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,  2001
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.)


  2470 Chandler Avenue, Suite 5, Las Vegas, Nevada               89120
(Address of Principal Executive Offices)                       (Zip Code)

Registrant's telephone number, including area code  (702) 262-1999

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

       Title of each class             Name of each exchange on which registered
              None                                   Not Applicable

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

                          Common Stock, Par Value $.001
                                (Title of Class)


<PAGE>


     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. [_]

     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
February 28, 2002 is $3,722,787.

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

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

                                 NOT APPLICABLE

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

     The number of shares outstanding of the issuer's Common Stock, $.001 par
value, as of February 28, 2002 was 25,056,144

                       DOCUMENTS INCORPORATED BY REFERENCE

                                 NOT APPLICABLE

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


<PAGE>


                                TABLE OF CONTENTS

Part I

Item 1.       Description of Business

Item 2.       Description of Property

Item 3.       Legal Proceedings

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


Part II

Item 5.       Market for Common Equity and Related Stockholder Matters

Item 6.       Plan of Operation

Item 7.       Financial Statements

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

Part III

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

Item 10.      Executive Compensation

Item 11.      Security Ownership of Certain Beneficial Owners and Management

Item 12.      Certain Relationships and Related Transactions

Item 13.      Exhibits and Reports on Form 8-K

<PAGE>


                                     PART I

Item 1.   Description of Business

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

     Development and Business of the Company

     Envirokare Tech, Inc., ("Envirokare" or the "Company") was incorporated
under the laws of the State of Nevada on June 15, 1998. The executive offices of
the Company are located at 2470 Chandler, Suite 5, Las Vegas, Nevada 89120. The
Company's telephone number is (702) 262-1999. During the first quarter of 2001,
the Company leased additional office space at 2255 Glades Road, Suite 112E, Boca
Raton, FL 33431. The Company is currently in the process of searching for a
subleasee for its Boca Raton, FL office.

     The Company is a development stage company, which was originally formed to
create and market environmentally responsible products that would contain a
component of recycled materials in their manufacture. Currently, the Company is
completing development of industrial and commercial products, through a
licensing agreement with Thermoplastic Composite Designs, Inc. ("TCD"), a
research and development organization, which has developed and is attempting to
secure patents on certain processes for itself. Specifically, the license
agreement contains provisions for the Company to commercially exploit the TCD
developed Thermoplastic Flowforming process ("TPF Process" or "Process") by
marketing products currently in development and creating and marketing other
contemplated products within various market sectors and industries.

     The Company's current operating strategy is consistent with its focus on
developing environmentally responsible products. As products are developed and
readied for market, the Company intends to enter into operations to bring such
products to market through license agreements and potentially through its own
production efforts.

     The Company anticipates that the materials handling industry will be the
initial entry point for the Company's first commercial application of the TPF
Process, with the


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introduction of the Company developed E Pallet (sometimes referred to herein as
the "Pallet"). A pallet is a portable platform for handling, storing, or moving
materials and packages as used in, for example, warehouses, factories and
vehicles.

     The Company possesses previous experience in the pallet industry, having
entered the pallet manufacturing business in December 1998. Pursuant to an asset
purchase agreement and an assignment agreement, each dated December 15, 1998,
the Company purchased certain assets, including all of the equipment,
early-stage rubber mold technology and patent rights potentially applicable to
future development of rubber mold technology for creating a pallet made of
recycled materials, from Real Morel, a businessman operating International
Pallet Control Systems Inc. and The Pallet Company, both private Canadian
companies. The Company substantially improved upon the purchased early-stage
rubber mold technology and developed, after more than a year of research and
working with specialists in the field, a molded Pallet created by mixing
plastics with composite materials. The Company believes that the finished
product will meet the requirements of many pallet users.

     In November 1999, the Company enlisted the services of TCD to design and
supply the appropriate system required to manufacture the Pallet and other
contemplated materials handling products. TCD was also contracted to assist in
making Pallet design modifications to meet product specifications provided by
the Company.

     On March 30, 2001, the Company, through its wholly-owned subsidiary,
Envirokare Composite Corp. ("ECC"), entered into a licensing agreement with TCD
to manufacture the Pallet and other products to be developed. Additionally,
Envirokare and ECC also entered into a merger agreement with TCD, which provides
that TCD will merge with ECC if Envirokare's shares trade at a specified level
during the thirty (30) month period following the agreement date. In the event
that Envirokare's shares have not traded at such specified level by the end of
the thirty (30) month period, then ECC and Envirokare have the option to effect
the merger of TCD with ECC by paying to TCD's shareholders additional
consideration, either in cash or additional shares of Envirokare.

     In addition to Pallets, the Company expects to be able to market a wide
range of large structural parts manufactured through the joint efforts of the
Company and TCD, for industries which may include aerospace, automotive,
construction, marine, medical, military, transportation and waste management.

     Products; Product Development

     The Company anticipates that its first product to be commercialized will be
the Pallet, made through the unique TPF manufacturing Process, which allows for
up to 80% of the Pallet material to be comprized of recycled thermoplastics. The
TPF Process is proprietary and enables the manufacturer to create large
structural parts using thermoplastic resins. The Process uses recycled or virgin
resins and is designed to reuse its own waste, thereby minimizing the creation
of waste by-products.


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<PAGE>


     Key advantages of the Company's Pallet will include increased strength and
durability, lighter weight, environmental benefits (no lumber required, 100%
recyclable, no fungicides/bacterial spraying required, no land fill dumping, and
less energy to manufacture), increased safety, because there is no splintering
of wood or hazardous nails/bolts, increased ease of use (because of 4 way entry
access into the Pallet), longer life cycle, and lower costs per
pallet-round-trip. The Pallet has also been designed to resist damage caused
from use and to handle large loads when evenly loaded. The single piece
construction of the Pallet is expected to mitigate numerous product and personal
liability issues that occur in typical pallet programs. As there are no
fasteners or components to break apart from the Pallet, the Company anticipates
that its customers will experience reduced pallet breakage.

     The Company has been actively involved in extensive testing and development
of the Pallet. The Company's development focus is 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 focus on the safety, structural integrity,
reliability, and cost effectiveness of the Pallet, involving in-depth analysis
of compound variables and strengths, extrusion methods and equipment
modifications.

     The Company contracted with substrate component testing engineers in the
Akron, Ohio area during 1999 who performed the primary series of substrate
component tests. Subsequent to the preliminary tests conducted on substrate
components, the Company and TCD entered into a product/technology development
contract in connection with TCD's assisting the Company in modifying earlier
versions of the Pallet design. The contract required TCD to deliver a pallet
that would meet design specifications including: 48-inch by 40-inch dimension; a
maximum weight requirement; and a target substrate composition. The contract
also provided that TCD would supply the appropriate 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.

     Additional Pallet testing and evaluation was conducted at Virginia
Polytechnic Institute and State University, in Blacksburg, Virginia, through the
William H. Sardo Jr. Pallet and Container Research Laboratories ("Virginia Tech
Testing Facilities"). Pallet testing commenced during May 2000. Initial test
results at this facility provided the basis from which the Company and its
product design contractor were able to make design adjustments resulting in a
significantly improved Pallet. Further Pallet testing and evaluation through
2001 resulted in further adjustments to the Pallet design. As a result of the
design adjustments and modifications, the first generation mold was deemed to be
of no commercial value and the Company built a second generation mold during
2001, at a cost of $43,000. This second generation mold has produced Pallets
that are currently being tested and evaluated at the Virginia Tech Testing
Facilities.

     The Company believes that after extensive studies and refinement, it has
minimized or eliminated any concerns as to the Pallet's design and ability to
perform. The Company


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<PAGE>

conducted further testing during the first quarter of 2002, which provided
information as to the longevity of the Pallet compared to other materials. The
additional testing also provided important technical information which aided the
Company in modifying its mold design. These design modifications were
incorporated into the Company's second generation Pallet mold. Analysis to date
indicates that the Company's standard 48-inch by 40-inch Pallet will surpass
current hardwood and plastic pallet performance and will be a strong competitor
in the pallet industry worldwide. This additional information will further the
development of marketing strategies for the Company.

     The Company's Pallet design presents what the Company believes is a
preferable alternative to pallets made from wood and from non-wood materials.
Pallets had traditionally been made of wood but, due to escalating commodity
lumber prices and associated higher costs of wood pallets, pallet manufacturers
have in recent years been developing ways to manufacture pallets from non-wood
materials, in particular, metal, wood derivatives and plastic. However, each of
these materials has its disadvantages. Metal pallets, while they are strong,
hard to damage, and repairable, are expensive and not practical for general use.
Pallets made from pressed wood fiber and corrugated fiber board are light and
recyclable. However, most pallets manufactured from this type of substrate are
not able to carry standard load weights, are susceptible to damage, and cannot
be repaired. The most prevalent non-wood pallet material, plastic, is more
cost-effective than wood but is nonetheless expensive. Also, plastic pallets can
be damaged by forklift tines, or by being dropped, twisted or overloaded. They
can also splinter, causing injuries to workers. The Company believes that the
recent rapid increase in market share for plastic pallets indicates that pallet
buyers understand the benefits of utilizing substitutes for wood pallets. This
presents a market opportunity for the Company, as the Company considers the
Pallet to be a durable product and a cost-effective plastic pallet alternative.

     The Company believes that its specialization in thermoplastic composites
will provide a competitive advantage in the future. Until recently,
thermoplastic composites were not considered commercially viable substitutes for
thermoset composites, wood, aluminum, steel, and other metal alloys. However the
recent introduction of long-strand reinforcing fiber(s) has dramatically
increased the mechanical and physical properties of thermoplastic composites.
During past years, these thermoplastic composite materials were utilized almost
exclusively be the military and aerospace industries and were normally confined
to smaller parts, due to the inordinate cost of hand application, which is a
process of creating a part by manually applying layers of composite materials to
a mold or shape.

     TPF Process.

     The TPF Process is a proprietary process that enables the manufacturer to
create large structural parts using thermoplastic resins. The Process uses
recycled or virgin resins and is designed to reuse its own waste, thereby
minimizing the creation of waste by-products.


                                       4
<PAGE>

     The TPF Process can potentially be used to create products for a broad
range of industries including: Material Handling, Transportation, Marine,
Medical, Waste Management and Aerospace. The composite materials products
created using the Process have the ability to mimic many attributes found in
wood, aluminum, steel, and other metal alloys matching many of their physical
and mechanical properties while providing significant weight and cost
reductions. Another advantage of the Process is that it does not emit any
Volatile Organic Contaminants (VOCs), which are present in many thermoset
composites.

     Management believes that the TPF Process will give Envirokare the ability
to produce large structural parts at prices projected to be well below current
levels. This price advantage is the result of projected savings for the
following reasons:

     o Economies of scale as a result of the mechanical reproduction of large
structural parts, rather than necessitating manufacture of smaller components
followed by component assembly.

     o Reduced labor costs because of fewer component assemblies required.

     o Reduced cost of materials, due to the ability to reuse waste generated
from manufacturing.

     Acquisition of Electroship (N.Y.) Inc.

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

     The primary asset that the Company acquired in this merger was a patent
that was provisionally filed by Electroship with the United States Patent and
Trade Office ("USPTO"). The Company made application to the USPTO to
provisionally refile the patent during the first quarter of 2002. The Company
anticipates that patents that may be issued as result of its provisional filing
will provide the Company with, among other potential wireless product
developments, the ability to develop materials handling products that will have
wireless tracking capability. Design work commenced on initial wireless Pallet
prototypes during the first quarter of 2001. The Company believes that initial
Pallet designs that incorporate wireless tracking capabilities will prove
marketable to many prospective customers. Company plans for additional
development of this wireless Pallet technology are scheduled for late 2002.


                                       5
<PAGE>

     License Agreement with TCD

     The Company announced, on December 1, 2000, that it had completed a letter
of intent with TCD to enter into an arrangement to manufacture products
utilizing TCD's TPF Process. The Company, through ECC, its wholly-owned
subsidiary, and TCD completed a license agreement on March 30, 2001 pursuant to
which the Company's proprietary Pallet and other products it intends to develop
will be manufactured using the TPF Process. The license agreement provided that
the Company would make a payment in the amount of four hundred fifty thousand
dollars ($450,000) to TCD. This payment would be in addition to a deposit held
on the Company's account by TCD in the amount of seventy-five thousand dollars
($75,000). This deposit was to be applied to the license fee payable to TCD
during June 2001. As required by the license agreement, the Company completed
all license payments to TCD during September 2001.

     The Company and ECC also entered into a merger agreement with TCD, which
provides that TCD will merge with ECC if Envirokare's shares trade at a
specified level during the thirty (30) month period following the agreement
date. In the event that the Company's shares have not traded at such specified
level by the end of the thirty (30) month period, then ECC and the Company have
the option to effect the merger of TCD with ECC by paying to TCD's shareholders
additional consideration, either in cash or additional shares of Envirokare.

     Anticipated Revenue Sources; Marketing and Distribution

     The Company plans to generate revenues from developing and operating its
own manufacturing facilities in conjunction with TCD's production facility
development assistance. As opportunities present themselves, the Company will
also consider entering into national and international licensing agreements that
would provide for royalty payments in connection with the manufacture and
production of the Pallet and other contemplated products by third parties.
License fees and royalty revenues would be based on units of production.

     The Company had originally planned to have licensees begin producing the
Pallet during 2000 but decided to conduct additional product tests, which
delayed a previously planned production start date. Significantly improved
substrate technology developments caused the Company to rethink its business
plan, including the method of marketing the Pallet and initial production
start-up dates. The Company now expects to begin production of the Pallet
sometime in 2002.

     In December 1999, the Company announced that it had received a letter of
intent from Cultech International Corporation to manufacture and market the
Pallet in Asia. Cultech intends to obtain exclusive manufacturing and marketing
rights to the Pallet for all of Asia. The parties agreed in principle that, once
engineering studies are satisfactorily completed, the parties would enter into
an agreement whereby Cultech would make payments to the Company including
licensing fees and royalty payments based on units of Pallet production,
although the letter of intent does not obligate the Company to enter into


                                       6
<PAGE>

such an agreement. To date, the Company has taken no further action with respect
to the letter of intent.

     Also in March 2000, the Company announced that it had received a production
and marketing letter of intent from International Pallets of California. The
letter of intent provides for the parties to negotiate an agreement whereby
International Pallets, would build a production facility that would allow
International Pallets to produce, market and sell the Pallet in California and
Nevada, although the letter does not obligate the Company to enter into such an
agreement. In the event a formal agreement was negotiated between the parties,
the agreement would include provisions providing for International Pallets to
pay a license fee and royalty payments to the Company. To date, the Company has
taken no further action with respect to the letter of intent.

     Raw Materials

     The Company anticipates that its manufacturing processes 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 Pallet manufacturing process is flexible and
allows for the inclusion of plastics of varying grades. As such, access to raw
material required for production 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 Pallets
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.

     The Company currently faces significant competition with respect to the
Pallet, and this competition may increase as new competitors enter the market.
Competition consists mainly of small, single-location pallet companies with
limited resources; however, there are several large pallet manufacturing and
distribution companies. Many of the current pallet manufacturers produce either
wooden or plastic pallets. Several of these manufacturers have longer operating
histories and greater financial, marketing and other resources than the Company.
Chep Pallets, PalEx, IFCO and Pallet Management Systems are large suppliers of
pallets in North America. These companies mainly supply pallets manufactured
from wood. The domestic wood pallet market is estimated to be between $5-6
billion annually. There are as many as thirty-five producers of plastic pallets
in the U.S. The combined market for these companies is estimated at close to
$500 million annually (National Wood Pallet and Container Association, June
1998; Modern Materials Handling Association, July 1998). With respect to all of
the Company's products, there can be no assurance that the Company will be able
to compete successfully with existing or new entrant companies. In addition, new
product introductions or enhancements by the


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Company's competitors could cause a decline in sales or loss of market
acceptance of the Company's existing products. Increased competition could also
result in intensified price-based competition resulting in lower prices and
profit margins, which in turn could adversely affect the Company's business and
results of operations.

     The Company's growth strategy is substantially dependent upon its ability
to market and distribute its products successfully. 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 market and distribute products on acceptable terms, or at all. Failure of the
Company to 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. 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 its products and business may be
significantly influenced by constantly changing environmental laws and
regulations, which require that certain environmental standards be met and
impose liability 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.


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<PAGE>

     The Company has contemplated using recycled rubber in future products that
are under consideration for development. Manufacturing processes requiring the
use of rubber sometimes require the use of hazardous solvents in those
production processes and result in the disposal of waste products, such as used
solvents. Such manufacturing processes could subject the Company to United
States federal, state and local laws and regulations and international laws
governing the generation, handling, storage, transportation, treatment and
disposal of hazardous wastes. Pursuant to such laws, a lessee or owner of real
property may be liable for, among other things, (i) the costs of removal or
remediation of certain hazardous or toxic substances located on, in or emanating
from, such property, as well as related costs of investigation and property
damage and substantial penalties for violations of such laws, and (ii)
environmental contamination at facilities where its waste is or has been
disposed. Such laws often impose such liability without regard to whether the
owner or lessee knows of, or was responsible for, the presence of such hazardous
or toxic substances. While the Company's operations, to the best of its
knowledge, are in full compliance with all existing laws and regulations,
environmental legislation and regulations have changed rapidly in recent years,
and the Company cannot predict what, if any, impact future changes in such
legislation may have on the Company's liability for past actions that were
lawful at the time taken.

     As in the case with manufacturing companies in general, if damage to
persons or the environment has been caused, or is in the future 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 the Pallet. 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.

     In the event any domestic or foreign regulatory agency requires approval
and testing of the Pallet prior to its commercial exploitation, the Company
cannot provide any assurance that testing procedures will be successfully
completed or, if completed, such tests will demonstrate that the Pallet meets
the required guidelines. There can also be no assurance that any required
governmental approvals will be obtained. Accordingly, there


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<PAGE>

can be no assurance that the Company will be able to market the Pallet in the
United States or any foreign country. The same is true for any other products
that the Company may develop. 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'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. Accordingly, the Company has no employees at this time. 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. The Company was assigned the patent
rights to the invention and this application (and any related rights) during the
second quarter of 2000. The application was abandoned during February 2002; the
USPTO asserted patentability was barred by prior art pallet designs. The Company
is evaluating its patent filing options, which include refiling a new, more
comprehensive patent application that would include both product design and
product manufacturing and processing specifics and more clearly distinguish
prior art.

     The Company also acquired rights in an invention and related provisional
patent application entitled Apparatus and Method for Facilitating Shipping and
Commerce, in connection with the merger with Electroship that was completed
December 21, 2000. The application expired. The Company is refiling that
application.

     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.


                                       10
<PAGE>

     Reports to Securityholders

     The Company files annual, quarterly and special reports and other
information with the SEC. The public may read and copy any materials filed with
the SEC at the SEC's Public Reference Room at 450 Fifth Street N.W., Washington,
D.C. 20549. The public may also obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC. The address
of that site is http://www.sec.gov. The Company maintains its own website, with
the address of www.envirokare.com.


Item 2.  Description of Property

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

     During the first quarter of 2001, the Company leased additional 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. Company plans changed during 2001 resulting in the Company currently
seeking a subleasee to assume the lease and office space at the Boca Raton
location. The Company's total lease payments for its Boca Raton office space for
the fiscal year ended December 31, 2001 were $33,375. The Company's total lease
payments for the fiscal year ending December 31, 2002 will be $33,534.

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


                                       11
<PAGE>

ended December 31, 2001, 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

     None

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

     The Company's common shares trade from time to time, under the symbol ENVK,
on the OTC Bulletin Board Electronic Quotation System maintained by the National
Association of Securities Dealers, Inc. The Company's common shares commenced
trading on the OTC Bulletin Board on December 1, 1999. From January 1, 2001, to
March 31, 2001 (the first quarter), the high closing price of the Company's
common stock was $0.73 and the low closing price was $0.28. From April 1, 2001
to June 30, 2001 (the second quarter), the high closing price of the Company's
common stock was $0.30 and the low closing price was $0.13. From July 1, 2001 to
September 30, 2001 (the third quarter), the high closing price of the Company's
common stock was $0.19 and the low closing price was $0.09. From October 1, 2001
to December 31, 2001 (the fourth quarter) the high closing price of the
Company's common stock was $0.32 and the low closing price was $0.08. During the
quarter commencing January 1, 2002, through February 28, 2002, the high closing
price was $0.19 and the low closing price was $0.10. The quoted prices reflect
the Company's 2-for-1 stock split payable March 6, 2000 as discussed below.
These OTC quotations reflect inter-dealer quotations, without retail mark-up,
mark-down or commission, and may not necessarily represent actual transactions.

     On February 22, 1999, the Company effected a reverse 2-for-1 stock split,
reducing the Company's outstanding stock from 10,000,000 to 5,000,000 shares. On
March 6, 2000, the Company effected a 2-for-1 stock split, in the form of a 100%
stock dividend, payable to shareholders of record as of the close of business on
March 1, 2000. This increased the number of common shares outstanding as of
March 7, 2000, from 5,544,739 shares to 11,089,478 shares.

     As of February 28, 2002, there were 89 holders of record of the Company's
common stock.

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


                                       12
<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:

     The share amounts and prices shown below have been adjusted to take into
account the March 2000 stock split that was effected by the Company.

     During November 2001, the Company completed a private placement offering of
Units to accredited investors. Each Unit consisted of a two year promissory note
that bears interest at a rate of 15% per annum and a warrant, exercisable for
two years from the agreement date, to purchase three (3) additional shares of
the Company's common stock at a price of $0.195. The Company sold each Unit for
$1.00 per Unit. The Company realized proceeds of $1,025,000 from the sale of
Units under this offering.

Item 6.  Plan of Operation

     Overview

     The Company is currently in the development stage and has not yet generated
any operating revenues. Since its inception in June 1998, the Company has
developed a single piece molded pallet, E Pallet, manufactured primarily from
thermoplastics, including recycled plastics. The Company's management expects
that the Company will commence commercial production and sale of the Pallet
sometime in 2002. The Company is completing development of the Pallet and
several other industrial and commercial products, through a licensing agreement
with Thermoplastic Composite Designs, Inc. ("TCD"), a research and development
organization, which has developed or secured certain patented products and
processes. See " -- License Agreement with TCD," above, for discussion of the
Company's licensing, manufacturing and other agreements with TCD.

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

     Although the Company's decision to further develop and test the Pallet has
set back production dates, the Company believes that this additional research
and development has substantially minimized or eliminated any concerns as to the
Pallet's design and ability to perform. The Company's testing program has
included in-depth analysis of substrate compounds, extrusion methods and
equipment modifications. Initial


                                       13
<PAGE>

prototypes of the Pallet have been developed and refined. The Company expects to
have potential customers evaluate the Pallet through in-use testing beginning in
the second quarter of 2002. Company management anticipates that the Company will
commence commercial production of the Pallet once appropriate production
facilities are procured and commissioned for production, currently anticipated
for sometime in 2002.

     Liquidity and Capital Resources

     The Company is not yet generating revenues. For the year ended December 31,
2001, the Company had a net loss of $1,226,117. The Company's net loss
accumulated for the period from June 15, 1998 (inception) to December 31, 2001
was $2,760,998. The Company anticipates that it will begin to generate revenue
during 2002, upon the planned start of production of the E Pallet by the
Company. At December 31, 2001, the Company had current assets of $118,927.
During the year ended December 31, 2001, the Company's cash resources increased
by $101,127. At December 31, 2001 the Company had current liabilities of
$202,831. At December 31, 2001 current liabilities exceeded current assets by
$83,904. Other than as discussed above, the Company is not aware of any trends,
demands, commitments or uncertainties, other than those affecting business and
the economy in general, that could result in the Company's liquidity decreasing
or increasing in a material way within the next 12 months.

     To date, the Company has raised capital through private placements of
common stock, convertible preferred stock and units consisting of promissory
notes and attached warrants. The Company has budgeted pre-production and other
production-related expenditures for the twelve months through December 31, 2002
at $360,000, excluding license fees which may become due and payable, and plans
to raise additional funds in the next several months to cover its proposed
expenditures. These funds may be raised through additional equity financings, as
well as borrowings and other resources. There can be no assurances, however,
that the Company will be able to raise these funds.

     Since late 2000, the Company has been raising capital through a series of
private placements. Although it encountered difficulties during late 2000 and
early 2001, due in part to the volatile condition of the equity markets, the
Company believes that it has recently overcome such difficulties, as it
completed in the second quarter of 2001 a private placement consisting of units
of the Company's common stock and warrants to purchase common stock.
Additionally, the Company completed a new private placement of units during
November 2001. This offering consisted of a promissory note that bears interest
at a rate of 15% per annum and a warrant to purchase three (3) shares of the
Company's common stock, at an exercise price of $0.195 per share, exercisable
for two (2) years from the date of subscription. The Company raised one million
twenty-five thousand dollars ($1,025,000) in this offering.

     The Company is currently holding discussions with potential investors. With
the capital it has raised to date, and the additional funds it plans to raise in
the next several months, the Company believes that it can continue with its
production and marketing


                                       14
<PAGE>

plans, which in the short term include the establishment of licensee funded
Pallet manufacturing operations, and in the longer term include adding
additional production facilities through licensees or the Company to expand the
Company's product line mix. The Company's management believes that its financing
plans described above will enable it to meet its obligations including cash
requirements for at least the next twelve months to December 31, 2002.

     To achieve and maintain competitiveness of its products and to conduct
further testing and development that will allow the Company to enter into the
production stage of operations, the Company may be required to raise substantial
funds in addition to funds already raised through the issuance of the Company's
securities. There can be no assurance that additional funding will be available
under favorable terms, if at all. If adequate funds are not available, the
Company may be required to curtail operations significantly. For example, the
Company's plans include the possibility of setting up its own production
operations, in addition to having licensees produce various Company products
under development. If the Company cannot raise enough funds, it may not be able
to carry out a plan to set up its own manufacturing operations. The Company
might also have to obtain funds through entering into arrangements with
collaborative partners or others. That could require the Company to relinquish
rights to certain products, which could impair future sources of revenues for
the Company.



                                       15
<PAGE>

Item 7. Financial Statements





                              ENVIROKARE TECH, INC.
                        Consolidated Financial Statements

                                December 31, 2001








                              WILLIAMS & WEBSTER PS

                          Certified Public Accountants
                        Bank of America Financial Center
                           W 601 Riverside, Suite 1940
                                Spokane, WA 99201
                                 (509) 838-5111




                                       16
<PAGE>


     Index to Consolidated Financial Statements



                              Envirokare Tech, Inc.

                                December 31, 2001


                                TABLE OF CONTENTS


INDEPENDENT AUDITOR'S REPORT                                                18

FINANCIAL STATEMENTS

     Consolidated Balance Sheets                                            19

     Consolidated Statements of Operations and Comprehensive Loss           20

     Consolidated Statement of Stockholders' Equity                         21

     Consolidated Statements of Cash Flows                                  22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                  23



                                       17
<PAGE>

Board of Directors
Envirokare Tech, Inc.
2470 Chandler Avenue, Suite 5
Las Vegas, Nevada 89120



                          INDEPENDENT AUDITOR'S REPORT


We have audited the accompanying consolidated balance sheets of Envirokare Tech,
Inc. (a development stage company) as of December 31, 2001 and 2000, and the
related consolidated statements of operations and comprehensive loss,
stockholders' equity and cash flows for the years then ended, and for the period
from June 15, 1998 (inception) to December 31, 2001. 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 audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides 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, 2001 and 2000, and the results of its operations and its cash flows
for the years then ended, and for the period from June 15, 1998 (inception) to
December 31, 2001 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 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
February 11, 2002


                                       18
<PAGE>

                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                           December 31,     December 31,
                                                                                               2001             2000
                                                                                           ------------     ------------
<S>                                                                                        <C>              <C>
ASSETS
    CURRENT ASSETS
        Cash                                                                               $    118,927     $     11,362
        Due from related party                                                                     --              6,438
                                                                                           ------------     ------------
             TOTAL CURRENT ASSETS                                                               118,927           17,800
                                                                                           ------------     ------------

    PROPERTY AND EQUIPMENT
        Furniture and fixtures                                                                    1,893            1,893
        Office equipment                                                                          7,999            6,661
        Molds                                                                                    43,000           70,000
             Less accumulated depreciation                                                       (4,829)          (3,017)
                                                                                           ------------     ------------
             TOTAL PROPERTY AND EQUIPMENT                                                        48,063           75,537
                                                                                           ------------     ------------

    OTHER ASSETS
        Deposits and retainers                                                                   22,223           81,560
        License agreement                                                                       525,000             --
        Patent acquisition and patent costs                                                   1,968,459        1,966,726
                                                                                           ------------     ------------
             TOTAL OTHER ASSETS                                                               2,515,682        2,048,286
                                                                                           ------------     ------------

        TOTAL ASSETS                                                                       $  2,682,672     $  2,141,623
                                                                                           ============     ============

LIABILITIES & STOCKHOLDERS' EQUITY
    CURRENT LIABILITIES
        Accounts payable                                                                   $    100,759     $       --
        Accounts payable - related party                                                         20,921             --
        Notes payable                                                                            61,965           61,965
        Accrued interest                                                                         19,186           12,989
                                                                                           ------------     ------------
             TOTAL CURRENT LIABILITIES                                                          202,831           74,954
                                                                                           ------------     ------------

    LONG-TERM LIABILITIES
        Notes payable to stockholders                                                         1,025,000             --
        Accrued interest to stockholders                                                         30,051             --
                                                                                           ------------     ------------
             TOTAL LONG-TERM LIABILITIES                                                      1,055,051             --
                                                                                           ------------     ------------

    COMMITMENTS AND CONTINGENCIES                                                                  --               --
                                                                                           ------------     ------------

    STOCKHOLDERS' EQUITY
        Convertible preferred stock, 10,000,000 shares authorized, $.001 par
             value; 0 and 500,000 shares issued and
             outstanding, respectively                                                             --                500
        Common stock, 200,000,000 shares authorized,
             $.001 par value; 24,356,144 and 13,889,478 shares
             issued and outstanding, respectively                                                24,356           13,889
        Additional paid-in capital                                                            3,320,790        3,066,257
        Stock options and warrants                                                              840,642          529,000
        Accumulated deficit during development stage                                         (2,760,998)      (1,538,929)
        Other comprehensive loss                                                                   --             (4,048)
                                                                                           ------------     ------------
        TOTAL STOCKHOLDERS' EQUITY                                                            1,424,790        2,066,669
                                                                                           ------------     ------------

        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                         $  2,682,672     $  2,141,623
                                                                                           ============     ============
</TABLE>

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


                                       19
<PAGE>


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


<TABLE>
<CAPTION>
                                                                                                     Period from
                                                                                                    June 15,1998
                                                             Year Ended          Year Ended        (Inception) to
                                                            December 31,        December 31,        December 31,
                                                                2001                2000                2001
                                                           -------------       -------------       -------------
<S>                                                        <C>                 <C>                 <C>
REVENUES                                                   $        --         $        --         $        --
                                                           -------------       -------------       -------------

EXPENSES
   Consulting fees - related parties                             267,752              81,987             642,455
   Other consulting fees                                         220,500             134,115             739,665
   Financing costs                                               219,642                --               219,642
   Rent                                                           26,913               9,276              50,008
   General and administrative                                    126,009             115,398             348,064
   Depreciation                                                    1,812               1,632               4,829
   Professional fees                                             217,068             117,681             380,712
   Research and development                                       82,269              27,519             180,938
   Wages, salaries, and payroll taxes                             14,377             117,502             131,879
                                                           -------------       -------------       -------------
        TOTAL EXPENSES                                         1,176,342             605,110           2,698,192
                                                           -------------       -------------       -------------

LOSS FROM OPERATIONS                                          (1,176,342)           (605,110)         (2,698,192)

OTHER EXPENSE
   Interest expense                                              (49,775)             (6,219)            (62,806)
                                                           -------------       -------------       -------------
        TOTAL OTHER EXPENSE                                      (49,775)             (6,219)            (62,806)
                                                           -------------       -------------       -------------

LOSS BEFORE PROVISION FOR INCOME TAXES                        (1,226,117)           (611,329)         (2,760,998)

PROVISION FOR INCOME TAXES                                          --                  --                  --
                                                           -------------       -------------       -------------

NET LOSS                                                      (1,226,117)           (611,329)         (2,760,998)

OTHER COMPREHENSIVE LOSS
   Foreign currency translation gain (loss)                        4,048              (2,846)               --
                                                           -------------       -------------       -------------

COMPREHENSIVE LOSS                                         $  (1,222,069)      $    (614,175)      $  (2,760,998)
                                                           =============       =============       =============

   BASIC AND DILUTED NET LOSS
     PER COMMON SHARE                                      $       (0.08)      $       (0.05)
                                                           =============       =============

   WEIGHTED AVERAGE NUMBER
     OF BASIC AND DILUTED COMMON
     STOCK SHARES OUTSTANDING                                 15,756,510          11,363,561
                                                           =============       =============
</TABLE>

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


                                       20
<PAGE>


                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                               Preferred Stock                Common Stock
                                                          --------------------------    --------------------------     Additional
                                                            Number                        Number                        Paid-in
                                                           of Shares       Amount        of Shares       Amount         Capital
                                                          -----------    -----------    -----------    -----------    -----------
<S>                                                       <C>            <C>             <C>           <C>            <C>
Issuance of common stock in June, 1998
   for cash at $0.001 per share                                  --      $      --       10,000,000    $    10,000    $      --

Net loss for period ended December 31, 1998                      --             --             --             --             --
                                                          -----------    -----------    -----------    -----------    -----------
Balance, December 31, 1998                                       --             --       10,000,000         10,000           --

Issuance of common stock at an average of $0.45
   per share for cash                                            --             --          746,140            746        334,053

Issuance of  preferred stock at $0.50 per share
   for cash                                                   500,000            500           --             --          249,500

Issuance of stock options for services                           --             --             --             --             --

Contribution of capital by shareholders in the form
   of foregone payment of accounts payable                       --             --             --             --            1,847

Net loss for year ended December 31, 1999                        --             --             --             --             --

Foreign currency translation loss                                --             --             --             --             --
                                                          -----------    -----------    -----------    -----------    -----------
Balance, December 31, 1999                                    500,000            500     10,746,140         10,746        585,400

Cash received for subscriptions receivable                       --             --             --             --             --

Issuance of common stock at an average of $0.45
   per share for cash                                            --             --          543,338            543        356,957

Expiration of stock options                                      --             --             --             --          120,000

Issuance of stock options for services                           --             --             --             --             --

Stock options exercised at $0.58 per share                       --             --          100,000            100         81,400

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

Net loss for the year ended December 31, 2000                    --             --             --             --             --

Foreign currency translation loss                                --             --             --             --             --
                                                          -----------    -----------    -----------    -----------    -----------
Balance, December 31, 2000                                    500,000            500     13,889,478         13,889      3,066,257

Expiration of stock options                                      --             --             --             --          132,000

Issuance of stock options for services                           --             --             --             --             --

Issuance of common stock at $0.14 per share for cash
   with attached warrants at $0.06 per share                     --             --        1,000,000          1,000        139,000

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)

Warrants issued for financing expense                            --             --             --             --             --

Other comprehensive income                                       --             --             --             --             --

Net loss for the year ended December 31, 2001                    --             --             --             --             --
                                                          -----------    -----------    -----------    -----------    -----------
Balance, December 31, 2001                                       --      $      --       24,356,144    $    24,356    $ 3,320,790
                                                          ===========    ===========    ===========    ===========    ===========

<CAPTION>
                                                                                        Accumulated
                                                                                          Deficit         Other
                                                         Stock Options                    During       Comprehensive     Total
                                                             and        Subscriptions   Development       Income      Stockholders'
                                                           Warrants      Receivable        Stage          (Loss)         Equity
                                                          -----------    -----------    -----------    -----------    -----------
<S>                                                       <C>            <C>            <C>            <C>            <C>
Issuance of common stock in June, 1998
   for cash at $0.001 per share                           $      --      $      --      $      --      $      --      $    10,000

Net loss for period ended December 31, 1998                      --             --          (34,427)          --          (34,427)
                                                          -----------    -----------    -----------    -----------    -----------
Balance, December 31, 1998                                       --             --          (34,427)          --          (24,427)

Issuance of common stock at an average of $0.45
   per share for cash                                            --         (105,000)          --             --          229,799

Issuance of  preferred stock at $0.50 per share
   for cash                                                      --             --             --             --          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

Net loss for year ended December 31, 1999                        --             --         (893,173)          --         (893,173)

Foreign currency translation loss                                --             --             --           (1,202)        (1,202)
                                                          -----------    -----------    -----------    -----------    -----------

Balance, December 31, 1999                                    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 $0.45
   per share for cash                                            --             --             --             --          357,500

Expiration of stock options                                  (120,000)          --             --             --             --

Issuance of stock options for services                        121,000           --             --             --          121,000

Stock options exercised at $0.58 per share                    (24,000)          --             --             --           57,500

Stock issued for acquisition of Electroship Acquisition
   Corporation, a wholly-owned subsidiary, at
   $0.77 per share                                               --             --             --             --        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                                    529,000           --       (1,538,929)        (4,048)     2,066,669

Expiration of stock options                                  (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                   60,000           --             --             --          200,000

Conversion of preferred stock into common stock                  --             --             --             --             --

Common stock repurchase at $0.02 per share                       --             --             --             --           (7,500)

Warrants issued for financing expense                         219,642           --             --             --          219,642

Other comprehensive income                                       --             --             --            4,048          4,048

Net loss for the year ended December 31, 2001                    --             --       (1,222,069)          --       (1,222,069)
                                                          -----------    -----------    -----------    -----------    -----------
Balance, December 31, 2001                                $   840,642    $      --      $(2,760,998)   $      --      $ 1,424,790
                                                          ===========    ===========    ===========    ===========    ===========
</TABLE>

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


                                       21
<PAGE>


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


<TABLE>
<CAPTION>
                                                                                                                       Period from
                                                                                                                       June 15,1998
                                                                                      Year Ended      Year Ended      (Inception) to
                                                                                     December 31,     December 31,     December 31,
                                                                                         2001             2000             2001
                                                                                    -------------    -------------    -------------
<S>                                                                                 <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss                                                                      $  (1,222,069)   $    (611,329)   $  (2,760,998)
      Adjustments to reconcile net loss
           to net cash used by operating activities:
      Depreciation                                                                          1,812            1,632            4,829
      Stock options issued for consulting fees                                            164,000          121,000          837,000
      Warrants issued for financing expense                                               219,642             --            219,642
      Consulting fees due to related party applied to receivable                            6,438            8,562           15,000
      Decrease (increase)  in prepaid expenses and deposits                                59,337           13,520          (22,223)
      Increase (decrease) in accounts payable                                             121,680         (100,356)         121,680
      Increase in accrued interest payable                                                 36,248            6,219           49,237
                                                                                    -------------    -------------    -------------

      Net cash used by operating activities                                              (612,912)        (560,752)      (1,535,833)
                                                                                    -------------    -------------    -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Loan to related party                                                                  --            (15,000)         (15,000)
      (Purchase) write-off of molds                                                        27,000          (70,000)         (43,000)
      Payments of license agreement                                                      (525,000)            --           (525,000)
      Patent costs                                                                         (1,733)          (7,786)         (10,129)
      Purchase of equipment                                                                (1,338)            (300)          (8,045)
                                                                                    -------------    -------------    -------------

      Net cash used in investing activities                                              (501,071)         (93,086)        (601,174)
                                                                                    -------------    -------------    -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from sale of preferred stock                                                  --               --            250,000
      Proceeds from sale of common stock                                                  200,000          520,000          959,799
      Repurchase of common stock                                                           (7,500)            --             (7,500)
      Proceeds from issuance of notes payable to related parties                        1,025,000             --          1,053,635
                                                                                    -------------    -------------    -------------

      Net cash provided by financing activities                                         1,217,500          520,000        2,255,934
                                                                                    -------------    -------------    -------------

Increase (decrease) in cash                                                               103,517         (133,838)         118,927

Foreign currency translation adjustment                                                     4,048           (2,846)            --

Cash, beginning of period                                                                  11,362          148,046             --
                                                                                    -------------    -------------    -------------

Cash, end of period                                                                 $     118,927    $      11,362    $     118,927
                                                                                    =============    =============    =============

SUPPLEMENTAL CASH FLOW INFORMATION:
      Interest paid                                                                 $      13,413    $        --      $      13,413
                                                                                    =============    =============    =============

      Income taxes paid                                                             $        --      $        --      $        --
                                                                                    =============    =============    =============

NON-CASH TRANSACTIONS:
      Common stock issued for acquisition of subsidiary                             $        --      $   1,925,000    $   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
      Warrants issued for financing activities                                      $     219,642    $        --      $     219,642
      Stock options issued for consulting fees                                      $     164,000    $     121,000    $     837,000
      Stockholder's contribution for equipment                                      $        --      $        --      $       1,847
</TABLE>

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


                                       22
<PAGE>


                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 2001


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 the property, assets and undertakings of a business
engaged in manufacturing and developing a rubber mold technology and patent
rights potentially applicable to future development of a pallet made of recycled
materials. The Company is currently developing marketing and manufacturing plans
for the products under development. The Company maintains an office in Las
Vegas, Nevada. The Company has elected a fiscal year-end of December 31.

The Company includes the assets and investment in Electroship Acquisition
Corporation and Envirokare Composite Corp., wholly-owned non-operating
subsidiaries, in these financial statements. See Notes 3 and 7.

The Company is in the development stage and, as of December 31, 2001, had
realized no revenues from its planned operations.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Going Concern

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

As shown in the accompanying financial statements, the Company has incurred an
accumulated deficit of $2,760,998, which includes a net loss of $1,226,117 for
the year ended December 31, 2001, and has a working capital deficit and no
revenues. The Company, being a development stage enterprise, is currently
putting technology in place 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 on an ongoing basis.

The Company has historically raised equity capital through the sale of its
common and preferred stock. Management has proceeded as planned in the ongoing
development of a recycled plastic composite pallet. The Company has worked with
contract laboratories to conduct in-depth analysis of compounds. Extrusion
methods and equipment modifications have been studied and refined, as have
initial prototypes. The Company has contracted with Thermoplastic Composite
Designs Inc. and Thermoplastic Flowforming Technologies Corp. for professional
and technical


                                       23
<PAGE>

                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 2001


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Going Concern (continued)

services in order to improve the Company's prospective product offerings and
manufacturing processes. The finished product is expected to be available for
distribution to potential customers for in-use evaluation in the near future.

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

Accounting Method

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

Cash and Cash Equivalents

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

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 refinement of a manufacturing process which is
based on research findings for the development of pallets made of recycled and
virgin plastic materials.

Derivative Instruments

The Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities," as amended by SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB No.
133", and SFAS No. 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities", which is effective for the Company as of January 1,
2001. These statements establish accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. They require that an entity
recognize all derivatives as either assets or liabilities in the consolidated
balance sheet and measure those instruments at fair value.

If certain conditions are met, a derivative may be specifically designated as a
hedge, the objective of which is to match the timing of gain or loss recognition
on the hedging derivative with the recognition of (i) the changes in the fair
value of the hedged asset or liability that are attributable to the hedged risk
or (ii) the earnings effect of the hedged forecasted transaction. For


                                       24
<PAGE>

                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 2001


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Derivative Instruments (continued)

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, 2001, the Company has not engaged in any transactions that would
be considered derivative instruments or hedging activities.

Fair Value of Financial Instruments

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

Loss Per Share

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, 2001, the Company had stock options and
warrants outstanding, equivalent to 6,725,000 common stock shares, which are
considered to be anti-dilutive.

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 SFAS No. 109 "Accounting for Income Taxes" ("SFAS No. 109"). Under this
approach, deferred income taxes are recorded to reflect the tax consequences on
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, 2001, the Company had net deferred tax assets of approximately
$340,000, 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, 2001.


                                       25
<PAGE>

                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 2001


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Provision for Taxes (continued)

At December 31, 2001, the Company has net operating loss carryforwards of
approximately $1,700,000, which expire in the years 2018 through 2021. The net
operating loss carryforwards do not include expenses that are not deductible for
tax purposes, such as compensation expense, in the amount of $1,056,642
attributable to options and warrants issued to employees and consultants.

Reclassification

The reclassification of expenses in the financial statements has resulted in
certain changes in presentation which have no effect on the reported net losses
or shareholders' equity for December 31, 2001 and December 31, 2000, or the
periods then ended.

Comprehensive Income and Loss

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

Accounting Pronouncements

In September 2000, the FASB issued SFAS No. 140 "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities" ("SFAS No.
140"). This statement provides accounting and reporting standards for transfers
and servicing of financial assets and extinguishment of liabilities and also
provides consistent standards for distinguishing transfers of financial assets
that are sales from transfers that are secured borrowings. SFAS No. 140 is
effective for recognition and reclassification of collateral and for disclosures
relating to securitization transactions and collateral for fiscal years ending
after December 15, 2000, and is effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after March 31,
2001. The Company believes that the adoption of this standard will not have a
material effect on the Company's results of operations or financial position.

In June 2001, the FASB issued SFAS No. 141, "Business Combinations" ("SFAS No.
141") and SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142").
SFAS No. 141 provides for the elimination of the pooling-of-interests method of
accounting for business combinations with an acquisition date of July 1, 2001 or
later. SFAS No. 142 prohibits the amortization of goodwill and other intangible
assets with indefinite lives and requires periodic reassessment of the
underlying value of such assets for impairment. SFAS No. 142 is effective for
fiscal years beginning after December 15, 2001. An early adoption provision
exists for companies with fiscal years beginning after March 15, 2001. On
September 1, 2001, the Company adopted SFAS No. 142. Application of the
nonamortization provision of SFAS No. 142 will have no effect on the Company's
financial statements as the Company does not currently have any assets with
indefinite lives.

In October 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement


                                       26
<PAGE>

                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 2001


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Pronouncements (continued)

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

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

Research and Development Costs

Costs of research and development are expensed as incurred.

Translation of Foreign Currency

Monetary assets and liabilities denominated in foreign currencies are translated
into United States dollars at rates of exchange in effect at the balance sheet
date. Gains or losses are included in income for the year, except gains or
losses relating to long-term debt which are deferred and amortized over the
remaining term of the debt. Non-monetary assets and liabilities and items
recorded in income arising from transactions denominated in foreign currencies
are translated at rates of exchange in effect at the date of the transaction.

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.


                                       27
<PAGE>

                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 2001


NOTE 3 - INTANGIBLE ASSETS

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. The Company is currently investigating the patent process on
this technology. During the years ended December 31, 2001, and 2000, attorney
fees of $1,733, and $7,787, respectively, were added to patent costs. The
amortization of patent costs will begin when the final patents are granted. If
the Company does not obtain the patent, the costs of acquiring the patent rights
from its originator will be charged to operations.

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 7. The acquired technology rights
relate to an application stage patent for an invention that is expected to
facilitate shipping commerce and/or for processing information regarding
shipping services in a network environment. This acquisition was valued using
the trading price of the Company's common stock at the date of acquisition.

On March 30, 2001, the Company completed a license agreement with Thermoplastic
Composite Designs, Inc. (TCD) and received a license to manufacture the
Company's E Pallet, or Pallet, and other products to be developed. The license
fee is a one-time fee of $525,000 that was paid during the year ended December
31, 2001. See Note 5.

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. The useful
lives of property, plant and equipment for purposes of computing depreciation
are five and seven years. The following is a summary of property, equipment and
accumulated depreciation.

                                                 December 31,       December 31,
                                                     2001               2000
                                                 -----------        -----------

          Furniture and Fixtures                 $     1,893        $     1,893
          Less:  Accumulated Depreciation                899                596
                                                 -----------        -----------
          Net Furniture & Fixtures               $       994        $     1,297
                                                 ===========        ===========

          Office Equipment                       $     7,999        $     6,661
          Less:  Accumulated Depreciation              3,930              2,421
                                                 -----------        -----------
          Net Office Equipment                   $     4,069        $     4,240
                                                 ===========        ===========

          Molds                                  $    43,000        $    70,000
                                                 ===========        ===========


                                       28
<PAGE>

                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 2001


NOTE 4 - PROPERTY AND EQUIPMENT (continued)

The Company, in the development of its pallet products, has acquired two sets of
molds. The first generation mold was utilized for preliminary testing and pallet
redesign purposes. This mold was developed at a cost of $70,000 and is of no
commercial value. Accordingly, the first generation mold costs were expensed to
research and development on September 30, 2001. The second generation molds were
acquired at a cost of $43,000. These molds are currently carried at cost. The
Company is continuing its research and development using these molds. When
completed and placed in service, the molds will be depreciated over their
expected useful lives.

NOTE 5 - SHORT-TERM DEBT

Short-term notes payable at December 31, 2001 and December 31, 2000 consist of
unsecured notes bearing 10% interest. These notes, which originated between
August 18, 1998 and December 16, 1998, are payable to Mr. Real Morel and are due
on demand. The principal amount on the notes is $61,965. Accrued interest
recorded on the notes payable at December 31, 2001 and December 31, 2000 was
$19,186 and $12,989, respectively.

The Company is a named 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. 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.

NOTE 6 - LONG-TERM DEBT

As of December 31, 2001, long-term debt consisted of an unsecured $100,000 note
payable, dated July 9, 2001, an unsecured $200,000 note payable, dated September
30, 2001, an unsecured $200,000 note payable, dated November 9, 2001, an
unsecured $375,000 note payable, dated November 15, 2001, an unsecured $100,000
note payable, dated November 16, 2001, and an unsecured $50,000 note payable,
dated November 23, 2001. All of the aforementioned notes are unsecured and bear
interest at 15% per annum, payable at maturity, which is two years from the
dates of issuance. Three common stock 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. See Note 9.


                                       29
<PAGE>

                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 2001



NOTE 7 - COMMON STOCK

During June 2001, 1,000,000 shares of common stock with one warrant attached to
each common share were issued at $0.20 per share. Each warrant is exercisable at
$0.50 per share until June 30, 2003. See Note 9. These shares were issued in
reliance upon the exemption from the registration requirements of the Securities
Act of 1933 (the "Securities Act") under Regulation D as specified by the
provisions of Regulation S and Rule 506.

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. As
such, no proforma financial information is contained in these disclosures.

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. These shares were issued in reliance upon the exemption from the
registration requirements of the Securities Act specified by the provisions of
Regulation S.

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 years ended
December 31, 2001 and 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, under Regulation D, Rule 504. At December 31, 1998,
this common stock was held by 30 shareholders, none of whom held in excess of
ten percent of the total.


                                       30
<PAGE>

                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 2001


NOTE 8 - PREFERRED STOCK

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

NOTE 9 - STOCK OPTIONS AND WARRANTS

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
2000, risk-free interest rate of 5%, volatility of 30%; for 2001, risk-free
interest rate of 4%, volatility of 91.25%.

Warrants

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

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

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


                                       31
<PAGE>

                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 2001


NOTE 9 - STOCK OPTIONS AND WARRANTS (continued)

Stock Options (continued)

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 $552,000 ($.24 per
option) in consulting fees for the value of these options. These stock options
will expire September 29, 2009. See Note 10.

On March 6, 2001, stock options totaling 300,000 expired. These stock options
were valued at $0.24 per option for a total of $72,000. On June 28, 2001, stock
options totaling 250,000 expired. These stock options were valued at $0.24 per
option for a total of $60,000. On January 16, 2001, stock options totaling
100,000 were issued. These options were valued at $0.29 per option for a total
of $29,000. On March 14, 2001, stock options totaling 700,000 were issued. These
options were valued at $0.15 per option for a total of $105,000. On June 28,
2001, stock options totaling 200,000 were issued. These stock options were
valued at $0.15 per option for a total of $30,000.

<TABLE>
<CAPTION>
                                                                                 Weighted
                                                                                  Average
                                                                                 Exercise
                                                                Shares            Price
                                                              ----------        ----------
<S>                                                            <C>              <C>
Outstanding at January 1, 2000                                 2,300,000        $    0.575
Expired                                                         (500,000)            0.575
Granted                                                          500,000             0.500
Exercised                                                       (100,000)            0.575
                                                              ----------        ----------
Outstanding and exercisable at December 31, 2000               2,200,000        $    0.559
                                                              ==========        ==========

Outstanding at January 1, 2001                                 2,200,000
Expired                                                         (550,000)       $    0.575
Granted                                                          100,000             0.600
Granted                                                          900,000             0.300
                                                              ----------        ----------
Outstanding and exercisable at December 31, 2001               2,650,000        $    0.469
                                                              ==========        ==========

Weighted average fair value of options granted during
the year ended December 31, 2001                                                $     0.16
                                                                                ==========
</TABLE>


                                       32
<PAGE>

                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 2001


NOTE 10 - RELATED PARTIES

Jeannie M. Runnalls, who was appointed president, secretary, and director of the
Company on January 24, 2000, received $32,988 in cash for consulting fees during
the year ended December 31, 2000 and $22,715 in cash for consulting fees during
1999.

On August 8, 2000, the Company authorized a shareholder's loan to Ms. Runnalls
in the amount of $15,000. Terms of the unsecured, demand loan require interest
payments of 7% per annum, simple interest. This loan was retired during December
2001 in consideration of consulting services provided to the Company by Ms.
Runnalls during the fourth quarter of 2001, valued at $6,753.

Stock options of 2,300,000 were issued for common stock shares during the year
ended December 31, 1999. Of these stock options, 1,000,000 were issued to
related parties. During the year ended December 31, 2000, the Company granted
200,000 stock options for 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.

During 2001, a shareholder loaned the Company $285,000. This amount, including
interest calculated at 10% per annum, was paid in full on November 15, 2001.
This same shareholder invested $375,000 in an unsecured note payable, dated
November 15, 2001, bearing interest at 15% per annum, payable at maturity, which
is two years from the date of issuance. See Note 6. As of December 31, 2001, the
Company owed this shareholder $20,921 for reimbursable expenses.

On January 16, 2001, the Company granted 100,000 stock options for common stock
shares to Trevor Bedford, who was a member of the board of directors of the
Company. Effective September 13, 2001, Mr. Bedford resigned as a member of the
board of directors of the Company.

On March 14, 2001, the Company granted 100,000 stock options for common stock
shares to Charles Stein, then president of the Company. See Note 9. Effective
May 1, 2001, Mr. Stein resigned as president of the Company and remained a
member of the board of directors of the Company until November 27, 2001.

On March 14, 2001, the Company granted 300,000 stock options for common stock
shares each to Gerald Breslauer, the vice president of administration of the
Company, and Mark Kallan, the executive vice president of the Company. Mr.
Breslauer and Mr. Kallan resigned their respective positions with the Company on
November 28, 2001.


                                       33
<PAGE>

                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 2001


NOTE 11 - COMMITMENTS AND CONTINGENCIES

Consulting Agreements

The Company entered into employment contracts with former employees Charles H.
Stein, Mark Kallan, and Gerald Breslauer in agreements dated December 18, 2000.
These contracts call for aggregate annual compensation of $144,000 commencing on
December 31, 2000 and ending on December 31, 2005. These employment contracts
also contain a provision for issuance of stock options, which have been included
in the stock options calculation. See Note 9.

The employment contract with Charles H. Stein was canceled effective May 1,
2001. This contract carried an employment cancellation fee of $20,000 to be paid
to Mr. Stein at $2,000 per month for ten months commencing on June 1, 2001. An
amendment to the employment termination agreement with Mr. Stein was made on
November 27, 2001, wherein the Company made payment to Mr. Stein in the amount
of $7,500 in return for Mr. Stein agreeing to terminate his employment contract
with the Company. The employment contracts for Mr. Kallan and Mr. Breslauer were
amended by new agreements, dated March 14, 2001 which provide aggregate annual
compensation of $84,000.

Later in 2001, Mr. Kallan and Mr. Breslauer each agreed to terminate their
employment agreements with the Company on November 28, 2001, in consideration of
a payment made by the Company of $7,500 each to Messrs. Breslauer and Kallan.

Lease Agreements

The Company entered into a lease for office space in Las Vegas, Nevada for the
period of thirty-six months beginning October 1, 1998. The lease was extended
for a three-month period to December 31, 2001, by mutual agreement between the
landlord and the Company. The lease agreement was further extended for an
additional twelve-month period to December 31, 2002, by mutual agreement between
the landlord and the Company. Monthly payments are currently $838 per month,
including $40 for utilities. In compliance with the terms of the lease, the
Company has purchased comprehensive public liability insurance.

The Company entered into a lease for office space in Boca Raton, Florida on
February 7, 2001 for sixty months. Monthly payments of the lease are currently
$2,795 per month with additional charges for common area. A security deposit and
last month's rent was paid in the amount of $8,412. A portion of this office
space is being subleased with the sub-lessee reimbursing the Company $3,000 of
the security deposit and last month's rent. There is no written sublease
agreement at this time.


                                       34
<PAGE>

                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 2001


NOTE 11 - COMMITMENTS AND CONTINGENCIES (continued)

Lease Agreements (continued)

Future annual minimum lease payments for the term of the Florida lease as of
December 31, 2001 are as follows for the years ending December 31:

                       2002              $33,534
                       2003              $34,876
                       2004              $36,272
                       2005              $37,725
                       2006              $39,235

The Company is no longer occupying the Florida office. Pursuant to a letter of
understanding between Gerald Breslauer and the Company, dated November 28, 2001,
Mr. Breslauer will be compensated by the Company in the amount of $15,000 should
he be successful in locating a suitable tenant to sublease the remainder of the
Company's Florida office space.

Litigation

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

Merger Agreement with Thermoplastic Composite Designs, Inc.

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


                                       35
<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, 2001, as well as the Company's current sole
executive officer and sets forth certain information regarding each person. Each
director serves in office until the next annual meeting of shareholders; the
Company's President serves as such at the pleasure of the Board of Directors.

       Name                      Age                        Position
       ----                      ---                        --------
Steve Pappas                     58                 President, Treasurer and
                                                    Director

Jonathan Edelstein               59                 Secretary, Director

Dale E. Polk                     44                 Director

     On March 26, 2001, Steve Pappas was elected as President and a director of
the Company. 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 has over twenty-five years experience in investment
banking, finance and mergers and acquisitions, in both senior management and
board-level positions. His responsibilities have included the acquisition,
restructuring and management of small and mid-sized companies, major takeovers,
dispositions, real estate development and financing. Mr. Edelstein is a Senior
Advisor to the WestSphere Group, a private equity and fund manager focused in
Latin America. Prior to his association with WestSphere, he was in partnership
with Merrill Lynch Inter-Funding Inc. 1988 to 1993, where he was involved in the
acquisition and


                                       36
<PAGE>

merger of a number of companies to create Pacific Outlook, Inc., one of the
largest sportswear groups in the United States with gross annual revenues of
over $125 million.

     Dale E. Polk is the co-founder and President of Thermoplastic Composite
Designs, Inc. (TCD) and the inventor of TCD's Thermoplastic Flowforming (TPF)
technology. He has an extensive background in plastics, plastic composites, and
processing with major companies. As the inventor of the TPF technology, Mr. Polk
is uniquely qualified to assess TPF applications, provide system design
direction, and determine precise polymer selection and composite structure that
meet the requirements of proprietary and licensee product and performance
objectives. Before launching TCD in 1996, Mr. Polk held design and process
development roles with Hercules Incorporated and Ciba-Geigy Corporation, as well
as development and operations positions with Phillips Petroleum Company. Mr.
Polk resigned his position as director of the Company effective January 25,
2002.

     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

     On December 7, 2000, a Form 4 was filed late for Jeannie M. Runnalls, a
director of the Company, with respect to one transaction in the Company's common
stock during October 2000. On January 8, 2001, a Form 3 was filed late for
Electroship Partners, which acquired beneficial ownership of more than 10% of
the Company's outstanding common stock as of December 21, 2000. On January 22,
2001, a Form 3 was filed late for Gerald Breslauer, an officer of the Company.
On January 29, 2001, Forms 3 were filed late for Charles H. Stein, a director
and officer of the Company, and Mark L. Kallan, an officer of the Company.

Item 10.  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) Any additional individuals for whom disclosure would have been provided
under (b)


                                       37
<PAGE>

except that the individual was not serving as an executive officer of the
Company at the end of the most recently completed fiscal year.

     From the Company's inception on June 15, 1998 to and including the fiscal
year ended December 31, 2001, the following persons served in the capacity of
President and/or Chief Executive Officer of the Company:

     Charles H. Stein was elected President, Chief Executive Officer and
Chairman of the Board of Directors of the Company, effective December 22, 2000
to March 12, 2001. Steve Pappas was elected President of the Company March 26,
2001and currently serves in that capacity. No other persons fall within the
above-listed categories (b) or (c).

     Summary of Compensation

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

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                           Annual Compensation             Long Term Compensation
--------------------------------------------------------------------------------------------------------------
                                                           Awards                     Payouts
--------------------------------------------------------------------------------------------------------------
                                                           Securities    Restricted
                                              Other        Under         Shares or
Name and                                      Annual       Options/      Restricted   LTIP        All Other
Principal                  Salary   Bonus     Compen-      SARs          Share        Payouts     Compen-
Position          Year     ($)      ($)       sation ($)   Granted (#)   Units ($)    ($)         sation ($)
--------------------------------------------------------------------------------------------------------------
<S>               <C>      <C>      <C>       <C>          <C>           <C>          <C>         <C>
Charles H.
Stein,
President and     2000     0        0         0            100,000       0            0           0
CEO*              2001     27,000   0         0            0             0            0           0
--------------------------------------------------------------------------------------------------------------
Steve Pappas,
President*        2001     60,500   0         0            0             0            0           0
--------------------------------------------------------------------------------------------------------------
</TABLE>

*    Charles H. Stein joined the Company on December 22, 2000 and served as
     President and CEO from December 22, 2000 to March 12, 2001. Steve Pappas
     joined the Company on March 26, 2001 and has served as President from March
     26, 2001 to present.


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

The Company did not grant any options or stock appreciation rights during its
most recent completed fiscal year.

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

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


                                       38
<PAGE>

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

     The following table sets out stock options exercised by the Named Executive
Officers during Fiscal 2001, as well as the fiscal year end value of stock
options held by each of the Named Executive Officers. During the reporting
period, none of the Named Executive Officers held stock appreciation rights.

<TABLE>
<CAPTION>
                                                                                  Value of Unexercised in the
                    Securities    Aggregate         Unexercised Options/SARs at   Money Options/SARs at
                    Acquired on   Value Realized         Dec. 31, 2001 (#)        Dec. 31, 2001 ($)
Name                Exercise      ($)                Exercisable/Unexercisable    Exercisable/Unexercisable (1)

<S>                 <C>           <C>               <C>                           <C>
Charles H. Stein    0             0                 100,000/0                     $0
</TABLE>

(1)  In-the-money options are those where the market value of the underlying
     securities on a given date exceeds the option exercise price at that date.
     The closing market price of the Company's shares on December 31, 2001, was
     $.17 (adjusted to reflect the Company's 2-for-1 stock split, effected in
     the form of a 100% stock dividend, payable on March 6, 2000, to
     shareholders of record on March 1, 2000) As of December 31, 2001, all
     underlying securities were valued below the option exercise price and were
     out-of-the-money options and, as such, have no monetary value as of
     December 31, 2001.

     None of the above named persons exercised options during Fiscal 2001.


     Compensation of Directors and Remuneration of Senior Officers

     The Company paid one thousand dollars ($1,000) cash compensation to Trevor
Bedford in his capacity as director of the Company, for services as a director
during Fiscal 2001. Mr. Bedford served as a director of the Company from January
16 to September 13, 2001.

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

     There has been no arrangement pursuant to which Directors were compensated
by the Company in their capacity as Directors or for services rendered as
consultants or experts during Fiscal 2001, other than as specified above in
respect of compensation to paid Trevor Bedford.


                                       39
<PAGE>

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

     The Company entered into an employment agreement with Charles H. Stein, on
December 18, 2000, effective December 22, 2000. The contract was amended
pursuant to an amendatory letter agreement (the "Amendment"), dated March 14,
2001, between the Company and Mr. Stein. The Amendment provided, among other
things, that the number of shares to be granted to Mr. Stein under option would
be 500,000. The Amendment further provided that if Mr. Stein were not
instrumental in helping the Company secure $200,000 through the private
placement of its common shares by April 23, 2001, (i) he would agree to the
reduction of the number of shares to be granted to him under such option to
100,000 and (ii) the Company could cancel Mr. Stein's employment contract with
the Company at any time after April 23, 2001, upon payment to Mr. Stein of
$20,000. The Amendment also provided for monthly remuneration for Mr. Stein of
$6,000.

     Pursuant to a letter agreement dated May 8, 2001, between the Company and
Mr. Stein (the "Stein Letter Agreement", filed as an Exhibit with the Company's
Form 10-QSB for the period ended June 30, 2001), the Company confirmed that it
would reduce the number of shares to be granted to Mr. Stein under such option
to 100,000, and would cancel Mr. Stein's employment contract effective May 1,
2001, in consequence of Mr. Stein's failure to secure financing for the Company
in the amount of at least $200,000, all as provided in the Amendment. The Stein
Letter Agreement provides that, instead of receiving a one-time payment of
$20,000 upon cancellation of Mr. Stein's employment contract as provided in the
Amendment, Mr. Stein would instead receive $2,000 per month for ten months,
commencing June 1, 2001. Further, the Stein Letter Agreement provides that, if
Mr. Stein is able to arrange financing for the Company in the future, the
Company will grant Mr. Stein an option to purchase a number of shares of the
Company's Common Stock, up to 400,000, based on the contemplated financing
target of $200,000 (e.g., if Mr. Stein raises $100,000, then the Company will
grant 200,000 shares under option).

     The Company and Mr. Stein entered into an Agreement and General Release
(filed as an Exhibit to this Form 10-KSB), dated November 27, 2001, wherein the
Company made payment to Mr. Stein in the amount of seven thousand five hundred
dollars ($7,500) as full payment towards the Company's obligations to Mr. Stein,
with the Company receiving in return the termination of the Stein Letter
Agreement and Mr. Stein's release of the Company against any and all rights and
claims with respect to Mr. Stein's employment with the Company and the Company's
obligations thereunder.


                                       40
<PAGE>


Item 11.  Security Ownership of Certain Beneficial Owners and Management

     To the knowledge of the Company's management, as of February 28, 2002, 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 its
executive officers and directors and by its executive officers and directors, as
a group, as of February 28, 2002. Beneficial ownership numbers reflect the
Company's 2-for-1 stock split, effected as a 100% stock dividend, payable March
6, 2000 to shareholders of record as of March 1, 2000.


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

  James Pappas                               3,200,000 (3)             12.7%

  Vanessa Houiris                            3,200,000 (3)             12.7%

  Steve Pappas                               3,157,400 (4)             12.6%

  Jonathan Edelstein                                 0 (5)              0.0%

  All executive officers and directors       3,157,400 (2)             12.6%
  as a group (2 persons)

(1) The address for each of the persons listed is 2470 Chandler Avenue, Suite 5,
Las Vegas, Nevada 89120.

(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, 2002 are deemed
outstanding. Such shares, however, are not deemed outstanding for the purposes
of computing the percentage ownership of any other person.

(3) Includes 150,000 shares of convertible preferred stock, each of which was
converted into twenty shares of common stock of the Company, or an aggregate of
3,000,000 shares of common stock, on November 9, 2001. Includes 100,000 shares
of common stock of the Company issuable upon the exercise of a warrant, which is
exercisable immediately and until June 28, 2003.

(4) Includes 75,000 shares of convertible preferred stock, each of which was
converted into twenty shares of common stock of the Company, or an aggregate of
1,500,000 shares of common stock on November 9, 2001.

(5) Jonathan Edelstein is a current director and Secretary of the Company.


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


                                       41
<PAGE>

     As a result of transactions dated March 14 and May 25, 2001, the
controlling interest in the Company's stock was sold in privately transacted
sales by and between Arcade Investments Limited (the "Seller") and James
Gerosavas, Angelo Gerosavas, Betty Kapakos, Gus Papadimitriou, Gregory
Angelides, Steven Angelides, Paul Angelides, James Pappas, Steve Pappas, Vanessa
Houiris, Tamie Konstantinidis, Paul Konstantinidis and Stacey Lauridia (the
"Purchasers"). The Purchasers acquired Two Hundred Fifty Thousand shares
(250,000) of the Company's Series A Convertible Preferred Stock, par value $.001
per share (the "Preferred Stock"), from the Seller in the transactions. At the
time of the first transaction, dated March 14, 2001, the Seller held
approximately Forty-five percent (45%) interest in the Company, by way of
holding all then issued and outstanding Preferred Stock, as well as Six Hundred
Fifty Thousand shares (650,000) of the Company's Common Stock. The consideration
paid by the Purchasers to the Seller to acquire the Preferred Stock was One
Hundred Twenty-five Thousand ($125,000.00) dollars. The consideration was
provided in the form of a cash payment of Twenty-five Thousand ($25,000.00) and
a promissory note in the amount of One Hundred Thousand ($100,000.00) dollars,
payable no later than December 31, 2002 and bearing interest payable at a rate
of six percent (6%) per annum.

     All Purchasers act independently of each other, as it relates to their
interest in the Company's capital stock. As such, none of the Purchasers acts as
an affiliate of any of the other Purchaser(s), as the Securities and Exchange
Commission may define that term.

Item 12.  Certain Relationships and Related Transactions

None.

Item 13.  Exhibits and Reports on Form 8-K

       (a)    Exhibits

       3.1    Company's Articles of Incorporation, as amended October 12, 1999
              (incorporated herein by reference to Exhibit 3.1 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).

       3.2    Company's By-laws as amended and restated December 11, 2000
              (incorporated herein by reference to Exhibit 3.2 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).

       10.1   Merger Agreement, dated as of December 1, 2000 by and among the
              Company, Electroship Acquisition Corp., Electroship (N.Y.) Inc.,
              Electroship Partners, John Gremmo, John A. Notarianni, Leo J.
              Mangan, Raymond Anthony Joao and Richard Reichler (incorporated
              herein by reference to Exhibit (c) 1. to the Company's Report on
              Form 8K, filed with the Commission on January 3, 2001).


                                       42
<PAGE>

       10.2   Assignment of Patent Application from Electroship Partners to
              Electroship (N.Y.) Inc. and Defined Field of Use License Agreement
              between Electroship Partners and Electroship (N.Y.) Inc. dated as
              of September 20, 2000 (incorporated herein by reference to Exhibit
              (c) 2. to the Company's Report on Form 8K, filed with the
              Commission on January 3, 2001).

       10.3   License Agreement between Envirokare Composite Corp. and
              Thermoplastic Composite Designs, Inc. dated March 30, 2001
              (incorporated herein by reference to Exhibit 10.3 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).

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

       10.5   Employment Agreement between Envirokare Tech, Inc. and Charles H.
              Stein dated, December 18, 2000 (incorporated herein by reference
              to Exhibit 10.5 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).

       10.6   Employment Agreement between Envirokare Tech, Inc. and Mark L.
              Kallan dated, December 18, 2000 (incorporated herein by reference
              to Exhibit 10.6 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).

       10.7   Employment Agreement between Envirokare Tech, Inc. and Gerald
              Breslauer dated, December 18, 2000 (incorporated herein by
              reference to Exhibit 10.7 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).

       10.8   Amendment to Employment Agreements between the Company and each of
              Charles H. Stein, Mark Kallan, and Gerald Breslauer, dated March
              14, 2001 (incorporated herein by reference to Exhibit 10.8 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).


                                       43
<PAGE>

       10.9   Letter of Agreement between the Company and Charles H. Stein,
              dated May 8, 2001 (incorporated herein by reference to Exhibit
              10.9 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).

       10.10  Agreement and General Release between Envirokare Tech, Inc. and
              Charles H. Stein dated November 27, 2001.

       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).

       (b)    Reports on Form 8-K

       A report on Form 8-K was filed by the Company on January 3,
       2001,concerning the completion of the merger of Electroship (N.Y.) Inc.,
       a New York corporation, with and into Electroship Acquisition Corp., a
       New York corporation and a wholly-owned subsidiary of the Company. See
       "Item 1. Description of Business - Acquisition of Electroship (N.Y.) Inc.


                                       44
<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 March 28, 2002.


                                       ENVIROKARE TECH, INC.
                                       Registrant

                                       By:  /S/ STEVE PAPPAS
                                            ---------------------------------
                                            Name: Steve Pappas
                                            Title: President, Treasurer


     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.


         Signature                          Title                     Date
         ---------                          -----                     ----

     /S/ STEVE PAPPAS              President, Treasurer,         March 28, 2002
---------------------------        Director
       Steve Pappas

  /S/ JONATHAN EDELSTEIN
---------------------------
    Jonathan Edelstein             Secretary, Director           March 28, 2002



                                       45
<PAGE>

Exhibit
Number      Description of Document
------      -----------------------

3.1         Company's Articles of Incorporation, as amended October 12, 1999
            (incorporated herein by reference to Exhibit 3.1 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).

3.2         Company's By-laws as amended and restated December 11, 2000
            (incorporated herein by reference to Exhibit 3.2 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).

10.1        Merger Agreement, dated as of December 1, 2000 by and among the
            Company, Electroship Acquisition Corp., Electroship (N.Y.) Inc.,
            Electroship Partners, John Gremmo, John A. Notarianni, Leo J.
            Mangan, Raymond Anthony Joao and Richard Reichler (incorporated
            herein by reference to Exhibit (c) 1. to the Company's Report on
            Form 8K, filed with the Commission on January 3, 2001).

10.2        Assignment of Patent Application from Electroship Partners to
            Electroship (N.Y.) Inc. and Defined Field of Use License Agreement
            between Electroship Partners and Electroship (N.Y.) Inc. dated as of
            September 20, 2000 (incorporated herein by reference to Exhibit (c)
            2. to the Company's Report on Form 8K, filed with the Commission on
            January 3, 2001).

10.3        License Agreement between Envirokare Composite Corp. and
            Thermoplastic Composite Designs, Inc. dated March 30, 2001
            (incorporated herein by reference to Exhibit 10.3 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).

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

10.5        Employment Agreement between Envirokare Tech, Inc. and Charles H.
            Stein dated, December 18, 2000 (incorporated herein by reference to
            Exhibit 10.5 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).


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<PAGE>

10.6        Employment Agreement between Envirokare Tech, Inc. and Mark L.
            Kallan dated, December 18, 2000 (incorporated herein by reference to
            Exhibit 10.6 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).

10.7        Employment Agreement between Envirokare Tech, Inc. and Gerald
            Breslauer dated, December 18, 2000 (incorporated herein by reference
            to Exhibit 10.7 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).

10.8        Amendment to Employment Agreements between the Company and each of
            Charles H. Stein, Mark Kallan, and Gerald Breslauer, dated March 14,
            2001 (incorporated herein by reference to Exhibit 10.8 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).

10.9        Letter of Agreement between the Company and Charles H. Stein, dated
            May 8, 2001 (incorporated herein by reference to Exhibit 10.9 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).

10.10       Agreement and General Release between Envirokare Tech, Inc. and
            Charles H. Stein dated November 27, 2001.

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).



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