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 March 31, 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                                  (I.R.S. Employer
of incorporation or organization)                            Identification No.)

             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  June  6,  2001,  was
13,889,478.

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

Item 2.   Plan of Operation...................................................19


Part II -- OTHER INFORMATION

Item 1.   Legal Proceedings...................................................28

Item 2.   Changes in Securities...............................................28

Item 3.   Defaults Upon Senior Securities.....................................28

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
                                 March 31, 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 March 31, 2001 and the related
consolidated  statements of operations and  comprehensive  loss, cash flows, and
stockholders'  equity for the three months ended March 31, 2001,  and 2000,  and
for the period from June 15, 1998  (inception)  through  March 31,  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
generally accepted auditing standards,  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 review, 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 generally accepted accounting principles.

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
June 10, 2001


                                       2


<PAGE>

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

<TABLE>
<CAPTION>
                                                                 March 31,
                                                                    2001       December 31,
                                                                (unaudited)       2000
                                                                -----------    -----------
<S>                                                             <C>            <C>
 A S S E T S
      CURRENT ASSETS
           Cash                                                 $    23,879    $    11,362
           Due from related party                                     6,543          6,438
                                                                -----------    -----------
                TOTAL CURRENT ASSETS                                 30,422         17,800
                                                                -----------    -----------

      PROPERTY AND EQUIPMENT
           Furniture and fixtures                                     1,893          1,893
           Office equipment                                           7,999          6,661
           Molds                                                     70,000         70,000
                Less accumulated depreciation                        (3,421)        (3,017)
                                                                -----------    -----------
                TOTAL PROPERTY AND EQUIPMENT                         76,471         75,537
                                                                -----------    -----------

      OTHER ASSETS
           Deposits and retainers                                   114,973         81,560
           License agreement                                        450,000             --
           Patent acquisition and patent costs                    1,966,726      1,966,726
                                                                -----------    -----------
                TOTAL OTHER ASSETS                                2,531,699      2,048,286
                                                                -----------    -----------

           TOTAL ASSETS                                         $ 2,638,592    $ 2,141,623
                                                                ===========    ===========

L I A B I L I T I E S   &   S T O C K H O L D E R S '  E Q U I T Y
      CURRENT LIABILITIES
           Accounts payable                                     $    38,951    $        --
           Deposits                                                   3,000
           Notes payable                                             61,965         61,965
           Accrued interest                                          14,517         12,989
           Due to related party                                      50,000             --
           Deposits for stock                                       156,000             --
           License payable                                          450,000             --
                                                                -----------    -----------
                TOTAL CURRENT LIABILITIES                           774,433         74,954
                                                                -----------    -----------

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

      STOCKHOLDERS' EQUITY
           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; 13,889,478 shares
                issued and outstanding                               13,889         13,889
           Stock subscriptions receivable                                --             --
           Additional paid-in capital                             3,138,257      3,066,257
           Stock options                                            457,000        529,000
           Accumulated deficit during development stage          (1,741,439)    (1,538,929)
           Other comprehensive loss                                  (4,048)        (4,048)
                                                                -----------    -----------
           TOTAL STOCKHOLDERS' EQUITY                             1,864,159      2,066,669
                                                                -----------    -----------

           TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $ 2,638,592    $ 2,141,623
                                                                ===========    ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements


                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                            Period from
                                             For the         For the       June 15, 1998
                                            Three Months    Three Months   (Inception) to
                                           Ended March 31, Ended March 31,   March 31,
                                               2001           2000            2001
                                           (unaudited)     (unaudited)     (unaudited)
                                           ------------    ------------    ------------
<S>                                        <C>             <C>             <C>
REVENUES                                   $         --    $         --    $         --
                                           ------------    ------------    ------------

E X P E N S E S
      Consulting fees - related parties          56,500          15,170         431,203
      Other consulting fees                      41,000          32,500         560,165
      Rent                                       10,400           2,292          33,495
      General and administrative                 28,521          24,886         254,624
      Depreciation                                  404             404           3,421
      Professional fees                          64,014          10,686         227,658
      Research and development                       --              --          98,669
      Wages, salaries, and payroll taxes             --              --         117,502
                                           ------------    ------------    ------------
           TOTAL EXPENSES                       200,839          85,938       1,726,737
                                           ------------    ------------    ------------

LOSS FROM OPERATIONS                           (200,839)        (85,938)     (1,726,737)

OTHER EXPENSES
      Interest expense                            1,671           1,551          14,702
                                           ------------    ------------    ------------
           TOTAL OTHER EXPENSES                   1,671           1,551          14,702
                                           ------------    ------------    ------------

LOSS BEFORE PROVISION FOR INCOME TAXES         (202,510)        (87,489)     (1,741,439)

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

NET LOSS                                       (202,510)        (87,489)     (1,741,439)

OTHER COMPREHENSIVE LOSS
      Foreign currency translation loss              --          (1,158)         (4,048)
                                           ------------    ------------    ------------

COMPREHENSIVE LOSS                         $   (202,510)   $    (88,647)   $ (1,745,487)
                                           ============    ============    ============


      BASIC AND DILUTED NET LOSS
           PER COMMON SHARE                $      (0.01)   $      (0.01)   $      (0.16)
                                           ============    ============    ============

      WEIGHTED AVERAGE NUMBER
           OF BASIC AND DILUTED COMMON
           STOCK SHARES OUTSTANDING          13,889,478      10,917,809      10,915,327
                                           ============    ============    ============
</TABLE>

   The accompanying notes are an integral part of these financial statements


                                       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 $.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                                           --           --           --          --      72,000

Net loss for the three months ended March 31, 2001 (unaudited)        --           --           --          --          --
                                                                --------  -----------  -----------  ----------  ----------
                                                                 500,000  $       500   13,889,478  $   13,889  $3,138,257
                                                                ========  ===========  ===========  ==========  ==========

<CAPTION>
                                                                                          Accumulated
                                                                                            Deficit
                                                                                             During        Other          Total
                                                                  Stock     Subscriptions  Development  Comprehensive  Stockholders
                                                                 Options     Receivable      Stage          Loss          Equity
                                                                ---------   -----------   -----------   -----------   -----------
<S>                                                             <C>         <C>           <C>           <C>           <C>
Issuance of common stock in June, 1998
       for cash at $.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                                       (72,000)           --            --            --            --

Net loss for the three months ended March 31, 2001 (unaudited)         --            --      (202,510)           --      (202,510)
                                                                ---------   -----------   -----------   -----------   -----------
                                                                $ 457,000   $        --   $(1,741,439)  $    (4,048)  $ 1,864,159
                                                                =========   ===========   ===========   ===========   ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements


                                       5
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                 Period from
                                                                                                 June 15, 1998
                                                                  For the Three  For the Three  (Inception) to
                                                                  Months Ended   Months Ended     March 31,
                                                                 March 31, 2001 March 31, 2000      2001
                                                                  (unaudited)    (unaudited)     (unaudited)
                                                                   ---------      ---------      -----------
<S>                                                                <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
       Net loss                                                    $(202,510)      $ (87,489)      $(1,741,439)
       Adjustments to reconcile net loss
            to net cash used by operating activities:
       Depreciation  and amortization                                    404             404             3,421
       Stock options issued for consulting fees                           --              --           673,000
       Consulting fees due to related party applied to receivable         --              --             9,000
       Increase (decrease)  in prepaid expenses and deposits         (33,413)        (17,499)         (114,973)
       Increase (decrease) in accounts payable and deposits           41,951         (84,157)           41,952
       Increase in accrued interest receivable                          (105)             --              (543)
       Increase in accrued interest payable                            1,528           1,551            14,517
                                                                   ---------       ---------       -----------

       Net cash used by operating activities                        (192,145)       (187,190)       (1,115,065)
                                                                   ---------       ---------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
       Loan to related party                                              --              --           (15,000)
       Purchase of molds                                                  --              --           (70,000)
       Patent costs                                                       --              --            (8,397)
       Purchase of equipment                                          (1,338)           (300)           (8,045)
                                                                   ---------       ---------       -----------

       Net cash used in investing activities                          (1,338)           (300)         (101,442)
                                                                   ---------       ---------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
       Proceeds from sale of preferred stock                              --              --           250,000
       Proceeds from sale of common stock                                 --         362,500           759,799
       Proceeds from deposit for stock                               156,000              --           156,000
       Proceeds from issuance of notes payable to related party       50,000              --            78,635
                                                                   ---------       ---------       -----------

       Net cash provided by financing activities                     206,000         362,500         1,244,434
                                                                   ---------       ---------       -----------

Increase (decrease) in cash                                           12,517         175,010            27,927

Adjustment for foreign currency  translation                              --          (1,158)           (4,048)

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

Cash, end of period                                                $  23,879       $ 321,898       $    23,879
                                                                   =========       =========       ===========

SUPPLEMENTAL CASH FLOW INFORMATION:

       Interest paid                                               $      --       $      --       $        --
                                                                   =========       =========       ===========

       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
       Stock options issued for consulting fees                    $      --       $      --       $   673,000
       Stockholder's contribution for equipment                    $      --       $      --       $     1,847
       Payable for license agreement                               $ 450,000       $      --       $   450,000

</TABLE>

   The accompanying notes are an integral part of these financial statements


                                       6
<PAGE>

                              ENVIROKARE TECH, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                 March 31, 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 Note 3 and 6.

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of  significant  accounting  policies of Envirokare  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 $1,741,439, which includes a net loss of $202,510 for the
three months ended March 31, 2001, and has a working capital deficit, and has 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 stock in the
near-term and from product sales on an ongoing basis.


                                       7
<PAGE>

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Going Concern (continued)
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  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 third quarter of year 2001.

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.

Concentration of Risk
The Company  maintains  its cash in one  commercial  bank in Las Vegas,  Nevada.
Accounts are guaranteed by the Federal Deposit Insurance  Corporation  (FDIC) up
to $100,000.  The Company opened an additional  checking  account in Boca Raton,
Florida in January 2001.

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  initial  payroll was in May 2000. The Company's  policy
will be to recognize  the cost of  compensated  absences  when  actually paid to
employees.  If  the  amount  could  be  estimated,  currently  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
materials.


                                       8
<PAGE>

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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.

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  derivatives  contracts to hedge
existing risks or for speculative purposes.

At March 31, 2001, the Company has not engaged in any transactions that would be
considered derivative instruments or hedging activities.

Fair Value of Financial Instruments
The  carrying  amounts for cash,  accounts  payable,  notes  payable and accrued
liabilities approximate their fair value.

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 March
31, 2001.


                                       9
<PAGE>

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Interim Financial Statements
The interim financial  statements as of and for the three months ended March 31,
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 March 31, 2001, the Company had convertible preferred stock
and stock options  equivalent to 11,900,000 common shares,  which are considered
to be anti-dilutive.

Principles of Consolidation
The Company's  financial  statements include the accounts of the Company and its
wholly owned 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 March 31,  2001,  the Company had net  deferred  tax assets of  approximately
$578,000  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 March 31, 2001.

At  March  31,  2001,  the  Company  has net  operating  loss  carryforwards  of
approximately $1,500,000, which expire in the years 2018 through 2020.


                                       10
<PAGE>

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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 March 31, 2001 and December  2000,  or the periods
then ended.

Recent 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.

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.


                                       11
<PAGE>

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of Estimates
The process of preparing financial statements in conformity with U. S. generally
accepted  accounting  principles  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 year ended  December  31, 2000,  attorney  fees of
$7,787,  and for the year ended  December 31, 1999 attorney  fees of $609,  were
added to patent  costs.  The  amortization  of patent  costs will begin when the
final patents are granted.  If the Company does not obtain the patent, the costs
of  acquiring  the  patent  rights  from  its  originator  will  be  charged  to
operations.

On December 1, 2000 the Company through its wholly owned subsidiary, Electroship
Acquisition  Corporation,  acquired technology rights, in exchange for shares of
the Company's common stock. See Note 6. The acquired technology rights relate to
an  application  stage  patent for an invention  that is expected to  facilitate
shipping commerce and/or for processing  information regarding shipping services
in a network environment. 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) to  manufacture  the Company's E Pallet(TM) and
other products to be developed. The license fee is a one-time fee of $450,000 to
be paid by  September  1,  2001.  (See  Note 5). As part of the  agreement,  the
Company was granted an option,  exercisable  for thirty (30) months,  to acquire
TCD in exchange  for  Company's  stock or cash in lieu of stock for up to 50% of
the agreed upon purchase price.  This merger,  if the option is exercised,  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 market  value of this stock,  when
issued, is less than $15,000,000,  the Company will elect to provide  additional
shares of common  stock or cash to the TCD  stockholders.  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.  The  Company has  created a wholly  owned  subsidiary,  Envirokare
Composite Corp. to effect this specific transaction.


                                       12
<PAGE>

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

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.

                                                        March 31,   December 31,
                                                         2001          2000
                                                       --------     ----------
          Furniture and Fixtures                       $  1,893     $    1,893
          Less:  Accumulated Depreciation                   674            569
                                                       --------     ----------
          Net Furniture & Fixtures                     $  1,219     $    1,297

          Office Equipment                             $  7,999     $    6,661
          Less:  Accumulated Depreciation                 2,747          2,421
                                                       --------     ----------
          Net Office Equipment                         $  5,252     $    4,240
                                                       ========     =========

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

The Company,  in the  development of its pallet  products,  has acquired  molds,
which will be depreciated over their expected useful lives,  which currently has
not been determined.  The 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 10.

NOTE 5- SHORT-TERM DEBT

Reimbursement  due,  in the  amount of  $1,847,  represented  money  owed to Mr.
Timothy Zuch for gift certificates  provided to the Company in fiscal year ended
December  31, 1998,  which were  deducted  from the  purchase  price of computer
equipment.  This debt was forgiven  during the year ending December 31, 1999 and
applied to additional paid-in capital.

Short-term  notes  payable at March 31, 2001 and  December  31, 2000  consist of
unsecured  notes bearing 10% interest.  These notes,  which  originated  between
August 18, 1998 and December 16, 1998, are payable to Mr. Real Morel and are due
on  demand.  The  principal  amount on the notes is  $63,965.  Interest  expense
recorded  on the notes  payable  at March 31,  2001 and  December  31,  2000 was
$14,517 and $12,989, respectively.


                                       13
<PAGE>

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

NOTE 5- SHORT-TERM DEBT (continued)

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  $450,000.  This amount is to be paid in full by September
1, 2001. See Note 3.

During March 2001 the Company  received  deposits of $156,000 cash for qualified
stock  purchase  agreements.  Common stock shares will be issued  subsequent  to
March 31, 2001, but during the current year.

NOTE 6 - COMMON STOCK

Upon incorporation on September 15, 1998, 10,000,000 shares of common stock were
issued at $.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.

On February 22, 1999, the Board of Directors  authorized a 1-for-2 reverse stock
split of the Company's $.001 par value common stock.

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.

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  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.


                                       14
<PAGE>

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

NOTE 6 - COMMON STOCK (continued)

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.

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 partnership
created to hold the intellectual  property rights.  Neither  Electroship  (N.Y.)
Inc., nor its predecessor partnership were considered operating entities and had
no material  transactions during 2000. As such no proforma financial information
is contained in these disclosures.

NOTE 7 - 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.

NOTE 8 - 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 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.


                                       15
<PAGE>

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

NOTE 8 - STOCK OPTIONS (continued)

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 9). The plan also requires early exercising of the options for various
reasons,   including  employment  termination,   separation  from  services,  or
cancellation of consulting contracts.

All of the option  grants made by the Company  during 1999 and 2000 provide that
the options 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. See Note 9.

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.

                                                               Fixed Plan
                                                       ------------------------
                                                                       Weighted
                                                                        Average
                                                       Number of       Exercise
                                                         Shares         Price
                                                       ----------       ------

Outstanding at December 31, 1998                               --       $  --
Granted                                                 2,300,000        .575
                                                       ----------       -----

Outstanding at December 31, 1999                        2,300,000        .575
Expired                                                  (500,000)       .575
Granted                                                   500,000        .500
Exercised                                                (100,000)       .575
                                                       ----------       -----
Outstanding at December 31, 2000                        2,200,000       $.558
                                                       ----------       -----

Expired                                                  (300,000)       .575
                                                       ----------       -----
Outstanding at March 31, 2001                           1,900,000       $.555
                                                       ==========       =====

Options Exercisable at March 31, 2001                   1,900,000       $.555
                                                       ==========       =====


                                       16
<PAGE>

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

NOTE 9 - 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 March 31, 2001 was $6,543.

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 8.) On  December  11,  2000,  the  president  of the Company
resigned and is currently a member of the board of directors for the Company.

During January 2001 a shareholder loaned the Company $50,000.  This amount bears
no interest or specified terms of repayments.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

Consulting Agreements
The Company  entered into  consulting  contracts with Susan Westfall and Madelyn
Thomas on November 1, 1998 for the purpose of establishing  corporate offices on
behalf of the Company.  The terms of Ms. Westfall's  contract specified that she
would  receive  $2,500 per month for the term of the contract,  which  commenced
November  1, 1998 and  terminated  April 30,  1999.  The terms of Mrs.  Thomas's
contract  specified  that she would receive $5,000 per month for the term of the
contract,  which  commenced  November 1, 1998 and terminated June 30, 1999. Both
contracts,  which  provided  indemnification  against any and all  liability and
provided for reimbursement of expenses up to a specified amount, expired in 1999
and were not renewed.

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  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.  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.


                                       17
<PAGE>

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

NOTE 10 - COMMITMENTS AND CONTINGENCIES (continued)

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

                        2001                           $4,560

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 months 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  months  rent.  There is no  written  sublease
agreement at this time. Future annual minimum lease payments for the term of the
lease as of March 31, 2001 are as follows for the years ending December 31:

                        2001                          $25,150
                        2002                          $34,764
                        2003                          $36,156
                        2004                          $37,605
                        2005                          $39,109

Development Contract
In November  1999,  the Company  entered into a  product/technology  development
contract with  Thermoplastic  Composite Designs,  Inc. (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.

Upon execution of a TCD Licensing  Agreement,  the Company will receive a credit
of $61,600  (representing  46% of the payments made to TCD under the development
contract) toward the license fee payable to TCD.

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


                                       18
<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 in 2001. 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  their  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  second  quarter  of  2001.  Company
management anticipates that the Company will commence commercial production


                                       19
<PAGE>

of  the  Pallet,  once  appropriate   production  facilities  are  procured  and
commissioned for production, currently anticipated for 2001.


     Liquidity and Capital Resources

     The Company is not yet  generating  revenues.  For the three  months  ended
March 31, 2001,  the Company had a net loss of $202,510.  The Company's net loss
accumulated for the period from June 15, 1998  (inception) to March 31, 2001 was
$1,741,439.  The  Company  anticipates  that it will begin to  generate  revenue
during 2001,  upon the planned  start of  production  of the E Pallet(TM) by the
Company. At March 31, 2001 the Company had current assets of $30,422, consisting
of $23,879 in cash and $6,543 in a related  party loan.  During the three months
ended March 31, 2001, the Company's cash resources increased as a result of cash
raised by issuance of the Company's  common stock for aggregate  proceeds to the
Company of $156,000,  offset by general and  administrative  costs. At March 31,
2001 the Company had current liabilities of $774,433.  At March 31, 2001 current
liabilities exceeded current assets by $744,011.  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  and  convertible   preferred  stock.  The  Company  has  budgeted
pre-production and other  production-related  expenditures for the twelve months
through March 31, 2002 of $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.  As of late 2000,
the  Company's  cash balances had declined to the extent that it needed to raise
capital in order to meet its day-to-day  operating  requirements,  as well as to
pay outside  counsel and  accountants in connection  with matters  including the
preparation  of this Form 10-QSB for the period ended March 31, 2001,  which the
Company  could  not file  previously  because  it could  not  timely  raise  the
necessary  funds.  Since late 2000,  the  Company has been  attempting  to raise
equity capital through a private  placement but encountered  difficulties due in
part to the  current  volatile  condition  of the equity  markets.  The  Company
believes  that it has  recently  overcome  such  difficulties,  and is currently
planning to complete a 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."

     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.  Management of
the Company  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 March 31, 2002.


                                       20
<PAGE>

     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
shares.  There can be no  assurance  that  additional  funding will be available
under  favorable  terms,  if at all. If adequate  funds are not  available,  the
Company may be required to curtail operations  significantly.  For example,  the
Company's plans include 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 its plan to
set up its own  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 will be 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 (no lumber required,  100%
recyclable,  no  fungicides/bacterial  spraying required,  no land fill dumping,
less energy to  manufacture)  safer,  because there is no splintering of wood or
hazardous nails/bolts, easier to utilize (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,  it is  anticipated  that  reduced  Pallet  breakage  and
associated  product  damage and worker injury claims will be  experienced by the
Company's customers.

     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  focuses  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: 48-inch by 40-inch dimension; a
maximum weight requirement; and a target substrate composition.


                                       21
<PAGE>

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  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  improved  Pallet.  Further  Pallet  testing  and
evaluation  through January 2001 has resulted in other, minor adjustments to the
Pallet design.

     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 conduct  further  testing 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


                                       22
<PAGE>

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  emit any
Volatile  Organic  Contaminants  (VOCs),  which are  present  in many  thermoset
composites.

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

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

     o    Reduced labor costs because of fewer component assemblies required.

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

     Acquisition of Electroship (N.Y.) Inc.

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

     The  primary  asset that the  Company  acquired in this merger was a patent
that has been  provisionally  filed by Electroship with the United States Patent
and Trade Office  ("USPTO").  The Company  anticipates  that patents that may be
issued as 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.


                                       23
<PAGE>

     License Agreement with TCD

     The Company announced,  on December 1, 2000, that it had completed a letter
of  intent  with  TCD to  enter  into an  arrangement  to  manufacture  products
utilizing  TCD's  TPF  process.  The  Company,  through  ECC,  its  wholly-owned
subsidiary,  and  TCD  completed  a  license  agreement  on  March  30,  2001 to
manufacture  Envirokare's  proprietary  E  Pallet(TM)  and other  products to be
developed using the proprietary TPF process.

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


     Anticipated Revenue Sources; Marketing and Distribution

     The Company plans to generate  revenues from  developing  and operating its
own  manufacturing  facilities  and in  conjunction  with TCD. As  opportunities
present  themselves,  the Company will also consider  entering into national and
international  licensing  agreements that would provide royalty agreements 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 their business
plan which  included the method of marketing  the Pallet and initial  production
start-up dates.

     In December  1999,  the Company  announced that it had received a letter of
intent from Cultech  International  Corporation  to  manufacture  and market the
Pallet in Asia. Cultech intends to obtain exclusive  manufacturing and marketing
rights to the Pallet for all of Asia. The parties agreed in principle that, once
engineering studies are satisfactorily  completed,  the parties would enter into
an  agreement  whereby  Cultech  would make  payments to the  Company  including
licensing  fees and  royalty  payments  based on  units  of  Pallet  production,
although  the letter of intent does not  obligate the Company to enter into such
an agreement.  To date,  the Company has taken no further action with respect to
the letter of intent.

     Also in March 2000, the Company announced that it had received a production
and marketing  letter of intent from  International  Pallets of California.  The
letter of intent  provides for the parties to  negotiate  an  agreement  whereby
International  Pallets,  would  build a  production  facility  that would  allow
International  Pallets to produce,  market and sell the Pallet in California and
Nevada,  although the letter does not obligate the Company to enter into such an
agreement.  In the event a formal agreement was negotiated  between the parties,
the agreement would include  provisions  providing for International  Pallets to
pay a license


                                       24
<PAGE>

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  currently  has three  employees.  Management  of the  Company
anticipates using consultants for business,  accounting and engineering services
on an as-needed basis.


     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  provides,  among other
things,  that the  number of shares  under the  Qualified  Option  grants in the
employment contracts shall be 500,000 as to Mr. Stein, and 300,000 as to each of
Mr. Kallan and Mr. Breslauer.  The Amendment further provides,  as to Mr. Stein,
that if he is not  instrumental in helping the Company secure  $200,000  through
the private placement of its common shares by April 23, 2001, (i) he shall agree
to the cancellation of 400,000 of his shares under option,  and (ii) the Company
may 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
provides 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
cancel 400,000 of Mr. Stein's shares under option,  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 re-grant the  forfeited  shares
under  option pro rata based on the  contemplated  financing  target of $200,000
(i.e.,  if Mr. Stein raises  $100,000,  then the Company will  re-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.


                                       25
<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

     On March 31, 2001,  the Company was in the process of  completing a private
placement offering of Units (the "Units") to Accredited  Investors (as such term
is defined in Rule 501 of Regulation D under the Securities  Act of 1933).  Each
Unit  consisted  of one (1)  share of the  Company's  common  stock  and one (1)
warrant,  exercisable  for one year from the agreement date, to purchase one (1)
additional  share of the Company's common stock at a price of $0.75. The Company
sold each Unit for $.20 per Unit. The Company anticipated  realizing proceeds of
$200,000  from the sale of Units under this  offering.  The Company  anticipated
completing  this  transaction in April 2001, with the proceeds from the offering
to be used to pay for operating costs and provide working capital.  Because of a
possible defect in the offering,  the Company offered the participants the right
to  rescind  their  subscriptions  in  the  offering  and  to  participate  in a
subsequent  offering in which the  possibility of a defect was  eliminated.  The
subsequent  offering was made upon the same terms with the  exceptions  that the
exercise  price was  changed  to $0.50 per  share  from  $0.75 per share and the
purchase warrant was extended to two (2) years as consideration for any possible
inconvenience  experienced by the  subscribers.  All participants in the initial
offering have  indicated  that they will accept the Company's  rescission  offer
with respect to the Units subscribed for in the initial 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


                                       26
<PAGE>

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).

     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.

     10.6 Employment  Agreement  between the Company and Mark L.  Kallan,  dated
          December 18, 2000.


                                       27
<PAGE>

     10.7 Employment  Agreement between the Company and Gerald Breslauer,  dated
          December 18, 2000.

     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.

     10.9 Letter Agreement  between the Company and Charles H. Stein,  dated May
          8, 2001.


     (b)  Reports on Form 8-K


     The Company filed a report on Form 8-K on January 3, 2001,  with respect to
the  Agreement  and Plan of Merger  (the  "Agreement"),  dated as of December 1,
2000,  by and among the  Company,  Electroship  Acquisition  Corp.,  Electroship
(N.Y.) Inc., and the other parties named therein,  which  Agreement is listed as
Exhibit 10.1 to this Form 10-QSB.  See also "Part I -- Financial  Information --
Item 2. Plan of Operation -- Acquisition of Electroship (N.Y.) Inc."



                                       28
<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 June 15, 2001.


                                    ENVIROKARE TECH, INC.
                                    Registrant

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


                                       29
<PAGE>

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

3.1       Company's  Articles  of  Incorporation,  as amended  October  12, 1999
          (incorporated  herein by  reference  to Exhibit  3.1 to the  Company's
          Annual  Report on Form 10-KSB for the year ended  December  31,  1999,
          filed with the Commission on April 7, 2000).

3.2       Company's   By-laws  as  amended  and   restated   December  11,  2000
          (incorporated  herein by  reference  to Exhibit  3.2 to the  Company's
          Annual  Report on Form 10-KSB for the year ended  December  31,  2000,
          filed with the Commission on April 16, 2001).

10.1      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.

10.6      Employment  Agreement  between the Company and Mark L.  Kallan,  dated
          December 18, 2000.

10.7      Employment  Agreement between the Company and Gerald Breslauer,  dated
          December 18, 2000.


                                       30
<PAGE>

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.

10.9      Letter Agreement  between the Company and Charles H. Stein,  dated May
          8, 2001.


                                       31