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 May, 2005

Commission File Number: 0-20055

Consolidated Envirowaste Industries Inc.

(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 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 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.

		(Registrant)

Date June 2, 2005	By		“Douglas R. Halward”

			(Signature)

		Douglas R. Halward, President

		(Name and Title of the Signing Officer)

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


EXHIBIT A:		News Release dated May 30, 2005
EXHIBIT B:		Unaudited financial statements for the six months ended March 31, 2005 and Management Discussion and Analysis

EXHIBIT A

(ENVIROWASTE LOGO)

27715 HUNTINGDON ROAD, ABBOTSFORD, BC V4X 1B6
TELEPHONE: 604-856-6836 FACSIMILE: 604-856-5644

NEWS RELEASE

Consolidated Envirowaste Reports 2005 2 ^nd Quarter Results

Abbotsford, British Columbia – May 30, 2005

Consolidated Envirowaste Industries Inc. (TSX Venture Exchange-CWD-V) announced today its results for the six months ended March 31, 2005. A complete copy of the Company’s report for the quarter is available at www.sedar.com. Excerpts from the unaudited financial statements are as follows:


						Six Months		Six Months
	Quarter Ended			Quarter Ended		Ended		Ended
	March 31, 2005			March 31, 2004		March 31, 2005		March 31, 2004

Revenue	$	6,682,903		$	5,484,735	$	13,856,167	$	10,359,094
Income from continuing operations before income taxes		123,617			133,948		1,155,740		253,601
Income (loss) from continuing operations after income taxes		(13,538	)		32,324		507,064		358
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. recorded 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. For the six months ended March 31, 2005, income from continuing operations before income taxes was $1,155,740 compared to $253,601 for the six months ended March 31, 2004. Net income after income taxes and discontinued operations totalled $536,289 or $0.05 per common share ($0.05 per share diluted) for the first six months of fiscal 2005 compared to $81,588 or $0.01 per share ($0.01 per share diluted) for the six months ended March 31, 2004.

Revenue increased 22% or $1.2 million to $6,682,903 for this quarter compared to the second quarter of 2004, but sales were down from the 1^st 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 31, 2004, reflecting more seasonal values compared to the 1^st quarter of 2005.

Driven by strong results in its Florida subsidiary, the Company’s revenue, 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. Revenue for the first six months of fiscal 2005, following a reduction of nearly $1 million in currency translation differences, is approximately $3.5 million higher than the first six months of 2004. Operating income during the six months was $855,000 higher and net income from continuing operations increased $506,700 compared to the six months ended March 31, 2004, while net income, including discontinued operations, is $454,700 more than the same six months of fiscal 2004. Results from the first quarter of fiscal 2005 have manifested themselves into a stronger balance sheet at March 31, 2005 with improved working capital and debt to equity ratios.

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

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Consolidated Financial Statements

March 31, 2005 and 2004


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

Prepared by Management


CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Consolidated Balance Sheets
March 31, 2005 and 2004		(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)

Approved by the Directors:


“signed”		“signed”

James Darby		Douglas R. Halward

Prepared by Management


CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Consolidated Statement of Operations and Deficit
For the six months ended March 31, 2005 and 2004


	3 months			3 months			6 months			6 months
	March 31, 2005			March 31, 2004			March 31, 2005			March 31, 2004
Revenue
Bulk	$	417,261		$	446,283		$	689,457		$	841,129

Packaged products		574,888			633,225			670,084			780,531

Tipping and processing fees		5,690,754			4,405,227			12,496,626			8,737,434


		6,682,903			5,484,735			13,856,167			10,359,094

Cost of sales (schedule)		3,927,904			3,190,602			7,643,510			6,069,807


Gross margin		2,754,999			2,294,133			6,212,657			4,289,287

Direct selling expenses (schedule)		1,551,656			1,054,367			2,711,977			1,913,881

General and administrative expenses (schedule)		1,183,628			1,296,733			2,585,872			2,315,626


Operating income (loss)		19,715			(56,967	)		914,808			59,780

Other income
Interest and sundry		3,505			28,915			9,772			31,821
Gain on disposal of capital assets		100,397			162,000			231,160			162,000


Income before income taxes		123,617			133,948			1,155,740			253,601
Income taxes (note 15)		137,155			101,624			648,676			253,243

Net income (loss) for the period from continuing operations		(13,538	)		32,324			507,064			358


Discontinued operations
Income before income taxes		23,536			104,355			48,442			138,217
Income taxes		9,338			44,704			19,217			56,987

Net income from discontinued operations		14,198			59,651			29,225			81,230


Net income for the period	$	660		$	91,975			536,289			81,588


Deficit, beginning of year								(8,288,260	)		(9,116,952	)


Deficit, end of period							$	(7,751,971	)	$	(9,035,364	)


Earnings per share for the period - basic	$	—		$	0.01		$	0.05		$	0.01

Weighted average number of common shares outstanding -basic		10,250,801			10,197,748			10,305,303			10,106,400


Fully diluted earnings per share	$	—		$	0.01		$	0.05		$	0.01

Weighted average number of common shares outstanding -diluted		10,331,629			10,209,084			10,386,131			10,117,736

Prepared by Management


CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Consolidated Statement of Cash Flows
For the six months ended March 31, 2005 and 2004

	3 months			3 months			6 months			6 months
	March 31, 2005			March 31, 2004			March 31, 2005			March 31, 2004
Cash flows from (used in) operating activities

Net income for the period	$	660		$	91,975		$	536,289		$	81,588
Items not involving cash:
Amortization		618,734			589,161			1,258,589			1,094,075
Gain on disposal of property, plant and equipment		(128,018	)		(162,000	)		(254,075	)		(295,650	)
Stock-based compensation		1,169			—			2,338			—
Unrealized foreign exchange loss		(107,149	)		(247,480	)		(163,297	)		(329,339	)
Issuance of shares for non-cash consideration		—			75,000			—			75,000
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		(424,350	)		(1,126,143	)		350,349			(802,141	)
Inventories		(177,896	)		(21,369	)		(235,932	)		(89,761	)
Prepaid expenses and deposits		(31,151	)		99,345			(59,836	)		103,993
Accounts payable and accrued liabilities		693,668			508,915			547,314			415,457
Income taxes payable		(252,367	)		5,731			230,517			162,262
Deferred revenue		(311,136	)		9,393			(671,680	)		(16,603	)
Current portion of long-term debt		16,542			459,459			(617,406	)		508,770
Current portion of capital lease obligations		7,598			18,515			(117,298	)		(1,870	)
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 (decrease) in long-term debt, net		(221,708	)		167,134			(628,156	)		308,315
Decrease in obligations under capital leases, net		(139,528	)		(120,480	)		(599,650	)		(295,242	)
Increase in loans payable		239,654			134,161			239,654			134,161
Issuance of share capital		31,725			2,700			31,725			58,431

		(89,857	)		183,515			(956,427	)		205,665

Cash flows from (used in) investing activities
Acquisition of property, plant and equipment		(29,127	)		(1,180,868	)		(29,127	)		(1,956,981	)
Proceeds from the sale of property, plant and equipment		125,733			159,438			126,387			300,763
Acquisition of assets under capital leases		—			(10,472	)		—			(10,472	)
Proceeds from the sale of assets under capital leases		2,642			—			425,806			—

		99,248			(1,031,902	)		523,066			(1,666,690	)

Increase (decrease) in cash position		(174,449	)		(550,034	)		179,179			(540,047	)
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	$	3,182,520		$	1,411,329		$	3,182,520		$	1,411,329
Demand loans, secured		(590,000	)		(630,000	)		(590,000	)		(630,000	)

	$	2,592,520		$	781,329		$	2,592,520		$	781,329


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.

Notes to Consolidated Financial Statements
March 31, 2005 and 2004

1.	Significant Accounting Policies

The Financial Statements of the Company have been prepared in accordance with Canadian generally accept accounting principles within reasonable limits of materiality and within the framework of the significant account policies summarized below

	(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:


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.

Notes to Consolidated Financial Statements
March 31, 2005 and 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.

	(i)	Goodwill and Other Intangible Assets

		The Company follows the recommendations of the Canadian Institute of Chartered Accountants (“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.

	(j)	Asset Retirement Obligations

		Effective October 1, 2004, the Company retroactively adopted the CICA handbook Section 3110 on the recognition and measurement of asset retirement obligations, which for the Company encompasses primarily site postclosure and remediation cost liabilities. Under this section, asset retirement obligations are recognized at the fair market value in the period in which the legal obligation was incurred, with fair value of a liability determined with reference to the present value of estimated future cash flows. In periods subsequent to the initial measurement, changes in the liability resulting from the passage of time and revisions to fair value calculations are recognized in the statement of operations as they occur. The nature of the Company’s operations are such that remediation cost liabilities are short term in nature, therefore costs approximate their discounted present value, and are recorded in deferred revenue (see note 1(n) Revenue Recognition and 1(p) Environmental and Site Remediation Liability). Site postclosure costs have not been incurred to date, therefore the Company has not had to restate prior periods as a result of the adoption of this new policy.

	(k)	Income Taxes

		Income taxes are accounted for using the asset and liability method pursuant to Section 3465, Income Taxes, of the CICA Handbook. Future taxes are recognized for the tax consequences of “temporary differences” by applying enacted or substantively enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. The effect on deferred taxes for a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment. In addition, Section 3465 requires the recognition of future tax benefits to the extent that realization of such benefits is more likely than not.

Prepared by Management


CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial Statements
March 31, 2005 and 2004

1.	Significant Accounting Policies (continued)

	(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


	March 31,		March 31,		September 30,
	2005		2004		2004 (audited)
Raw materials and supplies	$	700,764	$	736,012	$	618,784
Work-in-process		34,839		46,493		35,714
Finished goods		259,571		260,192		104,744

	$	995,174	$	1,042,697	$	759,242

3. Property, Plant and Equipment


	March 31,						March 31,		September 30,
	2005						2004		2004 (audited)
			Accumulated		Net Book		Net Book		Net Book
	Cost		Amortization		Value		Value		Value
Land	$	2,378,050	$	—	$	2,378,050	$	2,378,050	$	2,378,050
Plant		2,857,632		961,429		1,896,203		2,369,820		1,965,790
Land improvements		1,564,460		669,283		895,177		647,328		940,971
Equipment		8,284,790		5,353,652		2,931,138		3,569,809		3,554,044
Office equipment		239,055		89,230		149,825		158,600		171,335
Leasehold improvements		—		—		—		18,973		10,691
Computer equipment		134,214		107,003		27,211		38,505		38,016
Bag plates and artwork		337,634		310,419		27,215		45,012		34,707
Automotive equipment		902,519		545,797		356,722		389,340		416,105


	$	16,698,354	$	8,036,813	$	8,661,541	$	9,615,437	$	9,509,709

4. Assets Under Capital Leases


	March 31,						March 31,		September 30,
	2005						2004		2004 (audited)
			Accumulated		Net Book		Net Book		Net Book
	Cost		Amortization		Value		Value		Value
Equipment	$	3,816,989	$	1,598,554	$	2,218,435	$	1,906,633	$	2,895,467
Office equipment		—		—		—		3,170		793

	$	3,816,989	$	1,598,554	$	2,218,435	$	1,909,803	$	2,896,260

5. Other Assets


	March 31,		March 31,		September 30,
	2005		2004		2004 (audited)
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 $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 $740 (March 31, 2004 - $662; September 30, 2004 - $701)		817		895		856

	$	31,604	$	34,778	$	33,191

Goodwill represents the excess of the purchase price paid over the underlying value of the assets at the time of acquisition.

Prepared by Management

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


	March 31,			March 31,			September 30,
	2005			2004			2004 (audited)
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 $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 (repaid in full on October 13, 2004).		—			393,000			378,405


		2,592,936			3,988,869			3,838,498

Less: Principal due within one year		(935,641	)		(1,587,454	)		(1,553,047	)


Long-term portion	$	1,657,295		$	2,401,415		$	2,285,451

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 compliance with or obtained a waiver for all of these covenants as of March 31, 2005.

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


2006	$	935,641
2007		769,973
2008		455,129
2009		363,011
2010		69,182

	$	2,592,936

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial Statements
March 31, 2005 and 2004

8. Obligations Under Capital Leases

Capital lease obligations consist of leases on mobile equipment and office equipment, repayable over varying terms from 36 to 60 months at interest rates ranging from 5.25% to 12.99% per annum. Future minimum lease payments are as follows:


2006	$	685,312
2007		674,679
2008		405,358
2009		264,834
2010		136,011

Minimum lease payments		2,166,194
Less: amounts representing interest		222,016

Present value of obligations under capital leases		1,944,178

Less: principal due within one year		582,094

	$	1,362,084

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 $2,414,388 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 Company 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 March 31, 2005.

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial Statements
March 31, 2005 and 2004

10. Share Capital

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

	(b)	Issued and fully paid:


	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		10,247,199	$	16,110,290			9,994,299	$	15,976,859			9,994,299	$	15,976,859
Issued during the period:
Exercise of options for cash		117,500		31,725			152,900		58,431			152,900		58,431
For financing services		0		—			100,000		75,000			100,000		75,000

		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		10,364,699	$	15,488,238			10,247,199	$	15,456,513			10,247,199	$	15,456,513

(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		174,000	$	0.60	March 14, 2007
Employees *		60,000	$	0.44		July 7, 2009

		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, 2004		771,500		$	0.53
Exercised		(117,500	)	$	0.27
Cancelled		(17,500	)	$	0.42

Outstanding at March 31, 2005		636,500		$	0.58

Options outstanding and exercisable at March 31, 2005 are as follows:

Weighted

Average

Exercise

Range of

Remaining

Price on

Exercise

Number

Contractual

Outstanding

Exercisable

Prices

Outstanding

Exercisable

Life (years)

Options

Option

$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
March 31, 2005 and 2004

11. Related Party Transactions

Included in accounts payable and accrued liabilities at March 31, 2005 were amounts aggregating $351,422 (March 31, 2004 — $291,486; September 30,2004 — $627,065) 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:


	March 31,		March 31,		September 30,
	2005		2004		2004 (audited)
Management remuneration	$	165,950	$	138,402	$	597,649

Interest and loan fees		94,217		165,287		255,105


	$	260,167	$	303,689	$	852,754

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


	Canada			United States		Elimination			Consolidated
For the six months ended March 31, 2005
Revenue
Bulk	$	204,645		$	484,812	$	—		$	689,457
Packaged products		670,084			—		—			670,084
Tipping and processing fees		42,722			12,453,904		—			12,496,626
Inter-segment		294,960			55,943		(350,903	)		—

		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


	Canada		United States		Consolidated
Assets
Property, plant & equipment	$	1,578,197	$	9,301,779	$	10,879,976
Other		1,576,786		6,863,141		8,439,927

	$	3,154,983	$	16,164,920	$	19,319,903


Property, Plant & Equipment and assets acquired under capital lease — Current Expenditures	$	—	$	29,127	$	29,127

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial Statements
March 31, 2005 and 2004

12. Geographically Segmented Information (continued)


	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


	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


	Canada			United States			Elimination			Consolidated
For the year ended September 30, 2004 (audited)
Revenue
Bulk	$	597,299		$	1,060,045		$	—		$	1,657,344
Packaged products		2,004,593			—			—			2,004,593
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


	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

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial Statements
March 31, 2005 and 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:


	March 31,			March 31,			September 30,
	2005			2004			2004 (audited)
Income tax from U.S. operations	$	667,893		$	310,230		$	1,020,096
Income tax recovery from Canadian operations		(167,803	)		(118,648	)		(508,000	)

		500,090			191,582			512,096
Valuation allowance on Canadian operations		167,803			118,648			508,000

Income tax expense	$	667,893		$	310,230		$	1,020,096

At March 31, 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 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 March 31, 2005, the Company had, for Canadian tax purposes, operating losses aggregating approximately $2,888,000.

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


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

	$	2,888,000

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

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial Statements
March 31, 2005 and 2004

16.

Discontinued Operations

During 2004, the Company elected to cease operations of Greencycle and focus efforts on its Florida operations. Operating activity has now ceased, and as such, the results of its operations are presented as discontinued operations on a comparative basis.

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.

Schedule of Consolidated Cost of Sales
For the six months ended March 31, 2005 and 2004


	3 months			3 months			6 months			6 months
	March 31, 2005			March 31, 2004			March 31, 2005			March 31, 2004
Direct Materials
Inventory, beginning of period	$	597,665		$	713,394		$	618,784		$	739,180
Purchases of direct materials and subtrades		609,512			535,974			901,227			737,583
Testing		2,375			8,075			6,506			15,373

Cost of direct materials available for use		1,209,552			1,257,443			1,526,517			1,492,136
Less: Inventory, end of period		(700,764	)		(725,561	)		(700,764	)		(725,561	)

Direct materials used		508,788			531,882			825,753			766,575
Direct labour		1,010,116			882,995			1,990,619			1,725,321
Manufacturing overhead		2,483,797			1,784,787			4,981,090			3,681,796

Manufacturing costs incurred for the period		4,002,701			3,199,664			7,797,462			6,173,692
Work-in-process, beginning of period		48,416			28,956			35,714			26,458

		4,051,117			3,228,620			7,833,176			6,200,150
Less: Work-in-process, end of period		(34,839	)		(46,493	)		(34,839	)		(46,493	)

Cost of goods manufactured		4,016,278			3,182,127			7,798,337			6,153,657
Finished goods, beginning of period		171,197			263,441			104,744			171,116

		4,187,475			3,445,568			7,903,081			6,324,773
Less: Finished goods, end of period		(259,571	)		(254,966	)		(259,571	)		(254,966	)

Cost of sales for the period	$	3,927,904		$	3,190,602		$	7,643,510		$	6,069,807

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Schedule of Consolidated Direct Selling Expenses
For the six months ended March 31, 2005 and 2004


	3 months		3 months		6 months		6 months
	March 31, 2005		March 31, 2004		March 31, 2005		March 31, 2004
Advertising	$	22,209	$	19,347	$	24,301	$	19,121

Amortization — bag plates and artwork		3,496		4,746		7,492		9,377

Automobile		1,650		1,650		3,300		3,300

Bad debts		11,185		10,771		15,360		21,150

Commissions		2,100		2,100		4,200		4,200

Discounts and allowances		28,260		21,921		27,943		22,839

Entertainment and promotion		24		183		157		2,156

Freight out		1,292,492		877,274		2,296,077		1,615,591

Marketing consulting		6,560		9,151		13,119		22,069

Miscellaneous		44,743		11,735		55,284		18,102

Travel		138,937		95,489		264,744		175,976


Direct selling expenses	$	1,551,656	$	1,054,367	$	2,711,977	$	1,913,881

Prepared by Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Schedules of Consolidated General and Administrative Expenses
For the six months ended March 31, 2005 and 2004


	3 months			3 months		6 months		6 months
	March 31, 2005			March 31, 2004		March 31, 2005		March 31, 2004
Advertising	$	4,454		$	6,220	$	8,975	$	14,927

Amortization		97,714			176,863		203,600		241,425

Automobile		10,391			8,170		18,612		15,759

Bank charges and interest		2,071			3,338		4,652		5,481

Business taxes, licenses and fees		24,742			10,441		43,025		37,300

Consulting fees		26,079			34,275		63,007		70,491

Directors fees		2,000			—		2,000		—

Education and training		11,241			7,785		18,047		10,579

Entertainment and promotion		8,786			14,186		23,074		27,047

Foreign exchange loss (gain)		(6,434	)		607		28,734		4,884

Insurance		7,380			6,722		14,170		13,290

Interest on long-term debt		130,699			191,861		261,556		301,391

Management fees and salaries		91,852			59,489		154,856		118,217

Miscellaneous		11,985			8,349		23,018		23,777

Office and stationery		26,799			39,506		56,550		81,775

Professional fees		78,411			43,015		121,319		103,832

Rent and office services		26,347			42,253		27,783		52,504

Shareholder relations		14,329			11,523		20,757		17,973

Stock-based compensation		1,169			—		2,186		—

Telephone		37,798			33,326		75,995		68,216

Transfer agent and filing fees		13,054			12,245		14,670		14,985

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

May 30, 2005
MANAGEMENT DISCUSSION AND ANALYSIS

Second Quarter 2005, For the Six Months Ended March 31, 2005

Background

Consolidated Envirowaste Industries 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).

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.

Quarterly Results

The Company recorded 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.

Revenue increased 22% or $1.2 million to $6,682,903 for this quarter compared to the second quarter of 2004, but sales were down from the 1^st 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 31, 2004, reflecting more seasonal values compared to the 1^st quarter of 2005.

Revenue from continuing 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.

This translated to a 28% revenue increase in terms of Canadian funds for the current three months when compared to the second quarter of 2004. While the Canadian dollar was relatively more stable during the quarter ended March 31, 2005, the lower exchange rate compared to the second quarter of 2004 reduced the revenue increase by approximately $450,000. Currency translation differences had only a minor impact on overall net income for the quarter on a comparative basis. Bulk sales in the US unit improved as the Florida operation began to remove the backlog of storm material from sites. Packaged and bulk sales in our Canadian unit were negatively impacted by adverse weather conditions in Western Canada.

Driven by strong results in its Florida subsidiary, the Company’s revenue, 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. Revenue for the first six months of fiscal 2005, following a reduction of nearly $1 million in currency translation differences, is approximately $3.5 million higher than the first six months of 2004. Gross margins increased to 44.8% for the six months ended March 31, 2005 compared to 41.4% for the first six months of fiscal 2004. Operating income during the six months was $855,000 higher and net income from continuing operations increased $506,700 compared to the six months ended March 31, 2004, while net income, including discontinued operations, is $454,700 more than the same six months of fiscal 2004.

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


	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 reader will note that our first quarter of 2005 was not typical of our first quarters; although the quarter ended December 31, 2003 did have revenues above the norm from storm work. Our business, and particularly the Canadian operations which derive almost 82% of their revenues in the 2^nd and 3^rd quarters during the spring/summer growing season, is subject to seasonal patterns. To a lesser extent, our US operations are subject to the same seasonal patterns given that the material we process is green

waste which is more abundant in the spring and summer months, while both units’ processing efficiency declines during cold or wet periods.

Cash Flow and Liquidity

The Company generated $389,000 in cash flows from operations during the quarter-similar to that of the comparable quarter of 2004. After changes in working capital items, the Company used 184,000 in cash flows from operating activities during the quarter compared to generating $298,000 in cash flows from operating activities in the quarter ended March 31, 2004-the changes resulting from the processing of the backlog of material from the first quarter represented in deferred revenue and changes in income taxes payable compared to the 2^nd quarter of last fiscal year. For the first six months of fiscal 2005, the Company generated approximately $612,000 in cash flows from operating activities after changes in working capital items, compared to $921,000 generated in the first six months of fiscal 2004. Again, this is a reflection of the reduction in deferred revenue related to storm materials processed since September 30, 2004 and the pay down/change in current portions of long-term debt and capital lease balances since the relative year ends.

Results 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.

Although the majority of the Company’s financial instruments (cash, accounts receivable, bank indebtedness, accounts payable and accrued liabilities etc.) are denominated in US funds, and are subject to exchange rate fluctuation risk versus the Canadian dollar, management is of the opinion that, in the near term, US and Canadian exchange rates will be relatively stable compared to the last two years.

Capital Resources

At present, the Company has adequate internal resources to fund working capital requirements and operating lease commitments (Note 13). In addition to these, CRR (Florida) has entered into a 60 month capital lease agreement subsequent to March 31, 2005 to fund the purchase additional transport equipment worth approximately Cdn$ 689,000 (US$ 569,500). CRR (Florida) has also purchased a parcel of land valued at Cdn$ 1,687,000 (US$ 1,394,000) for future development utilizing a combination of internal cash resources and a new US$ 600,000 demand loan facility which is repayable in full on or before March 31, 2006. Any additional capital expenditures, if deemed appropriate, will be financed through commercial sources. During the quarter ended March 31, 2005, the Company received $31,725 in proceeds from the exercise of 117,500 employee stock options.

Off-Balance Sheet Arrangements

The Company does not have any such arrangements at present or contemplated in the future.

Transactions with Related Parties

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

The Company will return to normal operating levels during the remaining six months of this fiscal year. Weather patterns and competitive pressures have yet to play their roles in the remainder of the spring season; however we expect a continuation of volatile weather conditions and increasing competition in the Western Canadian packaged soil markets. The Company will continue efforts to optimize operations and seek new growth 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

CONSOLIDATED ENVIROWASTE INDUSTRIES INC 6-K