envk10qsb063005

Equity Compensation Plans Approved by Shareholders

Shares Issuable Upon Exercise of Outstanding Options

Weighted Average Exercise Price

Shares Available for Issuance

1999 Equity Incentive Plan

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

FORM 10-QSB/A No. 2

(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the quarterly period ended September 30, 2005

[ ] 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 of incorporation)		(IRS Employer Identification Number)

641 Lexington Avenue, 14^th Floor
New York, New York 10022

(Address of principal executive office)

(212) 634-6333

(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 September 30, 2005, was
43,097,032.

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

TABLE OF CONTENTS

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements:
        Consolidated Balance Sheets
        Consolidated Statements of Operations
        Consolidated Statements of Cash Flows
        Condensed Notes to the Consolidated Financial Statements
Item 2. Management's Discussion and Analysis or Plan of Operations
Item 3. Control and Procedures

Part II - OTHER INFORMATION

Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K

SIGNATURES

CAUTIONARY INFORMATION ABOUT FORWARD-LOOKING STATEMENTS

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

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

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

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

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

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

ITEM 1. FINANCIAL INFORMATION:

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

					September 30, 2005 (restated) (unaudited)		December 31, 2004 (restated)





A S S E T S
	CURRENT ASSETS
		Cash and cash equivalents		$	2,200,366	$	432,155
		Accounts receivable			285,366		-
		Deposits and retainers			41,219		22,466
		Employee and related party receivables			2,186		1,864
		Prepaid expenses			622,400		-
		Inventory			-		43,216

			TOTAL CURRENT ASSETS		3,151,538		499,700


	PROPERTY AND EQUIPMENT
		Furniture and fixtures			7,129		7,129
		Equipment			414,332		25,292
		Molds			16,000		170,912
		Real estate and building			400,000		-
		Less accumulated depreciation			(39,932)		(12,538)

			TOTAL PROPERTY AND EQUIPMENT		797,529		190,795


	OTHER ASSETS
		Prepaid expenses - long term			400,000		-
		Patents, net			7,150,455		33,939

			TOTAL OTHER ASSETS		7,550,455		33,939


		TOTAL ASSETS		$	11,499,522	$	724,435


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		$	275,877	$	330,933
		Deposits from customers			-		61,215
		Deposit owed on exclusivity agreement			-		280,000
		Accrued compensation			94,565		182,325
		Accrued interest			517,675		37,835
		Accrued interest to stockholders			9,977		8,936
		Capital equipment lease payable, current portion			6,360		5,200
		Notes payable, current portion			61,965		64,902
		Notes payable to shareholders, current portion			91,191		100,197

			TOTAL CURRENT LIABILITIES		1,057,609		1,071,542


	LONG-TERM LIABILITIES
		Capital equipment lease payable, net of current portion			4,631		5,791
		Notes payable, net of current portion			5,690,297		10,499
		Notes payable to shareholders, net of current portion			1,426,088		1,476,594
		Discount on notes payable - other			(290,876)		(467,588)

			TOTAL LONG-TERM LIABILITIES		6,830,140		1,025,296


	MINORITY INTEREST IN SUBSIDIARY				5,827,057		-


	COMMITMENTS AND CONTINGENCIES				-		-


	STOCKHOLDERS' EQUITY
		Convertible preferred stock, 10,000,000 shares authorized,
			$0.001 par value; no shares issued and outstanding		-		-
		Common stock, 200,000,000 shares authorized,
			$0.001 par value; 43,097,031 and 38,943,980 shares
			issued and outstanding, respectively		43,097		38,944
		Additional paid-in capital			7,328,261		5,895,238
		Stock options and warrants			8,773,325		3,685,675
		Accumulated deficit			(18,359,967)		(10,992,260)

			TOTAL STOCKHOLDERS' EQUITY		(2,215,284)		(1,372,403)


	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	11,499,522	$	724,435

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

F-1

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



				Three Months Ended				Nine Months Ended

				September 30,		September 30,		September 30,		September 30,
				2005		2004		2005		2004
				(restated)		(restated)		(restated)		(restated)
				(unaudited)		(unaudited)		(unaudited)		(unaudited)


REVENUES			$	447,589	$	-	$	662,285	$	-

COST OF GOODS SOLD				(162,843)		-		(323,774)		-


	GROSS PROFIT			284,746		-		338,511		-


E X P E N S E S
	Consulting fees - related parties			56,308		88,461		5,799,709		267,117
	Consulting fees - other			54,938		4,560		152,016		61,340
	Board of directors fees			-		89,420		-		89,420
	Rent			31,347		27,034		77,186		65,346
	General and administrative			171,536		65,677		523,928		169,914
	Depreciation and amortization			169,005		3,054		285,139		5,102
	Professional fees			155,636		46,884		309,420		191,822
	Research and development			131,573		1,850		249,190		6,909
	Wages and salaries			3,642		5,843		23,259		45,236

		TOTAL EXPENSES		773,985		332,783		7,419,847		902,206


LOSS FROM OPERATIONS				(489,239)		(332,783)		(7,081,336)		(902,206)

OTHER INCOME (EXPENSES)
	Gain on exclusivity agreement			-		-		280,000		-
	Other income			12,550		-		12,550		-
	Interest expense			(276,654)		(114,369)		(751,735)		(347,498)

		TOTAL OTHER EXPENSE		(264,104)		(114,369)		(459,185)		(347,498)


LOSS BEFORE INCOME TAXES				(753,343)		(447,152)		(7,540,521)		(1,249,704)

INCOME TAXES				-		-		-		-


MINORITY INTEREST ALLOCATION				18,073		-		172,943		-


NET LOSS			$	(735,270)	$	(447,152)	$	(7,367,578)	$	(1,249,704)



	BASIC AND DILUTED NET LOSS
	PER COMMON SHARE		$	(0.02)	$	(0.01)	$	(0.18)	$	(0.04)


	WEIGHTED AVERAGE NUMBER
	OF BASIC AND DILUTED COMMON
	STOCK SHARES OUTSTANDING			41,063,809		36,659,197		39,902,098		35,112,010

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

F-2

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



					Nine Months Ended

					September 30,		September 30,
					2005		2004
					(restated)		(restated)
					(unaudited)		(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss			$	(7,367,578)	$	(1,072,992)
	Loss allocated to minority interest				(172,943)		-

					(7,540,521)		(1,072,992)

	Adjustments to reconcile net loss to
	net cash used by operating activities:
		Depreciation and amortization			285,139		5,102
		Amortization of debt discount			176,712		-
		Inventory asset expensed			43,216		-
		Intangible asset expensed			40,295		-
		Gain on exclusivity agreement			(280,000)		-
		Impairment of molds			154,912		-
		Stock options issued for consulting fees			5,488,500		38,780
		Stock options issued for directors fees			-		89,420
		Common stock issued for consulting fees			-		-
		Common stock issued for payment of expenses			-		134,000
	Changes in assets and liabilities:
		Accounts receivable			(285,366)		-
		Deposits and retainers			(18,754)		-
		Customer deposits			(61,215)		(2,500)
		Employee and related party receivables			(322)		-
		Prepaid expenses			(22,400)		(1,605)
		Accounts payable			(55,527)		116,416
		Accrued compensation			(87,759)		-
		Accrued interest payable			480,881		(11,612)
		Deposit owed on exclusivity agreement			-		250,000

		Net cash used by operating activities			(1,682,209)		(454,991)


CASH FLOWS FROM INVESTING ACTIVITIES:

		Patent costs			(6,356)		-
		Purchase of equipment			(39,040)		-

		Net cash used in investing activities			(45,396)		-


CASH FLOWS FROM FINANCING ACTIVITIES:
		Payment of capital equipment lease			-		(3,483)
		Payment of notes payable			(62,910)		(1,939)
		Proceeds from sale of preferred stock			-		-
		Proceeds from sale of common stock			1,036,326		780,750
		Proceeds from line of credit			22,400		-
		Proceeds from notes payable, related parties (net)			-		(63,405)
		Proceeds from minority interest capital contribution			5,000,000		-
		Payment on acquisition agreement			(2,500,000)		-

		Net cash provided by financing activities			3,495,816		711,923


Net increase in cash					1,768,211		256,932

Cash and cash equivalents, beginning of period					432,155		65,809


Cash and cash equivalents, end of period				$	2,200,366	$	322,741


SUPPLEMENTAL CASH FLOW INFORMATION:
		Interest paid		$	150,520	$	1,072

		Income taxes paid		$	-	$	-


NON-CASH TRANSACTIONS:
		Stock options issued for consulting fees		$	741,000	$	89,420
		Common stock issued for payment of expenses		$	-	$	134,000
		Stock options issued to management and directors		$	4,747,500	$	38,780
		Interest imputed on Note to merger entity shareholders		$	475,205	$	-
		Receivable due to LRM (services in kind from NOVA)		$	1,000,000	$	-
		Equipment acquired via capital lease		$	-		6,132
		Debt incurred in acquisition of subsidiary's property
			and patents	$	8,157,208	$	-

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

F-3

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

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

During 2001, the Company acquired the licensing rights to a proprietary thermoplastic processing technology, the TPF Thermoplastic Flowforming™ process. The licensing agreement provides the Company with the ability to utilize the TPF Thermoplastic Flowforming technology to design, develop, manufacture, market, license and sublicense a wide range of large structural parts, including the Company's proprietary pallet. The pallet is now composed of long-fiber reinforced thermoplastic composite and will be manufactured using the acquired TPF Thermoplastic Flowforming technology.

In March 2005, the Company acquired the assets of Thermoplastic Composite Designs, Inc. (hereinafter "TCD"). These assets were subsequently contributed to LRM Industries, LLC, a joint venture with Nova Chemicals, Inc. (hereinafter "Nova"), to commercialize the Company's TPF Thermoplastic Flowforming technology. The joint venture is being accounted for as a majority control subsidiary, with Nova's interest treated as a minority interest. See Note 10.

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

The Company's consolidated financial statements include the following entities: Electroship Acquisition Corporation, Envirokare Composite Corp., Thermoplastic Composite Designs, Inc., and LRM Industries, LLC.

All intercompany accounts and transactions have been eliminated in the consolidation.

NOTE 2 – BASIS OF PRESENTATION

The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Regulation S-B as promulgated by the Securities and Exchange Commission ("SEC"). Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements. These unaudited interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2004. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.

F-4

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company's financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions and could have a material effect on the reported amounts of the Company's financial position and results of operations.

Operating results for the nine month period ended September 30, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company's assets and the satisfaction of its liabilities in the normal course of operations.

As shown in the accompanying financial statements, the Company has incurred an accumulated deficit of $18,359,967 through September 30, 2005, has substantial debt and has minimal revenues. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company's 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 existence.

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is provided using the straight line method over the estimated useful lives of the assets, which range from three to seven years. Molds are depreciated over their estimated useful lives once placed in service. During the quarter ended June 30, 2005, the Company deemed that pallet molds valued at $43,000 were of no commercial value and expensed the value of these molds. Additionally, during the quarter ended September 30, 2005, the Company expensed the value of a top cap and pallet mold valued at $111,912. None of the molds expensed in the current quarter, or the molds previously deemed to be of no commercial value, are carried in valuations of the Company's assets. The costs included in molds as of June 30, and September 30, 2005 are comprised of design, machining, manufacturing and delivery costs. Costs relating to the Beam mold and are valued at $16,000. This mold is being depreciated over a five year period.

Depreciation expense for the nine month periods ended September 30, 2005 and 2004 was $27,394 and $2,048, respectively.

F-5

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

The following is a summary of the Company's property and equipment and related accumulated depreciation:

		September 30,		December 31,
		2005		2004

Furniture and fixtures	$	7,129	$	7,129
Equipment		414,332		25,292
Molds		16,000		170,912
Buildings		50,000		-
Land		350,000		-

		837,461		203,333
Less: Accumulated depreciation		(39,932)		(12,538)

	$	797,529	$	190,795

NOTE 4 – INTANGIBLE ASSETS

Intangible assets are tested for impairment on an annual basis. At September 30, 2005, the Company considered the acquisition costs of its intangible assets to be fully recoverable. The Company will commence the amortization of such costs when the assets are placed in service.

License Agreement

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

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

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

Patent Acquisition Costs and Technology Rights

On December 1, 2000, the Company acquired technology rights in exchange for common stock shares in the Company, through its wholly-owned subsidiary, Electroship Acquisition Corp. The acquired technology rights relate to an application stage patent for an invention that is expected to facilitate shipping commerce and/or for processing information regarding shipping services in a network environment. This acquisition was valued using the trading price of the Company's common stock at the date of acquisition. The Company amended its financial statements for the years ended December 31, 2001 and 2002 to provide for amortization of the Electroship patent. The effects of the amortization for the prior years ended resulted in an increased charge to amortization in the amount of $113,235 in each year ended. The effect of the amortization also increased the accumulated deficit in the amount of $113,235 in each of the years ended. The Company also recorded amortization of the Electroship patent in the amount of $28,309 for the quarters ended March 31, June 30 and September 30, 2003.

The Company has amended its financial statements for the years ended December 31, 2001, 2002, and 2003 to provide for amortization of this patent. The effects of the amortization for the respective years results in an increased charge to amortization expense in the amount of $113,235 for 2001 and 2002 and $84,926 for the year ended 2003. This amortization increased the Company's accumulated deficit for the years ended December 31, 2001 and 2002 by $113,235 and the year ended December 31, 2003 in the amount of $84,926, respectively.

Accumulated amortization for the years ended December 31, 2001, 2002 and 2003 is $113,235, $226,470 and $311,666, respectively.

Subsequent to amending the financial statements for the years ended December 31, 2001 and 2002, and the quarters ended March 31, June 30 and September 30, 2003, the Company determined that the value of the Electroship patent is impaired. The Company believes that the impairment is primarily a result of the Company's inability to dedicate appropriate resources to develop and market the potential opportunities contained within the patent filing and also the inability of the Company to make a reasonable determination of cash flows and associated patent life, for the pending patent. The Company has recognized a reduction in the remaining intangible asset value of $1,613,603. The effect of this impairment created a charge to earnings during the fiscal year ended December 31, 2003 and is also recognized as an increase in the Company's accumulated deficit in subsequent reporting periods.

In March 2005, the Company acquired the assets of Thermoplastic Composite Designs, Inc., which included patents and other intellectual property. For the period ended June 30, 2005, the Company amortized the value for the acquired patents in an amount of $95,651, which amount is also the accumulated amortization of the patent value for the period ended. See Note 10.

F-6

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

NOTE 5 – NOTES PAYABLE TO SHAREHOLDERS

During the year ended December 31, 2003, the Company entered into a promissory note arrangement with two Company shareholders, in the principal amount of $100,000. The note bears an interest rate of 15% per annum with principal and interest payment payable in 36 equal monthly installments of $3,467 commencing September 1, 2003. Three common stock warrants are attached to each dollar of debt, with an exercise price of $0.20 per share, with each warrant being valued at $0.11 per share. These warrants are fully exercisable for up to three years from the dates of issuance. The Company used the assumptions of a 4% interest rate, volatility of 69% and a three-year period to calculate the warrant value. The calculated fair value of the warrants, in the amount of $32,810, has been recorded as a discount on the debt issued and is being amortized over the life of the debt. During the years ended December 31 2003 and 2004, the Company has amortized this discount on debt, in the amounts of $3,646 and $10,938, respectively. The accumulated amortization for the respective years is $3,646 and $14,584. During the nine months ended September 30, 2005, the Company has amortized this discount on debt in an amount of $8,202. The accumulated amortization for the discount on debt relating to this promissory note is $22,786. The amortization previously described is reflected in the financial statements as a charge to interest for the respective periods. See Note 7.

During the year ended December 31, 2003, the Company entered into a promissory note with a director and shareholder, in the principal amount of $200,000. The note bears an interest rate of 15% per annum, with principal and interest payment payable in 36 equal monthly installments of $6,933, commencing January 1, 2003. Three common stock warrants are attached to each dollar of debt, with an exercise price of $0.20 per share, with each warrant being valued at $0.13 per share. These warrants are fully exercisable for up to three years. The Company used the assumptions of a 4% interest rate, volatility of 69% and a three-year period to calculate the warrant value. The calculated fair value of the warrants, in the amount of $78,000, has been recorded as a discount on the debt issued and is being amortized over the life of the debt. During the year ended December 31 2004, the Company has amortized this discount on debt, in an amount of $26,000. This amortized amount increased accumulated amortization for the year ended December 31, 2004 in the amount of $26,000. During the nine months ended September 30, 2005, the Company has amortized this discount on debt in an amount of $19,500. The accumulated amortization for the discount on debt relating to this promissory note is $45,500. The amortization previously described is reflected in the financial statements as a charge to interest for the respective periods. See Note 7.

In December 2003, with the exception of the notes discussed in the two paragraphs above, the Company rolled all of its remaining outstanding notes payable and accrued interest to related parties into new notes. These notes bear an interest rate of 12% per annum, with interest payments made in equal monthly installments of varying amounts, commencing on January 1, 2004. Common stock warrants to purchase up to an aggregate of 5,125,000 shares of Company common stock were attached to these loans, with an exercise price of $0.24 per share. The Company calculated a fair value for these warrants, in the amount of $138,888. The Company used the assumptions of a 4% interest rate, volatility of .69% and a three-year term to calculate the warrant value. Subsequent to reporting the original transaction as previously described, the Company discovered a defect in the assumptions utilized to calculate the fair value of the newly issued and extended warrants. The revised assumptions utilized to calculate the warrant value are a 4% interest rate, volatility of 69% and a three-year term. The restated warrant valuation of $596,038 has been recorded as a discount on the debt issued and is being amortized over the life of the debt. During the year ended December 31 2004, the Company has amortized this discount on debt, in an amount of $198,679. During the nine months ended September 30, 2005, the Company has amortized this discount on debt, in an amount of $149,010. For the nine month period ended September 30, 2005, this amortized amount increased accumulated amortization pertaining to this promissory note to $347,689. The amortization previously described is reflected in the financial statements as a charge to interest for the respective periods. See Note 7.

F-7

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

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

The warrant value was treated as a finance expense and immediately charged to earnings for the year ended December 31, 2001. The Company has subsequently determined that the warrant value should have been more appropriately recorded as a discount on the related debt and amortized over the two year life of the debt. Accordingly, interest expense has been recognized in the amount of $109,821, for the year ended December 31, 2002. The change in accounting treatment as previously described, required the Company to amend and restate its financial statements for the years ended December 31, 2001, 2002 and 2003, to reflect the amortization of the discount on debt. See Note 7.

The affect of this restatement reduced the Company's 2001 accumulated deficit and loss per share by $219,642 and $0.01, respectively. For the year ended December 31, 2002, accumulated deficit and loss per share increased $109,821 and $0.004, respectively.

NOTE 6 – COMMON STOCK

During the nine months ended September 30, 2005, the Company issued 2,662,500 shares of its common stock when warrants were exercised at prices ranging between $0.25 and $0.40 per share for a total of $595,317 and 876,087 shares were issued when stock options were exercised at prices ranging between $0.23 and $0.30 per share for a total of $177,300. In addition, the Company issued 614,465 shares of its common stock when options were exercised by a former Company executive at $0.23 per share, with payment set off against severance owing to the former executive.

F-8

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

NOTE 7 – STOCK OPTIONS AND WARRANTS

Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (hereinafter "SFAS No. 123"), defines a fair value-based method of accounting for stock options and other equity instruments. The Company has adopted this method, which measures compensation costs based on the estimated fair value of the award and recognizes that cost over the service period. In accordance with SFAS No. 123, the fair value of stock options and warrants granted are estimated using the Black-Scholes Option Price Calculation. The assumptions utilized to estimate fair values for options and warrants are provided in the respective option and warrant discussion that follows.

Common Stock Options

Summarized information about common stock options outstanding and exercisable at September 30, 2005 is as follows:

	Options Outstanding						Options Exercisable

	Exercise Price		Number of Shares Under Options Outstanding	Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price	Number of Shares Under Options Exercisable		Weighted Average Exercise Price

$	0.	23	6,334,449	8.02	$	0.23	6,334,449	$	0.23
	0.	30	50,000	4.00		0.30	50,000		0.30
	0.	40	250,000	4.00		0.40	250,000		0.40
	0.	575	250,000	4.00		0.575	250,000		0.575
	0.	75	600,000	10.00		0.75	0		0.75
	0.	94	1,300,000	2.40		0.94	1,300,000		0.94
	0.	965	8,830,000	9.45		0.965	6,330,000		0.965

$	0.23 - 0.965		17,614,449	8.26	$	0.68	14,514,449	$	0.62

F-9

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

Following is a summary of the Company's stock option activity during the nine months ending September 30, 2005:

	Shares		Weighted Average Exercise Price

Options outstanding at December 31, 2004	8,375,000	$	0.25
Granted	1,300,000		0.94
Granted	8,830,000		0.97
Granted	600,000		0.75
Exercised	(1,490,551)		0.23

Options outstanding at September 30, 2005	17,614,449	$	0.68

Options issued, year to date, by the Company total 10,730,000 and include the number of shares under options outstanding of 1,300,000 shares issued to LRM employees and consultants, at a strike price of $0.94 per share and a three year exercise period with immediate vesting of the option grants, and 8,830,000 shares issued to the Company's management team and consultants, at a strike price of $0.965 per share and a ten year exercise period. Of the grants issued to Company's management team and consultants, 2,500,000 shares are not included in the options exercisable section of the tabular format above but are included in the options issued section of the tabular format, as the vesting of these options is subject to certain performance criteria that must be met by LRM Industries prior to vesting, with these options being issued to two Company management team members. The Company has calculated the future value of these non-vested option grants to be $1,875,000 and will recognize the effect of this valuation in its financial statements as the vesting criteria are achieved and the option grants become vested. These non-vested options previously discussed are exercisable only if LRM achieves: (i) $40,000,000 in annual revenue or (ii) has 17% profit based on pre tax income, in any 4 calendar years ending December 31, 2005, 2006, 2007 and 2008. In connection with the 1,300,000 options issued to LRM employees and consultants, these options were issued as a part of their respective employment and consulting agreements to retain their services for the newly created joint venture entity, LRM Industries, and the fair value ascribed to the option grants is $741,000, which amount has been recorded as a compensation expense at the time of the grants. See Note 10.

F-10

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

Additionally, the Company granted 600,000 options to Board members during the period ended September 30, 2005, at a strike price of $0.75 per share. These options vest ½ after one year from the date of issue and ½ two years after the date of issue, given that the Board members remain in their capacities with the Company. Due to the vesting criteria established for these Board members, the Company will not recognize the effect of the compensation, until such time as the options vest. The assumptions used to calculate the fair value of the options issued to former TCD shareholders are, a risk-free interest rate of 4%, volatility of 94% and a term of three years. The options granted to Company management and consultants were rewards for efforts expended and achievements made by virtue of completion of the merger agreement of TCD into the Company's wholly-owned subsidiary ECC, formation of the joint venture with an established plastics industry partner, Nova Chemicals Inc. and for various additional management services provided to the Company since 2003 and as incentive for services to be provided to the Company in future years. The assumptions used to calculate the fair value of the options issued to management and consultants are presently contained in Note 7 as, a risk-free interest rate of 3%, volatility of 72% and a term of ten years. The expense recorded during the period ended June 30, 2005 is $4,747,500 and allocated to Professional fees – related parties and Professional fees – other, in the amounts of $4,653,900 and $93,600, respectively. Any deferred expense will be recorded when it appears likely that the LRM operating performance criteria, as previously set out, will be achieved.

The weighted average fair market value of stock options granted for the years ended December 31, 2004 and 2003 was $0.28 and $0.26, respectively.

During 2004, the Company granted options to purchase 2,750,000 shares of common stock in consideration for directors' fees valued at $487,090. Additionally, the Company granted options to purchase 287,500 shares of common stock in consideration for consulting services valued at $57,094. Also during 2004, 100,000 options expired.

During 2003, the Company granted options to purchase 1,787,500 shares of common stock to members of the board of directors, valued at $367,689. In addition, the Company granted 2,700,000 options to related party consultants, valued at $529,811.

The Company discovered an error in not recognizing certain stock options granted in 2003. As a result of correcting this error in the Company's balances and presentation, the Company has incurred an additional charge against earnings, in the amount of $44,650, arising from the expense calculated on the fair value of the options issued to purchase up to 250,000 common stock shares at a purchase price of $0.23 per share. The assumptions used to calculate the value of the options were a risk-free interest rate of 4%, volatility of 69%, with an exercise period of ten years.

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

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

F-11

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

Common Stock Warrants

Summarized information about common stock warrants outstanding and exercisable at September 30, 2005 is as follows:

	Common Shares Under Warrants	Exercise Price Per Share	Weighted Average Fair Value Per Share At Grant Date	Expiration Date

Balance, December 31, 2004	20,990,000	$0.20 - $0.75	$0.20	2/05 - 9/14

Exercise of warrants	(2,562,500)	$0.40	$0.25	2/06

Expiration of warrants	(20,000)	$0.75	$0.23	2/05

Balance, September 30, 2005	18,407,500	$0.20 - $0.75	$0.20	2/05 - 9/14

During the year ended 2004, the Company issued 7,428,750 warrants valued at $376,598, less issuance costs of $122,118. In October of 2004, the Company issued an extension offer to existing holders of the Company's warrants that expired after January 1, 2004. The extension offer, provided at a price of $0.02 per warrant, increased the exercise period of the related warrants by fifteen months from the current date of expiration. The Company received cash proceeds of $102,825 from participants to the warrant extension offering. Additionally, the Company issued 1,400,000 warrants under an exclusivity agreement with Nova Chemicals, Inc. These warrants were immediately exercised in December 2004; therefore no value was assigned (see Note 13). Also during 2004, 400,000 warrants expired.

During the period ended December 31, 2003, warrants to purchase common stock of the Company, in the amount of 600,000 shares, were reported as canceled in error. The warrants have been reinstated to reflect proper disclosure and account allocation for the periods ended December 31, 2003 and 2004. The assumptions utilized to estimate the fair value of warrants issued by the Company were specific to the issuance dates of the warrants and the assumptions ranged according to the following: risk-free interest rate of 3 to 4%, terms of 2 to 5 years, strike prices of $0.20 to $0.75 and volatilities of 53% to 101%.

F-12

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

During the year ended December 31, 2003, the Company entered into a promissory note with a director and shareholder, in the principal amount of $200,000. The note bears an interest rate of 15% per annum, with principal and interest payment payable in 36 equal monthly installments of $6,933, commencing January 1, 2003. Three common stock warrants are attached to each dollar of debt, with an exercise price of $0.20 per share, with each warrant being valued at $0.13 per share. These warrants are fully exercisable for up to three years. The Company used the assumptions of a 4% interest rate, volatility of 69% and a three-year period to calculate the warrant value. The calculated fair value of the warrants, in the amount of $78,000, has been recorded as a discount on the debt issued and is being amortized over the life of the debt. During the year ended December 31 2004, the Company has amortized this discount on debt, in an amount of $26,000. During the nine months ended September 30, 2005, the Company has amortized this discount on debt in an amount of $19,500. The accumulated amortization for the discount on debt relating to this promissory note is $45,500. This amortized amount increased accumulated amortization for the year ended December 31, 2004 in the amount of $26,000. The amortization previously described is reflected in the financial statements as a charge to interest for the respective periods. See Note 5.

In December 2003, with the exception of the notes discussed in the two paragraphs above, the Company rolled all of its remaining outstanding notes payable and accrued interest to related parties into new notes. These notes bear an interest rate of 12% per annum, with interest payments made in equal monthly installments of varying amounts, commencing on January 1, 2004. Common stock warrants to purchase up to an aggregate of 5,125,000 shares of Company common stock were attached to these loans, with an exercise price of $0.24 per share. The Company calculated a fair value for these warrants, in the amount of $138,888. The Company used the assumptions of a 4% interest rate, volatility of .69% and a three-year term to calculate the warrant value. Subsequent to reporting the original transaction as previously described, the Company discovered a defect in the assumptions utilized to calculate the fair value of the newly issued and extended warrants. The revised assumptions utilized to calculate the warrant value are a 4% interest rate, volatility of 69% and a three-year term. The restated warrant valuation of $596,038 has been recorded as a discount on the debt issued and is being amortized over the life of the debt. During the nine months ended September 30, 2005, the Company has amortized this discount on debt, in an amount of $149,010. For the nine month period ended September 30, 2005, this amortized amount increased accumulated amortization pertaining to this promissory note to $347,689. The amortization previously described is reflected in the financial statements as a charge to interest for the respective periods. See Note 5.

During the year ended December 31, 2003, the Company sold 2,216,250 shares of its common stock at $0.19 per share to purchasers who received warrants to purchase one additional share of common stock for each share purchased, exercisable at $0.40 per share for a period of one year. The warrants were valued at $68,935 and were recorded in the Company's operating expenses as a finance charge.

F-13

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

In February 2003, the exercise price of 720,000 warrants was adjusted from $0.50 to $0.15. All of these warrants were subsequently exercised, resulting in the issuance of 720,000 shares of common stock for $108,000. As the new warrants were modified and exercised on the same date, the effect of these transactions was to create a charge to earnings, in the amount of $37,900, which charge has been included in the Company's amended and restated financial statements for the period ended December 31, 2003. The modified fair value of the exercised warrants ranged from $0.1041 - $0.1379 per share. The assumptions used to calculate the $37,900 modified fair value of warrants exercised are: risk free interest rate of 4%, volatility of 85.67%, terms between 602 - 613 days, strike price of $0.15 per share, and market prices between $0.20 - $0.24 per share. In addition, the Company issued 720,000 warrants to these investors which have an exercise price of $0.75 and expire during May of 2006. The amount charged to earnings, and recorded as a finance charge in the amount of $25,816, has been included in the Company's amended and restated financial statements for the period ended December 31, 2003. The assumptions used to calculate the $25,816 modified fair value of warrants granted are: risk free interest rate of 4%, volatility of 85.67%, term of two years, strike price of $0.75 per share, and market prices between $0.20 - $0.24 per share.

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

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

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

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

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

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

F-14

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

During 2001, $1,025,000 was raised in a private debt offering. The notes attached to this debt were subsequently rolled into new notes (see discussion above concerning the issuance of new notes). Three warrants were attached to each dollar of debt, with an exercise price of $0.195 per share. These warrants were fully exercisable for up to two years from the dates of issuance. These warrants were valued at $0.07 per share, for a total of $219,642, using the valuation assumptions of 4% interest and a volatility of 91.25%. The warrant value has been recorded as a discount on the debt issued and the discount was amortized over the two year life of the debt. Accordingly, interest expense was recognized in the amount of $109,821, in each of the years ended December 31, 2002 and 2003. The valuation previously described required the Company to amend and restate its financial statements for the years ended December 31, 2001, 2002 and 2003, to reflect the amortization of the discount on debt, versus the prior accounting treatment which showed the value of the warrants as an immediate charge to earnings and recorded as a finance charge.

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

NOTE 8 – INCOME TAXES

At September 30, 2005, the Company had net deferred tax assets of approximately $2,690,000, principally arising from net operating loss carryforwards for income tax purposes. The Company calculates its deferred tax asset using a combined State and Federal tax rate of 39.5%. As the Company's management cannot determine that it is more likely than not that the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset has been established at September 30, 2005.

The significant components of the deferred tax asset at September 30, 2005 and December 31, 2004 are as follows:

		September 30,		December 31,
		2005		2004

Net operating loss carryforward	$	6,800,000	$	5,170,000


Deferred tax asset	$	2,690,000	$	2,040,000

Deferred tax asset valuation allowance	$	(2,690,000)	$	(2,040,000)

F-15

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

At September 30, 2005, the Company had net operating loss carryforwards of approximately $6,800,000, which expire in the years 2018 through 2025. The change in the allowance account from December 31, 2004 to September 30, 2005 was $650,000.

The Company recognized $741,000 of losses from the issuance of stock options during the nine month period ended September 30, 2005, which were not deductible for tax purposes.

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Operating Lease Agreements

The Company entered into a lease of office space in New York, New York on July 1, 2005 for a period of 24 months. Lease payments are currently $4,542 per month, with additional charges for common area services. The lease payment includes a provision for certain specific telephone and secretarial services. A security deposit was paid in the amount of $8,303. Total payments under the lease for the nine months ended September 30, 2005 were $13,883.

The Company entered into a lease for office space in Orlando, Florida on September 16, 2002 for a period of 36 months. The lease completed during the current reporting period. A security deposit was paid in the amount of $2,600, and the return of this deposit is pending. Total payments under this lease for the nine months ended September 30, 2005 and 2004 were $24,192 and $8,719 respectively.

The Company entered into a lease for office space in Boca Raton, Florida on February 7, 2001 for sixty months. Lease payments, including charges for common area, are currently $4,942. A security deposit and last month's rent were paid in the amount of $8,412. A portion of this space is being subleased, with the sublessee reimbursing the Company $3,000 per month. The Company's net lease payments amount to $2,121. Total net lease payments for the nine months ended September 30, 2005 and 2004 were $23,698 and $5,293, respectively.

The future minimum lease payments below for the Boca Raton office are the total amount of the payments as if there was no sublease. The Company anticipates the sublease to continue through the end of the lease term.

The Company also records as rent expense, payments to officers and directors for lodging reimbursement, but the Company is not contractually bound by lease agreements to make such payments. For the nine months ended September 30, 2005, the Company recorded $8,865 related to these transactions.

F-16

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

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

		New York Office		Boca Raton Office		Total

2005	$	13,626	$	15,363	$	28,989
2006	$	54,504	$	2,021	$	56,525
2007	$	31,794	$	-	$	31,794

The Company leases its facility in Mims, Florida, which was acquired in the acquisition of TCD, to its joint venture entity, LRM Industries, LLC. The two-year agreement provides for rents of $7,000 per month. These transactions have been eliminated in the consolidation of these financial statements.

Capital Leases Agreements

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

During year ended December 31, 2004, the Company acquired additional computer equipment under capital lease agreements. These leases, totaling $6,132, are for 36 months, with interest and principal payments of $222 per month.

Litigation

The Company is a named defendant in an action filed by Mr. Real Morel in May 2000 in the Supreme Court of British Columbia, Canada. In this action, Mr. Morel alleges non-payment by the Company of amounts due pursuant to demand promissory notes. After consultation with British Columbia legal counsel and a review of the circumstances surrounding the issuance of the notes, the Company has resolved to dispute this liability. Management of the Company believes that the outcome will not have a material adverse effect on the financial position of the Company. Although no further action has been taken with respect to this dispute, the Company intends to proceed to seek a dismissal of this matter through the Supreme Court of British Columbia, and pursue its legal options during the fourth quarter of 2005. Company management believes that it will prevail in this matter and that the outcome of the action will not have a material adverse affect on the Company's operations. Since the creation of the promissory notes as previously described, the Company has accrued interest on the notes. For the period ended September 30, 2005, the accrued interest balance on these promissory notes is $42,469, and this amount is shown in the Company's Balance Sheet under the accrued interest account.

F-17

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

The Company was a named defendant along with others including a director of the Company in a proceeding filed in the Superior Court of Cumberland County, Maine by former employees of Sports Quest of New England LLC ("Sports Quest"), for back wages and penalties, which could have totaled more than $300,000. The Company denied all liability, ownership, or other involvement with Sport Quest LLC. During the period ended September 30, 2005, the Company entered into a settlement agreement with Sports Quest, wherein the Company made payment in the amount of $20,000 to Sports Quest, without admitting to any wrongful actions with respect to allegations as set forth in the proceeding as filed in the Maine court.

The Company was the defendant in an action commenced by its former law firm for unpaid legal services in the amount of $18,952. The Company filed a motion to dismiss the action, and during the period ended September 30, 2005 the Company entered into a settlement agreement with its former law firm to resolve the dispute for payment of legal services provided. The Company made payment in the amount of $10,000 to resolve this matter. This payment is offset in the accompanying financial statements against the previously recorded liability amount of $18,952.

Schaefer Systems International, Inc.

On March 28, 2003, the Company entered into a product development agreement with Schaefer Systems International, Inc., (hereinafter "SSI") wherein the Company would design, develop and produce a quantity of prototypes for field testing. An initial payment of $61,215 was made by SSI to the Company to facilitate the development of a proprietary product.

The Company has delivered part of the first run of development parts. The initial period of the development contract has expired. Due to changes from both SSI and the company that is constructing the prototypes, the final product has not been finished. The Company believes that the first generation molds produced for SSI under the product development agreement are of no commercial value. Accordingly, the initial payment, previously held as a deposit on account, was recognized by the Company as an expense and charged to research and development costs during the period ended September 30, 2005.

NOTE 10 – ACQUISITIONS

In March, 2005, the Company announced that it had executed a definitive merger agreement in which Thermoplastic Composite Design (hereinafter "TCD") merged with and into the Company's wholly-owned subsidiary, Envirokare Composites Corp. (hereinafter "ECC"). The transaction combined all of TCD's business, including its intellectual property, property, plant and other assets, including contracts with ECC. Upon completion of the merger with TCD into the Company's wholly-owned subsidiary, ECC, the operating assets in TCD were assigned to LRM Industries, LLC ("LRM"), through ECC. TCD, as such, has no operations and LRM is the operating entity. Accordingly, the Company consolidates LRM's operations in its reporting. As a result of the structure as previously described, there are no operating results for TCD to report. LRM reports its financial activities on a quarterly basis and has elected a year end of December 31. The operating activities of LRM are consolidated in the Company's periodic financial reports. The merger agreement provided for an initial payment of $2.5 million to TCD shareholders and a subsequent schedule of payments over a seven-year period totaling $15 million. The current value of this note was determined by applying a discount rate of 12%. The original note value under this discount was $8,157,208, of which $2,500,000 was paid during the quarter ended March 31, 2005.

F-18

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

The intangible asset obtained in the acquisition of TCD was incorporated into and recorded as patent value, in conjunction with the purchase price for TCD and the real property and equipment, as previously discussed. The audit of TCD's books and records for the years ended December 31, 2003 and 2004 was completed and it was determined that in-process research and development, that realized gross margin profits in an approximate amount of $12,500, existed at the close of the merger. This amount has been included as a component of the assets acquired in the merger with TCD.

Following is a summary of the assets acquired under the TCD merger agreement:

Equipment	$	350,000
Real property		400,000
Contracts in-process		12,500
Patents		7,394,708

Assets acquired	$	8,157,208

Also in March, 2005, the Company announced that ECC executed a 50/50 joint venture agreement with Nova Chemicals, Inc., and created a new company, LRM Industries LLC, to commercialize the Company's TPF Thermoplastic Flowforming technology. The Company has contributed its intellectual property rights, technology, manufacturing equipment and all TPF Thermoplastic Flowforming business activities which were acquired through the merger with TCD into the joint venture, while Nova Chemicals has contributed $5,000,000 in cash and has agreed to contribute future services valued at $1,000,000. The joint venture is accounted for as a subsidiary of the Company.

Following is a summary of the net assets contributed to LRM by the Company:

Equipment	$	350,000
Contracts in-process		12,500
Patents		7,394,708

Net assets contributed	$	7,757,208

The Company issued 1,300,000 options to employees and consultants of LRM (former employees of TCD), in connection with the acquisition of TCD. Aspects of this issuance were previously discussed in Note 7, above. The value ascribed to contributed patents includes 1,300,000 common stock options, which were valued at $741,000. This amount is included in the contribution made by the Company in the acquisition of TCD and included under patent costs. The Black-Scholes model was utilized to calculate the value of these options and the assumptions used to calculate the fair value of the options issued to former TCD shareholders were a risk-free interest rate of 4%, volatility of 94% and a term of three years. The calculated value for these option shares was $0.57 per share and the options were granted at an exercise price of $0.94 per share. The options were treated as an element of the acquisition cost of TCD and the option value has been accounted for as a component of the acquired patents. The Company has also contributed equipment and in-process contracts to LRM, in the amounts of $350,000 and $12,500, respectively.

F-19

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

NOTE 11 – CORRECTION FOR ERRORS

The accompanying consolidated financial statements have been restated to correct information concerning certain transactions that are described in general in this Note 11 and in more detail in respective Notes above.

Amortization of TCD License

In March 2001, the Company obtained the rights to its TPF Thermoplastic Flowforming process in exchange for cash consideration of $525,000. The Company has determined that it was appropriate to amortize the value of the license over the initial period of the license grant, which expired September 30, 2003. See Note 4.

Impairment of Patent Value

On December 1, 2000 the Company acquired technology rights, in exchange for common stock shares in the Company. The Company has determined that it was appropriate to amortize the value of the patent commencing from the date of acquisition of the patent and has amended its financial statements to recognize amortization during the fiscal years ended 2001 and 2002 and for nine months ended September 30, 2003. The Company also has determined that impairment exists on the value of the patent and has amended its financial statements for the period ended December 31, 2003 to recognize this impairment. See Note 4.

During 2003, the Company raised $300,000 in a private debt offering. The notes included attached warrants. The warrant value has been recorded as a discount on the debt issued and the discount has been amortized over the life of the debt as a charge to interest expense. The valuation previously described required the Company to amend and restate its financial statements for the years ended December 31, 2003 and 2004, to reflect the amortization of the discount on debt. See Note 5 and Note 7.

During 2001, the Company raised $1,025,000 in a private debt offering. The notes, including attached warrants, were subsequently rolled into new notes with attached additional warrants. The warrant value has been recorded as a discount on the debt issued and the discount has been amortized over the life of the debt as a charge to interest expense. The valuation previously described required the Company to amend and restate its financial statements for the years ended December 31, 2001, 2002 and 2003, to reflect the amortization of the discount on debt. See Note 5 and Note 7.

F-20

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

In December 2003, the Company rolled all of its outstanding notes payable and accrued interest to related parties, as described in the previous paragraph and relating to the 2001 debt offering, into new notes, which contained attached warrants. Subsequent to reporting the original transaction, the Company discovered a defect in the assumptions utilized to calculate the accounting exposure of the newly issued and extended warrants. Based on the revised assumptions, the Company has revalued the newly issued and extended warrants and has amended its financial statements for the years ended December 31, 2003 and 2004 to recognize amortization of the discount. See Note 5 and Note 7.

Stock Options and Warrants

The accompanying consolidated financial statements had been restated to correct information concerning stock options granted during 2003, and the Company's valuation thereof. The effect of the restatement was to increase related party consulting fees as reported and stock options and warrants in the amount of $529,811. Accordingly, the Company's accumulated deficit at December 31, 2003 had been restated to reflect this correction. The correction increased the Company's loss per share by $0.02.

Additionally, the Company has reclassified various expenses for the year ended December 31, 2003.

Subsequent to the consolidated financial restatement to record changes in accounting treatment of various items, as previously described, the Company made certain adjustments to its financial statements for the year ended December 31, 2003, to correct errors in calculating its previously stated expense arising from the reissuance of certain warrants, the effect of which carry forward to ensuing reporting periods. The post 2003 financial reporting effects of the previously described adjustments also appear in the Company's accumulated deficit, additional-paid-in capital and stock options and warrants accounts. See Note 7.

The Company discovered, after the original issuance of the financial statements for the period ended June 30, 2005, that common stock options effective in June 2005 had not been included in the original reporting of financial position and activities. The Company issued stock options for the acquisition of up to 8,830,000 shares of common stock. As more fully described in Note 7, the fair value adjustment for consulting fees resulted in $4,747,500 of expenses being recognized.

The cumulative effects of the financial statement amendments and the correction for an accounting error, as described above in this Note 11, resulted in the following changes to the Company's financial statements: For the year ended December 31, 2004, the Company had originally reported a net loss of $1,824,817, and the corrected net loss is $2,060,434. The Company had reported an accumulated deficit of $7,874,110, which is now recognized as $10,992,260. The Company's losses per share increased by $.01 per share, from $.05 to the corrected value of $.06 per share. For the nine month period ended September 30, 2005, the Company had originally reported a net loss of $1,079,582, and the net corrected loss is $7,339,303. The Company had reported an accumulated deficit of $8,953,819, which is now recognized as $18,331,692. The Company's losses per share remain as previously reported at $0.18 per share.

F-21

ENVIROKARE TECH, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
September 30, 2005

NOTE 12 – DEVELOPMENT STAGE REPORTING

During the period ended September 30, 2005, the Company has recognized significant revenues from its consolidated joint venture entity, LRM Industries, LLC. As a result, the Company has discontinued its reporting as a development stage enterprise.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Envirokare Tech, Inc. (the "Company" or "Envirokare") is engaged in the application design, development and manufacturing, utilizing proprietary thermoplastic composite technologies including TPF Thermoplastic Flowforming™. Subsequent to end of the fiscal year ended December 31, 2004 and upon the closing of the Merger Agreement between the Company's subsidiary Envirokare Composite Corp. ("ECC") and Thermoplastic Composite Designs, Inc ("TCD") and of the Joint Venture Agreement (LRM Industries, LLC, or "LRM") between Envirokare Composite Corp. and NOVA Chemicals, Inc. ("NOVA") described below, the Company's TPF Thermoplastic Flowforming business is being conducted through its position and interest in LRM.

Technology: The TPF Thermoplastic Flowforming process is a proprietary process developed by TCD that enables the manufacture of large structural parts using long-fiber reinforced thermoplastic resins. The process utilizes recycled or virgin resins and is designed to reuse its own production scrap, thereby eliminating production waste by-products. TPF Thermoplastic Flowforming process patents have been issued under United States Patent and Trademark Office patent nos. 6,719,551, 6,869,558 and 6,900,547. These patents provide a system and method for forming an article from thermoplastic material and fiber.

Historically, advanced composite materials were utilized almost exclusively by the military and aerospace industries where such usage was normally restricted to the manufacture of small parts due to the inordinate cost of hand application, i.e., the process of manually applying layers of composite materials to a mold or shape. Management believes that the TPF Thermoplastic Flowforming process provides a cost-effective alternative for the in-line production of larger, long-fiber reinforced plastic parts at very low processing costs. The process has key advantages over many manufacturing processes currently in use such as compression molding, injection molding and rotational molding. The Company believes that these advantages provide for significant cost savings realized by utilization of the TPF Thermoplastic Flowforming process in the reduced labor required to create larger parts and reduced costs in assembly of larger parts which are made up from a number of smaller components. Material costs will typically also be lower due to the ability of the process to use recycled materials, reuse of its own production scrap and utilize in-line compounding, which is the process of mixing raw material components as an actual part of the production process.

The TPF Thermoplastic Flowforming process has application in a broad range of industries including: agriculture, automotive, material handling, transportation, marine, medical, waste management and aerospace. TPF Thermoplastic Flowforming composite products are an advantaged replacement for many wood, aluminum, steel, other metal alloys, concrete, other plastic and fiberglass products, by providing products that have corrosion resistance, are lighter and cost less to manufacture. As a thermoplastic process, TPF Thermoplastic Flowforming has an additional advantage in that it does not emit volatile organic contaminants (VOCs).

The Company entered into agreements acquiring specific application rights to this technology through license and merger agreements with TCD dated March 30, 2001, wherein the Company, through its wholly-owned subsidiary ECC, was granted rights to commercially exploit the TPF Thermoplastic Flowforming process in certain specific field-of-use applications.

On March 3, 2005, the Company completed a merger of TCD, a Florida corporation, into ECC resulting in the acquisition of TCD including the assets comprised of real property, plant, equipment and intellectual property, in exchange for cash and notes, as generally outlined below. These merger terms were modified from the March 30, 2001 merger agreement.

The "Merger Consideration" equaled the sum of (i) fifteen million dollars ($15,000,000) (the "Fixed Merger Consideration") and (ii) the aggregate amounts payable in accordance with Section (h) of the Merger Agreement: (the "Contingent Merger Consideration"). Following are the general payment terms to TCD Shareholders, as set forth in the Merger Agreement;

(a) At the Closing, ECC shall pay the Shareholders $2,500,000.

(b) The balance of the Merger Consideration shall be paid to the TCD Shareholders in eight (8) annual installments following the Closing with the first such payment due on or prior to January 31, 2006 and the last such payment due on or prior to January 31, 2013 (and such payments shall be deemed to be distributed to the Shareholders of TCD in complete liquidation), with each annual payment to be equal to 2.5% of the "Consolidated EBIDTA" of LRM Industries, LLC ("LRM") for each calendar year, commencing with the calendar year ending December 31, 2005, up to a maximum aggregate of $12,500,000 for all payments under this subsection (b). LRM is the Company's Joint Venture Company with NOVA Chemicals, Inc.

(c) In the event that 2.5% of the Consolidated EBIDTA of LRM during the first four years after the Closing Date (ending on December 31, 2008) is less than an aggregate of $2,000,000, ECC shall pay to the Shareholders any amount by which $2,000,000 exceeds 2.5% of the aggregate Consolidated EBIDTA of LRM during this period within 31 days after the end of the fourth year.

(d) In the event that 2.5% of the Consolidated EBIDTA of LRM during the years five six and seven after the Closing Date (ending on December 31, 2011) total less than an aggregate of $3,000,000, ECC shall pay to the Shareholders any amount by which $3,000,000 exceeds 2.5% of the aggregate Consolidated EBIDTA of LRM during the period, within 31 days after the end of the seventh year.

(e) At the end of the eighth year (ending December 31, 2012), in the event that the TCD Shareholders have not been paid $15,000,000 by virtue of the payments set forth in Section 2.01 (a), (b), (d) and (e), ECC shall pay on or prior to January 31, 2013, any amount by which $15,000,000 exceeds all monies paid to the Shareholders to date under Section 2.01(a), (b), (d) and so that the total payments made aggregate $15,000,000.

(f) In the event that a cash payment is due the Shareholders pursuant to this paragraph, any TCD Shareholder may elect to receive this payment in four equal annual payments beginning at the end of the eighth year set out above. Unpaid but due balances will carry interest equal to LIBOR plus one percent but not to the extent a Shareholder elects a deferral under the provisions of the prior sentence.

(g) The assurance of any such payments to be made pursuant to this Section is provided only by ECC and guaranteed by LRM and Parent (Envirokare) as set forth below. The Parties acknowledge that no such assurance is being provided by NOVA or any of NOVA's affiliates or subsidiaries other than ECC, LRM and Parent.

(h) Ongoing Payments. As additional Merger Consideration (the "Contingent Merger Consideration"), beginning January 1, 2013, the Shareholders shall be entitled to receive from ECC payments annually equal to their pro rata share of 1% of the Net Income of LRM payable to the extent of and at the time of distribution of such Net Income to ECC or 90 days after the end of each year, whichever is sooner.

The obligations of ECC to pay the Fixed Merger Consideration and the Contingent Merger Consideration are guaranteed by LRM and the Company, and are evidenced by guaranties executed and delivered by the Company and LRM to the TCD shareholders.

As part of the transaction described above, ECC sold to LRM, under an Asset Purchase Agreement, equipment and other personal property located in Mims, Florida and intellectual property acquired in the merger transaction described in this section. Other than real estate owned and leased to LRM, these assets were substantially all of the assets of ECC sold to LRM as part of the transaction in which ECC acquired a 50% interest in the LRM, the joint venture company (see below).

On March the 3, 2005, the Company through, its wholly-owned subsidiary ECC, executed a Limited Liability Company Agreement with NOVA creating a Joint Venture Company, LRM, which is a Delaware limited liability company created for the purpose of commercializing the Company's TPF Thermoplastic Flowforming technology, including but not limited to the manufacture, marketing, sales and/or licensing of the technology.

LRM is owned one half each by ECC and NOVA and is capitalized as generally set forth in the joint venture agreement between NOVA and ECC as follows:

1.1 Contribution of Envirokare. ECC shall make no Contributions to the Company, initially, and need not make any additional Contributions unless, in its sole discretion, it decides to do so, subject to approval. ECC is selling certain assets to the Company (i.e. LRM) pursuant to the Asset Purchase Agreement and ECC shall be paid the amounts specified below as consideration for such transfer.

1.2 Contributions of NOVA. NOVA has made and shall make Contributions to the Company as follows:

On the date of this Agreement, NOVA will contribute five million dollars ($5,000,000.00) to the Company (the "NOVA Investment"). In addition to the NOVA Investment, NOVA will also contribute one million dollars ($1,000,000.00) in services to the Company (i.e. LRM), pursuant to the NOVA Service Agreement, an exhibit to the Limited Liability Company Agreement.

As part of the Limited Liability Company Agreement, ECC entered into a lease agreement providing for the lease of the plant property in Mims, Florida to LRM for a period of two years with an option to renew for an additional two years. Lease payments payable to ECC equal $84,000 per year for the first two years and $91,200 per year for the two year renewal period. In addition, the property is subject to a cellular tower lease providing for additional payments, in the amount of $12,000 per year, to ECC as successor to TCD.

Product Research, Development and Testing:

Product Development - Product Research, Development and Testing continued during the period by LRM on a product by product basis, primarily in response to customer product development orders. During the nine months ended September 30, 2005, LRM announced a research and development contract with the U.S. Government for development of electromagnetic interference composite shelters valued at $1,000,000; a development contract with Hydrogenics for development of a hydrogen generation system component, and; a development agreement with E.I. duPont de Nemours and Company to explore the utility of the Company's TPF Thermoplastic Flowforming technology for a variety of applications within, among other potential industrial market segments, the building and construction markets.

Product Marketing and Market Exploitation:

The Company's plan for the marketing and exploitation of its technologies over the next twelve (12) months through LRM, its joint venture with NOVA Chemicals, Inc., includes:

a. direct development and manufacturing of products for materials handling, construction, housing, marine and other commercial and consumer applications.

b. 3rd party licensing of TPF Thermoplastic Flowforming technology for specific applications and products as well as for specific geographic areas.

c. product development for 3rd party applications and licensed manufacturing.

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

The closing of the Merger Agreement with TCD and combining that company with Envirokare's wholly-owned subsidiary ECC brought into the Company an existing TPF Thermoplastic Flowforming production facility including equipment and leased premises. The size of this facility is limited and the facility is used primarily for product development and small production runs. During the current fiscal year, the Company continued preliminary feasibility and development efforts focused on assessing the merits of building a full scale production facility for manufacture of Company and third party products at this facility. However, no specific manufacturing site has been contracted for to date. During the near term, the Company's business will be conducted through its position in LRM (see above).

The Company anticipates that LRM will add personnel required for operation of the existing facility and to facilitate expansion of the business. One of the Company's consultants has become a consultant to LRM and the joint venture directly retains personnel to meet various staffing requirements. The Company does not expect to add key employees to its own staff during the year.

Liquidity:

The Company has budgeted expenditures of $600,000 for the 12 months ending September 30, 2006. During the nine month period ended September 30, 2005, the Company raised $683,750 through warrant exercises, in addition to receiving $187,300 from the exercise of stock options. The Company had cash remaining at September 30, 2005 in the amount of $2,200,366, which includes cash balances in LRM, in the amount of $2,097,057. LRM was initially capitalized with a $5,000,000 contribution in cash and $1,000,000 in services to be provided by NOVA. LRM has budgeted to spend $1,572,000 during its first year of operation. The significant changes in assets during the nine month period ended September 30, 2005 were due to (i) the recognition of non-cash prepaid services to be provided by NOVA to LRM during the next two years, with the prepaid services set out as a current prepaid expense, in the amount of $600,000 and long term prepaid expense, in the amount of $400,000, (ii) a change in the net patent amount, as a result of the recognition of consideration received through the merger of TCD into ECC and the formation of the LRM joint venture, which includes the net present value of payments to be made to TCD shareholders as committed to in the merger agreement and the $2,500,000 cash provided to LRM as operating capital at the merger date completion, (iii) the deposits for stock purchase which were applied to the acquisition of common stock upon completion of the transactions during the period ended September 30, 2005, (iv) the increase in accrued interest by $475,205 due to the imputation of interest payable on the net present value of the note payable to TCD shareholders, and (v) the increase in accrued interest due to notes payable to a former director and officer, such payments that are in legal dispute by the Company. The Company expects to raise any required additional operating funds by sales of shares of its common stock conducted through private placement offerings and through funds received from individuals exercising warrants or options. Although management believes these capital sources to be sufficient to meet the needs of its operations, there is no assurance that the Company will be successful in raising additional capital to fund its operations.

Financial Position:

The Company consolidates its activities for all financial reporting purposes. For the nine month period ended September 30, 2005, the Company had a cash balance of $2,200,366 compared to a cash balance of $432,155 for the year ended December 31, 2004. The increase in cash was due to participation in the ownership of LRM Industries, LLC, wherein the Company acquired a 50% ownership interest in that entity during the quarter ended. For the nine month period ended September 30, 2005, the Company reported property and equipment in the amounts of $400,000 and $414,332, respectively, compared to an equipment balance of $25,292 for the year ended December 31, 2004. The increase in the property and equipment amounts is attributed to the acquisition of TCD Inc., by merger, during the quarter ended March 31, 2005. For the nine month period ended September 30, 2005, patents were valued at $7,150,455 compared to $33,939 for the year ended December 31, 2004. The increase in patent values is primarily due to participation in the formation of a joint venture entity, LRM Industries, LLC and the incorporation of the net present value of the merger consideration provided by the Company to the joint venture entity, LRM. Accounts payable for the nine month period ended September 30, 2005 were $275,877 compared to $330,933 for the year ended December 31, 2004. The 17% increase in accounts payable for the period is primarily due to increased operating costs experienced by the Company and by the Company's joint venture interest. The Company also reported a minority interest in a subsidiary during the nine month period ended September 30, 2005, in the amount of $5,827,057. This amount represents the Company's 50% interest in its joint venture with NOVA Chemicals Inc.

Operations:

The Company had revenues of $447,589 for the three months ended September 30, 2005, in comparison to no revenues for the previous year's corresponding period. Revenues for the three months ended September 30, 2005 resulted in a Gross Profit of $284,746 with Total Expenses of $773,985 resulting in a Loss From Operations of $506,282, compared to the previous year's corresponding period loss of $489,239. The interim period for the nine months ending September 30, 2005 showed a loss from operations of $7,081,336 including a one time expense of $4,947,869 for the issuance of market price options to executives and others granted after the closing of the ECC/TCD merger. The period covered by this report also represents the initial operations of LRM, with operations conducted at the facility acquired through the Company's merger with TCD.

ITEM 3. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2005, the end of the quarterly fiscal period covered by this quarterly report. The controls evaluation was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of such period, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported to management, including the Chief Executive Officer and the Chief Financial Officer to allow timely decisions regarding required disclosure.

Subsequent to the Company filing its interim Form 10-QSB for the period ended June 30, 2005, the Company determined that options granted to certain key management team members and consultants had been issued just prior to the completion of the interim period, but the value of these options were not accounted for in the Company's financial statements and associated notes. The Company immediately, upon recognizing this deficiency, prepared and filed an amended and restated Form 10-QSB for the period ended.

Notwithstanding the Company's current disclosures concerning the TCD license, the Company amended its filings for the Fiscal Years ended December 31, 2004, 2003, 2002 and 2001, to reflect the amortization of the TCD license, with amortization of the license commencing on the date of acquisition and with the license being fully amortized by the end of the original license agreement date, September 30, 2003. The Company also amended the financial statement note disclosure concerning the TCD license to reflect the amortization of that license.

Notwithstanding the Company's prior statements and disclosures relating to the accounting treatment of the Company's acquired patent application entitled "Apparatus and Method for Facilitating Shipping and Commerce", the Company amortized the value of the patent during the Fiscal Years ended December 31, 2001, 2002 and the nine month period ending September 30, 2003 and wrote down the remaining full value of the intangible asset during the Fiscal Year ended December 31, 2003 and restated its financial statements to reflect the effect of the write down against retained earnings for the periods ended December 31, 2003 and December 31, 2004, and amended its note disclosures for the same periods to disclose the accounting treatment applied for the intangible asset.

Notwithstanding the Company's prior statements and disclosures relating to the accounting treatment for 5,125,000 warrants issued in December 2003, as a part of a restructured debt offering by the Company, it has elected to amend its treatment of these warrants which resulted in an additional charge to earnings of $457,150 for the Fiscal Year ended December 31, 2003. The Company filed an amended Form 10-KSB, for the Fiscal Years ended December 31, 2004 and 2003, to reflect this restatement, in conjunction with the amendment that flows from accounting treatment of the original issuance of debt.

Notwithstanding the Company's prior statements and disclosures relating to the accounting treatment for 900,000 warrants issued in connection with a private debt offering undertaken by the Company in December 2003, the Company has elected to amend its treatment of these warrants which resulted in a charge to earnings of $110,813 for the Fiscal Year ended December 31, 2003 and which charge was recorded as a finance charge in the Company's Statement of Operations for the year then ended.

Notwithstanding the Company's prior disclosures as contained in its prior financial reports related to a warrant exercise that took place during late 2003, the Company has elected to take a charge to earnings in the period ended December 31, 2003, the period in which the warrants were modified.

Notwithstanding the Company's prior disclosures as contained in its prior financial reports for interim reporting periods ended during 2005 and that relate to options granted to former TCD shareholders and employees as part of the merger between TCD and the Company's wholly-owned subsidiary, ECC, the Company determined that it was appropriate to expense the fair value of the options, in an amount of $741,000, versus the prior treatment that capitalized the option values as a component of patent value, which would be amortized over the life of the patents acquired in the merger of TCD into ECC.

The restatement referred to, related to certain transactions that occurred at the end of the reported Quarter and further related to the closing and continued implementation of the Company's merger with TCD and its formation of its joint venture with NOVA Chemicals. During this critical period, the Company also lost one of its longest term directors and head of its audit committee, Jonathan Edelstein, who died during the first Quarter; this in addition to the Company losing its staff accountant whose activities were directly related to the reporting issuer. The situation was addressed immediately upon discovery by the Company.

Subsequent to the initial filing of the annual report on Form 10-KSB for the Fiscal Year ended December 31, 2004, Management conducted a reevaluation of its disclosure controls and procedures and determined that changes were required to certain accounting records. As previously described Management believes its disclosure controls and procedures were not effective. During the Interim Period ended September 30, 2005 the Company made no changes to its internal control procedures, other than as identified in the next two paragraphs.

Anticipated Changes to internal controls over financial reporting and to disclosure controls and procedures to prevent future misstatements of a similar nature: As a result of the events that caused the restatement, the CFO and CEO have taken certain immediate steps to mitigate and prevent future misstatements from occurring in the future. These steps include, (i) notification of the events causing the restatement to the Board of Directors at the Board's meeting of September 20, 2005, (ii) presentation of recommendations to the Board to strengthen the Company's controls and procedures, with such recommendations adopted by the board at the stated meeting, (iii) appointing new disclosure committee members, audit committee members and disseminating disclosure controls and procedures guidelines to all Board members, as well as a briefing on the duties and requirements of all Board members. Management continues to evaluate its controls and procedures in light of the changes in its business and operations.

(b) Changes in Internal Control Over Financial Reporting

During the Quarter ended September 30, 2005, in order to assure appropriate control over financial reporting of expanded activities of the Company due to the acquisition of assets from Thermoplastic Composite Design, Inc., the Company increased its disclosure controls. The additional controls include an increased meeting schedule between top executives focused on company activities; an additional level of management review of reports, the adoption of a more aggressive disclosure calendar and

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

The Company was a defendant along with others, including Steve Pappas, a Director of the Company, in a proceeding filed in the Superior Court of Cumberland County, Maine by former employees of Sports Quest of New England LLC, for back wages and penalties. The Company denied all liability, ownership or other involvement with Sport Quest LLC. The Company entered into a settlement agreement with the Plaintiffs in the case which has been fully executed. The result was not material to the Company.

The Company has filed a Declaratory Judgment action in U.S. District Court for the Southern District of New York against Steve Pappas, a director of the Company. Envirokare is asking that the Voting Trust and Trust Agreement signed by Mr. Pappas on August 7, 2003 be declared valid and in full force and effect until August 7, 2006. Mr. Pappas had previously made a demand of the Trustee and the Company to terminate this trust. The demand was rejected. Management expects to resolve this matter in a manner favorable to the Company. Regardless of outcome, management does not believe that this litigation will have any material effect on results of its operations. The docket number of this action is 1:05cv-05515-LAK.

ITEM 2. CHANGES IN SECURITIES

During the nine months ended September 30, 2005, the Company issued 62,500 shares of its common stock when warrants were exercised at $0.40 per share for a total of $25,000 and 50,000 shares were issued when stock options were exercised at $0.30 per share for a total of $15,000. In addition, the Company issued 614,465 shares of its common stock when options were exercised by a former Company executive at $0.23 per share, with payment set off against severance owing to the former executive. During the period ended September 30, 2005, the Company issued 2,600,000 shares of its common stock when stock warrants were exercised at prices ranging between $0.25 and $0.40 per share. During the period ended September 30, 2005 the Company issued 826,087 shares of its common stock when stock options were exercised at a price of $0.23 per share.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

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

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

Number Description of Document

(a) Exhibits

None

(b) Reports on Form 8-K

                A report on Form 8-K regarding Item 3 was filed by the Company on January 18, 2005.
                A report on Form 8-K regarding Item 1 was filed by the Company on March 10, 2005.
                A report on Form 8-K regarding Item 5 was filed by the Company on March 24, 2005.
                A report on Form 8-K regarding Item 7 was filed by the Company on March 29, 2005.
                A report on Form 8-K regarding Item 3 was filed by the Company on June 15, 2005.
                A report on Form 8-K regarding Item 8 was filed by the Company on June 22, 2005.
              A report on Form 8-K regarding Item 8 was filed by the Company on October 17, 2005.
              A report on Form 8-K regarding Item 8 was filed by the Company December 29, 2005.
              A report on Form 8-K regarding Item 8 was filed by the Company on December 29, 2005.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on April 5, 2006.

Registrant:		ENVIROKARE TECH, INC.


By:		/s/ Nicholas Pappas

Name: Title:		Nicholas Pappas Chairman and CEO

By:		/s/ George Kazantzis

Name: Title:		George Kazantzis President and Principal Financial Officer