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

                                   FORM 10-QSB

(Mark One)

[X]  Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934 For the quarterly period ended September 30, 2001

[_]  Transition report under 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 Identification No.)
 incorporation or organization)

             2470 Chandler Avenue, Suite 5, Las Vegas, Nevada 89120
                    (Address of principal executive offices)

                                 (702) 262-1999
                           (Issuer's telephone number)

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the issuer filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court. Yes [_] No [_] NOT APPLICABLE

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: The total number of shares of Common
Stock, par value $.001 per share, outstanding as of October 18, 2001, was
14,889,478.

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

<PAGE>


                                TABLE OF CONTENTS

Part I -- FINANCIAL INFORMATION

Item 1.    Financial Statements                                                1

               Accountant's Review Report                                      2

               Consolidated Balance Sheets                                     3

               Consolidated Statements of Operations and Comprehensive Loss    4

               Consolidated Statement of Stockholders' Equity                  5

               Consolidated Statements of Cash Flows                           6


               Notes to the Consolidated Financial Statements                  7


Item2.    Plan of Operation                                                   20


Part II -- OTHER INFORMATION

Item 1    Legal Proceedings                                                   29

Item 2    Changes in Securities                                               29

Item 3    Defaults Upon Senior Securities                                     29

Item 4    Submission of Matters to a Vote of Security Holders                 29

Item 5    Other Information                                                   29

Item 6    Exhibits and Reports on Form 8-K                                    29

<PAGE>


                         PART I - FINANCIAL INFORMATION


Item 1. Financial Statements


                              ENVIROKARE TECH, INC.
                              Financial Statements
                               September 30, 2001


                              WILLIAMS & WEBSTER PS

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


                                       1
<PAGE>


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


                           ACCOUNTANT'S REVIEW REPORT

We have reviewed the accompanying consolidated balance sheets of Envirokare
Tech, Inc. (a development stage company) as of September 30, 2001 and the
related consolidated statements of operations and comprehensive loss, cash
flows, and stockholders' equity for the three months and nine months ended
September 30, 2001 and 2000, and for the period from June 15, 1998 (inception)
through September 30, 2001. These financial statements are the responsibility of
the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in accordance with
auditing standards generally accepted in the United States of America, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with accounting principles generally accepted in the United States of
America.

The financial statements for the year ended December 31, 2000 were audited by us
and we expressed an unqualified opinion on them in our report dated March 30,
2001, but we have not performed any auditing procedures since that date.

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
October 25, 2001


                                       2
<PAGE>


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


<TABLE>
<CAPTION>
                                                                     September 30,
                                                                          2001       December 31,
                                                                      (unaudited)       2000
                                                                      -----------    -----------
<S>                                                                   <C>            <C>
ASSETS
     CURRENT ASSETS
         Cash                                                         $        41    $    11,362
         Due from related party                                             6,753          6,438
                                                                      -----------    -----------
             TOTAL CURRENT ASSETS                                           6,794         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                                 (4,331)        (3,017)
                                                                      -----------    -----------
             TOTAL PROPERTY AND EQUIPMENT                                  48,561         75,537
                                                                      -----------    -----------

     OTHER ASSETS
         Deposits and retainers                                            23,223         81,560
         License agreement                                                525,000             --
         Patent acquisition and patent costs                            1,968,458      1,966,726
                                                                      -----------    -----------
             TOTAL OTHER ASSETS                                         2,516,681      2,048,286
                                                                      -----------    -----------

         TOTAL ASSETS                                                 $ 2,572,036    $ 2,141,623
                                                                      ===========    ===========

LIABILITIES & STOCKHOLDERS' EQUITY CURRENT
     LIABILITIES
         Accounts payable                                             $   141,783    $        --
         Deposits payable                                                   3,000             --
         Notes payable                                                     61,965         61,965
         Accrued interest                                                  31,452         12,989
         Due to related party                                             285,000             --
                                                                      -----------    -----------
             TOTAL CURRENT LIABILITIES                                    523,200         74,954
                                                                      -----------    -----------

     NON-CURRENT LIABILITIES
         Notes payable                                                    300,000             --
                                                                      -----------    -----------
             TOTAL NON-CURRENT LIABILITIES                                300,000             --
                                                                      -----------    -----------

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

     STOCKHOLDERS' EQUITY
         Convertible preferred stock, 10,000,000 shares authorized,
             $.001 par value; 500,000 shares issued and
             outstanding                                                      500            500
         Common stock, 200,000,000 shares authorized,
             $.001 par value; 14,889,478 and 13,889,478 shares
             issued and outstanding, respectively                          14,889         13,889
         Stock subscriptions receivable                                        --             --
         Additional paid-in capital                                     3,337,257      3,066,257
         Stock options                                                    621,000        529,000
         Accumulated deficit during development stage                  (2,220,762)    (1,538,929)
         Other comprehensive loss                                          (4,048)        (4,048)
                                                                      -----------    -----------
         TOTAL STOCKHOLDERS' EQUITY                                     1,748,836      2,066,669
                                                                      -----------    -----------

         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $ 2,572,036    $ 2,141,623
                                                                      ===========    ===========
</TABLE>


              See accomanying notes and accountant's review report.


                                       3
<PAGE>


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


<TABLE>
<CAPTION>
                                                                                                          Period from
                                          Three Months    Three Months    Nine Months     Nine Months     June 15,1998
                                             Ended           Ended           Ended           Ended        (Inception) to
                                          September 30,   September 30,   September 30,   September 30,   September 30,
                                              2001            2000           2001            2000            2001
                                          (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)
                                          ------------    ------------    ------------    ------------    ------------
<S>                                        <C>            <C>             <C>             <C>             <C>
REVENUES                                  $         --    $         --    $         --    $         --    $         --
                                          ------------    ------------    ------------    ------------    ------------
EXPENSES
     Consulting fees - related parties          37,000          24,000         198,500          47,987         602,203
     Other consulting fees                      31,000          72,000         168,000         121,115         658,165
     Rent                                        7,871           2,292          20,975           6,876          44,070
     General and administrative                 24,367          33,266          62,271          99,670         288,374
     Depreciation                                  473             404           1,314           1,202           4,331
     Professional fees                          44,250          22,128         114,601          76,827         278,245
     Research and development                   82,269          13,310          82,269          20,319         180,938
     Wages, salaries, and payroll taxes            455          58,658          14,377          98,227         131,879
                                          ------------    ------------    ------------    ------------    ------------
        TOTAL EXPENSES                         227,685         226,058         662,307         472,223       2,188,205
                                          ------------    ------------    ------------    ------------    ------------

LOSS FROM OPERATIONS                          (227,685)       (226,058)       (662,307)       (472,223)     (2,188,205)

OTHER EXPENSES
     Interest expense                           16,251           1,562          19,526           4,657          32,557
                                          ------------    ------------    ------------    ------------    ------------
        TOTAL OTHER EXPENSES                    16,251           1,562          19,526           4,657          32,557
                                          ------------    ------------    ------------    ------------    ------------

LOSS BEFORE PROVISION FOR INCOME TAXES        (243,936)       (227,620)       (681,833)       (476,880)     (2,220,762)

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

NET LOSS                                      (243,936)       (227,620)       (681,833)       (476,880)     (2,220,762)

OTHER COMPREHENSIVE LOSS
     Foreign currency translation loss              --            (762)             --          (2,860)         (4,048)
                                          ------------    ------------    ------------    ------------    ------------

COMPREHENSIVE LOSS                        $   (243,936)   $   (228,382)   $   (681,833)   $   (479,740)   $ (2,224,810)
                                          ============    ============    ============    ============    ============

     BASIC AND DILUTED NET LOSS
        PER COMMON SHARE                  $      (0.02)   $      (0.02)   $      (0.05)   $      (0.04)   $      (0.19)
                                          ============    ============    ============    ============    ============

     WEIGHTED AVERAGE NUMBER
        OF BASIC AND DILUTED COMMON
        STOCK SHARES OUTSTANDING            14,889,478      11,189,478      14,233,800      11,035,402      11,668,397
                                          ============    ============    ============    ============    ============
</TABLE>


              See accomanying notes and accountant's review report.


                                       4
<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

Net loss for nine months ended September 30, 2001                 --           --           --           --           --
                                                          ----------   ----------   ----------   ----------   ----------
Balance, September 30, 2001 (unaudited)                      500,000   $      500   14,889,478   $   14,889   $3,337,257
                                                          ==========   ==========   ==========   ==========   ==========


<CAPTION>
                                                                                       Accumulated
                                                                                         Deficit
                                                            Warrants                      During         Other           Total
                                                              and       Subscriptions   Development   Comprehensive   Stockholders'
                                                          Stock Options   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

Net loss for nine months ended September 30, 2001                  --             --       (681,833)            --       (681,833)
                                                          -----------    -----------    -----------    -----------    -----------
Balance, September 30, 2001 (unaudited)                   $   621,000    $        --    $(2,220,762)   $    (4,048)   $ 1,748,836
                                                          ===========    ===========    ===========    ===========    ===========
</TABLE>


              See accomanying notes and accountant's review report.


                                       5
<PAGE>


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


<TABLE>
<CAPTION>
                                                                                                Period from
                                                                     Nine           Nine       June 15, 1998
                                                                 Months Ended   Months Ended   (Inception) to
                                                                 September 30,  September 30,  September 30,
                                                                     2001           2000           2001
                                                                  (unaudited)    (unaudited)    (unaudited)
                                                                  -----------    -----------    -----------
<S>                                                               <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                     $  (681,833)   $  (476,880)   $(2,220,762)
     Adjustments to reconcile net loss
         to net cash used by operating activities:
     Depreciation  and amortization                                     1,314          1,202          4,331
     Stock options issued for consulting fees                         164,000         96,000        837,000
     Consulting fees due to related party applied to receivable            --             --          9,000
     Decrease (increase)  in prepaid expenses and deposits             58,337          8,510        (23,223)
     Increase (decrease) in accounts payable                          141,783       (100,356)       141,783
     Increase in rent deposit payable                                   3,000             --          3,000
     Increase in accrued interest receivable, related party              (315)            --           (753)
     Increase in accrued interest payable                              18,464          4,657         31,453
                                                                  -----------    -----------    -----------

     Net cash used by operating activities                           (295,250)      (466,867)    (1,218,171)
                                                                  -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Loan to related party                                                 --        (15,175)       (15,000)
     Purchase of molds                                                 27,000        (70,000)       (43,000)
     Payments of license agreement                                   (525,000)            --       (525,000)
     Patent costs                                                      (1,733)        (6,228)       (10,129)
     Purchase of equipment                                             (1,338)          (300)        (8,045)
                                                                  -----------    -----------    -----------

     Net cash used in investing activities                           (501,071)       (91,703)      (601,174)
                                                                  -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from sale of preferred stock                                 --             --        250,000
     Proceeds from sale of common stock                               200,000        462,500        959,799
     Proceeds from notes payable                                      300,000             --        300,000
     Proceeds from issuance of notes payable to related party         285,000             --        313,635
                                                                  -----------    -----------    -----------

     Net cash provided by financing activities                        785,000        462,500      1,823,434
                                                                  -----------    -----------    -----------

Increase (decrease) in cash                                           (11,321)       (96,070)         4,089

Adjustment for foreign currency  translation                               --         (2,860)        (4,048)

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

Cash, end of period                                               $        41    $    49,116    $        41
                                                                  ===========    ===========    ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
     Interest paid                                                $     1,265    $        --    $     1,265
                                                                  ===========    ===========    ===========

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

NON-CASH TRANSACTIONS:
     Common stock issued for acquisition of subsidiary            $        --    $        --    $ 1,925,000
     Note issued for purchase of property, equipment,
          and operating expenses                                  $        --    $        --    $     3,635
     Note issued for pending patent to related party              $        --    $        --    $    33,330
     Note issued for deposit for stock                            $   100,000    $        --    $   100,000
     Stock options issued for consulting fees                     $   164,000    $    96,000    $   837,000
     Stockholder's contribution for equipment                     $        --    $        --    $     1,847
</TABLE>


              See accomanying notes and accountant's review report.


                                       6
<PAGE>


                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               September 30, 2001


NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Envirokare Tech,  Inc.,  (hereinafter  "the Company"),  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 offices in Las Vegas,
Nevada and Boca Raton,  Florida.  The  Company has elected a fiscal  year-end of
December 31.

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

The Company is in the  development  stage and, as of  September  30,  2001,  had
realized no revenues from its planned operations.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of  significant  accounting  policies of Envirokare  Tech,  Inc. 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 $2,220,762, which includes a net loss of $681,833 for the
nine months ended  September 30, 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.  During the year  ended  December  31,  1999,  the  Company
contracted  with   Thermoplastic   Composite   Designs  Inc.  and  Thermoplastic
Flowforming


                                       7
<PAGE>


                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               September 30, 2001


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Going Concern (continued)

Technologies  Corp. for professional and technical  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 during the first quarter of year 2002.

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  Statement  of  Cash  Flows,  the  Company  considers  all
short-term debt securities  purchased with a maturity 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  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.  This  standard   establishes   accounting  and  reporting  standards  for
derivative  instruments,  including certain derivative  instruments  embedded in
other  contracts,  and for  hedging  activities.  It  requires  that  an  entity
recognize all  derivatives as either assets or  liabilities in the  consolidated
balance sheet and measure those instruments at fair value.


                                       8
<PAGE>


                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               September 30, 2001


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Derivative Instruments (continued)

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

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

At September  30,  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.

Impaired Asset Policy

In March 1995,  the  Financial  Accounting  Standards  Board  issued a statement
titled "Accounting for Impairment of Long-lived  Assets." In complying with this
standard,  the Company reviews its long-lived  assets  quarterly to determine if
any events or changes in  circumstances  have transpired which indicate that the
carrying  value of its  assets  may not be  recoverable.  The  Company  does not
believe  any  adjustments  are  needed to the  carrying  value of its  assets at
September 30, 2001.

Interim Financial Statements

The interim  financial  statements as of and for the nine months ended September
30, 2001 included herein have been prepared for the company without audit.  They
reflect all  adjustments  which are, in the opinion of management,  necessary to
present fairly the results of operations for these periods. All such adjustments
are normal  recurring  adjustments.  The results of  operations  for the periods
presented are not  necessarily  indicative of the results to be expected for the
full fiscal year.

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 September 30, 2001, the Company had convertible  preferred
stock, stock options and warrants  outstanding,  equivalent to 14,550,000 common
stock shares, which are considered to be anti-dilutive.


                                       9
<PAGE>


                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               September 30, 2001


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Principles of Consolidation

The Company's  financial  statements include the accounts of the Company and its
wholly-owned non-operating 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." 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 September 30, 2001, the Company had net deferred tax assets of  approximately
$750,000  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 September 30, 2001.

At September  30, 2001,  the Company has net  operating  loss  carryforwards  of
approximately $2,224,000, which expire in the years 2018 through 2020.

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 September 30, 2001 and December 2000, or the periods
then ended.

Accounting Pronouncements

In June 1997,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting Standards No. 130, "Reporting  Comprehensive Income" ("SFAS
No. 130"), and No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS No. 131"). SFAS 130 establishes  standards for reporting and
displaying  comprehensive income, its components and accumulated balances.  SFAS
131 establishes  standards for the way that companies report  information  about
operating  segments in annual  financial  statements  and requires  reporting of
selected  information about operating segments in interim financial  statements.
Both SFAS 130 and SFAS 131 are effective for periods  beginning  after  December
15, 1997. The Company adopted these new accounting  standards,  and the adoption
of SFAS 131 had no effect on the Company's financial statements and disclosures.
The adoption of SFAS 130, related to comprehensive  income,  is disclosed in the
accompanying financial statements.


                                       10
<PAGE>


                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               September 30, 2001


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Pronouncements (continued)

In September  2000, the FASB issued SFAS No. 140  "Accounting  for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities." 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.

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.

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, 2000 and 1999,  attorney
fees of  $7,787  and  $609,  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.


                                       11
<PAGE>


                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               September 30, 2001


NOTE 3 - INTANGIBLE ASSETS (continued)

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(TM),  or Pallet,  and other  products to be  developed.  The
license fee is a one-time fee of $525,000  that was paid by September  30, 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.

                                                   September 30,   December 31,
                                                        2001         2000
                                                      -------       -------
     Furniture and Fixtures                           $ 1,893       $ 1,893
     Less:  Accumulated Depreciation                      797           596
                                                      -------       -------
     Net Furniture & Fixtures                         $ 1,096       $ 1,297
                                                      =======       =======

     Office Equipment                                 $ 7,999       $ 6,661
     Less:  Accumulated Depreciation                    3,534         2,421
                                                      -------       -------
     Net Office Equipment                             $ 4,465       $ 4,240
                                                      =======       =======

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

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,
acquired at a cost of $43,000,  will be depreciated  over their expected  useful
lives,  which  currently  has not been  determined.  These  molds are  currently
carried at cost and 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. See Note 11.


                                       12
<PAGE>


                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               September 30, 2001


NOTE 5 - SHORT-TERM DEBT

Short-term  notes payable at September 30, 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  September  30, 2001 and December 31, 2000 was
$17,624 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.

On March 30, 2001, the Company entered into a license agreement for intellectual
property  with TCD for  $525,000.  This amount was paid in full by September 30,
2001. See Note 3.

See Note 10 for discussion concerning a loan payable to a shareholder.

NOTE 6 - LONG-TERM DEBT

As of September 30, 2001, long-term debt consisted of an unsecured $100,000 note
payable  dated  July 9, 2001,  and an  unsecured  $200,000  note  payable  dated
September  30,  2001.  Both notes  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.

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.  These shares were issued in reliance  upon
the exemption from the  registration  requirements of the Securities Act of 1933
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.  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. which was previously a


                                       13
<PAGE>


                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               September 30, 2001


NOTE 7 - COMMON STOCK (continued)

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 1999 Stock Plan.

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  of  1933  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, 2000 and 1999 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 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.

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.


                                       14
<PAGE>


                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               September 30, 2001


NOTE 9 - STOCK OPTIONS

In September  1999, the Board of Directors (the "Board") of the Company  adopted
the Envirokare  Tech, Inc. 1999 Stock Plan (the "Plan"),  subject to approval of
the Company's  shareholders.  The  shareholders  approved the plan at the Annual
Meeting of the Company's shareholders in May 2000. As adopted, the Plan provided
for  authorization of 2,000,000 shares of common stock for issuance  pursuant to
awards under the Plan. In September 1999, the Board 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 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 also voted
to make  corresponding  adjustments  to the number of shares subject to previous
option grants and to the exercise prices for such options.

The Company filed a Form S-8 under the Securities  Act of 1933 (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.

The  purposes  of the  1999  Stock  Plan are to  attract,  retain  and  motivate
employees,  directors  and  consultants  of  the  Company.  In  accordance  with
Statement  on  Financial  Accounting  Standard  No.  123,  the fair value of the
options granted was estimated using the Black-Scholes  Option Price Calculation.
The  following  assumptions  were  made to value the  stock  options:  risk-free
interest rate at 5%, expected life at 10 years, and expected  volatility at 30%.
For the year ended  December 31, 1999, the Company  recorded  $552,000 ($.24 per
option)  in  consulting  fees for the  value of the  options  based  upon  these
Black-Scholes  assumptions.  These stock options will expire September 29, 2009.
See Note 10. The Plan also requires early  exercising of the options for various
reasons,  including  employment  termination,   separation  from  services,  and
cancellation or completion of consulting contracts.

All of the options granted by the Company are exercisable immediately.  The Plan
restricts  sales for shares  received  upon exercise of  non-qualified  options,
limiting each optionee to sales in any year of option shares equal to 25% of the
total number of shares  received under the optionee's  grant. As of December 31,
2000,  there remained  1,700,000  shares of common stock  available for issuance
under the Plan.


                                       15
<PAGE>


                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               September 30, 2001


NOTE 9 - STOCK OPTIONS (continued)

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.

                                                          Number of     Strike
                                                           Shares       Price
                                                          ----------    ------
Outstanding at December 31, 1998                                  --    $   --
Granted                                                    2,300,000     0.575
                                                          ----------    ------

Outstanding at December 31, 1999                           2,300,000     0.575
Expired                                                     (500,000)    0.575
Granted                                                      500,000     0.500
Exercised                                                   (100,000)    0.575
                                                          ----------    ------
Outstanding at December 31, 2000                           2,200,000
                                                          ----------
Weighted average strike price at December 31, 2000                      $0.559
                                                                        ------
Expired                                                     (550,000)    0.575
Granted                                                      100,000     0.600
Granted                                                      900,000     0.300
                                                          ----------    ------
Outstanding at September 30, 2001                          2,650,000
                                                          ==========
Weighted average strike price at September 30, 2001                     $0.469
                                                                        ======
Options Exercisable at September 30, 2001                  2,650,000
                                                          ==========

Weighted average fair value of options granted during
the nine months ended September 30, 2001                                $ 0.16
                                                                        ------


                                       16
<PAGE>


                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               September 30, 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 for  consulting  fees during the
year  ended  December  31,  2000.  Ms.  Runnalls  received  $22,715  in cash for
consulting fees during the year ended December 31, 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.  The  shareholder  loan  balance,
including accrued interest, at September 30, 2001 was $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 is currently a member of the board of directors of the Company.

During  2001,  a  shareholder  loaned the Company  $285,000.  This amount  bears
interest  calculated  at 10% per  annum.  The loan  balance,  including  accrued
interest,  on September  30, 2001 was $295,293.  It is the  Company's  intent to
repay this shareholder loan by the year ending December 31, 2001.

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 is currently a
member of the board of directors of the Company.

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.


                                       17
<PAGE>


                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               September 30, 2001


NOTE 11 - COMMITMENTS AND CONTINGENCIES

Consulting Agreements

The Company  entered  into  employment  contracts  with  Charles H. Stein,  Mark
Kallan,  and Gerald  Breslauer dated December 18, 2000. These contracts call for
compensation totaling $144,000 annually combined commencing on December 31, 2000
and ending on December 31, 2005.  These  employment  contracts  also carry stock
options, which have been included in the stock options calculation.  See Note 8.
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 Charles H.  Stein at $2,000  per month for ten months  commencing  on June 1,
2001. The employment contracts for Mark Kallan and Gerald Breslauer were amended
by contracts,  dated March 14, 2001 that call for compensation  totaling $84,000
annually combined ending December 31, 2005.

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 period was
extended for a  three-month  period to December 31,  2001,  by mutual  agreement
between the landlord and the Company.  Monthly  payments are currently  $800 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
$2,794.50 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. Future annual minimum lease payments for the term of the
lease as of September 30, 2001 are as follows for the years ending December 31:

          2001                           $8,384
          2002                          $34,764
          2003                          $36,156
          2004                          $37,605
          2005                          $39,109


                                       18
<PAGE>


                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                               September 30, 2001


NOTE 11 - COMMITMENTS AND CONTINGENCIES (continued)

Development Contract

In November  1999,  the Company  entered into a  product/technology  development
contract with TCD, whereby TCD would provide professional and technical services
to the  Company.  Terms of the contract  required  TCD to, among other  matters,
modify the Company's  pallet  design,  provide pallet  material  specifications,
supply the pallet molds, and develop pallet prototypes and demonstration  units.
The total payable by the Company  under this  contract was $133,800.  During the
year ended  December  31,  1999,  the amount paid was $50,800  leaving a balance
owing of $83,000.  During the period ended June 30, 2000, this balance was paid.
The Company  capitalized  $70,000 of these  research  and  development  costs as
prepaid  expenses at December 31, 1999 to reflect the value of the molds derived
from this  contract.  As of June 30, 2000,  this prepaid  expense of $70,000 was
reclassified  as molds,  a depreciable  component of the Company's  property and
equipment.  The first  generation  molds were utilized in initial pallet testing
and design.  Substantial physical  modifications were made to these molds, which
rendered the molds of no commercial value. Accordingly,  the cost of these molds
was allocated to research and  development  expenses,  as of September 30, 2001.
The  second  generation  molds  were  acquired  at a cost  of  $43,000  and  are
classified  as molds,  a  depreciable  component of the  Company's  property and
equipment.  The Company is continuing its research and development of the Pallet
using these molds. See Note 4.

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,  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.


                                       19
<PAGE>


Item 2. Plan of Operation

     This Form 10-QSB  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-QSB.

     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(TM)  (sometimes  referred to
herein as the "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,"  below,  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  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  first  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.


                                       20
<PAGE>


     Liquidity and Capital Resources

     The  Company is not yet  generating  revenues.  For the nine  months  ended
September  30, 2001,  the Company had a net loss of $681,833.  The Company's net
loss  accumulated for the period from June 15, 1998 (inception) to September 30,
2001 was  $2,220,762.  The  Company  anticipates  that it will begin to generate
revenue during 2002, upon the planned start of production of the E Pallet(TM) by
the Company.  At September 30, 2001,  the Company had current  assets of $6,794.
During the nine months ended  September 30, 2001,  the Company's  cash resources
decreased  by $114,138 as a result of general and  administrative  expenses  and
license payments.  At September 30, 2001 the Company had current  liabilities of
$523,200.  At September 30, 2001 current liabilities  exceeded current assets by
$516,406. 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 September 30, 2002
at $720,000,  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.

     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 2001a private  placement  consisting of units
of the Company's  common stock and warrants to purchase common stock.  See "Part
II -- Other  Information.  Item 2.  Changes in  Securities."  Additionally,  the
Company is currently  undertaking a new private placement of units consisting 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.  To date,  the Company has raised Three Hundred  Thousand  Dollars
($300,000) 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 plans,  which in the short term include the start-up of
Pallet  manufacturing  operations,   and  in  the  longer  term  include  adding
additional  production  lines and  expanding the 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 September 30, 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


                                       21
<PAGE>


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.

     Products; Product Development

     The  Company's  first  product is the E  Pallet(TM),  made through a unique
manufacturing  process  which  allows  for 80% of the  material  to be  recycled
thermoplastics. This process is called Thermoplastic Flow Forming ("TPF Process"
or "Process"). See " -- TPF Process," below.

Key  advantages  of the  Company's  Pallet will include  increased  strength and
durability,  lighter weight,  environmental  benefits (i.e., 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  testing.  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: a 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.

     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.  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


                                       22
<PAGE>


improved  Pallet.  Further Pallet testing and  evaluation  through  January 2001
resulted in other minor  adjustments to the Pallet design to bring the Pallet up
to the Company's specified standards.

     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 plans to continue to conduct  further  testing  during the
fourth  quarter of 2001,  which it believes will provide  information  as to the
longevity  of the Pallet  compared  to other  materials  and  provide  marketing
strategies  for the  Company.  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.

     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 composite materials were utilized almost exclusively be
the  military  and  aerospace  industries,  due to the  inordinate  cost of hand
application, normally confined to smaller parts.

     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.

     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


                                       23
<PAGE>


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 the Company  ("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  Company's  common stock,  par value $.001 per share.  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 had been  provisionally  filed by Electroship with the United States Patent
and Trade Office  ("USPTO").  The Company  anticipates  that patents that may be
issued as a result of the  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.

     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  Envirokare  Composite Corp.
("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  to be  developed  will be  manufactured  using TCD's  proprietary  TPF
process.  The license agreement provides that the Company will make a payment in
the amount of Four Hundred and Fifty  Thousand  dollars  ($450,000) to TCD. This
payment is 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 applied to
the  license  fee  payable to TCD during  June 2001.  As required by the license
agreement, the Company completed license payments to TCD during September 2001.


                                       24
<PAGE>


     The Company and ECC also entered into a merger  agreement  with TCD,  which
provides  that  TCD  will  merge  with ECC if the  Company'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 for
manufacture  and  production  of the Pallet and other  contemplated  products by
third parties,  which would provide  license fees and royalty  revenues 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 which  included 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 were 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 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 were  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.

     Employees

     The  Company's  current  policy is to  utilize  consultants  for  business,
accounting and engineering  services on an as-needed basis and these consultants
accommodate  the Company's  current needs in handling all aspects of operations.
Accordingly, the Company has no employees at this time.


                                       25
<PAGE>


     Amendments to Employment Contracts

     Effective as of December 22, 2000, the Company had entered into  employment
contracts with Charles H. Stein,  currently Vice Chairman of the Board;  Mark L.
Kallan,  Executive  Vice  President;  and Gerald  Breslauer,  Vice  President of
Administration,  Secretary and  Treasurer.  The contracts were  preliminary  and
subject to  renegotiation.  See "Item 10.  Executive  Compensation -- Employment
Contracts and Termination of Employment and  Change-in-Control  Arrangements" in
the Company's Annual Report on Form 10-KSB for the year ended December 31, 2000.

     Each  of  the  contracts  was  amended  pursuant  to an  amendatory  letter
agreement (the "Amendment"),  dated March 14, 2001, between the Company and each
of Messrs.  Stein,  Kallan and Breslauer.  The Amendment  provided,  among other
things, that the number of shares to be granted under option would be 500,000 as
to Mr.  Stein,  and  300,000  as to each of Mr.  Kallan and Mr.  Breslauer.  The
Amendment further provided, as to Mr. Stein, that if he 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 Messrs.  Stein,  Kallan and Breslauer of
$6,000, $3,000 and $4,000, respectively, subject to increases for Mr. Kallan and
Breslauer  based on the amount of time each  allocates  to the  business  of the
Company.

     Pursuant to a letter agreement (the "Stein Letter  Agreement") dated May 8,
2001,  between the Company and Mr. Stein,  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 shall 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,  up to  400,000,  based on the
contemplated  financing  target of $200,000 (i.e., if Mr. Stein raises $100,000,
then the  Company  will grant  200,000  shares  under  option).  Mr.  Stein also
acknowledged  in  the  Stein  Letter  Agreement  that,  as of May  1,  2001,  he
relinquished his titles of Chairman of the Board and Chief Executive  Officer of
the Company, and became Vice Chairman of the Board.


                                       26
<PAGE>


                           PART II -OTHER INFORMATION

Item 1. Legal Proceedings

     Reference  is made to the  Company's  Annual  Report on Form 10-KSB for the
year ended  December 31, 2000,  for a discussion  of an action filed by Mr. Real
Morel against the Company in the Supreme Court of British Columbia, Canada.

Item 2. Changes in Securities

     The  Company  is  currently   undertaking  a  private  placement  of  units
consisting 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.  To date, the Company has raised Three Hundred Thousand Dollars
($300,000) in this offering.

Item 3. Defaults Upon Senior Securities

     None

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

     None

Item 5. Other Information

     None

Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits

     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).


                                       27
<PAGE>


     10.1 Agreement  and Plan of  Merger,  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 8-K,
          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 8-K,  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 the Company 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 the Company 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 the Company 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 L. 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 Agreement  between the Company and Charles H. Stein,  dated


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<PAGE>


          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).

     (b)  Reports on Form 8-K

          None


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<PAGE>


                                    SIGNATURE

     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 November 14, 2001.


                                  ENVIROKARE TECH, INC.
                                  Registrant

                                  By:   /s/STEVE PAPPAS
                                       -----------------------------
                                       Name:  Steve Pappas
                                       Title: President
                                              (Principal Executive Officer and
                                              Principal Financial and Accounting
                                              Officer)


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