UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of ~~September~~May, ~~2004~~2005

Commission File Number: 0-20055

Consolidated Envirowaste Industries Inc. ~~(Translation of registrant’s name into English)~~

(Translation of registrant’s name into English)

27715 Huntingdon Road, Abbotsford, B.C., Canada V4X 1B6
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

FORM 20-F ~~[X]~~þ FORM 40-F ~~[ ]~~o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o ~~[ ]~~

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o ~~[ ]~~

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

YES ~~[X]~~ þ NO ~~[ ]~~o

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-1399.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	~~CONSOLIDATED ENVIROWASTE INDUSTRIES INC.~~			CONSOLIDATED ENVIROWASTE INDUSTRIES INC.
	~~(Registrant)~~			(Registrant)
Date September 2, 2004	By		“Douglas R. Halward”
Date June 2, 2005		By			“Douglas R. Halward”
			~~(Signature)~~		(Signature)
	~~Douglas R. Halward, President~~			Douglas R. Halward, President
	~~(Name and Title of the Signing Officer)~~			(Name and Title of the Signing Officer)

The following attached documents are filed under this Form 6-K:

EXHIBIT A:		News Release dated ~~September~~May 130, ~~2004~~2005
EXHIBIT B:		BCUnaudited ~~Form 51-901F together with schedules A (unaudited~~ financial statements for the ~~nine~~six months ended ~~June~~March 3031, ~~2004),~~2005 ~~B (supplementary information)~~ and CManagement ~~(management~~Discussion ~~discussion~~ and ~~analysis)~~Analysis

EXHIBIT A

(ENVIROWASTE LOGO)

~~Consolidated Envirowaste Industries Inc.~~ 27715 HUNTINGDON ROAD, ABBOTSFORD, BC V4X 1B6 TELEPHONE: 604-856-6836 FACSIMILE: 604-856-5644

NEWS RELEASE

Consolidated Envirowaste Reports ~~Third~~2005 2 nd Quarter ~~Earnings~~Results Abbotsford, British Columbia – ~~September~~May 130, ~~2004~~2005

Consolidated Envirowaste Industries Inc. (TSX Venture Exchange-CWD-V) announced today its results for the ~~nine~~six months ended ~~June~~March 3031, ~~2004~~2005. A complete copy of the Company’s ~~third~~report for the quarter ~~report~~ is available ~~on the internet~~ at www.sedar.com. Excerpts from the ~~quarterly~~ unaudited financial statements ~~are~~ are as follows:

	Quarter Ended			Quarter Ended		Nine Months Ended		Nine Months Ended
						Six Months		Six Months
	June 30, 2004			June 30, 2003		June 30, 2004		June 30, 2003
	Quarter Ended			Quarter Ended		Ended		Ended
Sales	$	7,383,221		$	7,366,287	$	17,742,315	$	17,075,126
	March 31, 2005			March 31, 2004		March 31, 2005		March 31, 2004
Net Earnings		497,725			688,366		579,313		588,855
Revenue	$	6,682,903		$	5,484,735	$	13,856,167	$	10,359,094
Basic earnings per common share		0.05			0.07		0.06		0.06
Income from continuing operations before income taxes		123,617			133,948		1,155,740		253,601
Diluted earnings per common share		0.05			0.07		0.06		0.06
Income (loss) from continuing operations after income taxes		(13,538	)		32,324		507,064		358
Weighted average common shares outstanding		10,247,199			9,994,299		10,153,161		9,985,596
Income from discontinued operations		14,198			59,651		29,225		81,230
Net income for the period		660			91,975		536,289		81,588
Basic earnings per common share	$	—		$	0.01	$	0.05	$	0.01
Diluted earnings per common share	$	—		$	0.01	$	0.05	$	0.01
Weighted average common shares outstanding		10,250,801			10,197,748		10,305,303		10,106,400

Consolidated Envirowaste Industries Inc. ~~has~~recorded ~~reported~~a ~~third~~net ~~quarter~~loss ~~net earnings~~from ~~for~~continuing operations for the three months ended ~~June~~March 3031, ~~2004~~2005 of $~~497~~13,~~725~~538 or $0.0500 per share ($0.0500 ~~fully-~~per share diluted) compared to net earnings from continuing operations of $~~688~~32,~~366~~324 or $0.0700 per share ($0.0700 ~~fully-~~per share diluted) for the ~~comparable~~three months ended March 31, 2004. The Company’s Georgia subsidiary ceased daily operations on March 31, 2005, and, is presented as discontinued operations on a comparative basis. After net income from discontinued operations for the quarter of $14,198 (2003. ~~For~~— ~~the~~$59,651), ~~nine~~overall net income for the three months ended ~~June~~March 3031, ~~2004~~2005 ~~the~~was ~~Company~~$660 ~~had~~or $0.00 per share ($0.00 per share diluted) compared to net ~~earnings~~income of $~~579~~91,~~313~~975 or $0.06 01 per share ($0.0601 ~~fully-~~per share diluted) earned in the same quarter of 2004. For the six months ended March 31, 2005, income from continuing operations before income taxes was $1,155,740 compared to ~~net~~$253,601 ~~earnings~~for ofthe six months ended March 31, 2004. Net income after income taxes and discontinued operations totalled $~~588~~536,~~855~~289 or $0.06 05 per common share ($0.0605 ~~fully-~~per share diluted) for the ~~same~~first ~~nine~~six months of ~~2003~~fiscal 2005 compared to $81,588 or $0.01 per share ($0.01 per share diluted) for the six months ended March 31, 2004.

~~The~~Revenue ~~Company~~increased ~~has~~22% ~~elected~~or $1.2 million to ~~wind down the operations of its Georgia subsidiary over the next six months~~$6, ~~and~~682,903 ~~as such, the results of the Georgia operations are presented separately as net after tax earnings from discontinued operations on a comparative basis. Included in net earnings~~ for ~~the~~this ~~three~~quarter ~~months ended June 30, 2004 is a net after tax loss of $11,442~~ compared to ~~net~~the ~~earnings~~second ~~after~~quarter ~~tax~~ of ~~$159~~2004,~~787~~ ~~for~~but ~~the~~sales ~~June 30,~~were ~~2003~~down ~~quarter. Results~~from ~~for~~ the ~~nine~~1st ~~months~~quarter ~~ended June 30, 2004 included Georgia’s net after tax earnings~~ of ~~$384,854~~2005 ~~compared~~by ~~to net earnings after tax of~~ $~~394~~490,~~766~~000 ~~for~~when ~~the~~CRR ~~comparable period of 2003.~~

~~Third~~(Florida) ~~quarter~~was ~~revenues~~involved ~~from~~with ~~continuing~~last ~~operations~~fall’s ~~were~~storm ~~comparable~~cleanup. toThe ~~revenues~~Company had similar gross margins ~~for~~compared to the ~~third~~second quarter of ~~2003~~2004 aswhile ~~revenue~~operating ~~from~~income ~~tipping~~ rose ~~18%~~$76,000 ~~over~~for the quarter compared ~~comparable~~to the three months ended March 31, 2004, reflecting more seasonal values compared to the 1st quarter of ~~2003 while~~2005.

~~revenue~~Driven ~~from~~by ~~bulk~~strong ~~and~~results ~~packaged~~in ~~products declined~~its 7%Florida ~~and~~subsidiary, ~~42%~~the ~~respectively.~~Company’s ~~Overall~~revenue, ~~sales~~operating and net income from continuing operations for the six months ended March 31, 2005, continued at a pace well ahead of the first six months of fiscal 2004. ~~nine~~Revenue ~~month~~for ~~period~~the ~~were~~first ~~impacted~~six bymonths ~~translation~~of ~~differences~~fiscal in2005, ~~the~~following ~~Canadian~~a ~~dollar,~~reduction asof itnearly ~~rose~~$1 million ~~10%~~in ~~against~~currency ~~the~~translation USdifferences, ~~dollar~~is ~~over~~approximately $3.5 million higher than the ~~comparative~~first ~~nine month~~six ~~period~~months of ~~2003~~2004. ~~Total~~Operating ~~revenue~~income ~~increased~~during ~~just~~the ~~over~~six months was $~~667~~855,000 higher orand 4%net ~~with revenue~~income from ~~tipping~~continuing ~~increasing~~operations ~~11%~~increased ~~and~~$506,700 ~~sales~~compared ofto ~~packaged~~the ~~product~~six ~~declining by~~months ~~30%~~ended ~~compared~~March 31, to2004, while net income, including discontinued operations, is $454,700 more than the ~~nine~~same six months ~~ended~~of ~~June~~fiscal 2004. Results from the first quarter of fiscal 2005 have manifested themselves into a stronger balance sheet at March 3031, ~~2004~~2005 with improved working capital and debt to equity ratios.

As in the first quarter of 2004, the Company improved gross margins for both the quarter and the nine month periods over 2003. Increased activity levels and new business resulted in an increase in selling expenses (primarily material removal from sites in our U.S. operations) over comparable periods in 2003 which were offset by lower freight volumes in the Canadian packaged products sector.

Pre-tax earnings from continuing operations increased $269,000 over the first nine months of 2003 and were augmented by gains on equipment dispositions of $255,000. Cash flows from operations after changes in non-cash working capital items in the third quarter fell $189,000 over the comparable quarter of 2003 and increased by $864,000 compared to the nine months ended June 30, 2003 when the Florida subsidiary was constructing its new facilities.

Consolidated Envirowaste Industries Inc. is a leading processor of wood and other organic wastes in Western Canada, Florida and Georgia. The Company markets and supplies biomass boiler fuel for electric generation facilities, charcoal manufacturers and pulp and paper mills in the U.S. as well as bulk landscaping products in each of these regions, and packaged soil products to major Western Canadian retailers.

Consolidated Envirowaste Industries Inc.

“Per: “James E. Darby”

James E. Darby
Chairman and Chief Executive Officer

The TSX Venture Exchange has not reviewed and does not accept responsibility
for the adequacy or accuracy of this release.

EXHIBIT B

British Columbia Securities Commission		QUARTERLY AND YEAR END REPORT
		BC FORM 51-901F
		(previously Form 61)

ISSUER DETAILS

For Quarter Ended:	June 30, 2004
Date of Report:	August 30, 2004
Name of Issuer:	Consolidated Envirowaste Industries Inc.
Issuer Address:	27715 Huntingdon Road, Abbotsford, B.C. V4X 1B6
Issuer Fax Number:		(604) 856-5644
Issuer Telephone Number:		(604) 856-6836
Contact Name:		Doug Halward
Contact Position:		President
Contact Telephone Number:		(604) 856-6836
Contact Email Address:		envirowaste@imag.net
Web Site Address:		Not applicable

CERTIFICATE

The one schedule required to complete this Report is attached and the disclosure contained therein has been approved by the Board of Directors. A copy of this Report will be provided to any shareholder who requests it.

Director’s Name:		“Douglas Halward”		Date Signed: August 30, 2004
Director’s Name:		“James Darby”		Date Signed: August 30, 2004

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Consolidated Financial Statements

~~June~~March 3031, ~~2004~~2005 and ~~2003~~2004

Index


Index
Consolidated Balance Sheets			2

Consolidated Statements of Income and Deficit			3

Consolidated Statements of Cash Flows			4

Notes to Consolidated Financial Statements			5

Schedules of Consolidated Cost of Sales			16

Schedules of Consolidated Direct Selling Expenses			17

Schedules of Consolidated General and Administrative Expenses			18

Consolidated Balance Sheets

Consolidated Statements of Income and Deficit

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Schedules of Consolidated Cost of Sales

Schedules of Consolidated Direct Selling Expenses

Schedules of Consolidated General and Administrative Expenses

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.


CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Consolidated Balance Sheets
March 31, 2005 and 2004		(audited)

Consolidated Balance Sheets June 30, 2004 and 2003 (audited)


	March 31,			March 31,			September 30,
	2005			2004			2004
ASSETS
Current
Cash	$	3,182,520		$	1,411,329		$	2,843,341
Accounts receivable		3,677,244			3,616,835			4,027,593
Inventories (note 2)		995,174			1,042,697			759,242
Refundable income taxes		—			—			70,863
Future income tax asset		210,342			201,325			219,222
Prepaid expenses and deposits		343,043			229,723			283,207

		8,408,323			6,501,909			8,203,468
Property, plant and equipment (note 3)		8,661,541			9,615,437			9,509,709
Assets under capital leases (note 4)		2,218,435			1,909,803			2,896,260
Future income tax asset		—			210,631			—
Other assets (note 5)		31,604			34,778			33,191

	$	19,319,903		$	18,272,558		$	20,642,628

LIABILITIES
Current
Demand loans, secured (note 6)	$	590,000		$	630,000		$	430,000
Accounts payable and accrued liabilities		2,883,765			2,282,496			2,336,451
Income taxes payable		159,654			97,922			—
Deferred revenue		108,741			201,246			780,421
Principal portion of long-term debt due within one year		935,641			1,587,454			1,553,047
Principal portion of capital lease obligations due within one year		582,094			498,500			699,392
Principal portion of loans due within one year		—			—			173,939

		5,259,895			5,297,618			5,973,250
Long-term debt (note 7)		1,657,295			2,401,415			2,285,451
Obligations under capital leases (note 8)		1,362,084			1,271,498			1,961,734
Loans payable (note 9)		2,564,388			2,510,031			2,324,734
Future income taxes payable		669,632			171,348			697,905

		11,513,294			11,651,910			13,243,074

SHAREHOLDERS’ EQUITY
Share capital (note 10)		15,488,238			15,456,513			15,456,513
Contributed Surplus		7,013			—			4,675
Unrealized foreign exchange gain		63,329			199,499			226,626
Deficit		(7,751,971	)		(9,035,364	)		(8,288,260	)

		7,806,609			6,620,648			7,399,554

	$	19,319,903		$	18,272,558		$	20,642,628

Commitments (note 13)
Contingent liability (note 14)

	June 30,			June 30,			September 30,
	2004			2003			2003
ASSETS
Current
Cash and cash equivalents	$	1,853,975		$	1,666,743		$	1,581,376
Accounts receivable		3,862,551			3,496,145			2,814,694
Inventories (note 2)		795,977			916,577			952,936
Refundable income taxes		—			—			64,340
Future income tax asset		204,913			296,776			215,255
Prepaid expenses and deposits		369,942			371,931			333,716
		7,087,358			6,748,172			5,962,317
Property, plant and equipment (note 3)		9,632,628			7,928,947			8,316,414
Assets under capital leases (note 4)		1,871,467			2,476,071			2,338,974
Future income tax asset		214,385			214,018			217,424
Other assets (note 5)		33,984			38,991			36,365
	$	18,839,822		$	17,406,199		$	16,871,494
LIABILITIES
Current
Demand loans, secured (note 6)	$	450,000		$	1,036,851		$	260,000
Accounts payable and accrued liabilities		2,170,773			2,196,264			1,867,039
Income taxes payable		336,338			180,053			—
Deferred revenue		265,503			147,959			217,849
Principal portion of long-term debt due within one year		1,662,263			864,308			1,078,684
Principal portion of capital lease obligations due within one year		516,421			482,168			500,370
		5,401,298			4,907,603			3,923,942
Long-term debt (note 7)		2,478,596			1,418,354			2,093,100
Obligations under capital leases (note 8)		1,191,749			1,695,475			1,566,740
Loans payable (note 9)		2,498,673			2,419,486			2,375,870
Future income taxes payable		174,402			—			176,874
		11,744,718			10,440,918			10,136,526
SHAREHOLDERS’ EQUITY
Share capital (note 10)		15,456,513			15,323,082			15,323,082
Unrealized foreign exchange gain		176,230			512,027			528,838
Deficit		(8,537,639	)		(8,869,828	)		(9,116,952	)
		7,095,104			6,965,281			6,734,968
	$	18,839,822		$	17,406,199		$	16,871,494

Approved by the Directors:

~~Commitments~~“signed” ~~(note~~“signed” ~~13) Contingent~~James ~~liabilities~~Darby ~~(note~~Douglas ~~14) Approved~~R. ~~by the Directors:~~ Halward

“Signed” “Signed” James Darby Douglas R. Halward

Prepared by Management

~~CONSOLIDATED ENVIROWASTE INDUSTRIES INC.~~2

CONSOLIDATED ENVIROWASTE INDUSTRIES INC. Consolidated ~~Statements~~Statement of Operations and Deficit For the ~~nine~~six months ended ~~June 30~~March 31, ~~2004~~2005 and ~~2003~~ 2004

	3 months			3 months			96 months			96 months
	June 30, 2004			June 30, 2003			June 30, 2004			June 30, 2003
	March 31, 2005			March 31, 2004			March 31, 2005			March 31, 2004
Revenue
Bulk	$	~~510~~417,~~807~~261		$	~~549~~446,~~467~~283		$	1689,~~351,936~~457		$	1841,~~334,464~~129
Packaged products		1574,~~135,260~~888			1633,~~974,112~~225			1670,~~915,791~~084			2780,~~694,844~~531
Tipping fees		5,737,154			4,842,708			14,474,588			13,045,818
Tipping and processing fees		5,690,754			4,405,227			12,496,626			8,737,434
		7,383,221			7,366,287			17,742,315			17,075,126
		6,682,903			5,484,735			13,856,167			10,359,094
Cost of sales (schedule)		3,~~944~~927,~~562~~904			43,~~191~~190,~~592~~602			107,~~130~~643,~~524~~510			106,~~189~~069,~~406~~807
Gross margin		32,~~438~~754,~~659~~999			32,~~174~~294,~~695~~133			76,~~611~~212,~~791~~657			64,~~885~~289,~~720~~287
Direct selling expenses (schedule)		1,~~334~~551,~~492~~656			1,~~278~~054,~~011~~367			32,~~248~~711,~~373~~977			21,~~937~~913,~~049~~881
General and administrative expenses (schedule)		1,~~240~~183,~~101~~628			1,~~210~~296,~~382~~733			32,~~686~~585,~~084~~872			32,~~549~~315,~~773~~626
Operating earnings		864,066			686,302			677,334			398,898
Operating income (loss)		19,715			(56,967	)		914,808			59,780
Other income (expense)
Other income
Interest and sundry		23,~~971~~505			3228,~~892~~915			349,~~792~~772			~~131~~31,~~590~~821
Provision for performance incentives		(100,535	)		(54,092	)		(166,375	)		(54,092	)
Gain on disposal of capital assets		100,397			162,000			231,160			162,000
Gain (loss) on disposal of property, plant & equipment		92,504			(1,587	)		254,504			55,123
Income before income taxes		123,617			133,948			1,155,740			253,601
Earnings before income taxes		859,006			663,515			800,255			531,519
Income taxes (note 15)		137,155			101,624			648,676			253,243
Income taxes (note 15)		349,839			134,936			605,796			337,430
Net income (loss) for the period from continuing operations		(13,538	)		32,324			507,064			358
Earnings from continuing operations		509,167			528,579			194,459			194,089
Discontinued operations
Discontinued operations (note 16)
Income before income taxes		23,536			104,355			48,442			138,217
Earnings (loss) before income taxes		(120,332	)		150,227			330,237			322,779
Income taxes		9,338			44,704			19,217			56,987
Income tax recovery		108,890			9,560			54,617			71,987
Net income from discontinued operations		14,198			59,651			29,225			81,230
Net earnings (loss) from discontinued operations		(11,442	)		159,787			384,854			394,766
Net income for the period	$	660		$	91,975			536,289			81,588
Net earnings for the period	$	497,725		$	688,366			579,313			588,855
Deficit, beginning of year								(8,288,260	)		(9,116,952	)
Deficit, beginning of period								(9,116,952	)		(9,458,683	)
Deficit, end of period							$	(7,751,971	)	$	(9,035,364	)
Deficit, end of period							$	(8,537,639	)	$	(8,869,828
Earnings per share for the period - basic	$	—		$	0.01		$	0.05		$	0.01
Earnings per share - basic	$	0.05		$	0.07		$	0.06		$	0.06
Weighted average number of common shares outstanding -basic		10,250,801			10,197,748			10,305,303			10,106,400
Earnings per share - fully diluted	$	0.05		$	0.07		$	0.06		$	0.06
Fully diluted earnings per share	$	—		$	0.01		$	0.05		$	0.01
Weighted average number of common shares outstanding - basic		10,247,199			9,994,299			10,153,161			9,985,596
Weighted average number of common shares outstanding -diluted		10,331,629			10,209,084			10,386,131			10,117,736
Weighted average number of common shares outstanding - fully diluted		10,258,535			10,133,484			10,164,497			10,124,781

Prepared by Management

~~CONSOLIDATED ENVIROWASTE INDUSTRIES INC.~~3

CONSOLIDATED ENVIROWASTE INDUSTRIES INC. Consolidated ~~Statements~~Statement of Cash Flows For the ~~nine~~six months ended ~~June 30~~March 31, ~~2004~~2005 and ~~2003~~ 2004

	3 months			3 months			96 months			96 months
	June 30, 2004			June 30, 2003			June 30, 2004			June 30, 2003
	March 31, 2005			March 31, 2004			March 31, 2005			March 31, 2004
Cash flows from (used in) operating activities
Net earnings for the period	$	497,725		$	688,366		$	579,313		$	588,855
Net income for the period	$	660		$	91,975		$	536,289		$	81,588
Items not involving cash:
Amortization		~~610~~618,~~315~~734			~~554~~589,~~467~~161			1,~~704~~258,~~390~~589			1,~~728~~094,~~631~~075
(Gain) loss on disposal of property, plant and equipment		(92,504	)		1,587			(388,154	)		(55,123	)
Gain on disposal of property, plant and equipment		(128,018	)		(162,000	)		(254,075	)		(295,650	)
Unrealized foreign exchange gain (loss)		(23,269	)		73,869			(352,608	)		107,449
Stock-based compensation		1,169			—			2,338			—
Issuance of shares for non-cash consideration		—			—			75,000			—
Unrealized foreign exchange loss		(107,149	)		(247,480	)		(163,297	)		(329,339	)
Future income taxes		(4,288	)		45,642			10,909			91,191
Issuance of shares for non-cash consideration		—			75,000			—			75,000
		987,979			1,363,931			1,628,850			2,461,003
Future income taxes		3,795			(2,149	)		(19,393	)		15,197
		389,191			344,507			1,360,451			640,871
Cash generated from (used in) operating working capital:
Accounts receivable		(~~245~~424,~~716~~350	)		(~~433~~1,~~998~~126,143	)		(1350,~~047,857~~349	)		(1802,~~146,172~~141	)
Inventories		~~246~~(177,~~720~~896	)		~~459~~(21,~~885~~369	)		~~156~~(235,~~959~~932	)		~~167~~(89,~~765~~761	)
Prepaid expenses and deposits		(~~140~~31,~~219~~151	)		~~(120~~99,~~419~~345	)		(3659,~~226~~836	)		~~(90~~103,~~393~~993	)
Accounts payable and accrued liabilities		~~(111~~693,~~723~~668	)		40508,~~298~~915			~~303~~547,~~734~~314			~~(335~~415,~~020~~457	)
Income taxes payable		~~238~~(252,~~416~~367	)		~~112~~5,~~352~~731			~~400~~230,~~678~~517			~~255~~162,~~639~~262
Deferred revenue		64(311,~~257~~136	)		19,~~528~~393			47(671,~~654~~680	)		23(16,~~013~~603	)
Current portion of long-term debt		7416,~~809~~542			~~(75~~459,~~673~~459	)		~~583~~(617,~~579~~406	)		~~(213~~508,~~800~~770	)
Current portion of capital lease obligations		177,~~921~~598			~~(26~~18,~~245~~515	)		16(117,~~051~~298	)		67(1,~~120~~870	)
		1,132,444			1,321,659			2,053,422			1,189,155
Current portion of loans payable		(93,939	)		—			(173,939	)		—
		(183,840	)		298,353			612,540			920,978
Cash flows from (used in) financing activities
Increase in long-term debt, net		77,181			23,774			385,496			13,982
Increase (decrease) in long-term debt, net		(221,708	)		167,134			(628,156	)		308,315
Decrease in obligations under capital leases, net		(79139,~~749~~528	)		(~~255~~120,~~565~~480	)		(~~374~~599,~~991~~650	)		(67295,~~444~~242	)
Increase (decrease) in loans payable		(11,358	)		(17,823	)		122,803			33,174
Increase in loans payable		239,654			134,161			239,654			134,161
Issuance of share capital		—31,725			—2,700			5831,~~431~~725			658,~~660~~431
		(13,926	)		(249,614	)		191,739			(13,628	)
		(89,857	)		183,515			(956,427	)		205,665
Cash flows from (used in) investing activities
Acquisition of property, plant and equipment		(~~567~~29,~~193~~127	)		(1,~~898~~180,~~950~~868	)		(229,~~524,174~~127	)		(31,~~373~~956,~~369~~981	)
Proceeds from the sale of property, plant and equipment		~~103~~125,~~196~~733			4159,~~205~~438			~~403~~126,~~959~~387			~~138~~300,~~536~~763
Acquisition of assets under capital leases		~~(31,875~~—	)		(3410,~~500~~472	)		~~(42,347~~—	)		(~~675~~10,~~795~~472	)
		(495,872	)		(1,929,245	)		(2,162,562	)		(3,910,628	)
Proceeds from the sale of assets under capital leases		2,642			—			425,806			—
Increase (decrease) in cash and cash equivalents		622,646			(857,200	)		82,599			(2,735,101	)
		99,248			(1,031,902	)		523,066			(1,666,690	)
Cash and cash equivalents, beginning of period		781,329			1,487,092			1,321,376			3,364,993
Increase (decrease) in cash position		(174,449	)		(550,034	)		179,179			(540,047	)
Cash and cash equivalents, end of period	$	1,403,975		$	629,892		$	1,403,975		$	629,892
Cash position, beginning of period		2,766,969			1,331,363			2,413,341			1,321,376
Cash position, end of period	$	2,592,520		$	781,329		$	2,592,520		$	781,329
Represented as:
Cash and cash equivalents	$	13,~~853~~182,~~975~~520		$	1,~~666~~411,~~743~~329		$	13,~~853~~182,~~975~~520		$	1,~~666~~411,~~743~~329
Demand loans, secured		(~~450~~590,000	)		(1630,~~036,851~~000	)		(~~450~~590,000	)		(1630,~~036,851~~000	)
	$	12,~~403~~592,~~975~~520		$	~~629~~781,~~892~~329		$	12,~~403~~592,~~975~~520		$	~~629~~781,~~892~~329
Supplemental Information
Interest paid in cash	$	86,150		$	93,888		$	190,419		$	215,645
Income taxes paid in cash	$	396,083		$	142,139		$	426,089		$	142,139

Prepared by Management

~~CONSOLIDATED ENVIROWASTE INDUSTRIES INC.~~4

CONSOLIDATED ENVIROWASTE INDUSTRIES INC. Notes to Consolidated Financial Statements ~~June 30~~March 31, ~~2004~~2005 and ~~2003~~ 2004

1.	Significant Accounting Policies

~~(a) Basis of Presentation~~ The ~~Company~~Financial ~~follows~~Statements ~~Canadian generally accepted accounting principles in the preparation~~ of ~~these financial statements. All dollar amounts are reported in Canadian funds. (b) Basis of Consolidation These consolidated financial statements include~~ the ~~accounts of the~~ Company ~~and~~have ~~its~~been ~~wholly-owned~~prepared subsidiaries, The Answer Garden Products Ltd., and its 72.74% owned subsidiary Bio-Waste Industries Limited, Envirowaste International Inc. (“EII”), a U.S. company, and its U.S subsidiaries, Consolidated Resource Recovery Inc. — Florida operations (“CRRI”), a Delaware corporation, and Consolidated Resource Recovery Inc. — Georgia operations (“Greencycle”), a Georgia corporation. (c) Use of Estimates The preparation of financial statements in ~~conformity~~accordance with Canadian generally ~~accepted~~accept accounting principles ~~requires~~within ~~management~~reasonable tolimits ~~make estimates and assumptions that affect the reported amount~~ of ~~assets~~materiality and ~~liabilities and disclosure of contingent assets and liabilities at~~ within the ~~date~~framework of the ~~financial~~significant ~~statements~~account ~~and~~policies ~~the~~summarized reported amount of revenues and expenses during the period. Actual results may differ from those estimates. (d) Inventories Inventories of raw materials are valued at the lower of cost and net realizable value. Inventories of work-in-process and finished goods are valued at the lower of standard cost and realizable value. (e) Property, Plant and Equipment Property, plant and equipment are recorded at cost. Amortization is charged to earnings in amounts sufficient to allocate the costs over their estimated useful lives on a straight-line basis using the following annual rates pro-rated from initial utilization:below

Plant		4%, 5%, 14%, 20% & 33%
Land improvements		6.7% & 8%
Equipment		10%, 15%, 20% & 33%
Office equipment		20%
Leasehold improvements		20%
Computer equipment		20%, 30%, & 33%
Bag plates and artwork		20% & 50%
Automotive equipment		20% & 30%

	(a)	Basis of Presentation

		The Company follows Canadian generally accepted accounting principles in the preparation of these financial statements. All dollar amounts are reported in Canadian funds.

	(b)	Basis of Consolidation

		These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, The Answer Garden Products Ltd., and its 72.74% owned subsidiary Bio-Waste Industries Limited, Envirowaste International Inc. (“EII”), a U.S. company, and its U.S subsidiaries, Consolidated Resource Recovery Inc. — Florida operations (“CRRI”), a Delaware corporation, and Consolidated Resource Recovery Inc. — Georgia operations (“Greencycle”), a Georgia corporation.

	(c)	Use of Estimates

		The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Actual results may differ from those estimates.

	(d)	Cash equivalents

		Cash equivalents consist of highly liquid investments which are readily convertible into cash with maturities three months or less when purchased. As at March 31, 2005, cash equivalents were $nil (March 31, 2004-$ September 30, 2004 — $nil)

	(e)	Inventories

		Inventories of raw materials are valued at the lower of cost and net realizable value. Inventories of work-in-process and finished goods are valued at the lower of standard cost and market value.

	(f)	Property, Plant and Equipment

		Property, plant and equipment are recorded at cost. Amortization is charged to earnings in amounts sufficient to allocate the costs over their estimated useful lives on a straight-line basis using the following annual rates pro-rated from initial utilization:

(f) Assets Under Capital Leases Assets acquired under capital leases and their related obligations are recorded at an amount equivalent to the present value of the minimum future lease payments discounted at the interest rate implicit in the agreement. Leased assets are amortized on the same basis as property, plant & equipment.


Plant		4%, 5%, 14%, 20% & 33%
Land improvements		6.7% & 8%
Equipment		10%, 20%, 33% & 50%
Office equipment		20% & 33%
Leasehold improvements		20% & 33%
Computer equipment		30%, & 33%
Bag plates and artwork		20%
Automotive equipment		20% & 30%

Prepared by Management

~~CONSOLIDATED ENVIROWASTE INDUSTRIES INC.~~5

CONSOLIDATED ENVIROWASTE INDUSTRIES INC. Notes to Consolidated Financial Statements ~~June 30~~March 31, ~~2004~~2005 and ~~2003~~ 2004

1.	Significant Accounting Policies (continued)

(g) Assets Under Capital Leases Assets acquired under capital leases and their related obligations are recorded at an amount equivalent to the present value of the minimum future lease payments discounted at the interest rate implicit in the agreement. Leased assets are amortized on the same basis as property, plant & equipment. (h) Other Assets


		Trademarks		Recorded at cost; amortized on a straight-line basis over periods of 10 years or 15 years.

		Technology license		Recorded at cost; amortized on a straight-line basis over 20 years.

(hi) ~~Foreign~~Goodwill ~~Currency~~and ~~Translation~~Other Intangible Assets The Company ~~treats~~follows the ~~operations~~recommendations of ~~Envirowaste~~the ~~International~~Canadian ~~Inc.~~Institute asof aChartered ~~self-sustaining~~Accountants ~~foreign~~(“CICA”) ~~operation~~Handbook, ~~using~~Section ~~the~~3062, ~~current~~“Goodwill ~~rate~~and ~~method~~Other ofIntangible ~~currency~~Assets”, ~~translation.~~under ~~Unrealized~~which ~~translation~~a ~~gains~~recognized orintangible ~~losses~~asset ~~are~~should ~~presented~~be asamortized aover ~~component~~its ofuseful ~~equity.~~life ~~(i)~~to ~~Cash~~an ~~equivalents~~enterprise ~~Cash~~unless ~~equivalents~~the ~~consist~~life ofis ~~highly~~determined ~~liquid~~to ~~investments~~be ~~which~~indefinite. ~~are~~An ~~readily~~intangible ~~convertible~~asset ~~into cash~~ with ~~maturities~~an ofindefinite ~~three~~life ~~months~~will ornot ~~less~~be ~~when purchased. As at June 30~~amortized, ~~2004,~~but ~~cash~~will ~~equivalents~~be ~~were~~tested ~~$nil~~for ~~(June~~impairment 30annually, ~~2003-$692,880;~~or ~~September~~more ~~30,~~frequently ~~2003~~if -events ~~$nil).~~or ~~(j)~~changes ~~Income~~in ~~Taxes~~circumstances ~~Income~~indicate ~~taxes~~that ~~are accounted for using~~ the asset ~~and~~might ~~liability~~be ~~method~~impaired. ~~pursuant~~The toimpairment ~~Section~~test ~~3465,~~will ~~Income~~consist ~~Taxes,~~ of ~~“The~~a ~~Handbook~~comparison of the ~~Canadian~~fair ~~Institute~~value of ~~Chartered~~the ~~Accountants”.~~intangible ~~Future~~asset ~~taxes~~with ~~are~~its ~~recognized~~carrying ~~for~~amount. When the ~~tax~~carrying ~~consequences~~amount of ~~“temporary~~the ~~differences”~~intangible byasset ~~applying~~exceeds ~~enacted~~its orfair ~~substantively~~value, ~~enacted~~an ~~statutory~~impairment ~~tax~~loss ~~rates~~will ~~applicable~~be torecognized ~~future~~in ~~years~~an toamount ~~differences~~equal ~~between~~to the ~~financial~~excess ~~statement~~and ~~carrying~~charged ~~amounts~~to ~~and~~operations. ~~the~~(j) ~~tax~~Asset ~~basis~~Retirement ofObligations ~~existing~~Effective ~~assets~~October ~~and~~1, ~~liabilities.~~2004, ~~The~~the ~~effect~~Company onretroactively ~~deferred~~adopted ~~taxes~~the ~~for~~CICA ahandbook ~~change~~Section in3110 ~~tax~~on ~~rates~~the isrecognition ~~recognized~~and inmeasurement ~~income~~of inasset ~~the~~retirement ~~period~~obligations, ~~that~~which ~~includes~~for the ~~date~~Company ofencompasses ~~enactment~~primarily orsite ~~substantive~~postclosure ~~enactment.~~and Inremediation ~~addition,~~cost ~~Section~~liabilities. ~~3465~~Under ~~requires~~this ~~the~~section, ~~recognition~~asset ofretirement ~~future~~obligations ~~tax~~are ~~benefits~~recognized toat the ~~extent~~fair ~~that~~market ~~realization~~value ofin ~~such~~the ~~benefits~~period isin ~~more~~which ~~likely~~the ~~than~~legal ~~not.~~obligation ~~(k)~~was ~~Earnings~~incurred, ~~Per~~with ~~Share~~fair ~~Earnings~~value ~~per~~of ~~share~~a ~~are~~liability ~~computed~~determined aswith ~~recommended~~reference byto ~~Section 3500 of~~ the ~~Handbook~~present value of ~~the~~estimated ~~Canadian~~future ~~Institute~~cash offlows. ~~Chartered~~In ~~Accountants.~~periods ~~Basic~~subsequent ~~earnings~~to ~~per~~the ~~share~~initial ismeasurement, ~~computed~~changes ~~using~~in the ~~weighted~~liability ~~average~~resulting ~~number~~from the passage of ~~common~~time ~~shares~~and ~~outstanding~~revisions ~~during~~to ~~the~~fair ~~year.~~value ~~Diluted~~calculations ~~earnings~~are ~~per~~recognized ~~share~~in ~~amounts~~the ~~are~~statement ~~calculated~~of ~~giving~~operations ~~effect~~as tothey ~~the~~occur. ~~potential~~The ~~dilution~~nature ~~that~~of ~~would~~the ~~occur~~Company’s ifoperations ~~securities~~are orsuch ~~other~~that ~~contracts~~remediation tocost ~~issue~~liabilities ~~common~~are ~~shares~~short ~~were~~term ~~exercised~~in ornature, ~~converted~~therefore tocosts ~~common~~approximate ~~shares.~~their ~~Under~~discounted ~~the~~present ~~standard~~value, ~~the~~and ~~treasury~~are ~~stock~~recorded ~~method~~in isdeferred ~~used~~revenue to(see ~~determine~~note ~~the~~1(n) ~~dilutive~~Revenue ~~effect~~Recognition ofand ~~stock~~1(p) ~~options~~Environmental and ~~other~~Site ~~dilutive~~Remediation ~~instruments~~Liability). ~~The~~Site ~~treasury~~postclosure ~~stock~~costs ~~method~~have ~~assumes~~not ~~that~~been ~~proceeds~~incurred ~~received~~to ~~from~~date, therefore the ~~exercise~~Company ofhas ~~stock~~not ~~options~~had ~~and~~to ~~warrants~~restate ~~are~~prior ~~used~~periods toas ~~repurchase~~a ~~common~~result ~~shares~~of at the ~~prevailing~~adoption ~~market~~of ~~rate~~this new policy. (lk) ~~Stock-Based~~Income ~~Compensation~~Taxes ~~The~~Income ~~Company~~taxes ~~has~~are ~~adopted~~accounted ~~the fair value~~ for ~~all~~using ~~direct~~the ~~awards~~asset ~~of stocks~~ and ~~applies~~liability ~~the fair value~~ method inpursuant ~~accordance~~to ~~with~~Section ~~the~~3465, ~~Canadian~~Income ~~Institute~~Taxes, of ~~Chartered~~the ~~Accountants (“~~CICA”) Handbook~~, section 3870~~. ~~“Stock-Based~~Future ~~Compensation~~taxes ~~and~~are ~~Other~~recognized ~~Stock-Based~~for ~~Payments”.~~the ~~The~~tax ~~fair~~consequences ~~value~~ of ~~stock~~“temporary ~~options~~differences” ~~is determined~~ by ~~the~~applying ~~“Black-Scholes~~enacted ~~Option~~or ~~Pricing~~substantively ~~Model”~~enacted ~~with~~statutory ~~assumptions~~tax ~~for~~rates ~~risk-free~~applicable ~~interest~~to ~~rates,~~future ~~dividend~~years ~~yields,~~to ~~volatility~~differences ~~factors~~between of the ~~expected~~financial ~~market~~statement ~~price~~carrying ofamounts and the ~~Company’s~~tax ~~common~~basis ~~shares~~of ~~and~~existing anassets ~~expected~~and ~~life~~liabilities. ofThe ~~the~~effect ~~options.~~on ~~The~~deferred ~~fair~~taxes ~~value~~for ofa ~~direct~~change ~~awards~~in oftax ~~stocks~~rates is ~~determined~~recognized byin ~~the~~income ~~quoted~~in ~~market~~the ~~price~~period ofthat includes the ~~Company’s~~date ~~stock.~~of ~~The~~enactment ~~Company~~or ~~did~~substantive ~~not~~enactment. ~~grant~~In ~~any~~addition, ~~stock~~Section ~~options~~3465 ~~during~~requires the ~~nine~~recognition ~~months~~of ~~ended~~future ~~June~~tax ~~30,~~benefits ~~2004~~to ~~and,~~the asextent that realization of such, nobenefits ~~compensation~~is ~~expense~~more ~~was~~likely ~~recognized~~than not.

Prepared by Management

~~CONSOLIDATED ENVIROWASTE INDUSTRIES INC.~~6

CONSOLIDATED ENVIROWASTE INDUSTRIES INC. Notes to Consolidated Financial Statements ~~June 30~~March 31, ~~2004~~2005 and ~~2003~~ 2004

1.	Significant Accounting Policies (continued)

(m)		Goodwill and Other Intangible Assets
		The Company follows the recommendations of the CICA Handbook, Section 3062, “Goodwill and Other Intangible Assets”, under which a recognized intangible asset should be amortized over its useful life to an enterprise unless the life is determined to be indefinite. An intangible asset with an indefinite life will not be amortized, but will be tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired.
		The impairment test will consist of a comparison of the fair value of the intangible asset with its carrying amount. When the carrying amount of the intangible asset exceeds its fair value, an impairment loss will be recognized in an amount equal to the excess and charged to operations.

	(l)	Stock-Based Compensation

		The Company accounts for stock-based compensation using the fair value method for all direct awards of stocks in accordance with the CICA Handbook, section 3870. “Stock-Based Compensation and Other Stock-Based Payments”. The fair value of the options granted are estimated at the date of grant using the Black-Scholes valuation model. Stock-based compensation is amortized into earnings over the vesting period of the related options. As the expense is incurred, an offset is created in contributed surplus in shareholders’ equity, which is converted in share capital when the related options are exercised. During the period, no options were granted (March 31, 2004 — nil; September 30, 2004 — 6,000) and charged $2,186 (March 31, 2004 -nil; September 30, 2004 — $4,675) to income.

	(m)	Foreign Currency Translation

		The Company treats the operations of Envirowaste International Inc. as a self-sustaining foreign operation using the current rate method of currency translation. Unrealized translation gains or losses are presented as a component of equity.

	(n)	Revenue Recognition

		Revenues from the sale of bulk and packaged products are recognized when title and risk of loss transfers to the customer, which is generally upon shipment.

		Revenues from tipping fees are recognized as services performed and are billed pursuant to the contract terms. The Company also occasionally performs contracting services for customers under a cost plus billing arrangement. Revenues related to these services are recognized gross in net revenues, with the related costs recorded in cost of sales.

		Certain contracts provide for billings upon receipt of material. These revenues are deferred and then recognized as the material is processed and all contractual commitments, including disposal and site remediation have been completed.

	(o)	Earnings Per Share

		Earnings per share are computed as recommended by Section 3500 of the CICA Handbook. Basic earnings per share is computed using the weighted average number of common shares outstanding during the year. Diluted earnings per share amounts are calculated giving effect to the potential dilution that would occur if securities or other contracts to common shares were exercised or converted to common shares. Under the standard, the treasury stock method is used to determine the dilutive effect of stock options and other dilutive instruments. The treasury stock method assumes that proceeds received from the exercise of stock options and warrants are used to repurchase common shares at the prevailing market rate.

	(p)	Environmental and Site Remediation Liability

		The Company could be subject to liability for environmental matters resulting from the operations of its waste processing facilities. The Company accrues these costs in the period when responsibility is established and when such costs are probable and reasonably estimable based on current law and existing technology. Any substantial liability incurred by the Company arising from environmental damage could have material adverse effect on the Company’s business, its financial condition and on its result of operations. The Company is not presently aware of any situations that would have a material adverse impact on the business, its results of operations or its financial condition. The Company allows for post closure and remediation costs for facilities at operating locations by deferring revenue in the current period in amounts sufficient to cover future anticipated costs based on management’s judgement and experience in remediating sites.

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial Statements
March 31, 2005 and 2004

2. Inventories

June 30,

September 30,

March 31,

September 30,

2004

2003

2003 (audited)

2005

2004

2004 (audited)

Raw materials and supplies

~~563~~700,~~251~~764

~~607~~736,~~474~~012

~~749~~618,~~968~~784

Work-in-process

4434,~~594~~839

5046,~~178~~493

2635,~~458~~714

Finished goods

~~188~~259,~~132~~571

~~258~~260,~~925~~192

~~176~~104,~~510~~744

~~795~~995,~~977~~174

~~916~~1,~~577~~042,697

~~952~~759,~~936~~242

3. Property, Plant and Equipment

June 30,

September 30,

March 31,

September 30,

2004

2003

2003 (audited)

2005

2004

2004 (audited)

Accumulated

Net Book

Cost

Amortization

Value

Land

2,378,050

—

2,378,050

12,~~698~~378,~~133~~050

Plant

32,~~234~~857,~~011~~632

~~922~~961,~~155~~429

21,~~311~~896,~~856~~203

~~999~~2,~~320~~369,820

~~978~~1,~~470~~965,790

Land improvements

1,~~106~~564,~~029~~460

~~478~~669,~~684~~283

~~627~~895,~~345~~177

~~201~~647,~~040~~328

~~191~~940,~~695~~971

Equipment

98,~~324~~284,~~570~~790

5,~~671~~353,~~613~~652

32,~~652~~931,~~957~~138

3,~~361~~569,~~132~~809

3,~~152~~554,~~949~~044

Office equipment

~~254~~239,~~136~~055

9589,~~567~~230

~~158~~149,~~569~~825

19158,~~355~~600

42171,~~652~~335

Leasehold improvements

~~168,528~~—

~~153,677~~—

~~14,851~~—

3418,~~812~~973

2910,~~775~~691

Computer equipment

~~182~~134,~~520~~214

~~142~~107,~~781~~003

3927,~~739~~211

3438,~~819~~505

3038,~~977~~016

Bag plates and artwork

~~399~~337,~~622~~634

~~357~~310,~~350~~419

4227,~~272~~215

5245,~~120~~012

4734,~~488~~707

Automotive equipment

~~915~~902,~~708~~519

~~508~~545,~~719~~797

~~406~~356,~~989~~722

~~417~~389,~~945~~340

~~389~~416,~~372~~105

Construction-in-progress

—

1,110,271

1,754,903

16,698,354

8,036,813

8,661,541

9,615,437

9,509,709

17,963,174

8,330,546

9,632,628

7,928,947

8,316,414

4. Assets Under Capital Leases

June 30,

September 30,

March 31,

September 30,

2004

2003

2003 (audited)

2005

2004

2004 (audited)

Accumulated

Net Book

Cost

Amortization

Value

Equipment

3,~~123~~816,~~375~~989

1,~~253~~598,~~889~~554

12,~~869~~218,~~486~~435

21,~~469~~906,~~335~~633

2,~~333~~895,~~426~~467

Office equipment

~~23,775~~—

~~21,794~~—

~~1,981~~—

63,~~736~~170

~~5,548~~793

3,~~147~~816,~~150~~989

1,~~275~~598,~~683~~554

12,~~871~~218,~~467~~435

21,~~476~~909,~~071~~803

2,~~338~~896,~~974~~260

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial Statements June 30, 2004 and 2003

5. Other Assets

	June 30,		June 30,		September 30,
	March 31,		March 31,		September 30,
	2004		2003		2003 (audited)
	2005		2004		2004 (audited)
Goodwill, net of accumulated amortization of $51,318 (June 30, 2003 - $49,485; September 30, 2003 - $51,318)	$	21,995	$	23,828	$	21,995
Goodwill, net of accumulated amortization of $51,318 (March 31, 2004 - $51,318; September 30, 2004 - $51,318)	$	21,995	$	21,995	$	21,995
Trademarks, net of accumulated amortization of $19,846 (June 30, 2003 - $16,750; September 30, 2003 - $17,524)		11,114		14,210		13,436
Trademarks, net of accumulated amortization of $22,168 (March 31, 2004 - $19,072; September 30, 2004 - $20,620)		8,792		11,888		10,340
Technology license, net of accumulated amortization of $682 (June 30, 2003 - $604; September 30, 2003 - $623)		875		953		934
Technology license, net of accumulated amortization of $740 (March 31, 2004 - $662; September 30, 2004 - $701)		817		895		856
	$	3331,~~984~~604	$	3834,~~991~~778	$	3633,~~365~~191

Goodwill represents the excess of the purchase price paid over the underlying value of the assets at the time of acquisition. ~~6. Demand Loans, Secured~~

(a) At June 30 2004, the Company’s subsidiary, The Answer Garden Products Ltd., had authorized credit facilities with the Royal Bank of Canada. The credit facilities include a revolving, demand operating loan of $500,000 bearing interest at the Royal Bank prime rate (“RBP”) plus 1.5% per annum, a peak period revolving demand loan of $250,000 bearing interest a RBP plus 2% per annum. The lines of credit are secured by a first charge on all property, plant and equipment, assignment of inventory, a registered general assignment of book debts of related companies, and a postponement and assignment of claim provided by two of the Company’s directors (see Note 9). The loans are subject to certain financial covenants including a minimum debt service coverage ratio and a maximum ratio of debt to tangible net worth. The Company was in compliance with these covenants at June 30, 2004. At June 30, 2004, borrowings outstanding on the operating lines of credit were $450,000 (June 30, 2003 - $430,000; September 30, 2003 - $260,000). At June 30, 2003, the Company’s Floriida subsidiary had advances outstanding under a demand construction lending facility (since replaced with a mortgage) in the amount of Cdn$ 606,851 (US$450,387).

Prepared by Management

~~CONSOLIDATED ENVIROWASTE INDUSTRIES INC. Notes to Consolidated Financial Statements June 30, 2004 and 2003~~8

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial Statements
March 31, 2005 and 2004

6. Demand Loans, Secured

At March 31, 2005, the Company’s subsidiary, The Answer Garden Products Ltd., had authorized credit facilities with the Royal Bank of Canada. The credit facilities include a revolving, demand operating loan of $500,000 bearing interest at the Royal Bank prime rate (“RBP”) plus 1.5% per annum, and a peak period revolving demand loan of $250,000 bearing interest at RBP plus 2.0% per annum. The lines of credit are secured by a first charge on all property, plant and equipment, assignment of inventory, a registered general assignment of book debts of related companies, and a postponement and assignment of claim provided by two of the Company’s directors (see Note 9). The loans are subject subject to certain financial covenants including a minimum debt service coverage ratio and a maximum ratio of debt to tangible net worth. The Company was in compliance with these covenants at March 31, 2005.

At March 31, 2005, borrowings outstanding on the operating lines of credit were $590,000 (March 31, 2004 — $630,000; September 30, 2004 — $430,000).

7. Long Term Debt

	June 30,			June 30,			September 30,
	March 31,			March 31,			September 30,
	2004			2003			2003 (audited)
	2005			2004			2004 (audited)
Notes bearing interest at rates ranging from 0% to 10.5% per annum and are repayable in up to 60 monthly installments of principal and interest through 2009, collateralized by the related equipment	$	2,834,937		$	2,282,662		$	2,022,371
Notes bearing interest at rates ranging from 0% to 7.03% per annum and are repayable in up to 60 monthly installments of principal and interest through 2010, collateralized by the related equipment.	$	2,013,225		$	2,621,030		$	2,685,985
Mortgage payable bearing interest at 5.95% per annum and repayable in 35 monthly installments of Cdn $33,650 (US $25,237) including interest		905,917			—			1,149,413
Mortgage payable bearing interest at 5.95% per annum and repayable in 35 monthly installments of Cdn $30,543 (US $25,237) including interest.		579,711			974,839			774,108
Promissory note payable bearing interest at the 30-day London Interbank Offered Rate (“LIBOR”) plus 3.5% repayable in full on February 28, 2005		400,005			—			—
Promissory note payable bearing interest at the 30-day London Interbank Offered Rate (“LIBOR”) plus 3.5% repayable in full on February 28, 2005 (repaid in full on October 13, 2004).		—			393,000			378,405
		4,140,859			2,282,662			3,171,784
		2,592,936			3,988,869			3,838,498
Less: Principal due within one year		(1935,~~662,263~~641	)		(~~864~~1,~~308~~587,454	)		(1,~~078~~553,~~684~~047	)
Long-term portion	$	21,~~478~~657,~~596~~295		$	12,~~418~~401,~~354~~415		$	2,~~093~~285,~~100~~451

The mortgage and promissory note are secured by a first charge on the mortgaged property and a first security interest in all the assets of the Company’s subsidiary CRRI supported by guarantees of related companies. The mortgage and certain of the notes contain restrictive covenants, including, among others, a debt service coverage ratio and a debt to worth ratio. The Company was in in compliance with or obtained a waiver for all of these covenants as of ~~June~~March 3031, ~~2004~~ 2005.

Principal obligations due within the next five years are as follows:

2005	$	1,662,263
2006	$	935,641
2006		1,173,145
2007		769,973
2007		707,894
2008		455,129
2008		410,173
2009		363,011
2009		187,384
2010		69,182
	$	42,~~140~~592,~~859~~936

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial ~~Statements~~ ~~June~~Statements March 3031, ~~2004~~2005 and ~~2003~~2004

8. Obligations Under Capital Leases

Capital lease obligations consist of leases on mobile equipment and office equipment, repayable over varying terms from 6036 to 6260 months at interest rates ranging from 5.325% to 12.99% per annum. Future minimum lease payments are as follows:

2005	$	604,861
2006	$	685,312
2006		598,626
2007		674,679
2007		520,731
2008		405,358
2008		144,560
2009		264,834
2009		11,102
2010		136,011
Minimum lease payments		12,~~879~~166,~~880~~194
Less: amounts representing interest		~~171~~222,~~710~~016
Present value of obligations under capital leases		1,~~708~~944,~~170~~178
Less: principal due within one year		~~516~~582,~~421~~094
	$	1,~~191~~362,~~749~~084

9. Loans Payable

By loan agreements, and as amended, between the Company and two of its directors and officers, the Company has borrowed a total of $2,~~348~~414,~~673~~388 to meet the Company’s working capital requirements. The principal is repayable on demand and bears interest at the Royal Bank of Canada prime rate plus 3.5% per annum, payable monthly. In addition to the security listed below, ~~the~~ the Company ~~has~~ provided one of the directors with a guarantee and postponement of claim supported by a registered charge over the assets of its U.S. subsidiaries and agreed to repay note principal subject to certain conditions (see Commitments — Note 13).

On April 1, 1999, the Company borrowed $300,000 from a shareholder of the Company to meet the Company’s short-term working capital requirements. Under the terms of the loan agreement, the principal is repayable on demand and the loan will bear interest at the prime rate of the Royal Bank of Canada plus 3.5 per annum, payable monthly. The company repaid $150,000 of the loan on October 22, 2002.

The loans are secured by a charge on the assets of the Company, a guarantee by its subsidiary, The Answer Garden Products Ltd., supported by a charge on its assets, including a mortgage over its Abbotsford, B.C. property. The loans are subrogated to the Royal Bank of Canada debt (note 6).

While the terms of repayment for the loans are on a demand basis, the lenders will not call for repayment of the debts on or before ~~June~~March 3031, 2005.

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial ~~Statements~~ ~~June~~Statements March 3031, ~~2004~~2005 and ~~2003~~2004

10. Share Capital

	(a)	Authorized: 50,000,000 common shares, no par value

	(b)	Issued and fully paid:

	June 30, 2004					June 30, 2003					September 30, 2003 (audited)
	March 31, 2005					March 31, 2004					September 30, 2004 (audited)
	Number		Stated			Number		Stated			Number		Stated
	of Shares		Capital			of Shares		Capital			of Shares		Capital
Balance, beginning of period		910,~~994~~247,~~299~~199	$	1516,~~976~~110,~~859~~290			9,~~976~~994,299	$	15,~~970~~976,~~199~~859			9,~~976~~994,299	$	15,~~970~~976,~~199~~859
Issued during the period:
Exercise of options for cash		~~152~~117,~~900~~500		5831,~~431~~725			18152,~~000~~900		658,~~660~~431			18152,~~000~~900		658,~~660~~431
For financing services		~~100,000~~0		~~75,000~~—			—100,000		—75,000			—100,000		—75,000
		10,247,199		16,110,290			9,994,299		15,976,859			9,994,299		15,976,859
		10,364,699		16,142,015			10,247,199		16,110,290			10,247,199		16,110,290
Share issue expenses		—0		(653,777	)		—		(653,777	)		—		(653,777	)
Balance, end of period		10,~~247~~364,~~199~~699	$	15,~~456~~488,~~513~~238			910,~~994~~247,~~299~~199	$	15,~~323~~456,~~082~~513			910,~~994~~247,~~299~~199	$	15,~~323~~456,~~082~~513

(c)

The Company has directors’ and employees’ stock options outstanding as follows:

	Number		Exercise Price
	of Shares		per Share		Expiry Date
Directors		402,500	$	0.60	March 14, 2007
Employees		~~127~~174,000	$	0.2760	~~February~~March 1514, ~~2005~~2007
Employees		184,000	$	0.60	March 14, 2007
Employees *		60,000	$	0.44		July 7, 2009
		713,500
		636,500

This option vested as to 20,000 shares on December 31, 2004, and will vest as to 20,000 shares each on December 31, 2005 and 2006 provided, in each case, that the employee is employed by the Company on the vesting date.

A summary of the stock option activity for the current period is as follows:

				Weighted
				Average
				Exercise
	Shares			Price
Outstanding at October 1, 2003		885,900		$	0.51
Outstanding at October 1, 2004		771,500		$	0.53
Granted		—			—
Exercised		(117,500	)	$	0.27
Exercised		(152,900	)		0.38
Cancelled		(17,500	)	$	0.42
Cancelled		(19,500	)		0.56
Outstanding at March 31, 2005		636,500		$	0.58
Outstanding at June 30, 2004		713,500		$	0.54

Options outstanding and exercisable at ~~June 30~~March 31, ~~2004~~2005 are as follows:

Weighted

~~Weighted~~

Weighted

~~Weighted~~

Average

~~Average~~

Average

~~Average~~

Average

~~Average~~

Exercise

~~Exercise~~

Exercise

~~Exercise~~

Range of

Remaining

~~Remaining~~

Price on

~~Price on~~

Price on

~~Price on~~

Exercise

Number

~~Number~~

Number

~~Number~~

Contractual

~~Contractual~~

Outstanding

~~Outstanding~~

Exercisable

~~Exercisable~~

Prices

Outstanding

~~Outstanding~~

Exercisable

~~Exercisable~~

Life (years)

~~Life (years)~~

Options

~~Options~~

Option

~~Option~~

0.27 - $0.60

713,500

2.20

0.54

$0.44 - $0.60

636,500

596,500

2.2

0.58

0.59

The fair value of options granted was estimated at the date of granting using the Black-Scholes option pricing model with the following assumptions; risk-free interest rate of 4.0%, dividend yield of 0.0%, volatility factor of 60.03%, and a life of 5 years.

On March 4, 2003, the Company adopted a share option plan subject to the rules and policies of the TSX Venture Exchange. A maximum of 1,995,260 common shares of the Company are issuable under the plan, including 911,900 options outstanding on the date of adoption.

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial ~~Statements~~ ~~June~~Statements March 3031, ~~2004~~2005 and ~~2003~~2004

11. Related Party Transactions

Included in accounts payable and accrued liabilities at ~~June~~March 3031, ~~2004~~2005 were ~~amounts~~ amounts aggregating $~~372~~351,~~732~~422 (~~June~~March 3031, ~~2003~~2004 -— $~~416~~291,~~599~~486; September 30,2004 ~~2003~~— - $~~390~~627,~~482~~065) payable to directors of the Company for accrued management remuneration, expense reimbursements, and accrued loan interest. In addition to loans, as detailed in Note 9, the Company had the following transactions with related parties:

June 30,

September 30,

March 31,

September 30,

2004

2003

2003 (audited)

2005

2004

2004 (audited)

Management remuneration

~~209~~165,~~343~~950

~~260~~138,~~750~~402

~~401~~597,~~697~~649

Interest and loan fees

~~209~~94,~~902~~217

~~134~~165,~~527~~287

~~181~~255,~~425~~105

~~419~~260,~~245~~167

~~395~~303,~~277~~689

~~583~~852,~~122~~754

Management is of the opinion that the terms and conditions of the above noted transactions are consistent with standard business practice.

12. Geographically Segmented Information

Nine months ended June 30, 2004:	Canada			United States			Consolidated
	Canada			United States			Elimination			Consolidated
Sales to unaffiliated customers	$	2,581,457		$	15,160,858		$	17,742,315
For the six months ended March 31, 2005
Inter-segment revenue (expense)		549,094			(549,094	)		—
Revenue
Total revenue	$	3,130,551		$	14,611,764		$	17,742,315
Bulk	$	204,645		$	484,812		$	—		$	689,457
Net income (loss) before income taxes	$	(195,760	)	$	1,326,252		$	1,130,492
Packaged products		670,084			—			—			670,084
Income tax expense		—			551,179			551,179
Tipping and processing fees		42,722			12,453,904			—			12,496,626
Net income (loss) for the period	$	(195,760	)	$	775,073		$	579,313
Inter-segment		294,960			55,943			(350,903	)		—
Identifiable assets on June 30, 2004	$	3,167,695		$	15,672,127		$	18,839,822
		1,212,411			12,994,659			(350,903	)		13,856,167
Expenses
Inter-segment		54,438			296,465			(350,903	)		—
Other		1,637,409			11,063,018			—			12,700,427
		1,691,847			11,359,483			(350,903	)		12,700,427
Income (loss) before income taxes		(479,436	)		1,635,176			—			1,155,740
Income taxes		—			648,676			—			648,676
Income (loss) from continuing operations		(479,436	)		986,500			—			507,064
Income from discontinued operations, net of tax		—			29,225			—			29,225
Net income (loss) for the period	$	(479,436	)	$	1,015,725		$	—		$	536,289

Nine months ended June 30, 2003:	Canada		United States			Consolidated
	Canada		United States			Consolidated
Sales to unaffiliated customers	$	3,243,570	$	13,831,556		$	17,075,126
Assets
Inter-segment revenue (expense)		513,375		(513,375	)		—
Property, plant & equipment	$	1,578,197	$	9,301,779		$	10,879,976
Total revenue	$	3,756,945	$	13,318,181		$	17,075,126
Other		1,576,786		6,863,141			8,439,927
Net income before income taxes	$	17,445	$	836,853		$	854,298
	$	3,154,983	$	16,164,920		$	19,319,903
Income tax expense		—		265,443			265,443
Property, Plant & Equipment and assets acquired under capital lease — Current Expenditures	$	—	$	29,127		$	29,127
Net income (loss) for the period	$	17,445	$	571,410		$	588,855
Identifiable assets on June 30, 2003	$	4,136,065	$	13,270,134		$	17,406,199

Year ended September 30, 2003 (audited):	Canada			United States			Consolidated
Sales to unaffiliated customers	$	3,579,117		$	20,778,973		$	24,358,090
Inter-segment revenue (expense)		661,627			(661,627	)		—
Total revenue	$	4,240,744		$	20,117,346		$	24,358,090
Net income (loss) before income taxes	$	(264,885	)	$	913,162		$	648,277
Income tax expense		—			306,546			306,546
Net income (loss) for the year	$	(264,885	)	$	606,616		$	341,731
Identifiable assets on September 30, 2003	$	2,921,990		$	13,949,504		$	16,871,494

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial Statements ~~June~~March 3031, ~~2004~~2005 and ~~2003~~2004

1312. ~~Commitments~~Geographically Segmented Information (continued)

CRRI has entered into an employment agreement with a certain member of management through December 31, 2006. This agreement provides for a total monthly salary of approximately Cdn $13,262 (US$ 9,946) and participation in a bonus pool based on pre-tax net profit, as defined. The salary base increases annually based on the consumer price index.


	Canada			United States		Elimination			Consolidated
For the six months ended March 31, 2004
Revenue
Bulk	$	211,494		$	629,635	$	—		$	841,129
Packaged products		780,531			—		—			780,531
Tipping and processing fees		84,722			8,652,712		—			8,737,434
Inter-segment		380,799			259,976		(640,775	)		—

		1,457,546			9,542,323		(640,775	)		10,359,094

Expenses
Inter-segment		98,295			542,480		(640,775	)		—
Other		1,698,246			8,407,247		—			10,105,493

		1,796,541			8,949,727		(640,775	)		10,105,493

Earnings (loss) before income taxes		(338,995	)		592,596		—			253,601
Income taxes		—			253,243		—			253,243

Earnings (loss) from continuing operations		(338,995	)		339,353		—			358
Loss from discontinued operations, net of tax		—			81,230		—			81,230

Net earnings (loss) for the period	$	(338,995	)	$	420,583	$	—		$	81,588

The Company has entered into operating leases for certain machinery, equipment and office space. Rental expense under these leases was approximately Cdn$1,287,685 (including US$915,764) for the nine months ended June 30, 2004. Minimum future rental payments under these leases are as follows:


	Canada		United States		Consolidated
Assets
Property, plant & equipment	$	1,744,545	$	9,780,695	$	11,525,240
Other		1,684,327		5,062,991		6,747,318

		3,428,872		14,843,686		18,272,558


Property, Plant & Equipment and assets acquired under capital lease — Current Expenditures	$	23,805	$	1,943,648	$	1,967,453

2005	$	1,479,653
	Canada			United States			Elimination			Consolidated
2006		440,972
For the year ended September 30, 2004 (audited)
2007		152,543
Revenue
2008		—
Bulk	$	597,299		$	1,060,045		$	—		$	1,657,344
2009		—
Packaged products		2,004,593			—			—			2,004,593
	$	2,073,168
Tipping and processing fees		301,164			20,573,625			—			20,874,789
Inter-segment		971,419			548,727			(1,520,146	)		—
		3,874,475			22,182,397			(1,520,146	)		24,536,726
Expenses
Inter-segment		201,809			1,318,337			(1,520,146	)		—
Other		4,226,996			18,279,604			—			22,506,600
		4,428,805			19,597,941			(1,520,146	)		22,506,600
Earnings (loss) before income taxes		(554,330	)		2,584,456			—			2,030,126
Income taxes		—			1,020,096			—			1,020,096
Earnings (loss) from continuing operations		(554,330	)		1,564,360			—			1,010,030
Loss from discontinued operations, net of tax		—			(181,338	)		—			(181,338	)
Net earnings (loss) for the year	$	(554,330	)	$	1,383,022		$	—		$	828,692

Pursuant to an agreement with one of its directors (see Note 9), the Company has committed to make principal repayments on his loan on or before February 28th of the year following, equivalent to 10% of its annual consolidated pre-tax profit, subject to certain restrictions.


	Canada		United States		Consolidated
Assets
Property, plant & equipment	$	1,674,403	$	10,731,566	$	12,405,969
Other		852,535		7,384,124		8,236,659

	$	2,526,938	$	18,115,690	$	20,642,628


Property, Plant & Equipment and assets acquired under capital lease — Current Expenditures	$	59,218	$	4,252,211	$	4,311,429

14. Contingent Liabilities

The Company has an irrevocable $10,000 letter of credit issued as a performance guarantee to one of its customers under the terms of a green waste processing contract.

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial ~~Statements~~ ~~June~~Statements March 3031, ~~2004~~2005 and ~~2003~~2004

13. Commitments

CRRI has entered into an employment agreement with a certain member of management through December 31, 2006. This agreement provides for a total monthly salary of approximately Cdn $12,103 (US$ 10,000) and participation in a bonus pool based on pre-tax net profit, as defined. The salary base increases at the discretion of the Company.

The Company has entered into operating leases for certain machinery, equipment and office space. Rental expense under these leases was approximately Cdn$ 834,641 (including US$ 644,736) for the six months ended March 31, 2005. Minimum future rental payments under these leases are as follows:


2006	$	828,323
2007		549,838
2008		227,488
2009		—
2010		—

	$	1,605,649

Pursuant to an agreement with one of its directors (see Note 9), the Company has committed to make principal repayments on the loan on or before February 28th of the year following equivalent to 10% of its annual consolidated pre-tax profit, subject to certain restrictions. The amount is to be determined at the Company’s fiscal year end.

14. Contingent Liability

The Company has an irrevocable $10,000 letter of credit issued as a performance guarantee to one of its customers under the terms of a green waste processing contract.

15. Income Taxes

The provision for income taxes from continuing operations is comprised of the following:

	June 30,			June 30,
	March 31,			March 31,			September 30,
	2004			2003
	2005			2004			2004 (audited)
Income tax from U.S. operations	$	~~551~~667,~~179~~893		$	~~265~~310,~~443~~230		$	1,020,096
Income tax expense (recovery) from Canadian operations		(97,880	)		8,722
Income tax recovery from Canadian operations		(167,803	)		(118,648	)		(508,000	)
		453,299			274,165
		500,090			191,582			512,096
Valuation allowance on Canadian operations		97167,~~880~~803			(8118,~~722~~648	)		508,000
Income tax expense	$	~~551~~667,~~179~~893		$	~~265~~310,~~443~~230		$	1,020,096

At ~~June~~March 3031, ~~2004~~2005, management is of the opinion that the “more likely than not” criteria have been met with respect to the U.S. operations and in accordance with generally accepted accounting principles, the Company has recognized the future income tax (“FIT”) benefits arising from loss carry-forwards of prior years and other timing differences which has resulted in the FIT assets in the current ~~year~~period.

With respect to the Canadian operations, management has claimed a valuation allowance equal to future income tax benefits arising from their loss carry forwards, reflecting the position that these tax assets, more likely than not, will not be realized.

At ~~June~~ March 3031, ~~2004~~2005, the Company had, for Canadian tax purposes, operating losses aggregating approximately $2,~~600~~888,000 ~~expiring at various times through 2010 and for U~~.~~S. tax purposes, approximately US$ 63,200 in net~~ ~~operating losses available to offset future income expiring at various times~~ ~~through 2021.~~

~~16.~~These ~~Discontinued~~losses ~~Operations~~are available to reduce taxable incomes earned by the Canadian operations of future years and expire as follows:

The Company has elected to wind down the operations of Greencycle, its Georgia subsidiary over the next six months, and as such, the results of its operations are presented separately on a comparative basis. The Company has provided for all costs of closing the operation including processing materials on its sites in accordance with contractual committments estimated to be $189,900 (US $142,400). Upon completion of these committments, all assets and key personnel will be deployed and fully utilized in the Florida based operations. No additional incremental costs are anticipated.


2005	$	1,550,000
2006		740,000
2007		—
2008		20,000
2009		—
2010		70,000
2014		508,000

	$	2,888,000

~~17.~~The ~~Financial~~net ~~Instruments~~operating losses available to offset future revenues of the US operations are approximately US$66,030 and expire at various times through 2021.

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, demand loans, accounts payable and accrued liabilities, loans payable, and long-term debt. It is management’s opinion that the Company is not exposed to significant interest, currency, or credit risks arising from these financial instruments. The fair values of these financial instruments approximate their carrying values.

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial Statements ~~June~~March 3031, ~~2004~~2005 and ~~2003~~2004

1816. ~~Subsequent~~Discontinued ~~events~~ Operations

~~The~~During ~~following~~2004, ~~events~~the ~~took~~Company ~~place~~elected ~~subsequent~~ to ~~June 30~~cease operations of Greencycle and focus efforts on its Florida operations. Operating activity has now ceased, ~~2004:~~and as such, the results of its operations are presented as discontinued operations on a comparative basis.

(a)		The Company has granted an employee option to purchase up to 60,000 Common shares of the Company at $0.44 per share expiring on July 7, 2009. The options will vest as to 20,000 shares on each of December 31, 2004, 2005 and 2006, provided in each case that the employee is still employed by the Company.
(b)		The Company’s Florida subsidiary has purchased two pieces of equipment and is in the process of selling an existing piece of equipment. CRRI has financed the purchase under capital leases totalling $1,225,600 (US$ 919,200) and paid out an existing note for $383,660 (US$ 287,750). The leases, secured by the equipment, are repayable in 60 monthly installments of $23,765 (US$ 17,825) including imputed interest of 6.15% per annum.

The following summarizes the significant items removed from continuing operations on a comparative basis for the six months ended March 31, 2005 and 2004.


	2005			2004
Revenue	$	276,087		$	1,569,445
Equipment rentals and administrative costs charged by Florida		(29,226	)		(236,764	)
Greencycle’s share allocated costs from parent		(33,532	)		(75,083	)
Other expenses		(184,104	)		(1,176,368	)

Earnings net of income taxes	$	29,225		$	81,230

The following summarizes the assets and liabilities of Greencycle as of March 31,2005, included in the accompanying consolidated balance sheet:


Cash	$	53,320
Accounts Receivable		9,422
Accounts Payable (including exit costs)		42,358
Payable to Affiliates		24,289

	Upon the completion of Greencycle’s commitments, the remaining net assets will be absorbed into the Florida operations.

17.	Financial Instruments

	Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subject in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values. The carrying value of cash, accounts receivable, prepaid expenses and deposits, bank indebtedness, demand loans, and accounts payable and accrued liabilities approximate their fair value because of the short-term nature of those instruments.

18.	Subsequent events

	The following events took place subsequent to March 31, 2005:

	(a)	The Company’s Florida subsidiary, CRRI, has acquired a parcel of land valued at US$ 1,394,000 (approximately Cdn$ 1,687,000) for future development utilizing a newly established US$ 600,000 (Cdn$ 726,150) demand loan and internal cash resources.

	(b)	On May 6, 2005, CRRI took delivery of new transport equipment which was financed entirely by a new capital lease in the amount of US$569,500 (approximately Cdn$ 689,250). The lease is repayable in 60 monthly installments of US$ 11,318 (Cdn $13,698) including interest at 7.157% secured by the equipment and guarantees of related companies.

19.	Comparative Figures

	Certain 2004 comparative amounts have been reclassified to conform with the financial statement presentation adopted for the current year.

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

~~Schedules~~Schedule of Consolidated Cost of Sales For the ~~nine~~six months ended ~~June~~March 3031, ~~2004~~2005 and ~~2003~~2004

3 months

96 months

June 30, 2004

June 30, 2003

June 30, 2004

June 30, 2003

March 31, 2005

March 31, 2004

March 31, 2005

March 31, 2004

Direct Materials

Inventory, beginning of period

~~736~~597,~~012~~665

~~715~~713,~~717~~394

~~749~~618,~~968~~784

~~712~~739,~~527~~180

Purchases of direct materials and subtrades

~~581~~609,~~303~~512

~~892~~535,~~566~~974

1901,~~318,886~~227

1737,~~722,767~~583

Testing

42,~~032~~375

48,~~156~~075

196,~~405~~506

15,~~513~~373

Cost of direct materials available for use

1,~~321~~209,~~347~~552

1,~~612~~257,~~439~~443

21,~~088~~526,~~259~~517

21,~~450~~492,~~807~~136

Less: Inventory, end of period

(~~563~~700,~~251~~764

)

(~~607~~725,~~474~~561

)

(~~563~~700,~~251~~764

)

(~~607~~725,~~474~~561

)

Direct materials used

~~758~~508,~~096~~788

1531,~~004,965~~882

1825,~~525,008~~753

1766,~~843,333~~575

Direct labour

~~968~~1,~~420~~010,116

~~893~~882,~~383~~995

21,~~693~~990,~~741~~619

21,~~520~~725,~~901~~321

Manufacturing overhead

2,~~144~~483,~~087~~797

1,~~941~~784,~~602~~787

54,~~941~~981,~~533~~090

53,~~762~~681,~~460~~796

Manufacturing costs incurred for the period

34,~~870~~002,~~603~~701

3,~~839~~199,~~950~~664

107,~~160~~797,~~282~~462

106,~~126~~173,~~694~~692

Work-in-process, beginning of period

4648,~~493~~416

5128,~~234~~956

2635,~~458~~714

5526,~~697~~458

3,917,096

3,891,184

10,186,740

10,182,391

4,051,117

3,228,620

7,833,176

6,200,150

Less: Work-in-process, end of period

(4434,~~594~~839

)

(5046,~~178~~493

)

(4434,~~594~~839

)

(5046,~~178~~493

)

Cost of goods manufactured

34,~~872~~016,~~502~~278

3,~~841~~182,~~006~~127

107,~~142~~798,~~146~~337

106,~~132~~153,~~213~~657

Finished goods, beginning of period

~~260~~171,~~192~~197

~~609~~263,~~511~~441

~~176~~104,~~510~~744

~~316~~171,~~118~~116

4,132,694

4,450,517

10,318,656

10,448,331

4,187,475

3,445,568

7,903,081

6,324,773

Less: Finished goods, end of period

(~~188~~259,~~132~~571

)

(~~258~~254,~~925~~966

)

(~~188~~259,~~132~~571

)

(~~258~~254,~~925~~966

)

Cost of sales for the period

3,~~944~~927,~~562~~904

43,~~191~~190,~~592~~602

107,~~130~~643,~~524~~510

106,~~189~~069,~~406~~807

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

~~Schedules~~Schedule of Consolidated Direct Selling Expenses For the ~~nine~~six months ended ~~June~~March 3031, ~~2004~~2005 and ~~2003~~2004

3 months

96 months

June 30, 2004

June 30, 2003

June 30, 2004

June 30, 2003

March 31, 2005

March 31, 2004

March 31, 2005

March 31, 2004

Advertising

1622,~~017~~209

1819,~~323~~347

3524,~~138~~301

4419,~~617~~121

Amortization - bag plates and artwork

4,950

4,632

14,327

13,811

Amortization — bag plates and artwork

3,496

4,746

7,492

9,377

Automobile

1,650

~~990~~1,650

43,~~950~~300

23,~~970~~300

Bad debts

1511,~~718~~185

2110,~~013~~771

3615,~~868~~360

4721,~~102~~150

Commissions

2,100

64,~~300~~200

Discounts and allowances

5628,~~005~~260

8221,~~611~~921

7827,~~844~~943

~~110~~22,~~634~~839

Entertainment and promotion

~~150~~24

~~444~~183

~~2,306~~157

12,~~571~~156

Freight out

1,~~111~~292,~~077~~492

1877,~~041,668~~274

2,~~726~~296,~~668~~077

21,~~419~~615,~~460~~591

Marketing consulting

6,~~559~~560

69,~~559~~151

2813,~~628~~119

2022,~~821~~069

Miscellaneous

1344,~~245~~743

1611,~~236~~735

3155,~~347~~284

2718,~~564~~102

Travel

~~107~~138,~~021~~937

8395,~~435~~489

~~282~~264,~~997~~744

~~242~~175,~~199~~976

Direct selling expenses

1,~~334~~551,~~492~~656

1,~~278~~054,~~011~~367

32,~~248~~711,~~373~~977

21,~~937~~913,~~049~~881

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Schedules of Consolidated General and Administrative Expenses For the ~~nine~~six months ended ~~June~~March 3031, ~~2004~~2005 and ~~2003~~2004

	3 months			3 months		96 months		96 months
	June 30, 2004			June 30, 2003		June 30, 2004		June 30, 2003
	March 31, 2005			March 31, 2004		March 31, 2005		March 31, 2004
Advertising	$	74,~~562~~454		$	6,~~025~~220	$	228,~~540~~975	$	3414,~~350~~927
Amortization		~~128~~97,~~131~~714			68176,~~154~~863		~~370~~203,~~144~~600		~~211~~241,~~286~~425
Automobile		710,~~814~~391			78,~~615~~170		2318,~~573~~612		2515,~~358~~759
Bank charges and interest		32,~~621~~071			53,~~477~~338		94,~~102~~652		165,~~355~~481
Business taxes, licenses and fees		1824,~~355~~742			1510,~~607~~441		5543,~~639~~025		4837,~~823~~300
Consulting fees		3326,~~791~~079			4634,~~203~~275		~~105~~63,~~799~~007		~~131~~70,~~761~~491
Education and training		6,628			10,253		17,207		24,004
Directors fees		2,000			—		2,000		—
Entertainment and promotion		17,913			17,265		46,574		45,318
Education and training		11,241			7,785		18,047		10,579
Foreign exchange loss (gain)		(1,416	)		2,830		3,429		(6,525	)
Entertainment and promotion		8,786			14,186		23,074		27,047
Insurance		7,206			6,858		22,120		18,606
Foreign exchange loss (gain)		(6,434	)		607		28,734		4,884
Interest on long-term debt		141,267			144,768		479,599		427,960
Insurance		7,380			6,722		14,170		13,290
Management remuneration		70,941			110,376		209,343		260,750
Interest on long-term debt		130,699			191,861		261,556		301,391
Miscellaneous		9,724			6,696		33,564		22,222
Management fees and salaries		91,852			59,489		154,856		118,217
Office and stationery		34,254			26,932		116,792		64,524
Miscellaneous		11,985			8,349		23,018		23,777
Professional fees		59,333			81,272		164,894		192,828
Office and stationery		26,799			39,506		56,550		81,775
Rent and office services		27,123			29,114		79,627		97,547
Professional fees		78,411			43,015		121,319		103,832
Shareholder relations		6,908			6,824		25,630		27,165
Rent and office services		26,347			42,253		27,783		52,504
Telephone		38,060			40,834		107,214		113,035
Shareholder relations		14,329			11,523		20,757		17,973
Transfer agent and filing fees		10,162			9,165		25,763		21,330
Stock-based compensation		1,169			—		2,186		—
Travel		22,732			21,615		56,012		68,955
Telephone		37,798			33,326		75,995		68,216
Wages and benefits		589,992			546,499		1,711,519		1,704,121
Transfer agent and filing fees		13,054			12,245		14,670		14,985
General and administrative expenses	$	1,240,101		$	1,210,382	$	3,686,084	$	3,549,773
Travel		17,129			13,780		34,263		27,241
Wages and benefits		545,632			572,779		1,365,023		1,064,532
General and administrative expenses	$	1,183,628		$	1,296,733	$	2,585,872	$	2,315,626

Prepared by Management

~~CONSOLIDATED ENVIROWASTE INDUSTRIES INC.~~18

~~QUARTERLY~~May 30, ~~REPORT FOR THE THIRD~~2005 ~~QUARTER~~MANAGEMENT ~~ENDED~~DISCUSSION ~~JUNE~~AND ~~30, 2004~~ANALYSIS

~~SCHEDULE~~Second A:Quarter ~~FINANCIAL~~2005, ~~INFORMATION~~For the Six Months Ended March 31, 2005

~~See accompanying unaudited financial statements for the nine months~~Background ~~ended June 30, 2004.~~

~~SCHEDULE~~Consolidated B:Envirowaste ~~SUPPLEMENTARY~~Industries ~~INFORMATION~~Inc. (the “Company”) is a leading processor of wood and other organic wastes in Western Canada and Florida. Directly and indirectly through its subsidiaries, the Company markets and supplies biomass boiler fuel for electric generation facilities, charcoal manufacturers, and pulp and paper mills in the US as well as bulk landscaping products in each of these regions, and packaged soil products to major Western Canadian retailers. The Company’s Canadian Operations are comprised of itself and a wholly-owned subsidiary, The Answer Garden Products Ltd. (“Answer”) both of Abbotsford, British Columbia and a division-Red River Soils (“Red River”) based in Winnipeg, Manitoba. The Company’s US Operations are controlled by a wholly-owned subsidiary, Envirowaste International Inc. (“EII”), which in turn controls two wholly-owned subsidiaries-Consolidated Resource Recovery Inc. (“CRR (Florida)” based in Sarasota, Florida, and Consolidated Resource Recovery Inc. (“CRR (Georgia)”), based in Atlanta, Georgia (now inactive).

1.		Analysis of expenses and deferred costs:
		See accompanying unaudited financial statements for the nine months ended June 30, 2004.
2.		Related party transactions:
		See Note 11 to the financial statements.
3.(a)		Summary of securities issued:
		See Note 10 to the financial statements.
3.(b)		Summary of options granted:
		See Note 10(c) to the financial statements.
4.(a)		Summary of authorized share capital:
		See Note 10(a) to the financial statements.
4.(b)		Number and recorded value of shares issued:
		See Note 10(b) to the financial statements.
4.(c)		Description of options, warrants and convertible securities:
		See Note 10(c) to the financial statements.
4.(d)		Shares subject to escrow or pooling agreements: None
5.(a)		Directors:
		Douglas R. Halward Derrick M. J. Rolfe
		James E. H. Darby Richard J. M. Chase
5.(b)		Officers:
		James E. H. Darby–Chairman, Chief Executive Officer and Secretary
		Douglas R. Halward–President

This MD&A should be read in conjunction with Consolidated Envirowaste Industries Inc.’s unaudited consolidated financial statements for the six months ended March 31, 2005 and related notes. These financial statements are reported in Canadian currency and have been prepared in accordance with Canadian generally accepted accounting principles. Information on the Company’s outstanding shares and segment information for the Company’s two business units-Canadian and US Operations and information thereon are presented in Notes 10 and 12 respectively of the financial statements. Readers are also directed to the annual audited financial statements, related notes and management discussion and analysis for the year ended September 30, 2004, all of which are available to readers on SEDAR at www.sedar.com.

~~SCHEDULE~~Quarterly ~~C: MANAGEMENT DISCUSSION~~Results

~~See~~The ~~accompanying~~Company ~~Management~~recorded ~~Discussion~~a net loss from continuing operations for the three months ended March 31, 2005 of $13,538 or $0.00 per share ($0.00 per share diluted) compared to net earnings from continuing operations of $32,324 or $0.00 per share ($0.00 per share diluted) for the three months ended March 31, 2004. The Company’s Georgia subsidiary ceased daily operations on March 31, 2005, and, is presented as discontinued operations on a comparative basis. After net income from discontinued operations for the quarter of $14,198 (2003 — $59,651), overall net income for the three months ended March 31, 2005 was $660 or $0.00 per share ($0.00 per share diluted) compared to net income of $91,975 or $0.01 per share ($0.01 per share diluted) earned in the same quarter of 2004.

~~MANAGEMENT~~Revenue ~~DISCUSSION~~increased ~~AND~~22% ~~ANALYSIS~~or $1.2 million to $6,682,903 for this quarter compared to the second quarter ~~June~~of 2004, but sales were down from the 1st quarter of 2005 by $490,000 when CRR (Florida) was involved with last fall’s storm cleanup. The Company had similar gross margins compared to the second quarter of 2004 while operating income rose $76,000 for the quarter compared to the three months ended March 3031, 2004, reflecting more seasonal values compared to the 1st quarter of 2005.

~~Information~~Revenue ~~About~~from ~~Industry~~continuing ~~Segments~~operations in our US unit was 38% higher in the second quarter of fiscal 2005, while gross margins were similar when compared to the second quarter of 2004 in terms of US funds.

~~Consolidated~~This ~~Envirowaste~~translated ~~Industries~~to ~~Inc.~~a ~~(the~~28% ~~“Company”)~~revenue isincrease ain ~~leading~~terms ~~processor~~ of ~~wood~~Canadian ~~and~~funds ~~other~~for ~~organic~~the ~~wastes~~current inthree ~~Western~~months when ~~Canada,~~compared ~~Florida~~to ~~and~~the ~~Georgia~~second quarter of 2004. ~~The~~While the Canadian dollar was relatively more stable ~~Company~~during ~~markets~~the ~~and~~quarter ~~supplies~~ended ~~biomass~~March 31, ~~boiler~~2005, ~~fuel~~the ~~for~~lower ~~electric~~exchange ~~generation~~rate compared to the second quarter of ~~facilities~~2004 reduced the revenue increase by approximately $450,000. ~~charcoal~~Currency ~~manufacturers~~translation ~~and~~differences ~~pulp~~had only ~~and~~a ~~paper~~minor ~~mills~~impact inon overall net income for the Uquarter on a comparative basis.S. asBulk ~~well~~sales in the US unit improved as ~~bulk~~the ~~landscaping~~Florida ~~products~~operation inbegan ~~each~~to ofremove ~~these~~the ~~regions,~~backlog ~~and~~of ~~packaged~~storm ~~soil~~material from ~~products~~sites. toPackaged ~~major~~and ~~Western~~bulk sales in our Canadian ~~retailers~~unit were negatively impacted by adverse weather conditions in Western Canada.

~~The~~Driven ~~following~~by ~~information~~strong ~~should~~results ~~be read~~ in ~~conjunction~~its ~~with~~Florida ~~Consolidated Envirowaste~~subsidiary, ~~Industries~~the ~~Inc.~~Company’s ~~unaudited~~revenue, ~~consolidated~~operating ~~financial~~and ~~statements~~net ~~for~~income from continuing operations for the ~~nine~~six months ended ~~June~~March 3031, 2005, continued at a pace well ahead of the first six months of fiscal 2004. ~~and~~Revenue ~~related~~for ~~notes~~the first six months of fiscal 2005, ~~which~~following a ~~are~~reduction ~~prepared~~of nearly $1 million in currency translation differences, is approximately $3.5 million ~~accordance~~higher ~~with~~than ~~Canadian~~the ~~generally~~first ~~accepted~~six ~~accounting~~months ~~principles~~of 2004. ~~Segmented information~~Gross onmargins increased to 44.8% for the ~~Canadian~~six ~~and~~months ended USMarch 31, ~~operating~~2005 ~~units~~compared ~~are~~to ~~presented~~41.4% infor ~~note~~the 12first six months of fiscal 2004. Operating income during the ~~unaudited~~six ~~consolidated~~months ~~financial~~was ~~statements~~$855,000 higher and anet ~~discussion~~income offrom ~~the~~continuing operations increased ~~operating~~$506,700 ~~results~~compared to the six months ended March 31, 2004, while net income, including discontinued operations, is ~~presented~~$454,700 ~~below~~more ~~according~~than tothe ~~these~~same ~~operating~~six ~~units~~months of fiscal 2004.

~~Overall~~The ~~Results~~table below provides selected information derived from the Company’s financial statements for each of the eight most recently completed quarters:

The Company has reported third quarter net earnings for the three months ended June 30, 2004 of $497,725 or $0.05 per share ($0.05 fully-diluted) compared to net earnings of $688,366 or $0.07 per share ($0.07 fully-diluted) for the comparable quarter of 2003. For the nine months ended June 30, 2004 the Company had net earnings of $579,313 or $0.06 per share ($0.06 fully-diluted) compared to net earnings of $588,855 or $0.06 per share ($0.06 fully-diluted) for the same nine months of 2003.


	Q2			Q1		Q4		Q3		Q2		Q1			Q4			Q3
	Mar 31,			Dec 31,		Sept 30,		Jun 30,		Mar 31,		Dec 31,			Sept 30,			Jun 30,
Quarter ended:	2005			2004		2004		2004		2004		2003			2003			2003
Total revenues	$	6,682,903		$	7,173,264	$	6,794,411	$	7,383,221	$	5,484,735	$	4,874,359		$	4,513,838		$	7,366,287

Income (loss) before discontinued operations		(13,538	)	$	520,602	$	361,326	$	651,060	$	32,324		($31,966	)		($133,916	)	$	696,393

Earnings (loss) per share-basic	$	0.00		$	0.04	$	0.04	$	0.06	$	0.00		($0.00	)		($0.01	)	$	0.01

Earnings (loss) per share-diluted	$	0.00		$	0.04	$	0.04	$	0.06	$	0.00		($0.00	)		($0.01	)	$	0.01

Net income (loss)	$	660		$	535,629	$	249,379	$	497,725	$	91,975		($10,387	)		($247,124	)	$	97,876

Earnings (loss) per share-basic	$	0.00		$	0.05	$	0.02	$	0.05	$	0.01		($0.00	)		($0.03	)	$	0.01

Earnings (loss) per share-diluted	$	0.00		$	0.05	$	0.02	$	0.05	$	0.01		($0.00	)		($0.03	)	$	0.01

Weighted average number of common shares outstanding-basic		10,250,801			10,247,199		10,247,199		10,247,199		10,197,748		10,016,044			9,994,299			9,986,299

Weighted average number of common shares outstanding-diluted		10,331,629			10,247,199		10,284,074		10,258,535		10,209,084		10,057,702			10,133,484			10,151,666

The ~~Company~~reader ~~has~~will ~~elected~~note tothat ~~wind~~our ~~down~~first ~~the~~quarter ~~operations~~of 2005 was not typical of ~~its~~our ~~Georgia~~first ~~subsidiary~~quarters; ~~over~~although the ~~next~~quarter ~~six~~ended ~~months~~December 31, ~~and,~~2003 asdid ~~such,~~have ~~the~~revenues ~~results~~above of the ~~Georgia~~norm ~~operations are~~from ~~presented~~storm ~~separately~~work. asOur business, ~~net~~and ~~after~~particularly ~~tax~~the ~~earnings~~Canadian ~~from discontinued~~ operations on awhich ~~comparative~~derive ~~basis.~~almost ~~Included~~82% inof ~~net~~their ~~earnings~~revenues ~~for~~in the ~~three months ended~~ ~~June 30,~~2nd ~~2004~~and is3rd aquarters ~~net~~during ~~after~~the ~~tax~~spring/summer ~~loss~~growing ~~of $11~~season,~~442~~ ~~compared~~is tosubject ~~net earnings after~~to ~~tax~~seasonal ~~of $159,787 for the June 30, 2003 quarter~~patterns. ~~Results~~To ~~for~~a ~~the~~lesser ~~nine months ended June 30~~extent, ~~2004~~our ~~included~~US ~~net~~operations ~~after~~are ~~tax~~subject ~~earnings~~to ofthe ~~$384,854~~same ~~compared~~seasonal ~~to net~~patterns ~~earnings~~given ~~after~~that ~~tax of $394,766 for~~ the ~~comparable~~material ~~period~~we ofprocess ~~2003.~~is green

~~Third quarter revenues from continuing operations were comparable to revenues~~2 for the third quarter of 2003 as revenue from tipping rose 18% over the comparable quarter of 2003 while revenue from bulk and packaged products declined 7% and 42% respectively. Overall sales from continuing operations for the 2004 nine month period were impacted by translation differences in the Canadian dollar, as it rose 10% against the US dollar over the comparative nine month period of 2003. Total revenue increased just over $667,000 or 4% with revenue from tipping increasing 11% and sales of packaged product declining by 30% compared to the nine months ended June 30, 2004.

Aswaste which is more abundant in the ~~first~~spring ~~quarter~~and ofsummer ~~2004~~months, ~~the~~while ~~Company~~both ~~improved~~units’ ~~gross~~processing efficiency ~~margins~~declines ~~for~~during ~~both the~~cold ~~quarter~~or ~~and~~wet ~~the~~periods.

~~nine~~Cash ~~month~~Flow ~~periods over 2003. Increased activity levels~~ and ~~new business~~Liquidity ~~resulted in an increase in selling expenses (primarily material removal from~~ ~~sites in our U.S. operations) over comparable periods in 2003 which were offset~~ ~~by lower freight volumes in the Canadian packaged products sector.~~

~~Pre~~The Company generated $389,000 in cash flows from operations during the quarter-~~tax~~similar ~~earnings~~to that of the comparable quarter of 2004. After changes in working capital items, the Company used 184,000 in cash flows from ~~continuing~~operating ~~operations~~activities ~~increased~~during the quarter compared to generating $~~269~~298,000 in ~~over~~cash flows from operating activities in the ~~first~~quarter ended March 31, 2004-the changes resulting ~~nine~~from ~~months~~the processing of ~~2003~~the backlog of material from the first quarter represented in deferred revenue and ~~were~~changes ~~augmented~~in byincome ~~gains~~taxes onpayable ~~equipment~~compared ~~dispositions~~to the 2nd quarter of last fiscal year. For the first six months of fiscal 2005, the Company generated approximately $~~255~~612,000. ~~Cash~~in cash flows from ~~operations~~operating activities after changes in ~~non-cash~~ working capital items, compared to $921,000 generated in the ~~third~~first ~~quarter~~six ~~fell~~months ~~$189~~of fiscal 2004. Again,~~000~~ ~~over~~this ~~the~~is ~~comparable~~a ~~quarter~~reflection of ~~2003 and~~the ~~increased~~reduction byin deferred ~~$864,000~~revenue ~~compared~~related to ~~the~~storm ~~nine~~materials ~~months~~processed ~~ended~~since ~~June~~September 30, ~~2003~~2004 ~~when~~ and the ~~Florida~~pay down/change ~~subsidiary~~in ~~was~~current ~~constructing~~portions ~~its~~of ~~new~~long-term ~~facilities~~debt and capital lease balances since the relative year ends.

USResults ~~Operations~~from the first quarter of fiscal 2005 have manifested themselves into a stronger balance sheet at March 31, 2005. Working capital at March 31, 2005 is 1.6:1, showing continued improvement compared to 1.52:1 at the end of the first quarter, and 1.23:1 at this time last year. Debt to equity ratios continue to improve from 1.76:1 at March 31, 2004, to 1.79:1 at our September 30, 2004 year end, 1.48:1 at the end of our first quarter to 1.47:1 at March 31, 2005. During the period from March 31, 2004 to March 31, 2005, the Company has reduced its debt (aided by favourable translation differences) by $1.17 million. Recent results have not only strengthened the balance sheet through the payout of debt, it allows the Company to enhance future earnings and cash flow by reducing interest costs and reducing debt service obligations. It also provides the Company with future borrowing capacity, should strategic investment opportunities arise.

~~Second~~Although ~~quarter~~the ~~revenue~~majority ~~from~~of ~~continuing~~the ~~operations~~Company’s offinancial ~~Cdn~~instruments ~~$5.9 million~~(cash, ~~grew~~accounts ~~16%~~receivable, bank ~~while~~indebtedness, ~~revenue~~accounts atpayable ~~Cdn~~and ~~$15~~accrued liabilities etc.~~1 million~~) ~~for~~are denominated in US funds, and are subject to exchange rate fluctuation risk versus the ~~first~~Canadian ~~nine~~dollar, ~~months~~management is of ~~2004,~~the ~~increased~~opinion ~~10%~~that, ~~over~~in the ~~comparable~~near ~~periods~~term, ofUS ~~last~~and ~~year~~Canadian ~~while~~exchange ~~being~~rates ~~unfavourably~~will ~~affected by~~be ~~currency~~relatively ~~translation~~stable ~~differences~~compared to the last two years.

~~Our~~Capital ~~core business from local municipal work as well as revenue derived from~~Resources ~~private sector processing continued to improve compared to last year as the~~ ~~U.S. economy recovered and storm activity was higher than in the first nine~~ months of the 2003 fiscal year. Gross margins improved, both for the quarter and the nine month period compared to the same periods last year, and the increase in activity and new business increased selling costs–primarily freight costs associated with material removal from the sites–and improved operating income. Net earnings were augmented by a Cdn $295,000 gain on disposition of equipment in the U.S. units.

~~Cash~~At ~~flows~~present, ~~from~~the ~~operating~~Company ~~activities~~has ~~for~~adequate ~~the~~internal ~~third~~resources ~~quarter~~to ~~were~~fund ~~similar~~working capital requirements and operating lease commitments (Note 13). In addition to ~~that~~these, CRR (Florida) has entered into a of60 month ~~fiscal~~capital ~~2003’s~~lease ~~third~~agreement ~~quarter~~subsequent ~~with~~to ~~the~~March 31, ~~exception~~2005 ofto ~~unfavourable~~fund ~~currency~~the purchase additional ~~translation~~transport ~~differences.~~equipment ~~Cash~~worth ~~flows~~approximately ~~from~~Cdn$ ~~operating~~689,000 ~~activities~~(US$ ~~after~~569,500). ~~changes~~CRR in(Florida) has also ~~non-cash~~purchased ~~working~~a ~~capital~~parcel ~~for~~of ~~the~~land ~~nine~~valued ~~months~~at ~~ended~~Cdn$ ~~June 30~~1,687,000 ~~2004~~(US$ ~~increased~~1,394,000) byfor future development ~~Cdn~~utilizing a combination of internal cash resources and a new US$~~288~~ 600,000 ~~compared~~demand toloan ~~the~~facility ~~nine~~which is ~~months~~repayable ~~ended~~in ~~June~~full on or before March 3031, ~~2003~~2006. ~~Cash~~Any ~~and~~additional ~~cash~~capital expenditures, if deemed ~~equivalents~~appropriate, ~~were~~will ~~$1 million~~be ~~higher~~financed ~~than~~through ~~June~~commercial sources. During the quarter ended March 3031, ~~2003~~2005, the ~~when~~Company ~~cash~~received ~~was~~$31,725 ~~being~~in ~~used to~~proceeds ~~construct~~from ~~its~~the ~~new~~exercise ~~facilities~~of 117,500 employee stock options.

~~Canadian~~Off-Balance ~~Operations~~Sheet Arrangements

~~Revenues~~The ~~declined~~Company ~~35%~~does innot ~~the~~have ~~third~~any ~~quarter~~such ~~and~~arrangements ~~21%~~at ~~for~~present ~~the~~or ~~nine~~contemplated months ended June 30,2004 over the comparable periods of 2003. Tipping fees and bulk sales improved as a result of warm, mild weather on the Canadian west coast, while packaged product sales were impacted by competitive pressures and soft sales as a result of poor weather conditions on the Canadian Prairies and Eastern Ontario. Lower volumes and under utilized capacity impacted operating results, however, measures to control costs and adjust production to changes in the ~~market~~ ~~served to improve cashflows from operations after working capital changes by $527,000 compared to the nine months ended June 30, 2003~~future.

~~Liquidity and Capital Resources~~3

~~The~~Transactions Company’s working capital is adequate for its present needs even though it has declined from that of June 30, 2003 as internal funds were utilized to construct the Florida subsidiary’s new facilities and to purchase the property on one of its operating sites in the second quarter of the current fiscal year. The Company continues to generate strong cashflows with ~~cash~~Related ~~and equivalents~~Parties ~~more than double that of June 30, 2003.~~

As detailed in Notes 9 and 11 of the financial statements, the Company has loans payable to two of its directors and officers as well as contractual employment amounts payable to them for accrued remuneration, accrued interest, and expense reimbursements consistent with standard business practice.

Financial Instruments and Other Instruments

As described above, management is of the opinion that the Company does not face any undue risk from its financial instruments. The Company does not participate in any hedging or forward contract programs.

Outlook

AsThe ~~anticipated,~~Company ~~weather~~will ~~patterns,~~return ~~rising~~to ~~costs,~~normal ~~competition~~operating ~~and~~levels ~~comparative Canadian~~during ~~and~~the Uremaining six months of this fiscal year.S. ~~exchange~~Weather ~~rates~~patterns and competitive pressures have ~~impacted~~yet ~~operations~~to ~~throughout~~play ~~the~~their ~~first three~~roles ~~quarters~~in the remainder of ~~this~~the ~~fiscal~~spring ~~year~~season; ~~and~~however ~~should~~we ~~continue~~expect toa docontinuation soof volatile weather conditions and increasing competition in the ~~remaining~~ ~~quarter~~Western Canadian packaged soil markets. WeThe Company will continue efforts to ~~focus~~optimize onoperations ~~operating~~and ~~level~~seek ~~adjustments~~new ~~as events~~growth ~~unfold~~opportunities.

Forward-Looking Statements

This report contains statements that are forward-looking in nature. Such statements involve known and unknown risks and uncertainties that may cause the actual results of the Company to be materially different from those expressed or implied by those forward-looking statements. Such risks include, among others: general economic and business conditions, weather factors, competition and product selling prices, raw material and operating costs, changes in foreign-currency exchange rates and other factors referenced herein and in the Company’s annual statutory report.


[signed]		[signed]

James E. Darby		Douglas R. Halward
Chairman and Chief Executive Officer		President

Filing Compare · CONSOLIDATED ENVIROWASTE INDUSTRIES INC