0.20 per unit.  Each warrant is exercisable at $0.50 per share until June 30, 2003.  See Note 9.

**F-16**

----

**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

On December 1, 2000, Electroship Acquisition Corporation, a wholly-owned subsidiary of the Company, acquired Electroship (N.Y.) Inc. in exchange for 2,500,000 common stock shares of Envirokare.  These shares were valued at $0.77 per share, which was fair market value on the date of the acquisition agreement.  See Note 3.  Electroship Acquisition Corporation acquired the intellectual property previously held by Electroship (N.Y.) Inc., whose predecessor organization was a partnership created to hold the intellectual property rights.  Neither Electroship (N.Y.) Inc. nor its predecessor partnership were considered operating entities.  Neither entity had material transactions during 2000. 

During December 2000, 100,000 stock options were exercised at $0.575 per common stock share.  These stock options were granted under the Envirokare Tech, Inc. 1999 Stock Option Plan.  See Note 9.

During September 2000, 200,000 shares of common stock were issued at $0.50 per share.

During the month of February 2000, 343,338 shares of common stock were issued at $0.75 per share.  The Company's common stock was split 2-for-1 in March 2000.  The split was effected

as a 100% stock dividend payable March 6, 2000 to holders of record at March 1, 2000.  All references in the accompanying financial statements to the number of common shares and per share amounts for the year ended December 31, 2000 have been restated to reflect the stock split.

During the year ended December 31, 1999, 746,140 shares of common stock were issued for cash.  At December 31, 1999, the balance of stock subscriptions was $105,000.  Stock subscriptions were paid and stock issued February 16, 2000 for these common stock shares.

On February 22, 1999, the Company's board of directors authorized a 1-for-2 reverse stock split of the Company's $0.001 par value common stock. 

Upon incorporation on September 15, 1998, 10,000,000 shares of common stock were issued at $0.001 per share.  At December 31, 1998, this common stock was held by 30 shareholders, none of whom held in excess of ten percent of the total.

**NOTE 8 – PREFERRED STOCK**

During the year ended December 31, 1999, 500,000 shares of preferred stock were issued for $250,000 cash.  The preferred stock has no dividend rights, but is convertible to common stock at the rate of ten shares of common for each preferred share.  This conversion feature was modified to twenty shares to one by the stock split effective March 1, 2000.  The preferred shareholders elected to exercise the conversion feature attached to the preferred stock and, accordingly, 10,000,000 shares of Company's common stock were issued on November 9, 2001 to the preferred stockholders of record on that date.

**F-17**

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**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

**NOTE 9 – STOCK OPTIONS AND WARRANTS**

Accounting for Stock Options and Warrants Granted to Employees and Nonemployees

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (hereinafter "SFAS No. 123")*,* defines a fair value-based method of accounting for stock options and other equity instruments.  The Company has adopted this method, which measures compensation costs based on the estimated fair value of the award and recognizes that cost over the service period.

In accordance with SFAS No. 123, the fair value of stock options and warrants granted are estimated using the Black-Scholes Option Price Calculation.  The following assumptions were made to value the stock options and warrants for 2001 and 2002: risk-free interest rate of 4%, volatility of 91.25%.

During October and November 2002, 1,200,000 shares of common stock with one warrant attached to each common stock share were issued.  Each warrant is exercisable at $0.50 per share until October and November 2004.  These warrants were valued at an average price of $0.04 per share, for a total of $41,950.  See Note 7.

During August and September 2002, 800,000 shares of common stock with one warrant attached to each common stock share were issued.  Each warrant is exercisable at $0.50 per share until August and September 2004.  These warrants were valued at an average price of $0.08 per share, for a total of $60,000.  See Note 7.

During June 2002, 1,500,000 shares of common stock with one warrant attached to each common stock share were issued.  Each warrant is exercisable at $0.25 per share until late June 2004.  These warrants were valued at an average price of $0.03 per share, for a total of $42,000.  See Note 7.

During April 2002, 1,000,000 shares of common stock with one warrant attached to each common stock share were issued.  Each warrant is exercisable at $0.25 per share until April 3, 2004.  These warrants were valued at an average price of $0.06 per share, for a total of $55,000.  See Note 7.

During March 2002, 500,000 shares of common stock with one warrant attached to each common stock share were issued.  Each warrant is exercisable at $0.25 per share until March 12, 2004.  These warrants were valued at an average price of $0.06 per share, for a total of $31,050.  See Note 7.

During June 2001, 1,000,000 shares of common stock with one warrant attached to each common stock share were issued.  Each warrant is exercisable at $0.50 per share until June 30, 2003.  These warrants were valued at $0.06 per share, for a total of $60,000.  See Note 7.

**F-18**

----

**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

During 2001, $1,025,000 was raised in a private debt offering.  Three warrants are attached to each dollar of debt, with an exercise price of $0.195 per share.  These warrants are fully exercisable for up to two years from the dates of issuance.  These warrants were valued at $0.07 per share, for a total of $219,642.  See Note 6.

In September 1999, the board of directors of the Company adopted the Envirokare Tech, Inc. 1999 Stock Option Plan (the "Plan") for the purpose of attracting, retaining and motivating employees, directors and consultants of the Company.  The shareholders approved the Plan at their annual meeting in May 2000.  As adopted, the Plan provides for authorization of 2,000,000 ****shares of common stock for issuance pursuant to awards under the Plan.  In September 1999, the board of directors had approved the granting of non-qualified options under the Plan to purchase an aggregate 1,150,000 shares of common stock.  In June 2000, the board of directors voted to adjust the number of shares of common stock authorized for issuance under the Plan from 2,000,000 to 4,000,000, pursuant to the anti-dilution provisions of the Plan, to reflect the 2-for-1 split of the Company's common stock effected in March 2000.  The board of directors also voted to make corresponding adjustments to the number of shares subject to previous option grants and to the exercise prices for such options.

All of the options granted by the Company are exercisable upon issuance.  The Plan restricts sales for shares received upon exercise of non-qualified options, limiting each optionee to sales in any year of option shares equal to 25% of the total number of shares received under the optionee's grant.  The Plan requires early exercising of the stock options for various reasons, including employment termination, separation from services, and cancellation or completion of consulting contracts. 

The Company filed a Form S-8 under the Securities Act with the Securities and Exchange Commission in March 2000 to register 1,150,000 shares (2,300,000 as adjusted for the stock split) of common stock authorized for issuance under the Plan.  In September 2000, the Company filed Post-Effective Amendment No. 1 to the Form S-8, to register the remaining 1,700,000 shares under the Securities Act.  For the year ended December 31, 1999, the Company

recorded $552,000 ($0.24 per option) in consulting fees for the value of these options.  These stock options will expire September 29, 2009.  See Note 10. 

During 2002, the Company issued 350,000 stock options valued at $52,173, and 2,300,000 stock options expired, which were valued at $476,000. 

During 2001, the Company issued 1,000,000 stock options valued at $164,000, and 550,000 stock options expired, which were valued at $132,000. 

**F-19**

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**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

|                                                                                   |   | Shares      |   |   | Weighted Average               Exercise Price |
|----------------------------------------------------------------------------------------|--------|-------------|--------|--------|-----------------------------------------------|
|                                                                                   |   |             |   |   |                                               |
| Outstanding at January 1, 2001                                                         |   | 2,200,000   |   |   |                                          |
| Expired                                                                                |   | (550,000)   |   | $      | 0.58                                          |
| Granted                                                                                |   | 100,000     |   |   | 0.60                                          |
| Granted                                                                                |   | 900,000     |   |   | 0.30                                          |
|                                                                                   |   |             |   |   |                                               |
| Outstanding and exercisable at December 31, 2001                                       |   | 2,650,000   |   | $      | 0.47                                          |
|                                                                                   |   |             |   |   |                                               |
|                                                                                   |   |        |   |   |                                          |
| Outstanding at January 1, 2002                                                         |   | 2,650,000   |   | $      | 0.47                                          |
| Granted                                                                                |   | 350,000     |   |   | 0.37                                          |
| Expired                                                                                |   | (2,300,000) |   |   | 0.44                                          |
|                                                                                   |   |             |   |   |                                               |
| Outstanding and exercisable at December 31, 2002                                       |   | 700,000     |   | $      | 0.43                                          |
|                                                                                   |   |             |   |   |                                               |
|                                                                                   |   |        |   |   |                                          |
| Weighted average fair value of options granted during the year ended December 31, 2002 |   |        | $      | 0.15   |
|                                                                                   |   |        |   |        |
| Equity Compensation               Plans Approved               by Shareholders |   | Shares Issuable Upon               Exercise of Outstanding               Options |   | Weighted Average               Exercise Price                                        |   | Available for               Issuance |
|--------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|--------------------------------------|
|                                                                                |   |                                                                                  |   |                                                                                      |   |                                      |
| 1999 Equity Incentive Plan                                                     |   | 700,000                                                                          |   |               $0.43 |   |   3,200,000                     |
|                                                                           |   |                                                                                  |   |                                                                                 |   |                                      |
| Total                                                                          |   | 700,000                                                                          |   |                                                                                 |   | 3,200,000                            |
|                                                                           |   |                                                                                  |   |                                                                                 |   |                                      |

**NOTE 10 – RELATED PARTIES**

On November 5, 2002, the Company granted 250,000 stock options enabling the option holder to purchase an equivalent number of common stock shares to Mr. Jonathan Edelstein, a director of the Company.  See Note 9.

Mr. Steve Pappas, who was appointed president, secretary, and director of the Company on March 26, 2001, received $54,500 and $82,000 in cash from the Company for consulting services rendered during the years ended December 31, 2001 and 2002, respectively.

Mr. George Kazantzis, who was appointed executive vice president of the Company on July 15, 2002, received $35,000 in cash for consulting fees during the year ended December 31, 2002.

**F-20**

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**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

On March 14, 2001, the Company granted 100,000 stock options enabling the option holder to purchase an equivalent number of common stock shares to Mr. Charles Stein, then president of the Company.  See Note 9.  Effective May 1, 2001, Mr. Stein resigned as president of the Company and remained a member of the board of directors of the Company until November 27, 2001.  The options granted to Mr. Stein expired unexercised on May 27, 2002.

On March 14, 2001, the Company granted 300,000 stock options enabling the option holder to purchase an equivalent number of common stock shares each to Mr. Gerald Breslauer, the vice president of administration of the Company, and Mr. Mark Kallan, the executive vice president of the Company.  Mr. Breslauer and Mr. Kallan resigned their respective positions with the Company on November 28, 2001.  The options granted to Messrs. Breslauer and Kallan expired unexercised on May 28, 2002.

On January 16, 2001, the Company granted 100,000 stock options enabling the option holder to purchase an equivalent number of common stock shares to Mr. Trevor Bedford, who was a member of the board of directors of the Company.  Effective September 13, 2001, Mr. Bedford resigned as a member of the board of directors of the Company.  The options granted to Mr. Bedford expired unexercised on March 13, 2002.

Stock options of 2,300,000 were issued enabling the option holder to purchase an equivalent number of common stock shares during the year ended December 31, 1999.  Of these stock options, 1,000,000 were issued to related parties.  Of these related party stock options, 500,000 expired unexercised during September 2000 and 500,000 expired unexercised during June 2002.  See Note 8.  During the year ended December 31, 2000, the Company granted 200,000 stock options enabling the option holder to purchase an equivalent number of common stock shares to the then president of the Company.  See Note 8.  On December 11, 2000, the president of the Company resigned and remained a member of the board of directors of the Company until December 8, 2001.  The stock options that were granted to this former president of the Company expired unexercised during June 2002.

On August 8, 2000, the Company authorized a shareholder's loan to Ms. Jeannie Runnalls in the amount of $15,000.  This loan was retired during December 2001 in consideration of consulting services provided to the Company by Ms. Runnalls.

See Note 5 for related party notes payable.

**NOTE 11 – COMMITMENTS AND CONTINGENCIES**

Consulting Agreement

In July 2001, the Company entered into a consulting agreement with Mr. Erwin Pruefer who performs marketing and sales services for the Company and is compensated on a commission basis.  Upon reaching certain sales targets, the consultant may receive stock options in lieu of additional commissions payable, with a maximum of 500,000 options so available. 

Lease Agreements

The Company entered into a lease for office space in Orlando, Florida on September 16, 2002 for a period of 36 months.  Lease payments are currently $2,595 per month, with additional charges for common area.  A security deposit was paid in the amount of $2,600.  Total payments for 2002 were $9,755.

**F-21**

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**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

The Company entered into a lease for office space in Boca Raton, Florida on February 7, 2001 for sixty months.  Lease payments are currently $2,795 per month, with additional charges for common area.  A security deposit and last month's rent were paid in the amount of $8,412.  A portion of this office space is being subleased with the sub-lessee reimbursing the Company $3,000 of the security deposit and last month's rent.  There is no written sublease agreement at this time.  The Company made lease payments for the Boca Raton, Florida office totaling $13,000 during the year ended December 31, 2002, but is no longer occupying this Florida office.  Pursuant to a letter of understanding between Mr. Gerald Breslauer and the Company, dated November 28, 2001, Mr. Breslauer will be compensated by the Company in the amount of $15,000 should he be successful in locating a suitable tenant to sublease the remainder of the Company's Boca Raton, Florida office space.

The Company has a lease for office space in Las Vegas, Nevada thru April 30, 2003.  Monthly payments are currently $838 per month, including $40 for utilities.  Total payments for 2002 were $10,096.

Future annual minimum lease payments for the term of the Orlando, Boca Raton and Las Vegas lease agreements as of December 31, 2002 are as follows for the years ending December 31:
|   |   |   | Orlando             Office                                                                                                             |   |   | Boca Raton             Office |   |   | Las Vegas             Office                                                                                                                             |
|--------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |                                                                                                                                        |   |   |                               |   |   |                                                                                                                                                          |
| 2003   |   | $      | 31,557                                                                                                                                 |   | $      | 34,876                        |   | $      | 3,352                                                                                                                                                    |
| 2004   |   | $      | 32,819                                                                                                                                 |   | $      | 36,272                        |   | $      |                         -             |
| 2005   |   | $      | 22,455                                                                                                                                 |   | $      | 37,725                        |   | $      |                           - |
| 2006   |   | $      |                        - |   | $      |   3,270                  |   | $      |                           - |

Litigation

For information on the Company's litigation, see Note 5.

Merger Agreement with Thermoplastic Composite Designs, Inc.

The Company and Thermoplastic Composite Designs, Inc. ("TCD") entered into a merger agreement dated March 30, 2001, which provides that TCD will merge with Envirokare's wholly-owned subsidiary, Envirokare Composite Corp., upon certain specific terms and conditions.  This merger, if consummated, will require the Company to issue 3,000,000 shares of common stock in exchange for all of the outstanding stock of TCD, if the Company's common stock trades in a nationally recognized securities market, such as the NYSE, NASDAQ (or OTCBB), or AMEX, at a minimum five dollar ($5.00) value for thirty days during the thirty month period immediately following March 30, 2001.  At the end of the thirty month period following March 30, 2001, if the market value for 3,000,000 shares of the Company's common stock is less than $15,000,000, the Company may elect to provide additional shares of common stock or cash to the TCD stockholders to meet the required $15,000,000 purchase price.  Any payment of cash in connection with the transaction purchase price shall not exceed $7,500,000.  The Company has the sole authority to determine the amounts of additional stock or cash that would be paid.

**F-22**

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**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

Agreement with Schaefer Systems International, Inc.

The Company and Schaefer Systems International, Inc. ("SSI") entered into a product development and production agreement dated August 6, 2002, which provides that the Company, with technical design and product development support provided by TCD, will develop a part on behalf of SSI, with part prototypes being deliverable to SSI no later than six months after the agreement date.  The delivery schedule for product prototypes was extended into the second quarter of 2003, by mutual verbal agreement between SSI and the Company.  Initial payment, in the amount of $61,215, was made by SSI to the Company to facilitate development of the part.  In the event that the Company fails to perform under the contract, this payment is returnable to SSI.  Accordingly, the Company currently recognizes the value of the initial payment made by SSI to the Company as a deposit for product development. 

The Company will recognize the deposited amount as revenue upon approval by SSI of initial product prototypes, which is expected to occur during the second quarter of 2003.

Letter Agreement with New Age Shelters Ltd.

The Company and New Age Shelters Ltd. ("New Age"), a building systems manufacturing company, entered into a non-binding letter agreement, dated October 1, 2002, expressing the intent of the parties to combine their businesses through a merger of New Age into a wholly-owned subsidiary of the Company.  Terms of the letter agreement provide that, subject to conditions including due diligence review, obtaining necessary approvals, and negotiation and execution of a definitive merger agreement, New Age would merge with and into a wholly-owned subsidiary of Envirokare, with the subsidiary to be the surviving company in the merger and continue the business of New Age.  Merger consideration would be in the form of Envirokare common stock issued to New Age shareholders, with 1,000,000 shares to be issued upon completion of the merger, and additional shares to be issued in 2006 based on net profits of New Age during the 2003-2005 periods.

**NOTE 12 – CORRECTION FOR ERRORS**

The accompanying consolidated financial statements have been restated to correct information concerning certain transactions that are described in general in this Note 12 and in more detail in respective Notes above. 

Amortization of TCD License

In March 2001, the Company obtained the rights to its Thermoplastic Flow forming process ("TPF technology") in exchange for cash consideration of $525,000.  The Company has determined that it was appropriate to amortize the value of the license over the initial period of the license grant, which expired September 30, 2003.  See Note 3. 

**F-23**

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**ENVIROKARE TECH, INC.**** (A Development Stage Company)****Notes to the Consolidated Financial Statements****December 31, 2002**

Impairment of Patent Value

On December 1, 2000 the Company acquired technology rights, in exchange for common stock shares in the Company.  The Company has determined that it was appropriate to amortize the value of the patent from the date of acquisition and has amended its financial statements to recognize amortization during the fiscal years ended 2001 and 2002.    See Note 3.

Notes Payable to Shareholders

During 2001, the Company raised $1,025,000 in a private debt offering.  The notes were issued with attached warrants.  The warrant value has been recorded as a discount on the debt issued and the discount is being amortized over the life of the debt as a charge to interest expense.  The valuation previously described required the Company to amend and restate its financial statements for the year ended December 31, 2002.  See Note 6. 

The cumulative effects of the financial statement amendments and the correction for an accounting error, as described above in this Note 12, resulted in the following changes to the Company's financial statements:  For the year ended December 31, 2002, the Company had originally reported a net loss of $1,035,359, and the corrected net loss is $1,468,415.  The Company had reported an accumulated deficit of $3,796,357, which is now recognized as $4,280,506.  The Company's losses per share increased by $.01 per share, from $.04 to the corrected value of $.05 per share.

**NOTE 13 – SUBSEQUENT EVENT**

Common Stock Issuances

In January 2003, existing warrant holders were offered a reduction in their respective warrant exercise prices to $0.15 per share if exercised on or before February 14, 2003.  This offer resulted in the Company raising $198,000 in cash and issuing 720,000 shares of common stock. Participants were issued replacement warrants, exercisable over a two year period, for the same number of shares of the Company's common stock as issued on exercise of the amended warrants.  The exercise price for the new warrants is $0.75 per share.

Changes in Company's Management

Mr. Steve Pappas, president of the Company as of the balance sheet date, relinquished his duties as president and has been elected chairman of the board of directors, effective March 5, 2003.  Mr. George Kazantzis, executive vice president of the Company as of the balance sheet date, relinquished his duties as executive vice president and has been elected president and interim chief executive officer of the Company, effective March 5, 2003.

**F-24**

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**Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure**

               None.

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**PART III**

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

Directors and Executive Officers

               The following list identifies the members of the Company's Board of Directors as of December 31, 2001, as well as the Company's current executive officers and sets forth certain information regarding each person.  Each director serves in office until the next annual meeting of shareholders; the Company's President and Executive Vice President serve as such at the pleasure of the Board of Directors. 
| Name               |   | Age |   | Position                                                        |
|--------------------|--------|-----|--------|-----------------------------------------------------------------|
|                    |   |     |   |                                                                 |
| Steve Pappas       |   | 58  |   | Chairman of the Board of Directors, Secretary                   |
| Jonathan Edelstein |   | 59  |   | Treasurer, Director                                             |
| Leo G. Kapakos     |   | 43  |   | Director                                                        |
| George Kazantzis   |   | 52  |   | President, Interim Chief Executive Officer, Assistant Treasurer |

               Steve Pappas was appointed Chairman of the Board of Directors, effective March 5, 2003. On March 26, 2001, Steve Pappas was elected as President and a director of the Company and served in that capacity until his resignation on March 5, 2003. Mr. Pappas has over thirty years of entrepreneurial, corporate executive, real estate management and development experience, most recently, from July 1988 to the present, as Managing General Partner of SPL Associates ("SPL") based in Brooklyn, New York. SPL has acquired and manages numerous large-scale residential and commercial real estate holdings in New York. Mr. Pappas was the founder and President of Servco Leasing Corporation from 1970 to 1980, during which time it became the largest third party leasing company for Xerox equipment.

               Jonathan Edelstein became a Director of the Company in 2001 and was appointed  treasurer by the Board of Directors as of December 14, 2002. Mr. Edelstein resigned his position as Treasurer and was appointed Secretary as of March 26, 2003. Mr. Edelstein has over twenty-five years experience in investment banking, finance and mergers and acquisitions, in both senior management and board-level positions. His responsibilities have included the acquisition, restructuring and management of small and mid-sized companies, major takeovers, dispositions, real estate development and financing. Mr. Edelstein is a Senior Advisor to the WestSphere Group, a private equity and fund manager focused in Latin America. Prior to his association with WestSphere, he was in partnership with Merrill Lynch Inter-Funding Inc., from 1988 to 1993, where he was involved in the acquisition and merger of a number of companies to create Pacific Outlook, Inc.

               Leo Kapakos was elected as a director of the Company on October 23, 2002.  Mr. Kapakos has sixteen years banking experience, including over fifteen years with Westdeutsche Landesbank AG, NY, where he is currently Associate Director in the Credit Department - Financial Institutions Group. During his tenure at Westdeutsche Landesbank, Mr. Kapakos has been responsible for providing various management services, with focus in the areas of transaction risk analysis and credit analysis with respect to a broad range of financial services products.

              George Kazantzis was appointed President and Interim Chief Executive Officer of the Company, effective March 5, 2003. Mr. Kazantzis was appointed Executive Vice President of Envirokare on July 1, 2002 and served in that capacity until his resignation on March 5, 2003. Mr. Kazantzis was also appointed Assistant Treasurer by the Board of Directors as of December 14, 2002 and resigned in that capacity to become Treasurer of the Company as of March 26, 2003. Mr. Kazantzis joined the Company bringing over twenty-five years of executive management and consulting experience in marketing, corporate structuring, finance, mergers and acquisitions. His marketing background includes the creation and launch of a successful license-merchandising program under the Team Gear USA(R) brand, in conjunction with Time Warner Sports Merchandising, World Cup USA and US Soccer Federation, from 1990 to 1994. Subsequently in 1998, Mr. Kazantzis, in a joint venture in conjunction with Merrill Lynch Inter-Funding Inc., facilitated a complex merger and acquisition transaction involving several Southern California clothing companies and brands to create Pacific Outlook, Inc., a U.S. sportswear manufacturer. At Pacific Outlook he was responsible for product licensing, trademarks and registrations, in addition to handling sales and marketing both domestically and internationally. Previously, he managed several successful corporate restructurings, most recently as a managing director of SLC Leasing Co. Ltd., working with the law firm of Tilleke & Gibbins, the accounting firm of Grant Thornton Thailand and CPA Ltd., Thailand, where he oversaw the restructuring of an automotive finance company with 42 offices and 400 employees. Mr. Kazantzis restructured, financed and successfully completed the transition of "good company" from "bad company". In 1999 he transferred all assets of the new company to a group of creditors and investors in a litigation proof structure. Mr. Kazantzis resigned his position as Executive Vice President of the Company and was appointed President and interim Chief Executive Officer of the Company, effective March 5, 2003.

               None of the persons specified above share any familial relationship. Other than the persons specified above, there are currently no significant employees expected by the Company to make a significant contribution to the business of the Company.

Board Meetings and Committees

               During the fiscal year ended December 31, 2002 ("Fiscal 2002"), the Board acted through unanimous written consents and teleconferences in which all board members were present.  Seven such consents and teleconferences were executed during the year.  The Company has no standing nominating committee, or committee performing similar functions.  The Board formed an audit committee during Fiscal 2002.  The current members of the audit committee are Jonathan Edelstein and Leo Kapakos, both directors of the Company.  This committee met once during Fiscal 2002.  The Board formed a compensation committee during Fiscal 1999 but that committee has not commenced any formal action.  The current members of the compensation committee are Jonathan Edelstein and Leo Kapakos, both directors of the Company.

Audit Review Disclosure

               The audit committee reviewed and discussed the audited financial statements for Fiscal 2002 with management; the audit committee discussed with Williams & Webster the matters required to be discussed by Statement on Auditing Standards No. 61 relating to the conduct of the audit; and management received written disclosures and the letter from Williams & Webster regarding its independence as required by Independence Standards Board Standard No. 1.  Additionally, Company's audit committee discussed with Williams & Webster their independence. 

               Based on the audit committee's review of the audited financial statements and discussions with management, the Board of Directors approved the inclusion of the audited financial statements in the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2002 for filing with the Securities and Exchange Commission.

               The Company has an audit committee comprised of Jonathan Edelstein and Leo Kapakos, both directors.  Mr. Edelstein and Mr. Kapakos both qualify as an "independent" directors under the applicable listing standards of the National Association of Securities Dealers.  The Board of Directors adopted a written charter for the Company's audit committee during January 2003.

Section 16(a) Beneficial Ownership Reporting Compliance

               To the company's knowledge, based solely on review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the fiscal year ended December 31, 2002, all Section 16(a) filing requirements applicable to its officers, directors and greater than 10% beneficial owners were complied with.    

#### Item 10. Executive Compensation

Executive Compensation

               The Company is required to set out particulars of compensation paid for each of the last three (3) completed fiscal years, or for such shorter period since the Company's inception, to the following persons (the "Named Executive Officers"):

               (a)  All persons serving as the Company's chief executive officer during the most recently completed fiscal year;

               (b)  Each of the Company's four most highly compensated executive officers who were serving as executive officers at the end of the most recently completed fiscal year and whose total salary and bonus exceeds $100,000 per year; and

               (c) Up to two additional individuals for whom disclosure would have been provided under (b), except that the individual was not serving as an executive officer of the Company at the end of the most recently completed fiscal year.

               Steve Pappas was elected President of the Company, effective March 26, 2001, and served the Company in that capacity until March 5, 2003. Mr. Pappas resigned from the position of President of the Company and was elected Chairman of the Board of Directors of the Company, effective March 5, 2003. George Kazantzis resigned from the position as Executive Vice President of the Company and was elected President and interim Chief Executive Officer of the Company, effective March 5, 2003. No other persons fall within the above-listed categories (a), (b) or (c).

*Summary of Compensation*

               The following table (the "Summary Compensation Table") sets forth certain information regarding compensation paid since the Company's inception to each of the Company's Named Executive Officers.
|                                        |   |   |            |        | **Annual Compensation**    | **Long Term Compensation** |                           |
|---------------------------------------------|--------|--------|------------|--------|----------------------------|----------------------------|---------------------------|
|                                        |   |   |            |        |                            |                            |                           |
|                                        |   |   |            |        |                            |                            |                           |  |  |  | **Awards** | **Payouts** |  |  |
|                                        |   |   |       |   |                       |                       |                      |   |   |   |  |  |   |   |
| **Name and             Principal Position** |   |   | **Year**   |        | **Salary             ($)** |                            | **Bonus             ($)** |  | **Other Annual Compen-             sation             ($)** |  | **Securities Under Options/             SARs Granted             (#)** |  | **Restricted Shares             or Restricted             Share Units             ($)** |  | **LTIP             Payouts             ($)** |  | **All Other Compen-sation             ($)** |
|                                             |   |        |            |   |                            |                       |                           |   |  |   |  |   |  |   |  |   |  |
| Steve Pappas, President*                    |   |   | 2001

2002 |        | 54,500

82,000             |                            | 0

0                      |  | 0

0 |  | 0

0 |  | 0

0 |  | 0

0 |  | 0

0 |

*Options and Stock Appreciation Rights Granted During the Most Recently Completed Fiscal Year*

               The Company did not grant options or stock appreciation rights to Named Executive Officers during the most recently completed Fiscal Year.

*Long-Term Incentive Plans -- Awards in Most Recently Completed Fiscal Year*

               The Company has no long-term incentive plan in place.  A "Long-Term Incentive Plan" is a plan under which awards are made based on performance over a period longer than one fiscal year.  It is different from a plan for options, stock appreciation rights, or restricted share compensation. 

*Options Exercised During the Most Recently Completed Fiscal Year and Fiscal Year End Option Values*

               During the reporting period, none of the Named Executive Officers held options or stock appreciation rights.

*Compensation of Directors and Remuneration of Senior Officers*

               The Company granted as compensation to Jonathan Edelstein, a director of the Company, an option to acquire 250,000 shares of the Company's Common Stock as consideration for services provided as a director during Fiscal 2002.  The Company made no other payments to any director for services provided as a director during Fiscal 2002.

               The Company has no standard arrangement to compensate directors for their services in their capacity as directors, except for the granting from time to time of stock options in accordance with the Company's 1999 Stock Plan.  All of the existing stock options are immediately exercisable, non-transferable and terminate on the earlier of the expiration date of the Plan or the end of the six-month period after the date on which the director, officer or employee, as the case may be, terminates his or her position at the Company.  The outstanding options will be adjusted if the Company consolidates, subdivides or similarly changes its share capital.

               Other than as discussed above, in respect of a payment made to Jonathan Edelstein, there has been no arrangement pursuant to which Directors were compensated by the Company in their capacity as Directors or for services rendered as consultants or experts during Fiscal 2002.

*Employment Contracts and Termination of Employment and Change-in-Control Arrangements*

               The Company did not enter into employment agreements or contracts with any of its Names Executive Officers during Fiscal 2002.

**Item 11.** **Security Ownership of Certain Benefici****al****Owners and Management**

               To the knowledge of the Company's management, as of February 28, 2003, no person beneficially owned more than five percent of any class of the Company's voting securities other than as set forth below. The following table sets forth the total amount of any class of the Company's voting securities owned by each of its executive officers, directors and director nominees and by its executive officers, directors and director nominees, as a group, as of February 28, 2003.
| Name and Address (1)                                        |   | Amount and Nature of             Beneficial Ownership (2) |        |        | Percentage             of Class   |
|-------------------------------------------------------------|--------|-----------------------------------------------------------|--------|--------|-----------------------------------|
|                                                             |   |                                                           |   |   |                                   |
| James Pappas                                                |   |   3,300,000 (3)                                      |   |   | 10.5%                             |
| Vanessa Houiris                                             |   |   3,300,000 (3)                                      |   |   | 10.5%                             |
| Adrian Alexandru                                            |   |   3,930,000 (4)                                      |   |   | 12.0%                             |
|                                                        |   |                                                      |   |   |                              |
| Steve Pappas                                                |   |   8,933,400 (5)                                      |   |   | 26.2%                             |
| Jonathan Edelstein                                          |   |      250,000 (6)                      |   |   | 0.1%                              |
| Leo G. Kapakos                                              |   |      170,000 (7)                      |   |   | 0.1%                              |
| George Kazantzis                                            |   |   1,420,000 (8)                                      |   |   | 4.4%                              |
|                                                        |   |                                                      |   |   |                              |
| All executive officers and directors as a group (4 persons) |   | 10,773,400 (2)                                            |   |   |      30.8%(2) |

(1) The address for each of the persons listed is 5850 T. G. Lee Blvd., Suite 535, Orlando, FL   32822.

(2) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission.  In computing the number of shares owned by a person and the percentage ownership of that person, shares of common stock subject to options and warrants held by that person that are currently exercisable or exercisable within 60 days of December 31, 2003, are deemed outstanding.  Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person.

(3)   Includes a warrant to purchase 100,000 shares of Common Stock of the Company exercisable immediately and until February 10, 2005.

(4)   Includes warrants to purchase 1,450,000 shares of Common Stock of the Company exercisable immediately and until varying dates up to February 17, 2005.

(5)   Includes warrants to purchase 2,775,000 shares of Common Stock of the Company exercisable immediately and until varying dates up to February 13, 2005. Includes 250,000 shares of Common Stock of the Company owned by the reporting person's wife, to which the reporting person disclaims beneficial ownership.

(6)   Includes an option to purchase up to 250,000 shares of Common Stock of the Company immediately exercisable.

(7)   Includes 170,000 shares of Common Stock of the Company owned by the reporting person's wife, to which the reporting person disclaims beneficial ownership.

(8)   Includes warrants to purchase 700,000 shares of Common Stock of the Company exercisable immediately and until varying dates up to October 10, 2004.

The Company's management is not aware of any arrangements which may result in "changes in control" as that term is defined by the provisions of Item 403(c) of Regulation S-B, other than those changes detailed as follows:

#### Item 12. Certain Relationships and Related Transactions

               On April 3, 2002, Steve Pappas invested $100,000 in a private offering of Company units at a price of $0.10 per unit. Each unit is comprised of one share of Company Common Stock and a warrant to purchase one share of Company Common Stock at a price of $0.25 per share, with the warrant exercisable at any time up to April 2, 2004. On June 27, 2002, the same shareholder invested $50,000 in a private offering of Company units at a price of $0.10 per unit. Each unit is comprised of one share of Company Common Stock and a warrant to purchase one share of Company Common Stock at a price of $0.25 per share, with the warrant exercisable at any time up to June 26, 2004. During November, 2002, the same shareholder invested $60,000 in a private offering of Company units at a price of $0.15 per unit. Each unit is comprised of one share of Company Common Stock and a warrant to purchase one share of Company Common Stock at a price of $0.50 per share, with the warrant exercisable at any time up to November, 2004. On February 14, 2003, the same shareholder invested $82,500 by participating in and amended warrant offering by the Company to current warrant holders of equity private placement transactions conducted by the Company during 2001 and 2002. The shareholder acquired 550,000 shares of Company common stock at a price of $0.15 per share. The shareholder acquired new warrants, exercisable at any time up to February 13, 2005, at a price of $0.65 (as to warrants issued in this offering to purchase up to 150,000 shares) and $0.75 (as to warrants issued in this offering to purchase up to 400,000 shares).

               On March 3, 2002, George Kazantzis, Executive Vice President of the Company,  invested $50,000 in a private offering of Company units at a price of $0.10 per unit. Each unit is comprised of one share of Company Common Stock and a warrant to purchase one share of Company Common Stock at a price of $0.25 per share, with the warrant exercisable at any time up to March 2, 2004. On October 10, 2002, the same shareholder invested $30,000 in a private offering of Company units at a price of $0.15 per unit. Each unit is comprised of one share of  Company Common Stock and a warrant to purchase one share of Company Common Stock at a price of $0.50 per share, with the warrant exercisable at any time up to October 9, 2004.

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

(a) Exhibits
| Exhibit               Number |   | Description of Document                                                                                                                                                                                                                          |     |
|------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----|
|                              |   |                                                                                                                                                                                                                                                  |     |
| 3.1                          |   | Company's Articles of Incorporation, as amended October 12, 1999                                                                                                                                                                                 | (1) |
| 3.2                          |   | Company's By-laws as amended and restated December 11, 2000                                                                                                                                                                                      | (2) |
| 10.1                         |   | Merger Agreement by and among the Company, Electroship Acquisition Corp., Electroship (N.Y.) Inc., Electroship Partners, John Gremmo, John A. Notarianni, Leo J. Mangan, Raymond Anthony Joao and Richard Reichler, dated as of December 1, 2000 | (3) |
| 10.2                         |   | Assignment of Patent Application from Electroship Partners to Electroship (N.Y.) Inc. and Defined Field of Use License Agreement between Electroship Partners and Electroship (N.Y.) Inc. dated as of September 20, 2000                         | (3) |
| 10.3                         |   | License Agreement between Envirokare Composite Corp. and Thermoplastic

Composite Designs, Inc., dated March 30, 2001                                                                                                                            | (2) |
| 10.4                         |   | Merger Agreement by and among the Company, Envirokare Composite Corp., Thermoplastic Composite Designs, Inc., Dale Polk, Sr. and Dale Polk, Jr., dated March 30, 2001                                                                            | (2) |
| 10.5                         |   | Letter Agreement between the Company and Charles H. Stein, dated ,May 8, 2001                                                                                                                                                                    | (4) |
| 10.6                         |   | Agreement and General Release between the Company and Charles H. Stein, dated November 27, 2001                                                                                                                                                  | (4) |
| 10.7                         |   | New Age Shelters Letter Agreement, dated October 1, 2002                                                                                                                                                                                         | (4) |
| 21                           |   | Subsidiaries of the Company (incorporated herein by reference to Exhibit 21 to the Company's Annual Report on Form 10-KSB for the  year ended December 31, 2000, filed with the Commission on April 16, 2001)                               |     |
| 31.1                         |   | Officer's Certification,  Section 302                                                                                                                                                                                                            |     |
| 31.2                         |   | Officer's Certification, Section 302                                                                                                                                                                                                             |     |
| 32.1                         |   | Officer's Certificate, dated January 26, 2006                                                                                                                                                                                                    |     |
|                         |   |                                                                                                                                                                                                                                             |     |

(1) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for the year ended December 31, 1999, filed with the Commission on April 7, 2000, and incorporated herein by reference.       (2) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for the year ended December 31, 2000, filed with the Commission on April 16, 2001, and incorporated herein by reference.       (3) Filed as an exhibit to the Company's Current Report on Form 8-K, filed with the Commission on January 3, 2001, and incorporated herein by reference.       (4) Filed as an exhibit to the Company's Quarterly Report on Form 10-QSB for the period ended March 31, 2001, filed with the Commission on June 15, 2001, and incorporated herein by reference.       (5) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for the year ended December 31, 2001, filed with the Commission on March 28, 2002, and incorporated herein by reference.

(b)  Reports on Form 8-K

               A report on Form 8-K regarding Item 5 was filed by the Company on October 17, 2002.

               A report on Form 8-K regarding Item 5 was filed by the Company on November 26, 2002.

**Item 14. Controls and Procedures**

               Within the 90 days prior to the filing date of this Annual Report, we carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and Principal Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-14 of the Securities Exchange Act of 1934. Based upon that evaluation, the Principal Executive Officer and the Principal Accounting Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to us (including our consolidated subsidiaries) required to be included in this Annual Report. There have been no significant changes in our internal controls or in other factors, which could significantly affect such internal controls, subsequent to the date we carried out our evaluation.

**SIGNATURES**

               In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on January 26, 2006.

ENVIROKARE TECH, INC.

Registrant

By:       / s /    NICHOLAS PAPPAS                                    Name:        Nicholas Pappas

        Title:         Chairman and CEO

By:  / s /        GEORGE KAZANTZIS                                   Name:        George Kazantzis

        Title:         President and Principal Financial Officer