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

                                   FORM 10-KSB
(Mark One)

[X]  Annual report  pursuant to Section 13 or 15(d) of the
     Securities  Exchange Act of 1934

                        For the fiscal year ended December 31, 2003
 or
[ ]  Transition report pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934

                        For the transition period from _____ to _____


Commission File Number:  000-26095


                               ENVIROKARE TECH INC
         ---------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in its Charter)


           Nevada                                                 88-0412549
-------------------------------                              -------------------
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)


               5850 T. G. Lee Blvd., Suite 535, Orlando, FL 32822
               ---------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (407) 856-8882


Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common Stock
                                                               ($.001 par value)


     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 April
14, 2004 is $5,489,865.


  (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

The number of shares  outstanding of the issuer's Common Stock, $.001 par value,
as of April 14, 2004 was 34,518,980.


                       DOCUMENTS INCORPORATED BY REFERENCE

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


<PAGE>


                                TABLE OF CONTENTS

Part I                                                                      Page

  Item 1.      Description of Business........................................ 4
  Item 2.      Description of Property........................................10
  Item 3.      Legal Proceedings..............................................11
  Item 4.      Submission of Matters to a
                 Vote of Security Holders.....................................11


Part II

  Item 5.      Market for Common Equity and Related
                Stockholder Matters...........................................11
  Item 6.      Plan of Operation..............................................13
  Item 7.      Financial Statements...........................................18
  Item 8.      Changes in and Disagreements with
                Accountants on Accounting and Financial Disclosure............45

Part III

  Item 9.      Directors, Executive Officers, Promoters
                 and Control Persons; Compliance with
                 Section 16(a) of the Exchange Act............................45
  Item 10.     Executive Compensation.........................................47
  Item 11.     Security Ownership of Certain Beneficial
                 Owners and Management........................................51
  Item 12.     Certain Relationships and Related Transactions.................52
  Item 13.     Exhibits and Reports on Form 8-K...............................54
  Item 14.     Controls & Procedures..........................................56



<PAGE>



             CAUTIONARY INFORMATION ABOUT FORWARD-LOOKING STATEMENTS


This document contains forward-looking  statements within the meaning of Section
27A of the Securities  Act and Section 21E of the Exchange Act. All  statements,
other than  statements  of  historical  facts,  included in or  incorporated  by
reference into this Form 10KSB which address activities,  events or developments
which the  Company  expects,  believes or  anticipates  will or may occur in the
future  are  forward-looking   statements.   The  words  "believes,"  "intends,"
"expects,"  "anticipates,"   "projects,"  "estimates,"  "predicts"  and  similar
expressions  are also  intended to identify  forward-looking  statements.  These
forward-looking   statements  include,  among  others,   statements  concerning:
expectations,   anticipations,  beliefs,  estimations,  projections,  and  other
similar matters that are not historical facts,  including such matters as future
capital  and  development  expenditures  and  expansion  and growth of  business
operations.

These  statements  are based on certain  assumptions  and  analyses  made by the
management of Envirokare  Tech Inc.,  ("ENVIROKARE")  in light of its experience
and its perception of historical trends,  current conditions and expected future
developments  as well as  other  factors  it  believes  are  appropriate  in the
circumstances.

Envirokare cautions the reader that these forward-looking statements are subject
to risks and  uncertainties,  including  those  associated  with:  the financial
environment,  general economic,  market and business conditions,  the regulatory
environment,  business  opportunities  that may be  presented  to and pursued by
Envirokare,  changes in laws or regulations,  availability to obtain  additional
financing on favorable conditions, trend projections, and other factors, many of
which are beyond the Company's control that could cause actual events or results
to differ  materially from those  expressed or implied by the  statements.  Such
risks and uncertainties include those risks and uncertainties  identified in the
Description of the Business and Management's Discussion and Analysis sections of
this  document and risk  factors  discussed  from time to time in the  Company's
filings with the Securities and Exchange Commission.

Significant  factors that could  prevent  Envirokare  from  achieving its stated
goals  include:  the  inability of  Envirokare  to obtain  financing for capital
expenditures and acquisitions,  declines or failure to develop in the market for
the Company's  products,  development of superior  products by competition,  and
adverse changes in the regulatory environment affecting the Company.

The cautionary  statements  contained or referred to in this document  should be
considered in connection  with any  subsequent  written or oral  forward-looking
statements  that may be issued by Envirokare  or persons  acting on its or their
behalf.

Envirokare  undertakes no  obligation  to release  publicly any revisions to any
forward-looking  statements to reflect  events or  circumstances  after the date
hereof or to reflect the occurrence of unanticipated events.

                                       3
<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS


     (a) Business Development

     Envirokare  Tech,  Inc.,  ("Envirokare"  or the "Company") was incorporated
under the laws of the State of Nevada on June 15, 1998. The executive offices of
the Company are located at 5850 T. G. Lee Blvd., Suite 535, Orlando, FL 32822.

     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. The
Company  entered  into  an  Amendment  ("Amendment")  signed  the  28th  day  of
September,  2003, amending that certain License Agreement  ("Agreement") entered
into on the 30th day of March,  2001 between  Thermoplastic  Composite  Designs,
Inc.,  a Florida  corporation  ("Licensor"),  having a business  address of 7400
State Road, #46, Mims, Florida 32754, and Envirokare Composite Corp., a Delaware
corporation, ("Licensee"). This Amendment provided for the extension of the term
of the exclusive agreement to and including March 1, 2005

     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.  The  Company has
entered  into an  Amendment  ("Amendment")  signed  September  28,  2003 to that
certain  Merger  Agreement  dated  March 30, 2001  ("Agreement"),  by and among,
Envirokare Tech, Inc., a Nevada corporation ("Parent"), and Envirokare Composite
Corp., a Delaware  corporation  and wholly owned  subsidiary of Parent  ("Merger
Sub"), on the one hand, and  Thermoplastic  Composite  Designs,  Inc., a Florida
corporation ("TCD"),  Dale Polk, Sr., an individual ("Polk Sr."), and Dale Polk,
Jr., an individual ("Polk Jr." and, together with Polk Sr., the "Shareholders"),
on the other hand. This Amendment  provides for the extension of the term of the
Merger  Agreement to and  including  March 1, 2005. A provision  was added which
permits TCD to incur debt in an amount greater than originally provided, for the
purposes  of capital  improvements.  An  additional  provision  was added  which
limited the debt  Envirokare  could carry forward at the time of closing  except
for debt related to capital expenditures.

     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.  The Company  subsequently  acquired  licensing  rights to the TPF
Process in 2001

     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.

                                       4
<PAGE>
     The Company is currently in the development stage and has not yet generated
material operating revenues.

     (b) Business of the Issuer

     Envirokare's business is the exploitation of the proprietary  Thermoplastic
Flowforming  TPF(TM)  technology through  manufacturing,  marketing and sales of
very  large  (10's  to  100's of  pounds)  long-fiber-reinforced,  thermoplastic
products fabricated under its exclusive TPF(TM) technology license.  The end-use
products of this process are currently  fabricated  using other materials (wood,
metal,  concrete  or  reinforced  thermoset  resins -  fiber-glass).  They often
require costly fabrication or assembly operations.  In other cases, the products
do not exist today and have become  feasible  only because of the  revolutionary
TPF(TM)  process  capabilities.  Envirokare  intends to  replace or enhance  the
existing products with more cost-effective, durable and lighter-weight materials
which  can be  converted  at low cost into  highly  functional  and  lower  cost
products.

     The  second  area  of  focus  for  the  company  is  the  licensing  of the
proprietary  TPF(TM)  process  technology  to  manufacturers,  converters  or in
strategic  alliances  when the  products  to be made or markets to be served are
best addressed by such a licensee. Licensing to manufacturers or converters will
include  up-front  license fees plus royalty  payments.  Fees and royalties will
vary with the scope of the license and any exclusivity  provisions  afforded the
licensee. License fees will also vary with the scope of the license granted. The
Technology:   The  TPF(TM)  process  is  a  unique,  patented  and  economically
attractive  process for producing  very large  (10-200lbs  and greater 10 square
feet) or very high  volumes of medium  sized parts from  thermoplastic  polymers
blended with long (.5" to 3") reinforcing fibers such as glass,  carbon,  Kevlar
and  others.  The  products  produced  by this  process  are unique in that they
contain long fiber  strands,  which impart high modulus and strength  typical of
high-performance  reinforced  plastics.  These TPF(TM) products also possess the
unique feature of having uniform mechanical properties in three dimensions.  The
TPF(TM)  process  can  produce   complex  shapes  with  multiple   functionality
(features)  molded in  low-cost,  low-pressure  (less than 100 psi) molds  (i.e.
aluminum or ceramic).

     The heart of the technology  involves a simple but elegant delivery system,
which  distributes the molten polymer and fiber mixture in a  near-net-shape  of
the final molded article.  As a result,  the final molding step requires minimal
movement  of the  molten  reinforced  polymer  and  requires  exceptionally  low
pressure to complete the  consolidation  and surface  finishing of the part. The
benefits  of this  near-net-shape  lay down of the molten  polymer are low fiber
breakage and random fiber orientation  (anisotropic),  providing maximum uniform
strength in the final part.  Lower  capital  costs in terms of the press tonnage
required and low mold costs are additional  benefits of TPF(TM).  The lower mold
costs make possible the  manufacture  of low volume part runs resulting from the
lower amortization costs of the mold. This translates into enhanced  performance
and lower cost for the products and higher value for the  end-user.  The TPF(TM)
process is robust in terms of the  volumes  and the  variety of resins,  fibers,
fillers,  pigments,  stabilizers and coupling  agents,  which can be efficiently
processed.  Resin  throughputs  for the process are variably  designed  based on
application  and range  into the 1000s of pounds  per hour.  Insert  molding  of
reinforcing  members,  fasteners or attachments is also exceptionally  simple in
the TPF(TM) process.  Consumer quality aesthetic  finishes can be produced using
the unique TPF(TM) process technology.

     The process readily uses recycled  thermoplastic  materials,  in part or in
whole,  to  generate  the  lowest  possible  materials  cost in  producing  high
performance  products at the lowest  possible cost. The TPF(TM)  process enables
resin manufacturers and product manufacturers to cost-effectively address market
applications  for large  parts  that have,  here-to-for  been  difficult  if not
impossible to serve with long-fiber-reinforced thermoplastic materials.

     The finished  products are generally  recyclable  after they have completed
their useful life.

     TPF(TM) Defined  Applications:  Identified  markets for the TPF(TM) process
and   long-glass-fiber   reinforced   thermoplastic  resins  include  aerospace,
communications,  construction,  housing,  marine,  material  handling,  medical,
military and  transportation.  Identified and developing  applications  include,
fieldable housing,  door skins,  piping,  utility boxes,  beams, marine decking,
power pole cross-arms,  pallets, medical backboards, radomes and flooring panels
among  others.  Some  applications  have  already  been  commercialized  by  TCD
including  fieldable shelters and stretchers.  Still other applications have had
TPF(TM)  products  tested and qualified  such as the E-pallet and the automotive
pallet.  Numerous other applications are in the conceptual and design stages and
appear highly attractive in terms of volume, pricing and feasibility.

                                       5
<PAGE>
     The company has been  exploring  applications  development  in a variety of
industries including  Construction,  Marine,  Material Handling,  Electrical and
Communications.

     The company has current  requests  and  inquiries to supply  quantities  of
several  different pallet products and beams.  The combined  requests for pallet
products,  in the first year,  from materials  handling  industry  participants,
exceeds 7 million  pounds of  production.  This volume  alone would  consume the
start-up  capacity of the initial  Envirokare  production line in the first full
year of operation.  These  applications  are  forecasted to grow to more than 18
million pounds of demand in the second year of operation. In addition, there are
several application development activities that could generate additional volume
demand in the second and third year of operation  totaling  more than 50 million
pounds.

     Management  believes that the recyclability of thermoplastic parts produced
by TPF(TM) will become a significant factor in market attractiveness, especially
in Europe where recycling is already mandated and promotes the  recyclability of
Envirokare products back into the same or other products, as a financial as well
as an environmental advantage.

     TCD  is  currently   manufacturing  products  for  military  and  aerospace
applications.  Revenues are  approximately  $2 million per year. The average per
pound  selling  price of its  current  products  is in excess of $2.00 per pound
using polypropylene and glass compositions. TCD expects its revenues to increase
to  between  $3 to $4  million  annually  over  the next 12 to 18  months.  This
represents  gross  margins  in excess of 50% based on  material  and  conversion
costs.

     In the more  competitive  materials  handling  market,  Envirokare has been
working  closely with a leader in the materials  handling  industry to develop a
plastic pallet application which in the worst case represents an average selling
price of $1.05 - $1.14 per pound based a polypropylene and long glass fiber at a
production cost of  approximately  $0.78 per pound.  The anticipated  demand for
pallet  applications  is estimated to exceed 5 million  pounds per year based on
current market usage.  This  represents an opportunity for gross margins between
26-32% in one of the most competitive  industries  examined to date. This sets a
range of average  selling  prices for products  produced by the TPF(TM)  process
between $1.05 and $2.00+ per pound.

     Additionally,  Azdel (a GE  Plastics  & PPG joint  venture)  sells  over 75
million pounds per year of Azdel; a polypropylene/glass mat which is oven heated
and high-pressure  compression molded. The material cost for the mat alone is in
excess  of $1.00  per  pound  before  conversion.  This  translates  to a market
end-user average selling price, after conversion, of between $1.30 and $1.50 per
pound.  Clearly this  represents and opportunity for conversion to TPF(TM) where
material costs are projected at $0.55 and processing costs at less than $0.30.

     These are estimates  made by the  management of the company and there is no
assurance that the Company will be able to penetrate these markets to the degree
which it estimates nor is there assurance that product can be  manufactured  and
sold at the  prices  referred  to above.  The only  production  to date has been
limited production by the Company's Licensor,  Thermoplastic  Composite Designs,
Inc.

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 is  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.
                                       6
<PAGE>
     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 that the acquired early-stage
rubber mold technology is of marginal  commercial value. The Company is focusing
its efforts on further  developing  the Pallet and it believes that the finished
Pallet 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:

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

o    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

o    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.  Following
appropriate  testing  approvals  and due  diligence  on Pallet  prototypes,  the
Company will pursue a comprehensive production agreement for Pallet manufacture.

                                       7
<PAGE>

     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.  The Company is presently  negotiating with prospective  clients who may
complete  development of the Pallet in cooperation  with the Company and make it
available for commercialization. The Company anticipates that the reengineered E
Pallet will be available for sale sometime in early 2004.

     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.,
which is discussed under "--  Development  and Business of the Company,"  above.
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 2003.

     The Beam
     --------

     The  Company  has  also  developed  a  mold  for a  first  generation  Beam
anticipated  to have  commercial  application  in the housing  construction  and
marine industries. A prototype Beam mold was built for the Company by TCD during
the first half of 2002,  at a cost of  $16,000.  The Beam is  designed  to carry
specific  weights,  or loads,  and to act as an  interconnector  for  structural
components within various designed systems such as docks and modular structures.
The Company is presently  conducting  tests on the Beam mold to  ascertain  more
precise engineering specifications.  Management expects the Beam to become a key
component  of,  among other  applications,  docks and modular  structures,  with
commercialization  of the Beam  targeted  for 2004.  The  Company  is  presently
conducting  discussions with certain  manufacturers that have expressed interest
in incorporating the Beam into their various modular structure designs.

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.  Prototype molds were
delivered  during April 2003, and testing of prototype parts is being conducted.
Field trials and related approvals during Fiscal Year 2004.

Raw Materials
-------------

     In the event that the Company  develops its own  manufacturing  facilities,
these facilities will utilize significant amounts of plastic, differing in grade
and price per pound. There are numerous recycled plastic suppliers in the United
States  including,  K.W.  Plastics  and Image  Products.  The TPF  manufacturing
process is flexible and allows for the inclusion of plastics of varying  grades.
As such, access to raw material required for production of various products that
utilize the TPF process in their  manufacture is not anticipated to be more than
a short term supply issue.  The Company's  current cost projections and analysis
indicate that there could be reasonable  profit  margins  realized from sales of
TPF  designed  and  produced  products  manufactured  using  virgin or  recycled
plastics.

     The Company is subject to risks in  connection  with  proposed raw material
procurement  and use.  These risks may have a material  effect on the  Company's
business.  Some  of the  possible  risks  relating  to  raw  materials  are  (i)
government legislation  prohibiting the use of recycled plastic in all products;
(ii) market  resistance to recycled  materials;  and (iii)  introduction of new,
more  sophisticated,  methods  of  plastic  recycling  equipment  rendering  the
Company's methodologies obsolete.

                                       8
<PAGE>

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  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 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 products  and/or  manufacturing  methods in order to develop and
manufacture  products for such market expansion.  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  Company  has not  been  materially  impacted  by  existing  government
environmental  regulation,  as the Company is not  presently  manufacturing  any
products.  The Company  recognizes,  however,  that products it develops and its
business,  in general,  may be  significantly  impacted by  constantly  changing
environmental laws and regulations, which may require that certain environmental
standards be met and  liabilities be imposed for the failure to comply with such
standards.  The Company  believes  that it is presently in  compliance  with all
applicable  federal,  state and local environmental laws, rules and regulations.
In the  future,  the  Company  may be subject to  various  laws and  regulations
governing  the  use,  manufacture,  storage,  handling,  and  disposal  of toxic
materials and certain waste products.  While the Company  anticipates taking all
necessary   steps  to  comply  with  all  applicable   environmental   laws  and
regulations,  there  can  be no  assurance  that  the  Company's  operations  or
activities,  or historical operations by others at the Company's locations, will
not result in civil or  criminal  enforcement  actions or private  actions  that
could have a materially  adverse effect on the Company.  The Company's  costs in
complying with environmental laws to date have been negligible.

     As in the case  with  manufacturing  companies  in  general,  if  damage to
persons or the  environment  has been caused by the  Company's  use of hazardous
solvents or by other hazardous  substances located at the Company's  facilities,
the Company may be fined or held liable for the cost of  remedying  such damage.
The levying of such fines or the  imposition  of  liability  may have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.  Further,  changes in  environmental  regulations  in the future may
require the Company to make significant  capital  expenditures to change methods
of disposal of hazardous  solvents or otherwise alter aspects of its operations.
The Company cannot estimate the potential costs of complying with local,  state,
and federal environmental laws.

     The Company's management believes that no toxic or hazardous materials will
be by-products of the  manufacturing  processes of products that utilize the TPF
process in their manufacture.  The TPF Process does not emit any VOCs, which are
present in many  thermoset  composites.  Accordingly,  management of the Company
believes  that the Company will not have  material  expenditures  related to the
cost of compliance with  applicable  environmental  laws,  rules or regulations.
However, the risk of accidental contamination or injury from hazardous materials
cannot be completely  eliminated.  In the event of such an accident, the Company
could be held liable for any damages  that result and any such  liability  could
exceed the financial resources of the Company.
                                       9
<PAGE>
     In the event any domestic or foreign  regulatory  agency requires  approval
and testing of the products  developed by the Company prior to their  commercial
exploitation,  the Company cannot provide any assurance that testing  procedures
will be  successfully  completed or, if completed,  such tests will  demonstrate
that the products meet the required  guidelines.  There can also be no assurance
that any required governmental  approvals will be obtained.  Accordingly,  there
can be no assurance that the Company will be able to market  developed  products
in the United  States or in any foreign  country.  Any failure by the Company or
its  collaborators or licensees to obtain any required  regulatory  approvals or
licenses  would  adversely  affect  the  ability  of the  Company  to market its
products and would have a significant adverse affect on the Company's revenues.

Employees
---------
     The Company currently has two 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  three
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 with the USPTO. 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.  This  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

     The Company leases  corporate office space located at 5850 T. G. Lee Blvd.,
Suite 535,  Orlando,  FL 32822. The leased premises consists of 1600 square feet
and is 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 $2,595.  The Company's  total lease payments for its Orlando office space for
the fiscal year ended December 31, 2003 was $34,047.  The Company's  total lease
payments  for the fiscal  years  ending  December  31,  2001 and 2002 was $0 and
$9,863, respectively.
                                       10
<PAGE>

     During the first quarter of 2001,  the Company  leased office space at 2255
Glades  Road,  Suite  112E,  Boca  Raton,  FL  33431.  The  Company  anticipated
relocating its executive  offices to the Boca Raton,  FL office during 2001, but
plans changed  resulting in the Company  seeking a subleasee to assume the lease
and  office  space at the Boca  Raton  location.  Currently  the  Company  has a
sublease in place and is responsible  for $1,764  monthly.  The Company's  total
lease  payments  for its Boca  Raton  office  space for the  fiscal  year  ended
December 31, 2001 and 2002 were $33,375 and $13,000, respectively. The Company's
total lease  payments for the fiscal year ending  December 31, 2003 was $24,692.
This lease expires on January 31, 2006.


ITEM 3.  LEGAL PROCEEDINGS

     The  Company is a  defendant  in an action  filed by Mr.  Real Morel in the
Supreme Court of British Columbia,  Canada under which the Company was served in
May 2000.  Mr. Morel alleges  non-payment by the Company of amounts due pursuant
to demand  promissory  notes made by the Company to Mr. Morel  during 1998.  The
amount claimed is approximately  $69,600 including interest.  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
liability and to advance a set-off and  counterclaim.  Management of the Company
believes  that the  outcome  will  not have a  material  adverse  effect  on the
financial  position of the  Company.  During the fiscal year ended  December 31,
2003,  no further  action was taken with respect to this  matter,  by either the
Company or Mr. Morel.


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

     There were no matters  submitted to a vote of  shareholders  by the Company
during the Fiscal Year


                                     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.

Quarter Ending:
                                                            Closing
                                                            -------
                                                     High               Low
                                                     -----             -----
March 31, 2002                                       $0.18             $0.10
June 30, 2002                                        $0.15             $0.08
September 30, 2002                                   $0.32             $0.09
December 31, 2002                                    $0.31             $0.17
March 31, 2003                                       $0.25             $0.16
June 30, 2003                                        $0.31             $0.18
September 30, 2003                                   $0.30             $0.20
December 31, 2003                                    $0.29             $0.21



     These bid prices were  obtained from OTCBB and do not  necessarily  reflect
actual   transactions,   retail   mark-ups,   mark-downs  or  commissions.   The
transactions include inter-dealer transactions.

     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.

Securities Authorized for Issuance under Equity Compensation Plans
------------------------------------------------------------------

Equity Compensation             Shares Issuable       Weighted
Plans Approved by              Upon Exercise of       Average         Available
Shareholders                  Outstanding Options  Exercise Price   for Issuance
-------------------           -------------------  --------------   ------------
1999 Equity Incentive Plan           700,000                          3,300,000
Total                                700,000                          3,300,000


                                       11
<PAGE>
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 year ended December 31, 2003, the Company received $323,250 from
the private sale of 1,616,250  shares of its common stock at $0.20 per share. In
addition, these purchasers received warrants to purchase one additional share of
common  stock for each  share  purchased,  exercisable  at $0.40 per share for a
period of one year. See Note 9

     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  1,320,000  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.  Exercise  prices  for the new  warrants  are  $0.75  per share (as to
warrants  issued in a 2001 equity private  placement) and $0.65 per share (as to
warrants issued in a 2002 equity private placement). See Note 9.

     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

     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.
                                       12
<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     Envirokare  Tech,  Inc. (the "Company" or  "Envirokare")  is engaged in the
application  design,   development  and  manufacturing,   utilizing  proprietary
thermoplastic  composite  technologies  including Thermo Plastic Flowforming for
TPF(TM).

     Technology:  The TPF Process is a proprietary  process  developed by Thermo
Composite Designs,  Inc., 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 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,  including
significantly,  cost savings  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  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  application in a broad range of industries  including:
agriculture,  automotive,  material handling,  transportation,  marine, medical,
waste  management  and  aerospace.  TPF  composite  products  are an  advantaged
replacement for 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 has an  additional  advantage  in that it does not  emit  volatile
organic contaminants (VOCs).

     The  Company  is  acquiring  this  technology  through  License  and Merger
Agreements with Thermo Composite  Designs,  Inc. On March 30, 2001, the Company,
through its wholly-owned subsidiary, Envirokare Composite Corp. ("ECC"), entered
into a licensing  agreement  with TCD that  allows the  Company to  commercially
exploit the TPF Process.  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  applications  including  the  Company's  proprietary
Pallet,  manufactured  through the joint  efforts of the Company and TCD, or the
Company's  sublicensees,   for  use  in  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. The
Company  entered  into  an  Amendment  ("Amendment")  signed  the  28th  day  of
September,  2003, amending that certain License Agreement  ("Agreement") entered
into on the 30th day of March,  2001 between  Thermoplastic  Composite  Designs,
Inc.,  a Florida  corporation  ("Licensor"),  having a business  address of 7400
State Road, #46, Mims, Florida 32754, and Envirokare Composite Corp., a Delaware
corporation, ("Licensee"). This amendment provided for the extension of the term
of the exclusive agreement to and including March 1, 2005

     To complete this  acquisition,  the Company 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,  Envirokare has 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.  The Company has entered into an
Amendment  ("Amendment")  signed  September  28,  2003  to that  certain  Merger
Agreement dated March 30, 2001  ("Agreement"),  by and among,  Envirokare  Tech,
Inc.,  a Nevada  corporation  ("Parent"),  and  Envirokare  Composite  Corp.,  a
Delaware  corporation  and wholly owned  subsidiary of Parent ("Merger Sub"), on
the one hand, and Thermoplastic  Composite Designs,  Inc., a Florida corporation
("TCD"),  Dale Polk,  Sr., an individual  ("Polk Sr."),  and Dale Polk,  Jr., an
individual ("Polk Jr." and, together with Polk Sr., the "Shareholders"),  on the

                                       13
<PAGE>
other hand. This Amendment  provides for the extension of the term of the Merger
Agreement to and  including  March 1, 2005. A provision  was added which permits
TCD to  incur  debt in an  amount  greater  than  originally  provided,  for the
purposes  of capital  improvements.  An  additional  provision  was added  which
limited the debt  Envirokare  could carry forward at the time of closing  except
for debt related to capital expenditures.

Product Research, Development and Testing
-----------------------------------------

     General Product Technology Testing:  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 the  standard  procedure  for
determining  certain  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.

     Product  Development  - E Pallet:  Since  inception,  the  Company has been
engaged in the development of the Pallet. In December 1998,  acquired equipment,
early-stage  rubber mold  technology  and patent  rights to the  development  of
rubber mold  technology  for  creating a pallet made of recycled  materials.  In
1999,  the Company and TCD entered  into a  product/technology  contract for the
continued  development  of the pallet.  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 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.

                                       14
<PAGE>

The study findings included the following:

a.   The Pallet could safely support a 2,800 pound,  uniformly  distributed load
     in warehouse storage racks as well as on conveyors;
b.   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
c.   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,
during the second quarter of 2002, the Company  engaged Metis Design to optimize
this Pallet  redesign.  The Pallet  design  modifications,  as proposed by Metis
Design, allow for a significant weight reduction of the Pallet making the Pallet
more  cost-effective  and easier to handle,  while  structural  features are not
anticipated  to be  materially  affected.  The Company is presently  negotiating
product  development  agreements with  prospective  partners to produce the next
generation  Pallet  prototypes  which  the  Company  believes  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.  The Company is presently  negotiating with prospective  clients who may
complete  development of the Pallet in cooperation  with the Company and make it
available for commercialization. The Company anticipates that the reengineered E
Pallet will be available for sale sometime in early 2004.

In addition to the second-generation Pallet discussed above, the Company is also
evaluating  pallets and other material handling devices  incorporating  wireless
tracking  capabilities,  based on  technology  acquired  in the  Company's  2000
acquisition of 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 in multiple markets.  Company plans for additional  development
of this wireless tracking technology are scheduled for late 2003.

                                       15
<PAGE>

     Product Development - Beam: The Company has initiated a product development
for a structural beam having application in the housing and marine industries. A
prototype  mold was built by TCD for the  company in 2002 at a cost of  $16,000.
The  Beam is  designed  to carry  specific  weights  or  loads  and to act as an
interconnector  for structural  components for modular  structures an docks. The
Company expects to begin commercialization of the Beam during 2004.

     Product  Development - Schaefer  Systems  International,  Inc. On March 28,
2003, the Company entered into a product development and purchase agreement with
SSI replacing a earlier  agreement dated August 6, 2002. Under the terms of this
agreement and pursuant to performance and dimensional  criteria provided by SSI,
the Company  will design and  develop and produce a quantity of  prototypes  for
field testing,  field trials and related approvals.  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 initial term of the contract is
26 weeks.  A payment of $61,215  was made by SSI to the  Company (at the time of
the August 6, 2002  agreement) to facilitate the  development of the proprietary
product.  The balance of the development fee is payable:  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.

     Product Marketing and Market Exploitation:

     The Company's plan for the marketing and  exploitation of its  technologies
over the next twelve (12) months includes:

     a.   direct   development  and  manufacturing  of  products  for  materials
          handling (pallets),  construction (beams),  housing,  marine and other
          commercial and consumer applications.
     b.   3rd party licensing of TPF(TM)Technology for specific applications and
          products as well as for specific geographic areas.
     c.   product   development  for  3rd  parties   applications  and  licensed
          manufacturing.

The Company expects to continue to market its technology  both directly  through
officers and directors and through third party marketing agreements.

The  Company  expects  additional  results  from a  broad  range  of  continuing
marketing and sales activities. As well, the Company expects to close its merger
with TCD during the next quarter and with it acquire  additional  marketing  and
sales opportunities.

Expected Purchase of Plant and Significant Equipment and
Expected Significant Changes in Number of Employees
--------------------------------------------------------

     During the second quarter of 2005,  the Company  expects to close it Merger
Agreement with TCD combining that company with its wholly owned  subsidiary ECC.
This will  bring  into the  Company  an  existing  TPF(TM)  production  facility
including  equipment and leased  premises.  The size of this facility is limited
and is used primarily for product  development  and small  production  runs. The
Company has continued preliminary  development work toward the end of creating a
full scale  production  facility  for  manufacture  of Company  and third  party
products,  however,  no specific site has yet been  contracted  for. The Company
continues to consider the option of assisting a prospective third party licensee
in the construction of a manufacturing facility in exchange for access to such a
facility but no decisions has been made.  There is no assurance  that funds will
be  available  for the  development  of such a  facility  or that a third  party
licensee can be located for the alternative.
                                       16
<PAGE>

     During the balance of the fiscal  year,  the Company  expects to add one to
three  people to its existing  staff.  As well,  the Company will add  personnel
required for the operation of the existing TCD facility  upon the  completion of
the merger with that company.  The schedule for any new production facility will
dictate the addition of any personnel associated with that facility.

Liquidity
---------

     The Company has budgeted  expenditures of $720,000 for the 12 months ending
September 30, 2003.  During the fiscal year ended December 31, 2003, the Company
raised  $551,128 from the private  placement of the Company's  Common shares and
had cash  remaining  at the end of the year of $65,810.  The Company  expects to
raise any additional  funds  required  through  private  placement of additional
shares. Although management believes these sources to be sufficient, there is no
assurance that the Company will be successful in raising  additional  capital to
fund operations.



                                       17
<PAGE>

Item 7.           Financial Statements


                              ENVIROKARE TECH, INC.
                        Consolidated Financial Statements
                                December 31, 2003
















                            WILLIAMS & WEBSTER, P.S.
                          Certified Public Accountants
                        Bank of America Financial Center
                          601 W. Riverside, Suite 1940
                                Spokane, WA 99201
                                 (509) 838-5111





                                       18
<PAGE>



                              Envirokare Tech, Inc.

                                TABLE OF CONTENTS


                                                                      Page

INDEPENDENT AUDITOR'S REPORT                                            20

FINANCIAL STATEMENTS

       Consolidated Balance Sheets                                      21

       Consolidated Statements of Operations                            22

       Consolidated Statement of Stockholders' Equity                   23

       Consolidated Statements of Cash Flows                            25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                              26















                                       19
<PAGE>


Board of Directors
Envirokare Tech, Inc.
Orlando, Florida


                          INDEPENDENT AUDITOR'S REPORT


We have audited the accompanying consolidated balance sheets of Envirokare Tech,
Inc. (a development  stage company and a Nevada  corporation) as of December 31,
2003  and  2002,  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, 2003. These 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 auditing standards generally accepted
in the  United  States of  America.  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 overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Envirokare  Tech, Inc. as of
December  31,  2003 and 2002,  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,  2003 in  conformity  with  accounting
principles generally accepted in the United States of America.

As discussed in Note 2, the Company has been in the development  stage since its
inception,  has  negative  working  capital and has no revenues.  The  Company's
continued  viability is dependent upon the Company's  ability to meet its future
financing requirements and the success of future operations. These factors raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plans  regarding  those  matters  are  described  in Note  2.  The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.



Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
April 6, 2004


                                       20
<PAGE>
<TABLE>
<CAPTION>
                                                       ENVIROKARE TECH, INC.
                                                  (A Development Stage Company)
                                                   CONSOLIDATED BALANCE SHEETS

                                                                                   December 31,          December 31,
                                                                                       2003                  2002
<S>                                                                              <C>                   <C>
                                                                                  ---------------       ---------------
       ASSETS
       ------
       CURRENT ASSETS
           Cash                                                                 $         65,809      $          9,506
           Deposits and retainers                                                         22,466                53,942
           Prepaid expenses                                                                5,916                     -
           Work-in-Process inventory                                                      43,216                     -
                                                                                  ---------------       ---------------
               TOTAL CURRENT ASSETS                                                      137,407                63,448
                                                                                  ---------------       ---------------
       PROPERTY AND EQUIPMENT
           Furniture and fixtures                                                          7,129                 8,144
           Office equipment                                                               18,167                 9,009
           Molds                                                                         170,912                59,000
               Less accumulated depreciation                                              (8,050)               (6,884)
                                                                                  ---------------       ---------------
               TOTAL PROPERTY AND EQUIPMENT                                              188,158                69,269
                                                                                  ---------------       ---------------
       OTHER ASSETS
           Deposits and retainers                                                              -                 8,412
           License agreement                                                             525,000               525,000
           Patent acquisition costs and technology rights                              1,958,939             1,958,939
                                                                                  ---------------       ---------------
               TOTAL OTHER ASSETS                                                      2,483,939             2,492,351
                                                                                  ---------------       ---------------

           TOTAL ASSETS                                                         $      2,809,504      $      2,625,068
                                                                                  ===============       ===============
       LIABILITIES & STOCKHOLDERS' EQUITY
       ----------------------------------
       CURRENT LIABILITIES
           Accounts payable                                                     $        327,285      $        114,145
           Accounts payable - related party                                               47,085                     -
           Customer deposit                                                               61,215                61,215
           Notes payable                                                                  77,790                61,965
           Accrued interest                                                               31,578                25,337
           Accrued interest to stockholders                                               16,258               183,802
           Equipment lease payable, current portion                                        3,144                     -
           Notes payable to stockholders, current portion                                 86,320             1,025,000
                                                                                  ---------------       ---------------
               TOTAL CURRENT LIABILITIES                                                 650,675             1,471,464
                                                                                  ---------------       ---------------
          LONG-TERM LIABILITIES
           Equipment lease payable, net of current portion                                 5,196                     -
           Notes payable to stockholders, net of current portion                       1,584,566                     -
                                                                                  ---------------       ---------------
               TOTAL LONG-TERM LIABILITIES                                             1,589,762                     -
                                                                                  ---------------       ---------------
          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; 32,992,394 and 30,056,144 shares
               issued and outstanding, respectively                                       32,992                30,056
           Additional paid-in capital                                                  5,060,660             4,273,090
           Stock options and warrants                                                    994,897               646,815
           Accumulated deficit during development stage                               (5,519,482)           (3,796,357)
                                                                                  ---------------       ---------------
           TOTAL STOCKHOLDERS' EQUITY                                                    569,067             1,153,604
                                                                                  ---------------       ---------------
           TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $      2,809,504      $      2,625,068
                                                                                  ===============       ===============

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

</TABLE>
                                                             21
<PAGE>
<TABLE>
<CAPTION>

                                                        ENVIROKARE TECH, INC.
                                                   (A Development Stage Company)
                                               CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                                         Period from
                                                                                                        June 15,1998
                                                     Year Ended                Year Ended              (Inception) to
                                                    December 31,              December 31,              December 31,
                                                        2003                      2002                      2003
                                               -----------------------   -----------------------   ------------------------
<S>                                          <C>                         <C>                      <C>

REVENUES                                       $               62,150    $                    -    $                62,150

COST OF GOODS SOLD                                            (17,500)                        -                    (17,500)
                                               -----------------------   -----------------------   ------------------------

      GROSS PROFIT                                             44,650                         -                     44,650
                                               -----------------------   -----------------------   ------------------------

EXPENSES
      Consulting fees - related parties                       269,651                   152,000                  1,064,106
      Other consulting fees                                         -                   305,773                  1,045,438
      Board of directors fees                                 367,689                         -                    367,689
      Financing costs                                         249,648                         -                    469,290
      Rent                                                          -                    32,851                     82,859
      General and administrative                              286,878                   157,356                    792,298
      Depreciation                                              4,128                     2,055                     11,012
      Professional fees                                       278,868                   176,169                    835,749
      Research and development                                 71,522                    46,005                    298,465
      Wages, salaries, and payroll taxes                       43,625                         -                    175,504
                                               -----------------------   -----------------------   ------------------------
           TOTAL EXPENSES                                   1,572,009                   872,208                  5,142,410
                                               -----------------------   -----------------------   ------------------------

LOSS FROM OPERATIONS                                       (1,527,359)                 (872,208)                (5,097,760)

OTHER EXPENSE
      Gain on sale of assets                                      577                         -                        577
      Interest expense                                       (196,343)                 (163,151)                  (422,299)
                                               -----------------------   -----------------------   ------------------------
           TOTAL OTHER EXPENSE                               (195,766)                 (163,151)                  (421,722)
                                               -----------------------   -----------------------   ------------------------
LOSS BEFORE INCOME TAXES                                   (1,723,125)               (1,035,359)                (5,519,482)

INCOME TAXES                                                        -                         -                          -
                                               -----------------------   -----------------------   ------------------------

NET LOSS                                     $             (1,723,125) $             (1,035,359) $              (5,519,482)
                                               =======================   =======================   ========================


      BASIC AND DILUTED NET LOSS
      PER COMMON SHARE                       $                  (0.05) $                  (0.04)
                                               =======================   =======================

      WEIGHTED AVERAGE NUMBER
      OF BASIC AND DILUTED COMMON
      STOCK SHARES OUTSTANDING                             31,570,042                27,337,240
                                               =======================   =======================




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

</TABLE>
                                                                22
<PAGE>
<TABLE>
<CAPTION>
                                                  ENVIROKARE TECH, INC.
                                               (A Development Stage Company)
                                     CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                                   Preferred Stock     Common Stock                Stock                Other    Other       Total
                                  ----------------- ------------------ Additional Options   Sunscrip-  Accum-   Compre-      Stock-
                                  Number              Number             Paid-in    and       tion     ulated   hensive     holders'
                                 of Share    Amount  of Shares  Amount   Capital  Warrants  Receivable Deficit   Income      Equity
                                 --------- -------- ---------- -------  -------- ---------  ---------- -------  -------     --------
<S>                              <C>       <C>      <C>       <C>      <C>      <C>        <c>         <c>      <c>        <c>
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
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)
Warrants issued for
 financing expense                      -       -          -       -         -     219,642        -           -         -   219,642
Foreign currency
 translation gain                       -       -          -       -         -           -        -           -     4,048     4,048
Net loss for the year
 ended December 31, 2001                -       -          -       -         -           -        -  (1,222,069)        -(1,222,069)
                                 --------- ------ ----------- -------- --------- --------- ---------- ----------  ------- ----------
Balance, December 31, 2001              -  $    - 24,356,144 $24,356   3,320,790  $840,642  $     - $(2,760,998)  $    - $1,424,790
                                 --------- ------ ----------- -------- --------- --------- ---------- ----------  ------- ----------

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

</TABLE>
                                                               23
<PAGE>
<TABLE>
<CAPTION>

                                                  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
                                                -----------  ---------  -------------  -------------  -------------- --------------
<S>                                            <C>          <C>         <C>           <C>            <C>             <C>
Balance, December 31, 2001                       24,356,144  $  24,356  $   3,320,790  $     840,642  $  (2,760,998) $    1,424,790

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 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             -          -              -              -     (1,035,359)     (1,035,359)

                                                ------------  ---------  -------------  -------------  --------------  -------------
Balance, December 31, 2002                       30,056,144     30,056      4,273,090        646,815     (3,796,357)      1,153,604

Issuance of options for board of
 directors fees                                           -          -              -        367,689              -         367,689

Issuance of common stock for $0.20 per
 share for cash with attached warrants
 at an average of $0.05 per share                 1,616,250      1,616        265,759         55,875              -         323,250

Exercise of warrants                              1,320,000      1,320        285,369        (88,688)                       198,001

Issuance of warrants for debt
 financing costs                                         -          -               -        249,648              -         249,648

Expiration of stock warrants                             -          -         236,442       (236,442)             -              -

Net loss for the year ended December 31, 2003            -          -               -              -     (1,723,125)     (1,723,125)

                                                ------------  ---------  -------------  -------------  --------------  -------------
Balance, December 31, 2003                        32,992,394  $ 32,992   $  5,060,660   $    994,897   $ (5,519,482)   $    569,067
                                                ============  =========  =============  =============  ==============  =============






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

</TABLE>
                                                             24
<PAGE>

<TABLE>
<CAPTION>
                                                 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,
                                                                 2003              2002               2003
                                                            ---------------   ----------------   ----------------
<S>                                                       <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss                                              $   (1,723,125)   $    (1,035,359)   $    (5,519,482)
      Adjustments to reconcile net loss
          to net cash used by operating activities:
      Depreciation                                                   4,128              2,055             11,012
      Intangible asset expensed                                          -              9,520              9,520
      Impairment of molds                                                -                  -             27,000
      Gain on sale of assets                                          (577)                 -               (577)
      Stock options issued for consulting fees                           -             52,173            889,173
      Stock options issued for directors fees                      367,689                               367,689
      Common stock issued for consulting fees                            -            112,000            112,000
      Warrants issued for financing expense                        249,648                  -            469,290
      Interest paid with issuance of debt                          350,890                  -            350,890
      Customer deposit                                                   -             61,215             61,215
      Increase in inventory                                        (43,216)                 -            (43,216)
      Increase in prepaid expenses                                  (5,916)                 -             (5,916)
      Increase (decrease) in accounts payable                      260,226             (7,536)           374,371
      Increase (decrease) in accrued interest payable             (146,549)           159,902             62,590
                                                            ---------------   ----------------   ----------------
      Net cash used by operating activities                       (686,802)          (646,031)        (2,834,441)
                                                            ---------------   ----------------   ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
      Deposits and retainers                                        39,888            (40,129)           (22,465)
      Purchase of molds                                           (111,912)           (16,000)          (197,912)
      Payments on license agreement                                      -                  -           (525,000)
      Patent costs                                                       -                  -            (10,129)
      Purchase of equipment                                           (968)            (7,262)           (16,275)
      Proceeds from sale of equipment                                1,275                  -              1,275
                                                            ---------------   ----------------   ----------------
       Net cash used in investing activities                        (71,717)           (63,391)          (770,506)
                                                            ---------------   ----------------   ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
      Payment of equipment lease                                    (1,123)                 -             (1,123)
      Payment of notes payable                                      (5,304)                 -             (5,304)
      Proceeds from sale of preferred stock                              -                  -            250,000
      Proceeds from sale of common stock and
         exercise of warrants                                      521,250            600,000          2,081,049
      Repurchase of common stock                                         -                  -             (7,500)
      Proceeds from issuance of notes payable
         to related parties                                        300,000                  -          1,353,635
                                                            ---------------   ----------------   ----------------
      Net cash provided by financing activities                    814,823            600,000          3,670,757
                                                            ---------------   ----------------   ----------------
Increase (decrease) in cash                                         56,304           (109,421)            65,810
Cash, beginning of period                                            9,506            118,927                  -
                                                            ---------------   ----------------   ----------------
Cash, end of period                                         $       65,810    $         9,506    $        65,810
                                                            ===============   ================   ================
SUPPLEMENTAL CASH FLOW INFORMATION:
      Interest paid                                         $            -     $         3,249   $        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
      Warrants issued for financing activities              $      249,649    $             -    $       469,291
      Stock options issued for consulting fees              $            -    $        52,173    $       889,173
      Stock options issued for directors fees               $      367,689    $             -    $     1,204,689
      Common stock issued for consulting fees               $            -    $       112,000    $       112,000
      Stockholder's contribution for equipment              $            -    $             -    $         1,847
      Equipment acquired via capital lease                  $        9,463    $             -    $         9,463

             The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
                                                         25
<PAGE>
                             ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003




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 Flow forming
process  (variously  referred to herein as "TPF Process",  the "Process" or "TPF
technology").  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. 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.

The  Company is in the  development  stage as of  December  31, 2003 and has not
realized any significant revenues from 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.


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.


Revenue Recognition
-------------------

The Company recognizes revenue from product sales upon shipment to the customer.
License revenue is recognized when billable.


Inventory
---------

Inventories,  consisting of products  available for sale, are recorded using the
specific-identification method and valued at the lower of cost or market value.

                                       26
<PAGE>
                             ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003


Going Concern
-------------

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

As shown in the accompanying  financial statements,  the Company has incurred an
accumulated  deficit of $5,519,483,  which includes a net loss of $1,723,125 for
the year ended  December  31,  2003,  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. For the
twelve-month  period  subsequent to December 31, 2003,  the Company  anticipates
that its minimum cash  requirements  to continue as a going concern will be less
than $800,000.

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.   Management
anticipates  that the Company  will realize  licensing  fee revenues in the near
future. See Note 11.

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.


Compensated Absences
--------------------

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.


Development Stage Activities
----------------------------

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. During 2003, the
Company received an initial payment on its licensing  agreement and the purchase
of one  mold,  but this  was not  sufficient  for  recognition  as an  operating
company.




                                       27
<PAGE>
                             ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003

Derivative Instruments
----------------------
In April 2003,  the Financial  Accounting  Standards  Board issued  Statement of
Financial   Accounting  Standards  No.  149,  "Amendment  of  Statement  133  on
Derivative  Instruments and Hedging  Activities"  (hereinafter  "SFAS No. 149").
SFAS No. 149 amends and clarifies the  accounting  for  derivative  instruments,
including certain derivative  instruments  embedded in other contracts,  and for
hedging  activities under SFAS No. 133,  "Accounting for Derivative  Instruments
and Hedging Activities".  This statement is effective for contracts entered into
or modified after June 30, 2003 and for hedging  relationships  designated after
June 30,  2003.  The adoption of SFAS No. 149 is not expected to have a material
impact on the financial position or results of operations of the Company.

The Financial  Accounting Standards Board ("FASB") issued Statement of Financial
Accounting  Standards  ("SFAS")  No. 138,  "Accounting  for  Certain  Derivative
Instruments and Certain Hedging Activities",  which is effective for the Company
as of January 1, 2001.  This  statements  establishs  accounting  and  reporting
standards for derivative  instruments,  including certain derivative instruments
embedded in other  contracts,  and for hedging  activities.  It requires 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, 2003 and 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.


Impaired Asset Policy
---------------------
In August 2001, the Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No. 144,  "Accounting  for the  Impairment  or
Disposal  of  Long-Lived  Assets"  (hereinafter  "SFAS No.  144").  SFAS No. 144
replaces SFAS No. 121,  "Accounting for the Impairment of Long-Lived  Assets and
for  Long-Lived  Assets to Be Disposed Of." 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 has adopted SFAS No. 144, and the
adoption  did not have a  material  impact on the  financial  statements  of the
Company as of December 31, 2003.


Loss Per Share
--------------
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,  2003,  the  Company  had stock  options and
warrants  outstanding,  equivalent  to  approximately  15,600,000  common  stock
shares, which are considered to be anti-dilutive.


                                       28
<PAGE>
                            ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003

Principles of Consolidation
---------------------------

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.


Provision for Taxes
-------------------

Income taxes are provided based upon the liability method of accounting pursuant
to Statement of Financial  Accounting  Standards No. 109  "Accounting for Income
Taxes." 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, 2003,  the Company had net deferred tax assets  calculated at an
expected rate of 34% of approximately  $1,300,000  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, 2003.  The
significant  components  of the  deferred  tax asset at  December  31,  2003 and
December 31, 2002 were as follows:

                                                   December 31,   December 31,
                                                       2003          2002
                                                   -----------    ------------

Net operating loss carryforward                    $3,900,000     $ 2,600,000
                                                   ===========    ============

Stock options issued under a non-qualified plan:
     For the year ended December 31, 2002          $              $   164,173

     For the year ended December 31, 2003             367,689               -
                                                   ===========    ============


Deferred tax asset                                  1,300,000         800,000
Deferred tax asset valuation allowance           $ (1,300,000)     $ (800,000)


At December  31,  2003,  the Company has net  operating  loss  carryforwards  of
approximately  $3,900,000,  which  expire in the years 2018  through  2023.  The
Company recognized  approximately  $367,000 and $164,000 of losses from issuance
of stock options for services in fiscal 2003 and 2002,  respectively,  which are
not deductible for tax purposes and are not included in the above calculation of
deferred tax assets.  The change in the allowance account from December 31, 2002
to December 31, 2003 was $500,000.

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.  In past years, the Company had activity that resulted in
required  disclosure  of  comprehensive  income  and/or loss.  The Company is no
longer involved in these  activities and therefore no longer is required to have
financial statement disclosure regarding comprehensive income.
                                       29
<PAGE>

                            ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003

Recent Accounting Pronouncements
--------------------------------

In May 2003,  the  Financial  Accounting  Standards  Board  issued  Statement of
Financial  Accounting  Standards  No. 150,  "Accounting  for  Certain  Financial
Instruments with  Characteristics  of Both Liabilities and Equity"  (hereinafter
"SFAS  No.  150").  SFAS No.  150  establishes  standards  for  classifying  and
measuring certain financial instruments with characteristics of both liabilities
and equity and requires that those  instruments  be classified as liabilities in
statements of financial  position.  Previously,  many of those  instruments were
classified  as  equity.  SFAS No. 150 is  effective  for  financial  instruments
entered  into or modified  after May 31, 2003 and  otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. The Company
has determined there will be no impact with the adoption of this statement.

In December 2002, the Financial  Accounting  Standards Board issued Statement of
Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation
- Transition and Disclosure"  (hereinafter  "SFAS No. 148"). SFAS No. 148 amends
SFAS No. 123, "Accounting for Stock-Based  Compensation," to provide alternative
methods of transition  for a voluntary  change to the fair value based method of
accounting for stock-based  employee  compensation.  In addition,  the statement
amends  the  disclosure  requirements  of  SFAS  No.  123 to  require  prominent
disclosure in both annual and interim  financial  statements about the method of
accounting for stock-based  employee  compensation  and the effect of the method
used on reported  results.  The  provisions  of the  statement are effective for
financial  statements  for fiscal  years ending  after  December  15, 2002.  The
Company currently reports stock issued to employees under the rules of SFAS 123.
Accordingly, there is no change in disclosure requirements due to SFAS 148.

In June 2002,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards No. 146,  "Accounting for Costs Associated with
Exit or  Disposal  Activities"  (hereinafter  "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 is
effective for activities  after  December 31, 2002.  There has been no impact on
the Company's financial position or results of operations from adopting SFAS No.
146.



                                       30
<PAGE>
                            ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003


In April 2002,  the Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44
and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical  Corrections"
(hereinafter "SFAS No. 145"), which updates,  clarifies and simplifies  existing
accounting pronouncements.  FASB 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.  As a result, FASB
No. 64, which amended FASB No. 4, was rescinded,  as it was no longer necessary.
FASB No. 44,  "Accounting for Intangible Assets of Motor Carriers",  established
the accounting  requirements  for the effects of transition to the provisions of
the Motor Carrier Act of 1980. Since the transition has been completed, FASB No.
44 is no longer necessary and has been rescinded.  SFAS No. 145 amended FASB No.
13  to  eliminate  an   inconsistency   between  the  required   accounting  for
sale-leaseback  transactions  and the  required  accounting  for  certain  lease
modifications  that have  economic  effects  that are similar to  sale-leaseback
transactions.  The Company  adopted SFAS No. 145 and the adoption did not have a
material effect on the financial  statements of the Company at December 31, 2003
and 2002.

In  January  2003,  the  Financial   Accounting   Standards  Board  issued  FASB
Interpretation  No.  46,   "Consolidation  of  Variable  Interest  Entities,  an
Interpretation  of ARB No. 51"  (hereinafter  "FIN 46"). FIN 46 requires certain
variable interest entities to be consolidated by the primary  beneficiary of the
entity if the equity investors in the entity do not have the  characteristics of
a controlling  financial  interest or do not have sufficient  equity at risk for
the entity to finance its activities without additional  subordinated  financial
support from other  parties.  FIN 46 is effective for all new variable  interest
entities  created or acquired  after January 31, 2003.  The provisions of FIN 46
must be applied for the first interim or annual period  beginning after June 15,
2003.  The Company does not have any entities  that  require  disclosure  or new
consolidation as a result of adopting the provisions of FIN 46.


Research and Development Costs
------------------------------

Costs of research and development are expensed as incurred.

                                       31
<PAGE>
                           ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003


Use of Estimates
----------------

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.


Reclassification
----------------

Certain  amounts  from prior  periods have been  reclassified  to conform to the
current period presentation. This reclassification has resulted in no changes to
the Company's accumulated deficit or net losses presented.


NOTE 3 - INTANGIBLE ASSETS

On March 30, 2001, the Company completed a license agreement with  Thermoplastic
Composite Designs, Inc. ("TCD") and received a license that 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  E Pallet.  The  license  fee is a  one-time  fee of
$525,000 that was paid during the year ended December 31, 2001.

On  December  1,  2000,  the  Company  through  its   wholly-owned   subsidiary,
Electroship Acquisition Corporation,  acquired technology rights in exchange for
shares of the Company's common stock. See Note 6. 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.  The assets  acquired  were valued
using  the  trading  price  of  the  Company's  common  stock  at  the  date  of
acquisition.

The Company intends to amortize the  aforementioned  intangible  assets once the
assets' useful lives begin.

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.

                                       32
<PAGE>
                            ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003

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,           December 31,
                                             2003                   2002
                                       ----------------      ----------------
Furniture and Fixtures                 $       7,129         $       8,144
Less:  Accumulated Depreciation                1,701                 1,358
                                       ----------------      ----------------
Net Furniture & Fixtures               $       5,428         $       6,786
                                       ================      ================

Office Equipment                       $      18,167         $       9,009
Less:  Accumulated Depreciation                6,348                 5,526
                                       ----------------      ----------------
Net Office Equipment                   $      11,819         $       3,483
                                       ================      ================
Molds                                  $     170,912         $      59,000
                                       ================      ================


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.

During the year ended December 31, 2003, the Company purchased  additional molds
with a  total  cost of  $111,912  to be used by the  Company  for  research  and
development  and have not yet been placed in service.  As with the other  second
generation  molds, in the event that the 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.


NOTE 5 - SHORT-TERM DEBT


Notes Payable
-------------

During 2001,  shareholders loaned the Company $1,025,000.  All of the notes bear
interest  at 15% per annum,  are  unsecured,  mature two years from the dates of
issuance and have three common  stock  warrants  attached to each dollar of debt
with an  exercise  price of $0.195 per share.  These  notes  matured in 2003 and
their  principal and accrued  interest  were rolled into new 3-year  notes.  See
Notes 6 and 9. 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.  The Company has not  received  any further
information  on this  action  during the year ended  December  31, 2003 but will
continue  to accrue  interest on the note.  Interest  accrued for the year ended
December 31, 2003 was $6,150.
                                       33
<PAGE>
                            ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003


NOTE 6 - RELATED PARTY NOTES PAYABLE

During the year ended December 31, 2003,  the Company  entered into a promissory
note between the Company two shareholders,  in the principal amount of $100,000.
The note bears an interest  rate of 15% per annum with  principal  and  interest
payment payable in 36 equal monthly  installments of $3,467 commencing September
1, 2003.  Three common stock warrants are attached to each dollar of debt,  with
an exercise price of $0.20 per share.  These warrants are fully  exercisable for
up to three years from the dates of  issuance.  See Note 7. The Company has paid
$10,400 on the note with interest of $5,095 being paid.

During the year ended December 31, 2003,  the Company  entered into a promissory
note with an directer and shareholder,  in the principal amount of $200,000. The
note bears an interest rate of 15% per annum with principal and interest payment
payable in 36 equal monthly  installments of $6,933 commencing  January 1, 2003.
Three  common  stock  warrants  are  attached  to each  dollar of debt,  with an
exercise price of $0.20 per share.  These warrants are fully  exercisable for up
to three years from the dates of issuance. See Note 9.

Also in December 2003, the Company rolled all of its  outstanding  notes payable
and accrued  interest  to related  parties  into new notes.  These notes bear an
interest  rate of 12% per annum with  interest  only  payable  in equal  monthly
installments  of varying  amounts,  commencing on January 1, 2003.  Common stock
warrants totaling 5,125,000 were attached to these loans, with an exercise price
of $0.20 per share.  These warrants are fully  exercisable for up to three years
from the dates of issuance. See Note 9.

Accrued  interest  on  these  notes  totaled  $16,259  and is  reflected  in the
financial statements.


NOTE 7 - COMMON STOCK

During the year ended December 31, 2003, the Company received  $323,250 from the
private  sale of  1,616,250  shares of its common  stock at $0.20 per share.  In
addition, these purchasers received warrants to purchase one additional share of
common  stock for each  share  purchased,  exercisable  at $0.40 per share for a
period of one year. See Note 9

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  1,320,000  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.  Exercise  prices  for the new  warrants  are  $0.75  per share (as to
warrants  issued in a 2001 equity private  placement) and $0.65 per share (as to
warrants issued in a 2002 equity private placement). See Note 9.

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.


                                       34
<PAGE>
                            ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003

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 was
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.


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 the
years  ended  December  31,  2003  and  2002:  risk-free  interest  rate  of 4%,
volatility of 69% and 91%, respectively, and terms of one to ten years.

                                       35
<PAGE>
                            ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003


Warrants
--------

During the year ended  December 31,  2003,  the Company  received an  additional
$323,250 from the private sale of 1,616,250  shares of its common stock at $0.20
per share.  In  addition,  these  purchasers  received  warrants to purchase one
additional share of common stock for each share purchased,  exercisable at $0.40
per share for a period of one year. The warrants were valued at $72,786.

A warrant  agreement  between the Company  and two  shareholders  dated July 22,
2003,  was approved by the board of directors in minutes  signed  September  21,
2003. These shareholders  received warrants to purchase 300,000 shares of common
stock,  exercisable at $0.20 per share,  expiring on July 22, 2006. The value of
the  warrants  issued  was $0.12 per  share,  or  $34,260,  and is  included  in
operating expense in the financial statements. See Note 6.

A warrant  agreement  between the Company and another  director and  shareholder
dated December 1, 2003, was approved by the board of directors.  The shareholder
received  warrants to purchase  600,000  shares of common stock,  exercisable at
$0.20 per share,  expiring on December 1, 2006. The value of the warrants issued
was $0.13 per share,  or $76,500,  and is included in  operating  expense in the
financial statements. See Note 6.

In December 2003, the Company  renegotiated  its  outstanding  loans and accrued
interest.  The Company  entered  into new loan  agreements  and  terminated  the
outstanding  3,075,000  warrants that were attached to the prior loans.  Warrant
agreements  were  signed by the  Company and the lenders on December 1, 2003 and
was  approved  by the board of  directors.  The  lenders  received  warrants  to
purchase 5,175,000 shares of common, exercisable at $0.24 per share, expiring on
December 1, 2006.  The value of the warrants  was $0.03 per share,  or $138,888,
and is included in operating expense in the financial statements. See Note 6.

In February  2003,  the exercise  price of 1,320,000  warrants was adjusted from
$0.50 to $0.15. All of these warrants were subsequently exercised,  resulting in
the issuance of 1,320,000 shares of common stock for $198,000. In addition,  the
Company issued 1,320,000  warrants to these investors,  of which 600,000 have an
exercise  price of $0.65,  and 720,000  have an exercise  price of $0.75.  These
warrants expire on February 14, 2005.

                                       36
<PAGE>
                            ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003

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 6.

At December 31, 2003, 3,355,000 warrants expired, which were valued at $236,422.

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 6.

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 6.

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 6.

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 6. 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
6.

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 5.

Stock Options
-------------

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.
                                       37
<PAGE>
                            ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003


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.

In October 2003, the Company  granted  options to purchase  1,787,500  shares of
common stock to new members of the board of directors.  These options are valued
at $367,689.

<TABLE>
<CAPTION>

                                                                                               Weighted
                                                                                           Average Exercise
                                                                                                Price
                                                                          Shares
                                                                      ---------------      -----------------
<S>                                                                  <C>                 <C>
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
                                                                      ===============      =================

Outstanding at January 1, 2003                                               700,000       $           0.43
Granted                                                                    1,787,500                   0.21
Expired                                                                            -                      -
                                                                      ---------------      -----------------
Outstanding and exercisable at December 31, 2003                           2,487,500       $           0.27
                                                                      ===============      =================



Weighted average fair value of options granted during the year
ended December 31, 2003                                                                    $           0.30
                                                                                           =================



 Equity Compensation Plans Approved         Shares Issuable Upon         Weighted Average          Shares
                                          Exercise of Outstanding                               Available for
          by Shareholders                         Options                 Exercise Price          Issuance
-------------------------------------    ---------------------------    -------------------    ----------------
1999 Equity Incentive Plan                                  700,000        $   0.43                  3,300,000
                                         ---------------------------                           ----------------
Total                                                       700,000                                  3,300,000
                                         ===========================                           ================


</TABLE>
                                       38
<PAGE>
                            ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003

NOTE 10 - RELATED PARTIES

In October 2003, the Company granted  1,787,500 stock option enabling the option
holder to purchase an equivalent  number of common stock shares to six directors
of the Company.

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 a
director  of the  Company.  See Note 10. A new  president  and  chief  executive
officer was  appointed to the Company in 2003.  Under the  employment  agreement
signed on October 1, 2003,  the Company will pay him $140,000 for his first year
of  employment,  $175,000  for the second  year,  and  $200,000 or the  industry
standard  (whichever  is  greater)  for the third year of the  contract.  Of the
compensation, $70,000 of the first year and $85,000 of the second year contracts
will be recorded as deferred  compensation.  Annual  interest equal to the prime
lending rate pus 2% will be accrued each quarter.  Accordingly,  the Company has
accrued $17,000 of deferred  compensation  and $263 of interest in the financial
statements.  Additionally,  the  Company  will grant to this  officer  2,000,000
options to purchase  shares of common stock at a price of $0.23 per share,  with
two-thirds  of the  warrants  vesting  on the  first  anniversary  date  and the
remaining to vest on the second  anniversary  date.  Following SFAS No. 123, the
value of these warrants will be recognized at the time they vest.

A new director of  operations  was  appointed to the Company in 2003.  Under the
employment agreement signed on October 1, 2003, the Company will pay him $96,000
for his first year of employment,  $100,000 for the second year, and $120,000 or
the industry standard (whichever is greater) for the third year of the contract.
Of the  compensation,  $36,000 of the first year and  $30,000 of the second year
contracts will be recorded as deferred  compensation.  Annual  interest equal to
the prime  lending rate pus 2% will be accrued each  quarter.  Accordingly,  the
Company has accrued $9,000 of deferred  compensation and $135 of interest in the
financial  statements.  Additionally,  the Company  will grant to this  director
500,000  options  to  purchase  shares of  common  stock at a price of $0.23 per
share, with two-thirds of the warrants vesting on the first anniversary date and
the remaining to vest on the second  anniversary  date.  Following SFAS No. 123,
the value of these warrants will be recognized at the time they vest.

The former executive vice president was appointed the chief operating officer of
the Company in 2003.  Under the employment  agreement signed on October 1, 2003,
the Company will pay him $110,000 for his first year of employment, $140,000 for
the second year,  and $160,000 or the industry  standard  (whichever is greater)
for the third year of the contract.  Of the  compensation,  $50,000 of the first
year and  $60,000 of the second  year  contracts  will be  recorded  as deferred
compensation.  Annual  interest  equal to the prime  lending rate pus 2% will be
accrued each quarter.  Accordingly,  the Company has accrued $12,500 of deferred
compensation and $187 of interest in the financial statements. Additionally, the
Company will grant this officer  1,200,000  options to purchase shares of common
stock at a price of $0.23 per share,  with two-thirds of the warrants vesting on
the first  anniversary date and the remaining to vest on the second  anniversary
date.  Following SFAS No. 123, the value of these warrants will be recognized at
the time they vest.

                                       39
<PAGE>
                            ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003


The former president,  secretary,  and director of the Company, elected on March
26, 2001,  received  $32,000 and $82,000 in cash from the Company for consulting
services   rendered   during  the  years  ended  December  31,  2003  and  2002,
respectively.  During the year ended  December  31,  2003,  he resigned  and new
president was elected.

The former  executive vice  president of the Company,  elected on July 15, 2002,
received  $65,920 and $35,000 in cash for consulting fees during the years ended
December  31, 2003 and 2002,  respectively.  During the year ended  December 31,
2003, he resigned this position and was elected chief operating officer.

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 the then
president of the Company.  See Note 9.  Effective May 1, 2001,  this  individual
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 him
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 the
former vice president of administration of the Company, and the former executive
vice  president  of the  Company.  These  gentlemen  resigned  their  respective
positions  with the Company on November  28, 2001.  The options  granted to them
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 a
member of the board of directors of the Company.  Effective  September 13, 2001,
this person  resigned as a member of the board of directors of the Company.  The
options granted to this person expired unexercised on March 13, 2002.

Stock options in the amount 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
9. 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 9 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 in the amount
of $15,000.  This loan was retired  during  December  2001 in  consideration  of
consulting services provided to the Company by this individual.

See Note 6 for related party notes payable.

                                       40
<PAGE>

                            ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003

NOTE 11 - COMMITMENTS AND CONTINGENCIES


Merger Agreement with Thermoplastic Composite Designs, Inc.
-----------------------------------------------------------

The Company and  Thermoplastic  Composite  Designs,  Inc. ("TCD") entered into a
merger  agreement  dated March 30, 2001 and amended  September  28, 2003,  which
provides,  as  amended,  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 dollars
($5.00) to the extent that this shall occur prior to March 1, 2005. In the event
that the shares do not attain that price prior to that date,  the Company has to
option to close this merger by giving  notice within 10 days after March 1, 2005
and close  upon  payment  of  $15,000,000.  The  purchase  price  shall  include
3,000,000  shares of the  Company's  common  stock plus stock  and/or  cash,  if
necessary,  to equal the purchase price, at the Company's option. 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.


Agreement with Schaefer Systems International, Inc.
---------------------------------------------------

On March 28, 2003, the Company  entered into a product  development and purchase
agreement  with  Schaefer  Systems  International,   Inc.,  (hereinafter  "SSI")
replacing  a earlier  agreement  dated  August 6, 2002.  Under the terms of this
agreement, and pursuant to performance and dimensional criteria provided by SSI,
the Company will design,  develop and produce a quantity of prototypes for field
testing,  field  trials and  related  approvals.  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 initial term of the contract is
26 weeks.  A payment of $61,215  was made by SSI to the  Company (at the time of
the August 6, 2002  agreement) to facilitate the  development of the proprietary

                                       41
<PAGE>
                            ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 2003


product.  The balance of the development fee is payable:  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 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.

The initial payment, in the amount of $61,215, was made by SSI to the Company to
facilitate  development of the part. The Company currently  recognizes the value
of the  initial  payment  made by SSI to the  Company as a deposit  for  product
development.

The  Company  has  delivered  part of the first run of  development  parts.  The
initial period of the development contract has expired. Due to changes from both
SSI and the company that is constructing  the prototypes,  the final product has
not been finished.  At such time as the product is delivered to SSI in its final
form, the Company will recognize the deposit as revenue.


Consulting Agreement
--------------------

In July 2001, the Company entered into a consulting agreement with a director of
the Company 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  leases  corporate  office  space  located 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 years ended  December 31,
2003 and 2002 were $34,047 and $9,863, respectively.

During the first  quarter of 2001,  the  Company  leased office  in Boca  Raton,
Florida and anticipated  relocating its executive  offices to Boca Ratone during
2001,  but plans changed resulting in the  Company seeking a subleasee to assume
the lease and office space at the Boca Raton  location.  A security  deposit and
last month's rent were paid in the amount of $8,412. Currently the Company has a
sublease in place and is  responsible  for $1,764 monthly of the total amount of
$4,495 per month. Total payments for years ended December 31, 2003 and 2002 were
$24,692 and $13,000, respectively.

Future annual minimum lease payments for the terms of the Orlando and Boca Raton
lease  agreements  as of December  31, 2002 are as follows for the years  ending
December 31:

                          Orlando Office            Boca Raton Office
                        --------------------     ------------------------
         2004           $            32,819      $                36,272
         2005           $            22,455      $                37,725
         2006           $                 -      $                 3,270


                                       42

<PAGE>
                            ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               December 31, 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.  During the year ended December 31, 2003, the two
companies  agreed to not complete the steps outlined in the letter agreement and
forgo the merger negotiations.


Capital Leases
--------------

During the year ended December 31, 2003, the Company acquired computer equipment
through two capital leases. The Company recognizes the value of the equipment in
property,  plant  and  equipment  in the  financial  statements  and  the  lease
liability in both current liabilities and long-term liabilities on the financial
statements.  The leases,  totaling $9,463, are for 36 months,  with interest and
principal payments of $345 per month.  Interest of $346 was paid during the year
ended December 31, 2003.


NOTE 12 - SUBSEQUENT EVENTS

Subsequent  to the date of  these  financial  statements,  the  Company  sold an
additional  1,378,750 share of common stock for $275,750 ($0.20 per share). Each
share of common stock has one warrant  attached for the purchase of one share of
common  stock at a price of $0.40.  The  warrants  were valued at  approximately
$82,000.



                                       43
<PAGE>
ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.


                                    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, 2002,  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
----                               ---                    --------
Dr. Nicholas Pappas                 74               Executive Chairman of
                                                      the Board of Directors

Steve Pappas                        60               Director

Jonathan Edelstein                  61               Director

Dr. E. Gary Cook                    59               Director

Dr. Walter Gerasimowicz             51               Director

Dr. John Verbicky                   52               Director, President and CEO

George Kazantzis                    53               Director,
                                                     Chief Operating Officer


     Dr.  Nick  Pappas,  Director  and as  Executive  Chairman  of the  Board of
Directors.  Dr.  Pappas  retired from the DuPont  Company  after 34 1/2 years of
service where he was Executive Vice  President and Member of DuPont's  Executive
Committee.  His  background  at DuPont was in coatings and polymers  technology.
After DuPont,  Dr. Pappas  served as President  and Chief  Operating  Officer of
Rollins  Environmental  Services and later Vice  Chairman of the Board from July
1991 to March 1996.

He is a member of the  Advisory  Board  for the Yale  Institute  for  Biospheric
studies,  Vice  Chairman  of the Board of  Biotraces,  Inc.  and a member of the
Boards of Directors of Yenkin  Majestic Paint Co. and  Integrated  Environmental
Technologies.  He is a former  Director of Nova  Chemicals,  Witco Chemicals and
Chemfab Corporation where he was Chairman of the Board.

Dr. Pappas has a Bachelor of Science  degree in chemistry  from Yale  University
and a Ph.D. degree in organic chemistry from Brown University.

     Steve  Pappas,  Director,  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 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

                                       44
<PAGE>

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.

     Dr. Gary Cook: Director. Dr. Cook joined E. I. DuPont in 1969 as a Research
Chemist.  Remaining  with  DuPont  for 23  years,  he held a  number  of  senior
management  positions,  including  Vice  President  of  Medical  Products,  Vice
President   and  General   Manager  of  Publishing   and   Printing,   and  Vice
President-Corporate Plans.

He joined Ethyl  Corporation  as Senior Vice  President and  President-Chemicals
Group and  Director  in 1992.  Dr.  Cook  later  served as  President  and Chief
Operating Officer of Albemarle Corporation,  the former Chemicals Group spun off
from Ethyl as the Albemarle  Corporation as an  independently  traded  specialty
chemical company.  He was named Chairman,  President and Chief Executive Officer
of Witco  Corporation  in 1996. He served in that  capacity  until the merger of
Witco and Crompton and Knowles in 1999,  at which time he was named  Chairman of
the merged company, CKWitco.

Dr. Cook has served on numerous industry association boards,  including those of
the Chemical Manufacturers Association,  the Soap and Detergent Association, the
Graphic  Arts  Technical  Foundation,  and  the  Health  Industry  Manufacturers
Association..   He  is   currently  a  director  of  Trimeris   Corporation,   a
biopharmaceutical company and Louisiana-Pacific Corporation, a building products
company.  Dr. Cook is also currently serving as Executive Chairman of Integrated
Environmental  Technologies,   LLC,  a  private  company  providing  proprietary
waste-to-energy and waste-to- hydrogen systems.

Dr. Cook received his B.S. in Chemistry  from the University of Virginia and his
Ph.D. in Chemistry from Virginia Polytechnic Institute and University.

     Dr.  Walter V.  Gerasimowicz:  Director  served as a Director  of  Advisory
Services  and  Chief  Investment  Strategist  for high net  worth  investors  in
Lehman's Private Client Services  Division.  As a Senior  Vice-President  he was
responsible for portfolio  allocation,  construction  and rebalancing  both on a
global and on a domestic  basis,  as well as for risk management and performance
attribution.  In his work he deals with all security classes  (fixed-income  and
equity), as well as with index,  derivative products and alternative investments
such as private equity and hedge funds,  which can be utilized both to diversify
and implement long and/or short-term allocation decisions. Additionally, tax and
monetization strategies are an integral part of his work.

Prior to assuming his duties at Lehman  Brothers,  Dr.  Gerasimowicz was Head of
the  International  Portfolio  Advisory Group at J.P.  Morgan where he pioneered
state-of-the art risk management techniques including downside risk measures and
methodologies.  He also  specialized  in global and  international  fixed-income
strategies as it related to benchmark  design,  replication and  out-performance
for major  institutions  including central banks,  state pension funds and large
endowment funds. Additionally,  he has worked closely with sovereign entities in
managing debt (re)  issuance on liability  side of the balance  sheet.  Prior to
joining J.P.  Morgan he worked as a Senior  Scientist  for the U.S.D.A.  and the
Naval Research  Laboratories  (NLR) in Washington,  D.C. where he specialized in
multiple-quantum  nuclear  magnetic  resonance  and  solid-state   thermodynamic
research.

Dr.  Gerasimowicz  has a B.S. in  Chemistry  from Ursinus  College,  MS and Ph.D
degree in Physical  Chemistry  from  Villanove  University and an MBA in Finance
from Wharton School of the University of Pennsylvania.

     Dr. John Verbicky, has over twenty-five years of business experience in the
high performance  materials and plastic  composites  industry,  most recently as
President  and  CEO of  Chemfab  Corporation,  a  global  manufacturer  of  high
performance composites.  During his tenure as CEO, Chemfab grew over 60% to $125
million in  revenues  and  expanded  its  presence  in the U.S.,  Europe,  South
America,  Japan  and  China.  Prior to  Chemfab,  he served  as  Manager  in the
Technology  Development  and  Commercialization  area for the  General  Electric
Company leading a series of successful development and commercialization efforts
for GE Plastics and GE Silicones.

Dr.  Verbicky  received a PhD.  Degree in Physical  Organic  Chemistry  from the
Georgia  Institute of Technology and holds 19 US and 7 foreign  patents and more
than 20 technical publications. He is a member of the American Chemical Society,
the EPA Science Advisory Board and the Society of Plastics Engineers.

                                       45
<PAGE>

     George Kazantzis, Director and Chief Operative Officer of the Company since
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. 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 Corporate  Performance Advisors Ltd., Thailand,  where he
oversaw the  restructuring of an automotive  finance company with 42 offices and
400  employees,  from 1998 to 1999.  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.

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,  2003,  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).

                                       46
<PAGE>

     Summary of Compensation
     -----------------------

     The following table (the "Summary  Compensation  Table") sets forth certain
information regarding compensation paid to each of the Company's Named Executive
Officers.
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
                                                Annual Compensation         Long Term Compensation
-----------------------------------------------------------------------------------------------------------------------------------
                                                                            Awards                          Payouts
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>     <C>     <C>     <C>        <C>              <C>             <c>        <c>

                                                                 Other      Securities       Restricted                  All
Name and                                                         Annual     Under            shares or                   Other
Principal                                                        Compen-    Options          Restricted     LTIP         Compen-
Position                               Year   Salary ($)Bonus ($)sation ($) SARs Granted ($) Share Units ($)Payouts ($)  sation ($)
-----------------------------------------------------------------------------------------------------------------------------------
Dr. Nicholas Pappas,                    2001        -        -          -               -               -            -           -
Executive Chairman of Board
 of Directors                           2002        -        -          -               -               -            -           -
                                        2003        -        -          -       1,200,000               -            -           -

Steve Pappas, Director                  2001   54,500        -          -               -               -            -           -
                                        2002   82,000        -          -               -               -            -           -
                                        2003   24,000        -          -               -               -            -           -

Jonathan Edelstein, Director            2001        -        -          -               -               -            -           -
                                        2002        -        -          -         250,000               -            -           -
                                        2003        -        -          -         400,000               -            -           -

Dr. E. Gary Cook, Director              2001        -        -          -               -               -            -           -
                                        2002        -        -          -               -               -            -           -
                                        2003        -        -          -         400,000               -            -           -

Dr. Walter Gerasimowicz, Director       2001        -        -          -               -               -            -           -
                                        2002        -        -          -               -               -            -           -
                                        2003        -        -          -         400,000               -            -           -

Dr. John Verbicky                       2001        -        -          -               -               -            -           -
Director, President, and CEO            2002        -        -          -               -               -            -           -
                                        2003   23,858        -          -       2,000,000               -            -           -

George Kazantzis                        2001                 -          -               -               -            -           -
Director, Chief Operating Officer       2002                 -          -               -               -            -           -
                                        2003   63,077        -          -       1,200,000               -            -           -
-----------------------------------------------------------------------------------------------------------------------------------

</TABLE>


     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 other than set
out in Compensation of Directors and Remuneration of Senior Officers below.

     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 most recently completed Fiscal Year, none of the Named Executive
Officers held or exercised options or stock appreciation rights.

                                       47
<PAGE>

     Compensation of Directors and Remuneration of Senior Officers
     -------------------------------------------------------------

     Dr. Nick Pappas was granted warrants to purchase the Company's common stock
at a price of $0.23,  600,000  exercisable from October 1, 2003 until October 1,
2013 and 600,000  exercisable  beginning  October 1, 2004 until October 1, 2014.
One third of the  warrants are subject to  forfeiture  in each of the second and
third  years in the event  that Dr.  Pappas  resigns  or refuses to stand for re
election.

     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. For
accounting purposes the Company valued the stock option granted to Mr. Edelstein
at $40,000.  The Company  made no other  payments to any  director  for services
provided as a director  during  Fiscal 2002.  During 2003 Mr.  Edelstein Dr. was
granted additional warrants to purchase the Company's common stock at a price of
$0.23,  200,000  exercisable  from  November 1, 2003 until  November 1, 2013 and
200,000 exercisable beginning November 1, 2004 until November 1, 2014.

     Dr. Gary Cook was granted  warrants to purchase the Company's  common stock
at a price of $0.23, 200,000 exercisable from November 1, 2003 until November 1,
2013 and 200,000 exercisable  beginning November 1, 2004 until November 1, 2014.
One third of the  warrants are subject to  forfeiture  in each of the second and
third  years in the event  that Dr.  Cook  resigns  or  refuses  to stand for re
election.

     Dr. Walter V.  Gerasimowicz  was granted warrants to purchase the Company's
common  stock at a price of $0.23,  200,000  exercisable  from  November 1, 2003
until November 1, 2013 and 200,000 exercisable  beginning November 1, 2004 until
November 1, 2014. One third of the warrants are subject to forfeiture in each of
the second and third years in the event that Dr. Gerasimowicz resigns or refuses
to stand for re election.

     Dr. John  Verbicky  President,  CEO and  Director  was granted  warrants to
purchase the Company's common stock at a price of $0.23,  2,000,000  exercisable
from October 24, 2003 until  October 24,  2013. A portion of these  warrants are
subject to forfeiture under certain conditions in Dr. Verbicky 's contract.

     Mr.  George  Kazantzis,  Chief  Operating  Officer and Director was granted
warrants to purchase the  Company's  common  stock at a price of $0.23,  600,000
exercisable  from October 1, 2003 until October 1, 2013 and 600,000  exercisable
beginning October 1, 2004 until October 1, 2014. A portion of these warrants are
subject to forfeiture under certain conditions in Mr. Kazantzis' contract.

     The grants  directors  an  Honorarium  of $1,500 per meeting for  Executive
Chairman of the Boards of Directors,  $1,000 per meeting for all other Directors
attending in person in addition to the options set out above.

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

     Dr. John  Verbicky as President  and CEO entered  into a contract  with the
Company  that  provides  for an initial  base  salary at the annual  rate of One
Hundred  Forty  Thousand  Dollars  ($140,000)  for the  first 12  months  hereof
($70,000 of which will be accrued as deferred compensation); One Hundred Seventy
five Thousand  Dollars  ($175,000)  for the second 12 months hereof  ($85,000 of
which will be accrued as deferred compensation) and Two Hundred Thousand Dollars
($200,000) or industry standard,  whichever is greater,  for the third 12 months
hereof (the "Base  Salary"),  which shall be payable at least as  frequently  as
weekly and not subject to deductions and withholding taxes. The Company,  on the
basis of Dr.  Verbicky's  performance  and the Company's  financial  success and
progress,  shall  review  this  salary  level at least  annually.  All  deferred
compensation  and interest is due and payable to the Dr. Verbicky 36 months from
the date of this  agreement  or sooner  subject  to any  termination  provisions
herein.  Deferred  compensation  will  accrue  interest  at a  annual  rate  two
percentage  points (2%) above the prime  lending  rate as  published in the Wall
Street Journal  (compounded  quarterly).  The relevant  deferred  amount and all
interest so accrued  thereon  shall be an unsecured  general  obligation  of the
Company.  Dr.  Verbicky  is  entitled  to  expenses  reimbursements  and certain
incentives as they are voted by the Board.

                                       48
<PAGE>

     Mr.  George  Kazantzis as COO entered into a contract with the Company that
provides  for an initial  base salary shall be at the annual rate of One Hundred
Ten Thousand Dollars ($110,000) for the first 12 months hereof ($50,000 of which
will be accrued as deferred  compensation);  One Hundred Forty Thousand  Dollars
($140,000) for the second 12 months hereof  ($60,000 of which will be accrued as
deferred  compensation)  and One Hundred Sixty  Thousand  Dollars  ($160,000) or
industry  standard,  whichever is greater,  for the third 12 months  hereof (the
"Base Salary"),  which shall be payable at least as frequently as weekly and not
subject to deductions and withholding  taxes.  The Company,  on the basis of Mr.
George Kazantzis'  performance and the Company's financial success and progress,
shall review this salary level at least annually.  All deferred compensation and
interest  is due and payable to the  contractor  36 months from the date of this
agreement  or sooner  subject to any  termination  provisions  herein.  Deferred
compensation  will accrue  interest at a annual rate two percentage  points (2%)
above the prime lending rate as published in the Wall Street Journal (compounded
quarterly).  The relevant  deferred  amount and all interest so accrued  thereon
shall  be an  unsecured  general  obligation  of the  Company,  due and  payable
according to the terms herein.

     Mr. Erwin  Pruefer as Director of  Operations  entered into a contract with
the Company that provides for an initial base salary shall be at the annual rate
of Ninety Six Thousand Dollars ($96,000) for the first 12 months hereof ($36,000
of which will be accrued as deferred compensation); One Hundred Thousand Dollars
($100,000) for the second 12 months hereof  ($30,000 of which will be accrued as
deferred  compensation)  and One Hundred Twenty Thousand  Dollars  ($120,000) or
industry  standard,  whichever is greater,  for the third 12 months  hereof (the
"Base Salary"),  which shall be payable at least as frequently as weekly and not
subject to deductions and withholding  taxes.  The Company,  on the basis of Mr.
Pruefer's  performance and the Company's  financial success and progress,  shall
review  this salary  level at least  annually.  All  deferred  compensation  and
interest  is due and payable to the  contractor  36 months from the date of this
agreement  or sooner  subject to any  termination  provisions  herein.  Deferred
compensation  will accrue  interest at a annual rate two percentage  points (2%)
above the prime lending rate as published in the Wall Street Journal (compounded
quarterly).  The relevant  deferred  amount and all interest so accrued  thereon
shall  be an  unsecured  general  obligation  of the  Company,  due and  payable
according to the terms herein.
                                       49
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     To the knowledge of the Company's  management,  as of December 31, 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 December 31, 2003.

                                     Amount and Nature of           Percentage
  Name and Address (1)              Beneficial Ownership (2)          of Class
  --------------------             ------------------------          ---------

  James Pappas                          3,300,000  (3)                  10.5%
  Vanessa Houiris                       3,300,000  (3)                  10.5%
  Adrain Alexandru                      2,480,000  (4)
  Steve Pappas                          8,933,400  (5)                  26.2%
  Jonathan Edelstein                      250,000  (6)                   0.1%
  Leo G. Kapakos                          670,000  (7)                   0.1%
  George Kazantzis

  All executive officers and
  directors as a  group                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 February 28, 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.  Includes warrants to purchase 500,000 shares of Common Stock of
     the Company exercisable immediately and until varying dates up to October ,
     2013.

(8)  Includes  warrants  to  purchase  1,100,000  shares of Common  Stock of the
     Company  exercisable  immediately  and until  varying dates up to October ,
     2013.

(9)  Includes  warrants  to  purchase  1,700,000  shares of Common  Stock of the
     Company  exercisable  immediately and until varying dates up to September ,
     2013.


     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.

                                       50
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the year ended December 31, 2003,  the Company  entered into a promissory
note between the Company two shareholders,  in the principal amount of $100,000.
The note bears an interest  rate of 15% per annum with  principal  and  interest
payment payable in 36 equal monthly  installments of $3,467 commencing September
1, 2003.  Three common stock warrants are attached to each dollar of debt,  with
an exercise price of $0.20 per share.  These warrants are fully  exercisable for
up to three years from the dates of  issuance.

During the year ended December 31, 2003,  the Company  entered into a promissory
note with an directer and shareholder,  in the principal amount of $200,000. The
note bears an interest rate of 15% per annum with principal and interest payment
payable in 36 equal monthly  installments of $6,933 commencing  January 1, 2003.
Three  common  stock  warrants  are  attached  to each  dollar of debt,  with an
exercise price of $0.20 per share.  These warrants are fully  exercisable for up
to three years from the dates of issuance.

Also in December 2003, the Company rolled all of its  outstanding  notes payable
and accrued  interest  to related  parties  into new notes.  These notes bear an
interest  rate of 12% per annum with  interest  only  payable  in equal  monthly
installments  of varying  amounts,  commencing on January 1, 2003.  Common stock
warrants totaling 5,125,000 were attached to these loans, with an exercise price
of $0.20 per share.  These warrants are fully  exercisable for up to three years
from the dates of issuance.

     In October 2003, the Company  granted  1,787,500  stock option enabling the
option  holder to purchase an  equivalent  number of common  stock shares to six
directors of the Company.

     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 a
director  of the  Company.  See Note 10. A new  president  and  chief  executive
officer was  appointed to the Company in 2003.  Under the  employment  agreement
signed on October 1, 2003,  the Company will pay him $140,000 for his first year
of  employment,  $175,000  for the second  year,  and  $200,000 or the  industry
standard  (whichever  is  greater)  for the third year of the  contract.  Of the
compensation, $70,000 of the first year and $85,000 of the second year contracts
will be recorded as deferred  compensation.  Annual  interest equal to the prime
lending rate pus 2% will be accrued each quarter.  Accordingly,  the Company has
accrued $17,000 of deferred  compensation  and $263 of interest in the financial
statements.  Additionally,  the  Company  will grant to this  officer  2,000,000
options to purchase  shares of common stock at a price of $0.23 per share,  with
two-thirds  of the  warrants  vesting  on the  first  anniversary  date  and the
remaining to vest on the second  anniversary  date.  Following SFAS No. 123, the
value of these warrants will be recognized at the time they vest.

     A new director of operations  was  appointed to the Company in 2003.  Under
the  employment  agreement  signed on October 1, 2003,  the Company will pay him
$96,000 for his first year of  employment,  $100,000  for the second  year,  and
$120,000 or the industry  standard  (whichever is greater) for the third year of
the contract. Of the compensation,  $36,000 of the first year and $30,000 of the
second year contracts will be recorded as deferred compensation. Annual interest
equal  to  the  prime  lending  rate  pus  2%  will  be  accrued  each  quarter.
Accordingly, the Company has accrued $9,000 of deferred compensation and $135 of
interest in the financial  statements.  Additionally,  the Company will grant to
this director  500,000  options to purchase shares of common stock at a price of
$0.23  per  share,  with  two-thirds  of  the  warrants  vesting  on  the  first
anniversary  date and the  remaining  to vest on the  second  anniversary  date.
Following  SFAS No. 123, the value of these  warrants  will be recognized at the
time they vest.

     The former  executive  vice  president was  appointed  the chief  operating
officer of the Company in 2003. Under the employment agreement signed on October
1, 2003,  the Company will pay him  $110,000  for his first year of  employment,
$140,000 for the second year, and $160,000 or the industry  standard  (whichever
is greater) for the third year of the contract. Of the compensation,  $50,000 of
the first year and  $60,000 of the second  year  contracts  will be  recorded as
deferred  compensation.  Annual  interest equal to the prime lending rate pus 2%
will be accrued each quarter.  Accordingly,  the Company has accrued  $12,500 of
deferred  compensation  and  $187  of  interest  in  the  financial  statements.
Additionally,  the Company will grant this officer 1,200,000 options to purchase
shares of common  stock at a price of $0.23 per share,  with  two-thirds  of the
warrants vesting on the first  anniversary date and the remaining to vest on the
second  anniversary  date.  Following  SFAS No. 123, the value of these warrants
will be recognized at the time they vest.

                                       51
<PAGE>

The former president,  secretary,  and director of the Company, elected on March
26, 2001,  received  $32,000 and $82,000 in cash from the Company for consulting
services   rendered   during  the  years  ended  December  31,  2003  and  2002,
respectively.  During the year ended  December  31,  2003,  he resigned  and new
president was elected.

The former  executive vice  president of the Company,  elected on July 15, 2002,
received  $65,920 and $35,000 in cash for consulting fees during the years ended
December  31, 2003 and 2002,  respectively.  During the year ended  December 31,
2003, he resigned this position and was elected chief operating officer.

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 the then
president of the Company.  See Note 9.  Effective May 1, 2001,  this  individual
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 him
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 the
former vice president of administration of the Company, and the former executive
vice  president  of the  Company.  These  gentlemen  resigned  their  respective
positions  with the Company on November  28, 2001.  The options  granted to them
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 a
member of the board of directors of the Company.  Effective  September 13, 2001,
this person  resigned as a member of the board of directors of the Company.  The
options granted to this person expired unexercised on March 13, 2002.

Stock options in the amount 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
9. 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 9 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 in the amount
of $15,000.  This loan was retired  during  December  2001 in  consideration  of
consulting services provided to the Company by this individual.




                                       52
<PAGE>

ITEM 13.         EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits
            Item 13. Exhibits and Reports on Form 8-K

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   (3)
        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

10.2    Assignment of Patent Application from Electroship Partners to        (3)
        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

10.3    License Agreement between Envirokare Composite Corp. and             (2)
        Thermoplastic Composite Designs, Inc., dated March 30, 2001

10.4    Merger Agreement by and among the Company, Envirokare Composite      (2)
        Corp., Thermoplastic Composite Designs, Inc., Dale Polk, Sr.
        and Dale Polk, Jr., dated March 30, 2001

10.5    Letter Agreement between the Company and Charles H. Stein,           (4)
        dated May 8, 2001

10.6    Agreement and General Release between the Company and                (5)
        Charles H. Stein, dated November 27, 2001

10.7    SSI Product Development and Purchase Agreement, dated August 6, 2002

10.8    New Age Shelters Letter Agreement, dated October 1, 2002

10.10   Promissory Note between the Company and Leo and Betty Kapakos

10.11   Warrant Agreement between the Company and Leo and Betty Kapakos

10.12   Amendment signed the 28th day of September, 2003, amending that
        certain License Agreement entered into on the 30th day of March,
        2001 between Thermoplastic Composite Designs, Inc., a Florida
        corporation, having a business address of 7400 State Road, #46,
        Mims, Florida 32754, and Envirokare Composite Corp., a Delaware
        corporation.
10.13   Amendment signed September 28, 2003 to that certain Merger
        Agreement dated March 30, 2001, by and among, Envirokare Tech, Inc.,
        a Nevada corporation, and Envirokare Composite Corp., a Delaware
        corporation and wholly owned subsidiary of Parent, on the one hand,
        and Thermoplastic Composite Designs, Inc., a Florida corporation,
        Dale Polk, Sr., an individual, and Dale Polk, Jr., an individual
        and, together with Polk Sr.,

10.14   Nick Pappas, Executive Chairman of the Board of
        Directors Letter Agreement

10.15   Nick Pappas, Executive Chairman of the Board of
        Directors  Warrant Agreement

10.16   E. Gary Cook, Director Letter Agreement

10.17   E. Gary Cook, Director Warrant Agreement

10.18   John Verbicky, Director/Chief Executive Officer
        Compensation Agreement

10.19   John Verbicky, Director/Chief Executive Officer Warrant Agreement

                                       53
<PAGE>
ITEM 13.  EXHIBITS  AND REPORTS ON FORM 8-K  (CONTINUED)

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


10.20   George Kazantzis, Director/Chief Operating Officer
        Compensation Agreement

10.21   George Kazantizis, Director/Chief Operating Officer
        Warrant Agreement

10.22   Jonathan Edelstein, Director Warrant Agreement

10.23   Leo Kapakos, Former Director Warrant Agreement

10.24   Erwin Pruefer,  Director of Operations Compensation Agreement

10.25   Erwin Pruefer,  Director of Operations Warrant Agreement

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)

99.1    Officer's Certificate, dated April 14, 2004

99.2    Officer's Certificate, dated April 14, 2004
----------------------------

(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.
(6)      Filed as an exhibit to the Company's Current Report on Form 8-K, filed
         with the Commission on October 3, 2003,and incorporated herein
         by reference.
(7)      Filed as an exhibit to the Company's Current Report on Form 8-K,
         filed with the Commission on October 20, 2003, and incorporated
         herein by reference.
(8)      Filed as an exhibit to the Company's Current Report on Form 8-K,
         filed with the Commission on September 26, 2003, and incorporated
         herein by reference.
(9)      Filed as an exhibit to the Company's Quarterly Report on Form 10-QSB
         for the period ended May 15, 2003, filed with the Commission on
         June 15, 2001, 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
          February 20, 2003.

          A report  on Form 8-K  regarding  Item 5 was filed by the  Company  on
          August 27, 2003.

          A report  on Form 8-K  regarding  Item 5 was filed by the  Company  on
          September 18,2003.

          A report  on Form 8-K  regarding  Item 5 was filed by the  Company  on
          September 26, 2003.

          A report  on Form 8-K  regarding  Item 5 was filed by the  Company  on
          October 3, 2003.

          A report  on Form 8-K  regarding  Item 5 was filed by the  Company  on
          October 20, 2003.
                                       54
<PAGE>



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.



                                       55
<PAGE>




                                   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 April 14, 2004.


                                      ENVIROKARE TECH, INC.
                                      Registrant

                                      By:   s/s John Verbicky
                                      -----------------------------------
                                      Name:  John Verbicky
                                      Title: President, Chief Operating Officer





                                       56

<PAGE>