~~Table~~UNITED ofSTATES SECURITIES ~~Contents~~AND EXCHANGE COMMISSION

~~UNITED~~Washington, ~~STATES SECURITIES~~DC ~~AND EXCHANGE COMMISSION~~20549

~~Washington,~~FORM ~~DC 20549~~6-K

~~FORM~~REPORT 6OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-K16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

~~REPORT~~For OFthe ~~FOREIGN~~month ~~PRIVATE~~of ~~ISSUER~~September, ~~PURSUANT TO RULE 13a-16 OR 15d-16~~2004 ~~UNDER THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~Commission ~~the~~File ~~month~~Number: ~~of August, 2003~~0-20055

~~Commission~~Consolidated ~~File~~Envirowaste ~~Number:~~Industries ~~0-20055~~Inc. (Translation of registrant’s name into English)

~~Consolidated~~27715 ~~Envirowaste~~Huntingdon ~~Industries~~Road, ~~Inc~~Abbotsford, B.C., Canada V4X 1B6 (Address of principal executive office)

~~(Translation~~Indicate ofby check mark whether the registrant’s ~~name~~files ~~into~~or ~~English)~~will file annual reports under cover of Form 20-F or Form 40-F.

~~27715~~FORM ~~Huntingdon~~20-F ~~Road,~~[X] ~~Abbotsford,~~FORM ~~B.C.,~~40-F ~~Canada~~[ ~~V4X 1B6 (Address of principal executive office)~~ ]

Indicate by check mark ~~whether~~if the registrant ~~files~~is orsubmitting ~~will~~the ~~file~~Form ~~annual~~6-K ~~reports under~~in ~~cover~~paper ofas permitted ~~Form~~by Regulation 20S-FT ~~or Form~~Rule ~~40-F.~~101(b)(1): [ ]

~~FORM~~Indicate 20by check mark if the registrant is submitting the Form 6-~~F X FORM~~K 40in paper as permitted by Regulation S-F T Rule 101(b)(7): [ ]

Indicate by check mark ifwhether the registrant isby ~~submitting~~furnishing the ~~Form 6-K~~information contained in ~~paper~~this asForm is also thereby furnishing the information to the ~~permitted~~Commission bypursuant ~~Regulation S-T~~to Rule ~~101~~12g3-2(b)~~(1):~~ ~~_____________~~under the Securities Exchange Act of 1934.

~~Indicate~~YES by[X] ~~check~~NO ~~mark~~[ ~~if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): _____________~~ ]

~~Indicate~~If by“Yes” ~~check~~is ~~mark~~marked, ~~whether~~indicate ~~the~~below ~~registrant by furnishing~~ the ~~information contained~~file innumber ~~this~~assigned ~~Form is also thereby furnishing the information~~ to the registrant ~~Commission~~in ~~pursuant~~connection towith Rule 12g3-2(b): ~~under the Securities Exchange Act of 1934~~82-1399.

~~YES X~~ SIGNATURES NO

IfPursuant ~~“Yes”~~to isthe ~~marked,~~requirements ~~indicate~~of ~~below~~the Securities Exchange Act of 1934, the registrant ~~file~~has ~~number~~duly ~~assigned~~caused this report to ~~the~~be ~~registrant in~~signed ~~connection~~on ~~with~~its ~~Rule 12g3-2(b):~~behalf ~~82-1399~~by the undersigned, thereunto duly authorized.

TABLE OF CONTENTS


	CONSOLIDATED ENVIROWASTE INDUSTRIES INC.
	(Registrant)
Date September 2, 2004	By	“Douglas R. Halward”
		(Signature)

	Douglas R. Halward, President
	(Name and Title of the Signing Officer)

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


EXHIBIT A:		News Release dated September 1, 2004
EXHIBIT B:		BC Form 51-901F together with schedules A (unaudited financial statements for the nine months ended June 30, 2004), B (supplementary information) and C (management discussion and analysis)

~~SIGNATURES~~EXHIBIT A

(ENVIROWASTE LOGO)

~~Pursuant~~Consolidated toEnvirowaste ~~the~~Industries ~~requirements~~Inc. 27715 ofHUNTINGDON ~~the~~ROAD, ~~Securities Exchange Act of 1934~~ABBOTSFORD, ~~the registrant~~BC ~~has~~V4X ~~duly caused this report to be signed on its behalf by the~~1B6 ~~undersigned,~~TELEPHONE: ~~thereunto~~604-856-6836 ~~duly~~FACSIMILE: ~~authorized.~~604-856-5644

		CONSOLIDATED ENVIROWASTE INDUSTRIES INC.
		(Registrant)
Date September 4, 2003		By “Douglas R. Halward”
		(Signature)
		Douglas R. Halward, President
		(Name and Title of the Signing Officer)

NEWS RELEASE

~~The~~Consolidated ~~following~~Envirowaste ~~attached~~Reports ~~documents~~Third ~~are~~Quarter ~~filed~~Earnings Abbotsford, ~~under~~British ~~this~~Columbia ~~Form~~– September ~~6-K:~~1, 2004

EXHIBIT A:		BC Form 51-901F together with schedules A (unaudited financial statements for the nine months ended June 30, 2003), B (supplementary information) and C (management discussion and analysis)
EXHIBIT B:		News release dated August 29, 2003

Consolidated Envirowaste Industries Inc. (TSX Venture Exchange-CWD) announced today its results for the nine months ended June 30, 2004. A complete copy of the Company’s third quarter report is available on the internet at www.sedar.com. Excerpts from the quarterly unaudited financial statements are as follows:


	Quarter Ended		Quarter Ended		Nine Months Ended		Nine Months Ended
	June 30, 2004		June 30, 2003		June 30, 2004		June 30, 2003
Sales	$	7,383,221	$	7,366,287	$	17,742,315	$	17,075,126
Net Earnings		497,725		688,366		579,313		588,855
Basic earnings per common share		0.05		0.07		0.06		0.06
Diluted earnings per common share		0.05		0.07		0.06		0.06
Weighted average common shares outstanding		10,247,199		9,994,299		10,153,161		9,985,596

~~EXHIBIT~~Consolidated AEnvirowaste Industries Inc. 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.

British Columbia Securities Commission		QUARTERLY AND YEAR END REPORT
		BC FORM 51-901F
		(previously Form 61)
ISSUER DETAILS
For Quarter Ended:	June 30, 2003
Date of Report:	August 29, 2003
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:	wade@envirowaste.ca
Web Site Address:	Not applicable

The Company has elected to wind down the operations of its Georgia subsidiary over the next six months, and, 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 three months ended June 30, 2004 is a net after tax loss of $11,442 compared to net earnings after tax of $159,787 for the June 30, 2003 quarter. Results for the nine months ended June 30, 2004 included Georgia’s net after tax earnings of $384,854 compared to net earnings after tax of $394,766 for the comparable period of 2003.

~~CERTIFICATE~~Third quarter revenues from continuing operations were comparable to revenues for the third quarter of 2003 as revenue from tipping rose 18% over the comparable quarter of 2003 while

~~The~~revenue ~~one~~from ~~schedule~~bulk ~~required~~and topackaged ~~complete~~products declined ~~this~~7% ~~Report~~and is42% ~~attached~~respectively. ~~and~~Overall sales from continuing operations for the ~~disclosure~~2004 ~~contained~~nine ~~therein~~month ~~has~~period ~~been approved~~were impacted by translation differences in the Canadian ~~Board~~dollar, as it rose 10% against the US dollar over the comparative nine month period of ~~Directors~~2003. ATotal ~~copy~~revenue increased just over $667,000 or 4% with revenue from tipping increasing 11% and sales of ~~this~~packaged ~~Report~~product ~~will~~declining beby 30% ~~provided~~compared to ~~any~~the ~~shareholder~~nine ~~who~~months ~~requests~~ended itJune 30, 2004.

Director’s Name: “Douglas Halward”		Date Signed: August 29, 2003
Director’s Name: “James Darby”		Date Signed: August 29, 2003

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.

~~Table~~Pre-tax earnings from continuing operations increased $269,000 over the first nine months of ~~Contents~~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~~Consolidated ~~ENVIROWASTE~~Envirowaste ~~INDUSTRIES~~Industries ~~INC~~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 ~~Financial~~Envirowaste ~~Statements~~Industries Inc.

~~June 30,~~Per: ~~2003~~“James ~~and~~E. ~~2002~~Darby”

~~Index~~James E. Darby Chairman and Chief Executive Officer

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

~~Consolidated~~EXHIBIT ~~Statement of Operations and Deficit~~B

Consolidated Statement of Cash Flows


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

~~Notes~~ISSUER ~~to Consolidated Financial Statements~~DETAILS

Schedule of Consolidated Cost of Sales


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

~~Schedule of Consolidated Direct Selling Expenses~~CERTIFICATE

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

Prepared by Management


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

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

~~Table~~CONSOLIDATED ofENVIROWASTE ~~Contents~~INDUSTRIES INC.

~~CONSOLIDATED~~Consolidated ~~ENVIROWASTE~~Financial ~~INDUSTRIES INC.~~Statements

~~Consolidated Balance Sheet~~ June 30, ~~2003~~2004 and ~~2002~~2003

	June 30,			June 30,			September 30,
	2003			2002			2002
ASSETS
Current
Cash and cash equivalents	$	1,666,743		$	1,666,706		$	2,559,153
Term deposit, restricted		—			—			805,840
Accounts receivable		3,496,145			3,457,034			2,349,973
Inventories (note 2)		916,577			959,933			1,084,342
Refundable income taxes		—			11,516			75,586
Future income tax asset		296,776			—			349,758
Prepaid expenses and deposits		371,931			215,893			281,538
		6,748,172			6,311,082			7,506,190
Capital assets (note 3)		7,928,947			6,161,031			5,949,589
Assets under capital leases (note 4)		2,476,071			1,739,643			2,200,503
Future income tax asset		214,018			—			252,227
Other assets (note 5)		38,991			822,302			56,797
	$	17,406,199		$	15,034,058		$	15,965,306
LIABILITIES
Current
Demand loans, secured (note 6)	$	1,036,851		$	120,000		$	—
Accounts payable and accrued liabilities		2,196,264			2,442,975			2,531,284
Income taxes payable		180,053			—			—
Deferred revenue		147,959			354,271			124,946
Principal of long-term debt due within one year		864,308			1,219,312			1,078,108
Principal of capital lease obligations, due within one year		482,168			279,692			415,048
		4,907,603			4,416,250			4,149,386
Long-term debt (note 7)		1,418,354			1,797,011			1,404,372
Obligations under capital leases (note 8)		1,695,475			1,243,088			1,762,919
Loans payable (note 9)		2,419,486			2,460,873			2,386,312
		10,440,918			9,917,222			9,702,989
SHAREHOLDERS’ EQUITY
Share capital (note 10)		15,323,082			15,316,422			15,316,422
Unrealized foreign exchange gain		512,027			218,070			404,578
Deficit		(8,869,828	)		(10,417,656	)		(9,458,683	)
		6,965,281			5,116,836			6,262,317
	$	17,406,199		$	15,034,058		$	15,965,306
Commitments (note 13)

Index

~~Approved~~Consolidated byBalance ~~the Directors:~~Sheets

~~[signed]~~Consolidated ~~[signed]~~Statements ~~Douglas~~of R.Income ~~Halward~~and ~~James E.H. Darby~~Deficit

~~Prepared~~Consolidated byStatements ~~Management~~of Cash Flows

~~Table~~ ofNotes ~~Contents~~to Consolidated Financial Statements

~~CONSOLIDATED~~Schedules ~~ENVIROWASTE~~of ~~INDUSTRIES~~Consolidated ~~INC.~~Cost of Sales

~~Consolidated~~Schedules ~~Statement~~ of ~~Operations~~Consolidated ~~and~~Direct ~~Deficit For~~Selling ~~the nine months ended June 30, 2003 and 2002~~Expenses

		3 months			3 months		9 months			9 months
		June 30, 2003			June 30, 2002		June 30, 2003			June 30, 2002
Revenue
	Bulk	$	617,844		$	742,854	$	1,595,299		$	1,677,122
	Packaged products		1,974,112			2,133,545		2,694,844			2,990,635
	Tipping fees (net)		5,458,644			6,090,548		14,680,312			16,568,661
			8,050,600			8,966,947		18,970,455			21,236,418
Cost of sales (schedule)			4,595,092			5,236,690		11,312,636			12,862,954
Gross margin			3,455,508			3,730,257		7,657,819			8,373,464
Direct selling expenses (schedule)			1,363,769			1,517,390		3,242,206			3,867,651
General and administrative expenses (schedule)			1,255,210			1,306,687		3,693,936			3,701,144
Operating earnings			836,529			906,180		721,677			804,669
Other income (expense)
	Interest and sundry		32,892			17,235		131,590			56,076
	Provision for performance incentives		(54,092	)		—		(54,092	)		(100,000	)
	Gain (loss) on disposal of capital assets		(1,587	)		177,507		55,123			429,930
Earnings before income taxes			813,742			1,100,922		854,298			1,190,675
Income taxes (note 14)			125,376			1,291		265,443			1,291
Net earnings for the period		$	688,366		$	1,099,631		588,855			1,189,384
Deficit, beginning of year								(9,458,683	)		(11,607,040	)
Deficit, end of period							$	(8,869,828	)	$	(10,417,656	)
Earnings per share — basic		$	0.07		$	0.11	$	0.06		$	0.12
Earnings per share — fully diluted		$	0.07		$	0.11	$	0.06		$	0.12
Weighted average number of common shares outstanding — basic			9,994,299			9,976,299		9,985,596			9,940,127
Weighted average number of common shares outstanding — fully diluted			10,133,484			10,137,173		10,124,781			10,101,001

Schedules of Consolidated General and Administrative Expenses

Prepared by Management

~~Table~~CONSOLIDATED ofENVIROWASTE ~~Contents~~INDUSTRIES INC.

~~CONSOLIDATED~~Consolidated ~~ENVIROWASTE~~Balance ~~INDUSTRIES~~Sheets ~~INC.~~ June 30, 2004 and 2003 (audited)

Consolidated Statement of Cash Flows For the nine months ended June 30, 2003 and 2002


	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

			3 months			3 months			9 months			9 months
			June 30, 2003			June 30, 2002			June 30, 2003			June 30, 2002
Cash flows from (used in) operating activities
	Net earnings for the period		$	688,366		$	1,099,631		$	588,855		$	1,189,384
	Items not involving cash:
		Amortization		554,467			628,834			1,728,631			1,957,540
		(Gain) loss on disposal of capital assets		1,587			(177,507	)		(55,123	)		(429,930	)
		Unrealized foreign exchange gain (loss)		73,869			(165,997	)		107,674			(136,136	)
		Future income taxes		45,642			—			91,191			—
				1,363,931			1,384,961			2,461,228			2,580,858
Cash generated from (used in) operating working capital:
	Accounts receivable			(433,998	)		(238,919	)		(1,146,172	)		(228,463	)
	Inventories			459,885			506,644			167,765			134,867
	Refundable income taxes			—			587			75,586			(11,516	)
	Prepaid expenses and deposits			(120,419	)		(16,080	)		(90,393	)		108,726
	Accounts payable and accrued liabilities			40,298			(101,545	)		(335,020	)		(244,873	)
	Income taxes payable			112,352			—			180,053			—
	Deferred revenue			1,528			118,371			23,013			(75,865	)
	Current portion of long-term debt			(75,673	)		(601,745	)		(213,800	)		(760,337	)
	Current portion of capital lease obligations			(26,245	)		255,321			67,120			247,194
				1,321,659			1,307,595			1,189,380			1,750,591
Cash flows from (used in) financing activities
	Increase (decrease) in long-term debt, net			23,774			(755,237	)		13,982			(1,566,458	)
	Increase (decrease) in obligations under capital leases, net			(255,565	)		1,194,824			(67,444	)		1,182,352
	Increase (decrease) in loans payable			(17,823	)		—			33,174			168,451
	Issuance of share capital			—			—			6,660			24,375
				(249,614	)		439,587			(13,628	)		(191,280	)
Cash flows from (used in) investing activities
	Acquisition of capital assets			(1,898,950	)		(438,295	)		(3,373,594	)		(722,992	)
	Proceeds from the sale of capital assets			4,205			412,426			138,536			827,618
	Acquisition of assets under capital leases			(34,500	)		(1,758,528	)		(675,795	)		(1,758,528	)
	Acquisition of other assets, net			—			—			—			(797,609	)
				(1,929,245	)		(1,784,397	)		(3,910,853	)		(2,451,511	)
Decrease in cash and cash equivalents				(857,200	)		(37,215	)		(2,735,101	)		(892,200	)
Cash and cash equivalents, beginning of period				1,487,092			1,583,921			3,364,993			2,438,906
Cash and cash equivalents, end of period			$	629,892		$	1,546,706		$	629,892		$	1,546,706
Represented as:
	Cash and cash equivalents		$	1,666,743		$	1,666,706		$	1,666,743		$	1,666,706
	Demand loans, secured			(1,036,851	)		(120,000	)		(1,036,851	)		(120,000	)
			$	629,892		$	1,546,706		$	629,892		$	1,546,706

Commitments (note 13)
Contingent liabilities (note 14)

Approved by the Directors:

~~Prepared~~“Signed” by“Signed” ~~Management~~ James Darby Douglas R. Halward

~~Table~~Prepared ofby ~~Contents~~Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

~~Notes~~Consolidated toStatements ~~Consolidated~~of ~~Financial~~Operations ~~Statements~~and Deficit For the nine months ended June 30, ~~2003~~2004 and ~~2002~~2003

1. Significant Accounting Policies


	3 months			3 months			9 months			9 months
	June 30, 2004			June 30, 2003			June 30, 2004			June 30, 2003
Revenue
Bulk	$	510,807		$	549,467		$	1,351,936		$	1,334,464
Packaged products		1,135,260			1,974,112			1,915,791			2,694,844
Tipping fees		5,737,154			4,842,708			14,474,588			13,045,818

		7,383,221			7,366,287			17,742,315			17,075,126
Cost of sales (schedule)		3,944,562			4,191,592			10,130,524			10,189,406

Gross margin		3,438,659			3,174,695			7,611,791			6,885,720
Direct selling expenses (schedule)		1,334,492			1,278,011			3,248,373			2,937,049
General and administrative expenses (schedule)		1,240,101			1,210,382			3,686,084			3,549,773

Operating earnings		864,066			686,302			677,334			398,898
Other income (expense)
Interest and sundry		2,971			32,892			34,792			131,590
Provision for performance incentives		(100,535	)		(54,092	)		(166,375	)		(54,092	)
Gain (loss) on disposal of property, plant & equipment		92,504			(1,587	)		254,504			55,123

Earnings before income taxes		859,006			663,515			800,255			531,519
Income taxes (note 15)		349,839			134,936			605,796			337,430

Earnings from continuing operations		509,167			528,579			194,459			194,089

Discontinued operations (note 16)
Earnings (loss) before income taxes		(120,332	)		150,227			330,237			322,779
Income tax recovery		108,890			9,560			54,617			71,987

Net earnings (loss) from discontinued operations		(11,442	)		159,787			384,854			394,766

Net earnings for the period	$	497,725		$	688,366			579,313			588,855

Deficit, beginning of period								(9,116,952	)		(9,458,683	)

Deficit, end of period							$	(8,537,639	)	$	(8,869,828

Earnings per share - basic	$	0.05		$	0.07		$	0.06		$	0.06

Earnings per share - fully diluted	$	0.05		$	0.07		$	0.06		$	0.06

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 - fully diluted		10,258,535			10,133,484			10,164,497			10,124,781

~~(a)~~Prepared ~~Basis~~by 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 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) 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 net realizable value. (e) Capital Assets Capital assets are recorded at historical 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 prorated from initial utilization:Management

Plant		5% & 33%
Land improvements		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%

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

~~(f)~~Consolidated ~~Assets~~Statements ~~Under Capital Leases Assets acquired under capital leases and their related obligations are recorded at an amount equivalent to the present value~~ of ~~the~~Cash ~~minimum~~Flows For ~~future lease payments discounted at~~ the ~~interest~~nine ~~rate~~months ~~implicit~~ended inJune 30, ~~the~~2004 ~~agreement.~~and ~~Leased assets are amortized on the same basis as capital assets. (g) Other Assets~~2003

Trademarks	Recorded at cost; amortized on a straight-line basis over 10 years.
	3 months			3 months			9 months			9 months
Goodwill	Recorded at cost; amortized on a straight-line basis over 10 years.
	June 30, 2004			June 30, 2003			June 30, 2004			June 30, 2003
Technology license	Recorded at cost; amortized on a straight-line basis over 20 years.
Cash flows from (used in) operating activities
Deferred aquisition costs	Recorded at cost; amortized on a straight-line basis over 4 years.
Net earnings for the period	$	497,725		$	688,366		$	579,313		$	588,855
Items not involving cash:
Amortization		610,315			554,467			1,704,390			1,728,631
(Gain) loss on disposal of property, plant and equipment		(92,504	)		1,587			(388,154	)		(55,123	)
Unrealized foreign exchange gain (loss)		(23,269	)		73,869			(352,608	)		107,449
Issuance of shares for non-cash consideration		—			—			75,000			—
Future income taxes		(4,288	)		45,642			10,909			91,191
		987,979			1,363,931			1,628,850			2,461,003
Cash generated from (used in) operating working capital:
Accounts receivable		(245,716	)		(433,998	)		(1,047,857	)		(1,146,172	)
Inventories		246,720			459,885			156,959			167,765
Prepaid expenses and deposits		(140,219	)		(120,419	)		(36,226	)		(90,393	)
Accounts payable and accrued liabilities		(111,723	)		40,298			303,734			(335,020	)
Income taxes payable		238,416			112,352			400,678			255,639
Deferred revenue		64,257			1,528			47,654			23,013
Current portion of long-term debt		74,809			(75,673	)		583,579			(213,800	)
Current portion of capital lease obligations		17,921			(26,245	)		16,051			67,120
		1,132,444			1,321,659			2,053,422			1,189,155
Cash flows from (used in) financing activities
Increase in long-term debt, net		77,181			23,774			385,496			13,982
Decrease in obligations under capital leases, net		(79,749	)		(255,565	)		(374,991	)		(67,444	)
Increase (decrease) in loans payable		(11,358	)		(17,823	)		122,803			33,174
Issuance of share capital		—			—			58,431			6,660
		(13,926	)		(249,614	)		191,739			(13,628	)
Cash flows from (used in) investing activities
Acquisition of property, plant and equipment		(567,193	)		(1,898,950	)		(2,524,174	)		(3,373,369	)
Proceeds from the sale of property, plant and equipment		103,196			4,205			403,959			138,536
Acquisition of assets under capital leases		(31,875	)		(34,500	)		(42,347	)		(675,795	)
		(495,872	)		(1,929,245	)		(2,162,562	)		(3,910,628	)
Increase (decrease) in cash and cash equivalents		622,646			(857,200	)		82,599			(2,735,101	)
Cash and cash equivalents, beginning of period		781,329			1,487,092			1,321,376			3,364,993
Cash and cash equivalents, end of period	$	1,403,975		$	629,892		$	1,403,975		$	629,892
Represented as:
Cash and cash equivalents	$	1,853,975		$	1,666,743		$	1,853,975		$	1,666,743
Demand loans, secured		(450,000	)		(1,036,851	)		(450,000	)		(1,036,851	)
	$	1,403,975		$	629,892		$	1,403,975		$	629,892

Prepared by Management

~~Table~~CONSOLIDATED ofENVIROWASTE ~~Contents~~INDUSTRIES INC.

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

~~Notes~~1. toSignificant ~~Consolidated~~Accounting ~~Financial Statements June 30, 2003 and 2002~~Policies

1(a) Basis of Presentation The Company follows Canadian generally accepted accounting principles in the preparation of these financial statements. ~~Significant~~All ~~Accounting~~dollar ~~Policies~~amounts are reported in Canadian funds. (~~continued~~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) 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:

(h) 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 are presented as a component of equity. (i) Cash equivalents Cash equivalents usually consist of highly liquid investments which are readily convertible into cash with maturities of three months or less when purchased. As at June 30, 2003, cash equivalents were $692,880 (June 30, 2002 — $538,823; September 30, 2002 — $1,251,042). (j) Income Taxes Income taxes are accounted for using the asset and liability method pursuant to Section 3465, Income Taxes, of “The Handbook of the Canadian Institute of Chartered Accountants”. 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 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. (k) Stock-based Compensation Stock-based compensation is accounted for following the guidelines set out in the Canadian Institute of Chartered Accountants (“CICA”) Handbook, Section 3870. As permitted by the CICA Handbook, Section 3870, the Company has chosen not to recognize consideration paid by employees on exercise of stock options to its employees. Any consideration paid by employees on exercise of stock options is credited to capital stock. The Company is required to provide pro-forma information with regard to its net income as if the compensation cost for the Company’s stock option plan had been determined in accordance with the fair value based method prescribed in the CICA Handbook, Section 3870. (l) Earnings per Share Basic earnings per share is computed using the weighted average number of common shares outstanding during the year. Diluted earnings per share are calculated using the treasury stock method to determine the dilutive effect of stock options and other dilutive instruments which assumes that proceeds received from the exercise of stock options and warrants are used to repurchase common shares at the prevailing market rate.


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%

2(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. ~~Inventories~~Leased assets are amortized on the same basis as property, plant & equipment.

	June 30,		June 30,		September 30,
	2003		2002		2002
Raw materials and supplies	$	607,474	$	624,319	$	712,527
Work-in-process		50,178		50,933		55,697
Finished goods		258,925		284,681		316,118
	$	916,577	$	959,933	$	1,084,342

Prepared by Management

~~Prepared~~CONSOLIDATED byENVIROWASTE ~~Management~~INDUSTRIES INC.

~~Table~~Notes ofto ~~Contents~~Consolidated Financial Statements June 30, 2004 and 2003

~~CONSOLIDATED ENVIROWASTE INDUSTRIES INC~~1. ~~Notes~~ toSignificant ~~Consolidated~~Accounting ~~Financial~~Policies ~~Statements June 30, 2003 and 2002~~(continued)

3.(g) ~~Capital~~Other Assets

	June 30,							June 30,		September 30,
	Trademarks		Recorded at cost; amortized on a straight-line basis over periods of
	2003							2002		2002
				10 years or 15 years.
				Accumulated		Net Book		Net Book		Net Book
	Technology license		Recorded at cost; amortized on a straight-line basis over 20 years.
	Cost			Amortization		Value		Value		Value
Land	$	1,698,133		$	—	$	1,698,133	$	1,490,483	$	1,603,295
Plant		1,733,324			734,004		999,320		602,439		751,438
Land improvements		608,016			406,976		201,040		156,085		145,734
Equipment		8,781,148			5,420,016		3,361,132		3,635,442		3,142,417
Office equipment		110,836			91,481		19,355		9,979		21,133
Leasehold improvements		180,731			145,919		34,812		56,145		52,103
Computer equipment		347,974			313,155		34,819		41,576		36,512
Bag plates and artwork		390,512			338,392		52,120		55,194		49,070
Automotive equipment		888,639			470,694		417,945		113,688		147,887
Construction-in-progress		1,110,271			—		1,110,271		—		—
	$	15,849,584		$	7,920,637	$	7,928,947	$	6,161,031	$	5,949,589

4(h) Foreign Currency Translation The Company treats the operations of Envirowaste International Inc. ~~Assets~~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. (i) Cash equivalents Cash equivalents consist of highly liquid investments which are readily convertible into cash with maturities of three months or less when purchased. As at June 30, 2004, cash equivalents were $nil (June 30, 2003-$692,880; September 30, 2003 - $nil). (j) Income Taxes Income taxes are accounted for using the asset and liability method pursuant to Section 3465, Income Taxes, of “The Handbook of the Canadian Institute of Chartered Accountants”. 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. (k) Earnings Per Share Earnings per share are computed as recommended by Section 3500 of the Handbook of the Canadian Institute of Chartered Accountants. 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 issue common shares were exercised or converted to common shares. Under ~~Capital~~the ~~Leases~~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. (l) Stock-Based Compensation The Company has adopted the fair value for all direct awards of stocks and applies the fair value method in accordance with the Canadian Institute of Chartered Accountants (“CICA”) Handbook, section 3870. “Stock-Based Compensation and Other Stock-Based Payments”. The fair value of stock options is determined by the “Black-Scholes Option Pricing Model” with assumptions for risk-free interest rates, dividend yields, volatility factors of the expected market price of the Company’s common shares and an expected life of the options. The fair value of direct awards of stocks is determined by the quoted market price of the Company’s stock. The Company did not grant any stock options during the nine months ended June 30, 2004 and, as such, no compensation expense was recognized.

	June 30,						June 30,		September 30,
	2003						2002		2002
			Accumulated		Net Book		Net Book		Net Book
	Cost		Amortization		Value		Value		Value
Equipment	$	3,081,028	$	611,693	$	2,469,335	$	1,721,705	$	2,185,695
Office equipment		23,775		17,039		6,736		17,938		14,808
	$	3,104,803	$	628,732	$	2,476,071	$	1,739,643	$	2,200,503

Prepared by Management

5.CONSOLIDATED ~~Other~~ENVIROWASTE ~~Assets~~INDUSTRIES INC.

	June 30,		June 30,		September 30,
	2003		2002		2002
Deferred costs, net of accumulated amortization of $228,496 (June 30, 2002 - $213,340; September 30, 2002 -218,570)	$	—	$	15,156	$	9,926
Goodwill, net of accumulated amortization of $49,485 (June 30, 2002 - $42,154; September 30, 2002 - $43,986)		23,828		31,159		29,327
Trademarks, net of accumulated amortization of $16,750 (June 30, 2002 - $13,654; September 30, 2002 - $14,428)		14,210		17,306		16,532
Technology license, net of accumulated amortization of $604 (June 30, 2002 - $526; September 30, 2002 - $545)		953		1,031		1,012
Performance bond, at cost		—		757,650		—
	$	38,991	$	822,302	$	56,797

Notes to Consolidated Financial Statements
June 30, 2004 and 2003

~~Goodwill~~1. ~~represents~~Significant ~~the~~Accounting ~~excess~~Policies ~~of the purchase price paid over the underlying value of the assets at the time of acquisition.~~ (continued)

Prepared by Management

(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.

~~Table~~2. ~~of Contents~~Inventories

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.


	June 30,		June 30,		September 30,
	2004		2003		2003 (audited)
Raw materials and supplies	$	563,251	$	607,474	$	749,968
Work-in-process		44,594		50,178		26,458
Finished goods		188,132		258,925		176,510

	$	795,977	$	916,577	$	952,936

~~Notes~~3. ~~to Consolidated Financial Statements June 30~~Property, ~~2003~~Plant and ~~2002~~Equipment

6. Demand Loans, Secured


	June 30,						June 30,		September 30,
	2004						2003		2003 (audited)
			Accumulated		Net Book		Net Book		Net Book
	Cost		Amortization		Value		Value		Value
Land	$	2,378,050	$	—	$	2,378,050	$	1,698,133	$	1,698,133
Plant		3,234,011		922,155		2,311,856		999,320		978,470
Land improvements		1,106,029		478,684		627,345		201,040		191,695
Equipment		9,324,570		5,671,613		3,652,957		3,361,132		3,152,949
Office equipment		254,136		95,567		158,569		19,355		42,652
Leasehold improvements		168,528		153,677		14,851		34,812		29,775
Computer equipment		182,520		142,781		39,739		34,819		30,977
Bag plates and artwork		399,622		357,350		42,272		52,120		47,488
Automotive equipment		915,708		508,719		406,989		417,945		389,372
Construction-in-progress		—		—		—		1,110,271		1,754,903

	$	17,963,174	$	8,330,546	$	9,632,628	$	7,928,947	$	8,316,414

	(a)		At June 30, 2003, the Company’s subsidiary, The Answer Garden Products Ltd., had authorized credit facilities which included a revolving, demand operating loan of $500,000 bearing interest at the Royal Bank prime rate (“RBP”) plus 2% per annum, a peak period revolving demand loan of $250,000 bearing interest a RBP plus 2.5% per annum, and a standby demand instalment/reducing loan or lease line of $250,000 bearing interest a RBP plus 2.5% per annum or at scheduled lease rates at time of draw down. 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. At June 30, 2003, borrowings outstanding on the revolving operating lines of credit were $650,000 (June 30, 2002 — $120,000; September 30, 2002 — nil). The standby loan/lease has not been drawn on.
	(b)		The Company’s Florida subsidiary, CRRI, had lending facilities consisting of a revolving line of credit of US $300,000 (Cdn $404,220) and a demand construction loan facility with a maximum value of US $850,000 (Cdn $1,174,240). As at June 30, 2003, there have been no borrowings under the revolving line of credit and US $450,387 (Cdn $606,851) has been drawn on the construction loan facility.
			The loans are secured and are subject to certain financial covenants including a minimum debt service coverage and a maximum ratio of debt to worth. The loans are guaranteed by the Company, EII and Greencycle. Interest rates for each of the loan segments are as follows:

Assets Under Capital Leases

Line of Credit:	floating at the 30-day London Interbank Offered Rate (“LIBOR”) plus 350 basis points;
	June 30,						June 30,		September 30,
Construction loan:	floating at the 30-day LIBOR plus 325 basis points.
	2004						2003		2003 (audited)
			Accumulated		Net Book		Net Book		Net Book
	Cost		Amortization		Value		Value		Value
Equipment	$	3,123,375	$	1,253,889	$	1,869,486	$	2,469,335	$	2,333,426
Office equipment		23,775		21,794		1,981		6,736		5,548
	$	3,147,150	$	1,275,683	$	1,871,467	$	2,476,071	$	2,338,974

~~The~~Prepared ~~Company~~by ~~was in compliance with all covenants at June 30, 2003.~~Management

~~Prepared~~CONSOLIDATED byENVIROWASTE ~~Management~~INDUSTRIES INC.

~~Table~~Notes ofto ~~Contents~~Consolidated Financial Statements June 30, 2004 and 2003

~~CONSOLIDATED~~5. ~~ENVIROWASTE~~Other ~~INDUSTRIES INC.~~ Assets

Notes to Consolidated Financial Statements June 30, 2003 and 2002


	June 30,		June 30,		September 30,
	2004		2003		2003 (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
Trademarks, net of accumulated amortization of $19,846 (June 30, 2003 - $16,750; September 30, 2003 - $17,524)		11,114		14,210		13,436
Technology license, net of accumulated amortization of $682 (June 30, 2003 - $604; September 30, 2003 - $623)		875		953		934

	$	33,984	$	38,991	$	36,365

7Goodwill represents the excess of the purchase price paid over the underlying value of the assets at the time of acquisition. ~~Long~~6. ~~Term~~Demand ~~Debt~~Loans, Secured

	June 30,		June 30,		September 30,
	2003		2002		2002
Notes Payable
Various notes bearing interest at 7.0% to 10.5% per annum and repayable in up to 60 monthly installments of principal and interest through 2008, collateralized by the related equipment.	$	2,282,662	$	3,016,323	$	2,482,480
Less: Principal due within one year		864,308		1,219,312		1,078,108
Long-term portion	$	1,418,354	$	1,797,011	$	1,404,372

	(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).

~~Principal~~Prepared ~~obligations~~by ~~due within the next five years are as follows:~~Management

2004	$	864,308
2005		591,498
2006		478,987
2007		236,928
2008		110,941
	$	2,282,662

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial Statements June 30, 2004 and 2003

87. ~~Obligations~~Long ~~Under~~Term Capital Leases Capital lease obligations consist of leases on mobile equipment and office equipment repayable over varying terms from 36 to 62 months at interest rates ranging from 5.25% to 12.99% per annum. Future minimum lease payments are as follows:Debt

		2004		$	600,986
	June 30,			June 30,			September 30,
		2005			604,824
	2004			2003			2003 (audited)
		2006			598,589
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
		2007			520,146
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
		2008			140,011
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			—			—
Minimum lease payments					2,464,556
		4,140,859			2,282,662			3,171,784
Less: amounts representing interest					286,913
Less: Principal due within one year		(1,662,263	)		(864,308	)		(1,078,684	)
Present value of obligations under capital leases					2,177,643
Long-term portion	$	2,478,596		$	1,418,354		$	2,093,100
Less: principal due within one year					482,168
Long term portion				$	1,695,475

~~Prepared~~The mortgage and promissory note are secured by ~~Management~~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 June 30, 2004.

~~Table~~Principal ofobligations ~~Contents~~due within the next five years are as follows:

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.


2005	$	1,662,263
2006		1,173,145
2007		707,894
2008		410,173
2009		187,384

	$	4,140,859

~~Notes~~Prepared toby ~~Consolidated Financial Statements~~Management ~~June 30, 2003 and 2002~~

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 $2,269,486 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 has agreed to provide one of the directors, if requested, a guarantee and postponement of claim supported by a registered charge over the accounts receivable of its Florida subsidiary, Consolidated Resource Recovery Inc.
		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(a)).
		While the terms of repayment for the loans are on a demand basis, it is the lenders intent not to call for repayment of the debts on or before June 30, 2004.
10.		Share Capital
		Authorized:
		50,000,000 common shares, no par value
		Issued and fully paid:

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

		June 30, 2003					June 30, 2002					September 30, 2002
		Number		Stated			Number		Stated			Number		Stated
		of Shares		Capital			of Shares		Capital			of Shares		Capital
Balance, beginning of period			9,976,299	$	15,970,199			9,913,799	$	15,945,824			9,913,799	$	15,945,824
Issued during the period:
	Exercise of options for cash		18,000		6,660			62,500		24,375			62,500		24,375
Share issue expenses			—		(653,777	)		—		(653,777	)		—		(653,777	)
Balance, end of period			9,994,299	$	15,323,082			9,976,299	$	15,316,422			9,976,299	$	15,316,422

Notes to Consolidated Financial Statements
June 30, 2004 and 2003

~~Prepared~~8. byObligations ~~Management~~Under Capital Leases

~~Table~~Capital lease obligations consist of ~~Contents~~leases on mobile equipment and office equipment, repayable over varying terms from 60 to 62 months at interest rates ranging from 5.3% to 12.99% per annum. Future minimum lease payments are as follows:

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.


2005	$	604,861
2006		598,626
2007		520,731
2008		144,560
2009		11,102

Minimum lease payments		1,879,880
Less: amounts representing interest		171,710

Present value of obligations under capital leases		1,708,170
Less: principal due within one year		516,421

	$	1,191,749

~~Notes~~9. toLoans ~~Consolidated Financial Statements~~Payable ~~June 30, 2003 and 2002~~

10By loan agreements, and as amended, between the Company and two of its directors and officers, the Company has borrowed a total of $2,348,673 to meet the Company’s working capital requirements. ~~Share~~The ~~Capital~~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 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 (~~continued~~see Commitments — Note 13)

(On April 1, 1999, the Company borrowed $300,000 from a) ~~The~~shareholder of the Company ~~has~~to ~~directors~~meet the Company’s short-term working capital requirements. Under the terms of the loan agreement, the principal is repayable on demand and the ~~employees’~~loan ~~stock~~will ~~options~~bear ~~outstanding~~interest asat ~~follows:~~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.

	Shares		Exercise Price		Expiry Date
Directors Directors Directors Employees Employees Employees Employees Employees*		115,000 402,500 15,000 27,900 34,500 105,000 156,000 30,000		0.39 0.60 0.60 0.39 0.27 0.27 0.60 0.60	December 18, 2003 March 14, 2007 March 20, 2007 December 18, 2003 February 15, 2005 February 15, 2005 March 14, 2007 March 14, 2007
		885,900

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 ~~This~~the ~~option~~terms isof ~~vested~~repayment asfor tothe ~~20,000~~loans ~~shares~~are on ~~March~~a 15demand basis, ~~2003~~the lenders ~~and~~ will ~~vest~~not ascall tofor ~~10,000~~repayment ~~additional~~of ~~shares on March 31, 2004, provided that~~ the ~~employee~~debts ~~is employed by the Company~~ on ~~the~~or ~~vesting~~before ~~date. (b) As at~~ June 30, ~~2003, the Company had issued 885,900 exercisable stock options with a weighted average exercise price of $0~~2005.~~51. The weighted average remaining contractual life of the options outstanding is 3.1 years.~~

				Weighted
				Average
				Exercise
	Shares			Price
Outstanding, October 1, 2002		911,900		$	0.51
Granted		0			0.00
Cancelled		(8,000	)		0.44
Exercised		(18,000	)		0.37
Outstanding, June 30, 2003		885,900		$	0.51

Prepared by Management

~~(c)~~CONSOLIDATED OnENVIROWASTE ~~March~~INDUSTRIES ~~4, 2003, the Company adopted a share option plan subject to the rules and policies of the TSX Venture Exchange~~INC. ~~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~~Notes byto ~~Management~~Consolidated Financial Statements June 30, 2004 and 2003

~~Table~~10. ofShare ~~Contents~~Capital

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

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

(b)		Issued and fully paid:

Notes to Consolidated Financial Statements June 30, 2003 and 2002


	June 30, 2004					June 30, 2003					September 30, 2003 (audited)
	Number		Stated			Number		Stated			Number		Stated
	of Shares		Capital			of Shares		Capital			of Shares		Capital
Balance, beginning of period		9,994,299	$	15,976,859			9,976,299	$	15,970,199			9,976,299	$	15,970,199
Issued during the period:
Exercise of options for cash		152,900		58,431			18,000		6,660			18,000		6,660
For financing services		100,000		75,000			—		—			—		—

		10,247,199		16,110,290			9,994,299		15,976,859			9,994,299		15,976,859
Share issue expenses		—		(653,777	)		—		(653,777	)		—		(653,777	)

Balance, end of period		10,247,199	$	15,456,513			9,994,299	$	15,323,082			9,994,299	$	15,323,082

~~11. Related Party Transactions Included in accounts payable and accrued liabilities at June 30, 2003 were amounts aggregating $369,099~~ (~~June 30, 2002 - $549,468; September 30, 2002 - $740,765~~c) ~~payable~~The ~~to directors of the~~ Company ~~for~~has ~~accrued~~directors’ ~~management remuneration, expenses reimbursements~~ and ~~accrued~~employees’ ~~loan~~stock ~~interest.~~options Inoutstanding ~~addition to the loans,~~ as ~~detailed in Note 9, the Company entered into the following transactions with the directors of the Company~~follows:

	June 30,		June 30,		September 30,
	Number		Exercise Price
	2003		2002		2002
	of Shares		per Share		Expiry Date
Management remuneration	$	260,750	$	231,805	$	554,728
Directors		402,500	$	0.60	March 14, 2007
Interest and loan fees		134,527		123,658		168,555
Employees		127,000	$	0.27	February 15, 2005
	$	395,277	$	355,463	$	723,283
Employees		184,000	$	0.60	March 14, 2007
		713,500

~~12.~~A ~~Geographically~~summary ~~Segmented~~of ~~Information~~the stock option activity for the current period is as follows:

Nine months ended June 30, 2003:	Canada			United States			Consolidated
				Weighted
Sales to unaffiliated customers		3,243,570			15,726,885			18,970,455
				Average
Inter-segment revenue (expense)		513,375			(513,375	)		—
				Exercise
Total revenue		3,756,945			15,213,510			18,970,455
	Shares			Price
Net earnings before income taxes		17,445			836,853			854,298
Outstanding at October 1, 2003		885,900		$	0.51
Income taxes		—			265,443			265,443
Granted		—			—
Net earnings for the period		17,445			571,410			588,855
Exercised		(152,900	)		0.38
Identifiable assets on June 30, 2003		4,136,065			13,270,134			17,406,199
Cancelled		(19,500	)		0.56
Outstanding at June 30, 2004		713,500		$	0.54

Nine months ended June 30, 2002:	Canada		United States			Consolidated
Sales to unaffiliated customers		3,483,176		17,753,242			21,236,418
Inter-segment revenue (expense)		479,213		(479,213	)		—
Total revenue		3,962,389		17,274,029			21,236,418
Net earnings before income taxes		112,893		1,077,782			1,190,675
Income taxes		—		1,291			1,291
Net earnings for the period		112,893		1,076,491			1,189,384
Identifiable assets on June 30, 2002		4,122,568		10,911,490			15,034,058

Options outstanding and exercisable at June 30, 2004 are as follows:

Year ended September 30, 2002:		Canada				United States				Consolidated
														Weighted		Weighted
Sales to unaffiliated customers			3,917,963				23,839,760				27,757,723
														Average		Average
Inter-segment revenue (expense)			791,781				(791,781	)			—
												Average		Exercise		Exercise
Total revenue			4,709,744				23,047,979				27,757,723
Range of												Remaining		Price on		Price on
Net earnings (loss) before income taxes			(148,807	)			1,687,109				1,538,302
Exercise				Number				Number				Contractual		Outstanding		Exercisable
Income tax recovery			(13,967	)			(596,088	)			(610,055	)
Prices				Outstanding				Exercisable				Life (years)		Options		Option
Net earnings (loss) for the year			(134,840	)			2,283,197				2,148,357
$	0.27 - $0.60				713,500				713,500				2.20	$	0.54	$	0.54
Identifiable assets on September 30, 2002			3,295,707				12,669,599				15,965,306

~~Prepared~~On byMarch 4, ~~Management~~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.

~~Table~~Prepared ofby ~~Contents~~Management

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

Notes to Consolidated Financial Statements June 30, ~~2003~~2004 and ~~2002~~2003

13.		Commitments
		CRRI has entered into an employment agreement with a certain member of management through December 31, 2002. This agreement provides for a total monthly salary of approximately Cdn $13,401 (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. Negotiations are presently underway to renew the contract on substantially the same terms.
		The Company has entered into operating leases for certain machinery, equipment and office space. Rental expense under these leases was approximately Cdn $1,361,574 (including US $865,867) for the nine months ended June 30, 2003. Minimum future rental payments under these leases are as follows:

11. Related Party Transactions

2004	$	1,443,881
2005		1,143,781
2006		177,848
	$	2,765,510

Included in accounts payable and accrued liabilities at June 30, 2004 were amounts aggregating $372,732 (June 30, 2003 - $416,599; September 30, 2003 - $390,482) 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:

In February, 2003 the Company’s subsidiary, CRRI commenced construction of a yard waste processing facility and new operations/administrative facilities on the property acquired by it in 2002. The facilities are expected to be completed in late summer to mid-September, 2003 at a forecast cost of US $2,029,000 (Cdn $2,861,000) As at June 30, 2003, the CRRI estimates the remaining costs to complete the project to be US $658,000 (Cdn $887,000). At June 30, 2003, the company had entered into contracts totalling US $965,051 towards the construction costs of which US $451,560 remained outstanding (Cdn $1,300,310 and Cdn $608,432 respectively). 14. Income Taxes The consolidated group has non-capital losses available to reduce taxable income earned in Canada and the United States this year. No future benefit for these losses has been recognized in these financial statements. Any income tax provision and liability relate to EII and its subsidiaries. Deferred income taxes result from timing differences in the recognition of various expenses for tax and financial reporting purposes. These differences primarily include amortization and various accruals and reserves recognized in different periods for tax and financial reporting purposes. 15. Financial Instruments 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. 16. Comparative Amounts Certain 2002 comparative amounts have been reclassified to conform with the financial statement presentation adopted for 2003.


	June 30,		June 30,		September 30,
	2004		2003		2003 (audited)
Management remuneration	$	209,343	$	260,750	$	401,697
Interest and loan fees		209,902		134,527		181,425

	$	419,245	$	395,277	$	583,122

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

~~Table~~12. ofGeographically ~~Contents~~Segmented Information

CONSOLIDATED ENVIROWASTE INDUSTRIES INC. Schedule of Consolidated Cost of Sales For the nine months ended June 30, 2003 and 2002


Nine months ended June 30, 2004:	Canada			United States			Consolidated
Sales to unaffiliated customers	$	2,581,457		$	15,160,858		$	17,742,315
Inter-segment revenue (expense)		549,094			(549,094	)		—

Total revenue	$	3,130,551		$	14,611,764		$	17,742,315

Net income (loss) before income taxes	$	(195,760	)	$	1,326,252		$	1,130,492
Income tax expense		—			551,179			551,179

Net income (loss) for the period	$	(195,760	)	$	775,073		$	579,313

Identifiable assets on June 30, 2004	$	3,167,695		$	15,672,127		$	18,839,822

			3 months				3 months				9 months			9 months
Nine months ended June 30, 2003:		Canada				United States				Consolidated
			June 30, 2003				June 30, 2002				June 30, 2003			June 30, 2002
Sales to unaffiliated customers		$	3,243,570			$	13,831,556			$	17,075,126
Direct Materials
Inter-segment revenue (expense)			513,375				(513,375	)			—
	Inventory, beginning of period		$	715,717			$	754,819			$	712,527		$	825,951
Total revenue		$	3,756,945			$	13,318,181			$	17,075,126
	Purchases of direct materials and subtrades			963,598				1,374,971				1,893,398			3,189,035
Net income before income taxes		$	17,445			$	836,853			$	854,298
	Testing			4,156				7,742				15,513			17,654
Income tax expense			—				265,443				265,443
	Cost of direct materials available for use			1,683,471				2,137,532				2,621,438			4,032,640
Net income (loss) for the period		$	17,445			$	571,410			$	588,855
	Less: Inventory, end of period			(607,474	)			(624,319	)			(607,474	)		(624,319	)
Identifiable assets on June 30, 2003		$	4,136,065			$	13,270,134			$	17,406,199
Direct materials used				1,075,997				1,513,213				2,013,964			3,408,321
Direct labour				997,833				1,073,332				2,839,579			3,064,432
Manufacturing overhead				2,169,620				2,274,001				6,396,381			6,456,966
Manufacturing costs incurred for the period				4,243,450				4,860,546				11,249,924			12,929,719
Work-in-process, beginning of period				51,234				56,241				55,697			83,133
				4,294,684				4,916,787				11,305,621			13,012,852
Less: Work-in-process, end of period				(50,178	)			(50,933	)			(50,178	)		(50,933	)
Cost of goods manufactured				4,244,506				4,865,854				11,255,443			12,961,919
Finished goods, beginning of period				609,511				655,517				316,118			185,716
				4,854,017				5,521,371				11,571,561			13,147,635
Less: Finished goods, end of period				(258,925	)			(284,681	)			(258,925	)		(284,681	)
Cost of sales for the period			$	4,595,092			$	5,236,690			$	11,312,636		$	12,862,954

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.


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

~~Schedule~~Prepared ofby ~~Consolidated Direct Selling Expenses~~Management ~~For the nine months ended June 30, 2003 and 2002~~

	3 months		3 months		9 months		9 months
	June 30, 2003		June 30, 2002		June 30, 2003		June 30, 2002
Advertising	$	18,323	$	24,725	$	44,901	$	56,012
Amortization — bag plates and artwork		4,632		6,124		13,811		18,144
Automobile		990		990		2,970		2,970
Bad debts		22,062		27,721		50,460		59,518
Commissions		2,100		2,100		6,300		6,300
Discounts and allowances		82,611		73,275		110,634		154,713
Entertainment and promotion		444		193		1,571		863
Freight out		1,120,268		1,231,930		2,702,141		3,234,903
Marketing consulting		6,559		7,075		20,821		21,227
Miscellaneous		16,715		70,851		29,262		84,941
Travel		89,065		72,406		259,335		228,060
Direct selling expenses	$	1,363,769	$	1,517,390	$	3,242,206	$	3,867,651

CONSOLIDATED ENVIROWASTE INDUSTRIES INC.

~~Prepared~~Notes byto ~~Management~~Consolidated Financial Statements June 30, 2004 and 2003

~~Table~~13. ~~of Contents~~Commitments

~~CONSOLIDATED~~CRRI ~~ENVIROWASTE~~has ~~INDUSTRIES~~entered ~~INC~~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.

~~Schedules~~The ofCompany ~~Consolidated~~has ~~General~~entered into operating leases for certain machinery, equipment and ~~Administrative~~office ~~Expenses~~space. Rental expense under these leases was ~~For~~approximately Cdn$1,287,685 (including US$915,764) for the nine months ended June 30, ~~2003~~2004. ~~and~~Minimum ~~2002~~future rental payments under these leases are as follows:

	3 months		3 months		9 months		9 months
2005	$	1,479,653
	June 30, 2003		June 30, 2002		June 30, 2003		June 30, 2002
2006		440,972
Advertising	$	6,025	$	6,611	$	34,350	$	20,782
2007		152,543
Amortization		70,646		82,639		219,941		262,720
2008		—
Automobile		7,615		6,778		25,358		17,926
2009		—
Bank charges and interest		5,546		21,747		16,424		34,315
	$	2,073,168
Business taxes, licenses and fees		18,054		38,775		55,292		63,813
Consulting fees		50,586		31,968		145,802		88,218
Education and training		10,713		6,521		25,695		16,220
Entertainment and promotion		17,265		14,649		45,318		43,485
Foreign exchange loss (gain)		5,782		47,713		1,858		39,236
Insurance		6,858		5,545		18,606		15,295
Interest on long-term debt		145,627		183,978		432,076		507,323
Management remuneration		110,376		78,310		260,750		231,805
Miscellaneous		6,659		9,143		21,915		22,781
Office and stationery		31,923		23,371		76,711		71,556
Professional fees		87,498		65,375		215,398		218,042
Rent and office services		29,490		36,514		98,745		117,466
Shareholder relations		6,824		10,007		27,165		27,905
Telephone		45,398		49,040		128,730		133,273
Transfer agent and filing fees		9,165		3,907		21,330		7,077
Travel		21,615		19,306		68,955		66,556
Wages and benefits		561,545		564,790		1,753,517		1,695,350
General and administrative expenses	$	1,255,210	$	1,306,687	$	3,693,936	$	3,701,144

~~Prepared~~Pursuant byto ~~Management~~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.

~~Table~~14. ofContingent ~~Contents~~Liabilities

~~CONSOLIDATED~~The ~~ENVIROWASTE~~Company ~~INDUSTRIES~~has ~~INC~~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.

~~QUARTERLY~~Prepared ~~REPORT~~by ~~FOR THE THIRD~~Management ~~QUARTER ENDED JUNE 30, 2003~~

~~SCHEDULE~~CONSOLIDATED A:ENVIROWASTE ~~FINANCIAL~~INDUSTRIES ~~INFORMATION~~INC.

~~See~~Notes ~~accompanying~~to ~~unaudited~~Consolidated ~~financial~~Financial ~~statements for the nine months~~Statements ~~ended~~ June 30, 2004 and 2003.

~~SCHEDULE~~15. B:Income ~~SUPPLEMENTARY INFORMATION~~Taxes

	1.		Analysis of expenses and deferred costs: See accompanying unaudited financial statements for the nine months ended June 30, 2003.
	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(a) to the financial statements.
	4.(a)		Summary of authorized share capital: See Note 10 to the financial statements.
	4.(b)		Number and recorded value of shares issued: See Note 10 to the financial statements.
	4.(c)		Description of options, warrants and convertible securities: See Note 10(a) and 10(b) 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 Howard S. Steinberg
	5.(b)		Officers: James E. H. Darby–Chairman, Chief Executive Officer and Secretary Douglas R. Halward–President

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

SCHEDULE C: MANAGEMENT DISCUSSION


	June 30,			June 30,
	2004			2003
Income tax from U.S. operations	$	551,179		$	265,443
Income tax expense (recovery) from Canadian operations		(97,880	)		8,722

		453,299			274,165
Valuation allowance on Canadian operations		97,880			(8,722	)

Income tax expense	$	551,179		$	265,443

~~See~~At ~~accompanying~~June 30, ~~Management~~2004, ~~Discussion~~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.

~~Table~~With ofrespect ~~Contents~~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.

~~MANAGEMENT DISCUSSION AND ANALYSIS~~At June 30, ~~2003~~2004, the Company had, for Canadian tax purposes, operating losses aggregating approximately $2,600,000 expiring at various times through 2010 and for U.S. tax purposes, approximately US$ 63,200 in net operating losses available to offset future income expiring at various times through 2021.

~~Information~~16. ~~About~~Discontinued ~~Industry Segments~~Operations

~~Consolidated~~The ~~Envirowaste~~Company ~~Industries~~has ~~Inc.~~elected ~~(the~~to ~~“Company”)~~wind isdown athe ~~leading~~operations ~~processor~~ of ~~wood~~Greencycle, ~~and~~its Georgia ~~other~~subsidiary ~~organic~~over ~~wastes~~the innext ~~Western~~six ~~Canada~~months, ~~Florida~~ and ~~Georgia.~~as ~~The~~such, the results of its ~~Company~~operations ~~markets~~are ~~and~~presented ~~supplies~~separately ~~biomass~~on ~~boiler~~a ~~fuel~~comparative ~~for~~basis. ~~electric~~The ~~generation~~Company has ~~facilities,~~provided ~~charcoal~~for ~~manufacturers~~all ~~and~~costs ~~pulp~~of ~~and~~closing ~~paper~~the ~~mills~~operation including processing materials on its sites in ~~the~~accordance ~~U.S.~~with ascontractual ~~well~~committments estimated asto ~~bulk~~be ~~landscaping~~$189,900 ~~products~~(US in$142,400). ~~each~~Upon completion of these ~~regions~~committments, all assets and ~~packaged~~key ~~soil~~personnel will be deployed and fully utilized in the Florida ~~products~~based tooperations. ~~major~~No ~~Western~~additional ~~Canadian~~incremental ~~retailers~~costs are anticipated.

~~The following information should be read in conjunction with Consolidated Envirowaste Industries Inc~~17.’s ~~unaudited~~Financial ~~consolidated financial statements for~~Instruments ~~the nine months ended June 30, 2003 and related notes, which are prepared in~~ ~~accordance with Canadian generally accepted accounting principles. Segmented~~ ~~information on the Canadian and US operating units are presented in note 12 of~~ ~~the unaudited consolidated financial statements and a discussion of the operating results is presented below according to these operating units.~~

~~Overall~~The ~~Results~~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.

~~The~~Prepared Company has reported third quarter net earnings for the three months ended June 30, 2003 of $688,366 or $0.07 per share ($0.07 fully-diluted) compared to net earnings of $1,099,631 or $0.11 per share ($0.11 fully-diluted) for the comparable quarter of 2002. For the nine months ended June 30, 2003 the Company had net earnings of $588,855 or $0.06 per share ($0.06 fully-diluted) compared to net earnings of $1,189,384 or $0.12 per share ($0.12 fully-diluted) for the same nine months of 2002. Third quarter revenues declined 10% over the third quarter of 2002 due to the effects of the strengthening Canadian dollar versus its US counterpart. Compared to last year’s third quarter, tipping fees and bulk sales declined 10% and 17% respectively. Overall sales for the nine month period continue to show the effects of the first quarter $1.5 million drop in tipping revenue with total revenue declining by ~~$2.3 million or 11% over the~~Management ~~same nine month period of 2002. Third quarter gross margins improved slightly~~ ~~and strong cost controls served to keep pre-tax earnings reasonably in line~~ ~~with the previous year. Income tax provisions of $125,000 for the quarter and~~ $265,000 for the nine months also impacted net earnings compared to the same periods in 2002 where earnings were sheltered from tax by the utilization of prior year losses. Cash flow from operations after changes in non-cash working capital items in the third quarter were comparable to the same quarter in 2002, but cash flow after changes in working capital declined by $561,000 over the same nine month period in 2002 due largely from an increase in US receivables compared to last year at this time.

~~Table~~CONSOLIDATED ofENVIROWASTE ~~Contents~~INDUSTRIES INC.

USNotes ~~Operations~~to Consolidated Financial Statements June 30, 2004 and 2003

~~Revenues for the quarter, at just over Cdn $5~~18.~~8 million,~~ ~~were~~Subsequent ~~off less than 2%~~events ~~in terms of US Funds, while unfavourable currency translation differences~~ ~~brought the sales reduction to 11% for the quarter. Revenues for the nine~~ ~~months were approximately $2 million lower than the first nine months of 2002~~ which included higher than usual storm related revenues and revenues from a large private sector project which completed late in 2002. Our core business from local municipal work improved over the comparable quarter of last year, while margins increased and selling costs (freight) were reduced as a result of the lower activity in the first quarter and strong cost controls in the second and third quarters. The Company’s Florida subsidiary commenced construction in February, 2003 of a yard waste facility and new operations/administrative facilities on the property acquired by it in 2002. The project is proceeding smoothly and on schedule for completion in late summer to mid-September, 2003. The Company has utilized US $450,000 of its US $850,000 construction financing facility.

~~Canadian~~The ~~Operations~~following events took place subsequent to June 30, 2004:

Revenues in the third quarter declined by 7% and 7% for the nine months ended June 30, 2003 over the comparable periods of 2002. Tipping fees increased 16%, bulk sales declined 11%, and packaged sales declined 7% in the third quarter compared to the same quarter of 2002. For the nine months, tipping fees have increased 9%, bulk sales rose by 12%, and packaged sales declined by 10% over the comparable period for last year. Customer reluctance to place early Spring orders and inclement weather in March, which affected packaged sales in the first two quarters, were not fully recouped in the third quarter. The Abbotsford storm water diversion system, completed in the first quarter, is working as planned and we continue to be within permit levels.

(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.

~~Liquidity~~Prepared ~~and~~by ~~Capital Resources~~Management

~~Net~~CONSOLIDATED ~~earnings~~ENVIROWASTE inINDUSTRIES ~~the third quarter continued to provide good cash flow from operations after changes in working capital~~INC. ~~While working capital has been~~ ~~depleted from September 30, 2002 levels with the construction of the new~~ ~~facilities in Florida, the Company has cash resources to meet day-to-day~~ ~~operating requirements with sufficient cash and credit facilities in place to~~ fund the remainder of the construction costs. The rising Canadian dollar, while having a detrimental effect on revenues, has had a favourable impact on our debt position relative to our US dollar denominated debt.

~~Table~~Schedules of ~~Contents~~Consolidated Cost of Sales For the nine months ended June 30, 2004 and 2003

Outlook


	3 months			3 months			9 months			9 months
	June 30, 2004			June 30, 2003			June 30, 2004			June 30, 2003
Direct Materials
Inventory, beginning of period	$	736,012		$	715,717		$	749,968		$	712,527
Purchases of direct materials and subtrades		581,303			892,566			1,318,886			1,722,767
Testing		4,032			4,156			19,405			15,513

Cost of direct materials available for use		1,321,347			1,612,439			2,088,259			2,450,807
Less: Inventory, end of period		(563,251	)		(607,474	)		(563,251	)		(607,474	)

Direct materials used		758,096			1,004,965			1,525,008			1,843,333
Direct labour		968,420			893,383			2,693,741			2,520,901
Manufacturing overhead		2,144,087			1,941,602			5,941,533			5,762,460

Manufacturing costs incurred for the period		3,870,603			3,839,950			10,160,282			10,126,694
Work-in-process, beginning of period		46,493			51,234			26,458			55,697

		3,917,096			3,891,184			10,186,740			10,182,391
Less: Work-in-process, end of period		(44,594	)		(50,178	)		(44,594	)		(50,178	)

Cost of goods manufactured		3,872,502			3,841,006			10,142,146			10,132,213
Finished goods, beginning of period		260,192			609,511			176,510			316,118

		4,132,694			4,450,517			10,318,656			10,448,331
Less: Finished goods, end of period		(188,132	)		(258,925	)		(188,132	)		(258,925	)

Cost of sales for the period	$	3,944,562		$	4,191,592		$	10,130,524		$	10,189,406

AsPrepared we reported to you in earlier management discussions, there is still a certain amount of anxiety in the American economy. The slower economy, competitive pressures, rising fuel costs, and the resurgence of the Canadian dollar have all been major factors affecting our operations thus far in the fiscal year, and, could continue to be factors which will affect our operations in the remaining quarter of 2003. The effect of weather patterns, which have deviated from norms over the past three to five years, and deferrals in public and private investment are still challenges to be faced in this fiscal year. We look forward to completion of the Florida facilities by ~~the end of the~~Management ~~fiscal year.~~

~~[signed]~~CONSOLIDATED ~~[signed]~~ENVIROWASTE ~~James~~INDUSTRIES EINC. ~~Darby Chairman and Chief Executive Officer Douglas R. Halward President~~

~~Table~~Schedules of ~~Contents~~Consolidated Direct Selling Expenses For the nine months ended June 30, 2004 and 2003

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


	3 months		3 months		9 months		9 months
	June 30, 2004		June 30, 2003		June 30, 2004		June 30, 2003
Advertising	$	16,017	$	18,323	$	35,138	$	44,617
Amortization - bag plates and artwork		4,950		4,632		14,327		13,811
Automobile		1,650		990		4,950		2,970
Bad debts		15,718		21,013		36,868		47,102
Commissions		2,100		2,100		6,300		6,300
Discounts and allowances		56,005		82,611		78,844		110,634
Entertainment and promotion		150		444		2,306		1,571
Freight out		1,111,077		1,041,668		2,726,668		2,419,460
Marketing consulting		6,559		6,559		28,628		20,821
Miscellaneous		13,245		16,236		31,347		27,564
Travel		107,021		83,435		282,997		242,199

Direct selling expenses	$	1,334,492	$	1,278,011	$	3,248,373	$	2,937,049

~~NEWS~~Prepared ~~RELEASE~~by Management

~~Consolidated~~CONSOLIDATED ~~Envirowaste~~ENVIROWASTE ~~Reports~~INDUSTRIES ~~Third Quarter Earnings~~INC. ~~Abbotsford, British Columbia – August 29, 2003~~

~~Consolidated~~Schedules ~~Envirowaste~~of ~~Industries~~Consolidated ~~Inc.~~General ~~(TSX~~and ~~Venture~~Administrative ~~Exchange-CWD) announced~~Expenses ~~today~~For ~~its results for~~ the nine months ended June 30, ~~2003.~~2004 Aand ~~complete copy of~~2003 ~~the Company’s third quarter report is available on the World Wide Web at~~ ~~www.sedar.com. Excerpts from the quarterly unaudited financial statements are as follows:~~

	Quarter Ended			Quarter Ended		Nine Months Ended		Nine Months Ended
	3 months			3 months		9 months		9 months
	June 30, 2003			June 30, 2002		June 30, 2003		June 30, 2002
	June 30, 2004			June 30, 2003		June 30, 2004		June 30, 2003
Sales	$	8,050,600		$	8,966,947	$	18,970,455	$	21,236,418
Advertising	$	7,562		$	6,025	$	22,540	$	34,350
Income before income taxes		813,742			1,100,922		854,298		1,190,675
Amortization		128,131			68,154		370,144		211,286
Income tax expense		125,376			1,291		265,443		1,291
Automobile		7,814			7,615		23,573		25,358
Net Earnings		688,366			1,099,631		588,855		1,189,384
Bank charges and interest		3,621			5,477		9,102		16,355
Basic earnings per common share		0.07			0.11		0.06		0.12
Business taxes, licenses and fees		18,355			15,607		55,639		48,823
Diluted earnings per common share		0.07			0.11		0.06		0.12
Consulting fees		33,791			46,203		105,799		131,761
Weighted average common shares outstanding		9,994,299			9,976,299		9,985,596		9,940,127
Education and training		6,628			10,253		17,207		24,004
Entertainment and promotion		17,913			17,265		46,574		45,318
Foreign exchange loss (gain)		(1,416	)		2,830		3,429		(6,525	)
Insurance		7,206			6,858		22,120		18,606
Interest on long-term debt		141,267			144,768		479,599		427,960
Management remuneration		70,941			110,376		209,343		260,750
Miscellaneous		9,724			6,696		33,564		22,222
Office and stationery		34,254			26,932		116,792		64,524
Professional fees		59,333			81,272		164,894		192,828
Rent and office services		27,123			29,114		79,627		97,547
Shareholder relations		6,908			6,824		25,630		27,165
Telephone		38,060			40,834		107,214		113,035
Transfer agent and filing fees		10,162			9,165		25,763		21,330
Travel		22,732			21,615		56,012		68,955
Wages and benefits		589,992			546,499		1,711,519		1,704,121
General and administrative expenses	$	1,240,101		$	1,210,382	$	3,686,084	$	3,549,773

~~The~~Prepared Company has reported third quarter net earnings for the three months ended June 30, 2003 of $688,366 or $0.07 per share ($0.07 fully-diluted) compared to net earnings of $1,099,631 or $0.11 per share ($0.11 fully-diluted) for the comparable quarter of 2002. For the nine months ended June 30, 2003 the Company had net earnings of $588,855 or $0.06 per share ($0.06 fully-diluted) compared to net earnings of $1,189,384 or $0.12 per share ($0.12 fully-diluted) for the same nine months of 2002. Third quarter revenues declined 10% over the third quarter of 2002 due to the effects of the strengthening Canadian dollar versus its US counterpart. Overall sales for the nine month period continue to show the effects of the first quarter $1.5 million drop in tipping revenue with total revenue declining by ~~$2.3 million or 11% over the same nine month period~~Management ~~of 2002. Third quarter gross margins improved slightly and strong cost~~ ~~controls served to keep pre-tax earnings reasonably in line with the previous~~ ~~year. Income tax provisions of $125,000 for the quarter and $265,000 for the~~ nine months also impacted net earnings compared to the same periods in 2002 where earnings were sheltered from tax by the utilization of prior year losses. Cash flow from operations after changes in non-cash working capital items in the third quarter were comparable to the same quarter in 2002, but cash flow after changes in working capital declined by $561,000 over the same nine month period in 2002 due largely from an increase in US receivables compared to last year at this time. While working capital has

~~Table~~CONSOLIDATED ofENVIROWASTE ~~Contents~~INDUSTRIES INC.

~~been~~QUARTERLY ~~depleted~~REPORT ~~from~~FOR ~~September 30,~~THE ~~2002 levels with the construction of the new~~THIRD ~~facilities~~QUARTER inENDED ~~Florida~~JUNE 30, ~~the Company has cash resources to meet day-to-day~~2004 ~~operating requirements with sufficient cash and credit facilities in place to~~ ~~fund the remainder of the construction costs and look forward to its completion~~ ~~towards the end of the fiscal year.~~

~~Consolidated~~SCHEDULE ~~Envirowaste~~A: ~~Industries~~FINANCIAL ~~Inc. is a leading processor of wood and~~INFORMATION ~~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~~See ~~Envirowaste~~accompanying ~~Industries~~unaudited ~~Inc~~financial statements for the nine months ended June 30, 2004.

~~Per~~SCHEDULE B: ~~“James~~SUPPLEMENTARY ~~E. Darby”~~INFORMATION

James E. Darby Chairman and Chief Executive Officer


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

~~The~~SCHEDULE ~~TSX~~C: ~~Venture~~MANAGEMENT ~~Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.~~DISCUSSION

See accompanying Management Discussion.

MANAGEMENT DISCUSSION AND ANALYSIS
June 30, 2004

Information About Industry Segments

Consolidated Envirowaste Industries Inc. (the “Company”) 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.

The following information should be read in conjunction with Consolidated Envirowaste Industries Inc.’s unaudited consolidated financial statements for the nine months ended June 30, 2004 and related notes, which are prepared in accordance with Canadian generally accepted accounting principles. Segmented information on the Canadian and US operating units are presented in note 12 of the unaudited consolidated financial statements and a discussion of the operating results is presented below according to these operating units.

Overall Results

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.

The Company has elected to wind down the operations of its Georgia subsidiary over the next six months, and, 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 three months ended June 30, 2004 is a net after tax loss of $11,442 compared to net earnings after tax of $159,787 for the June 30, 2003 quarter. Results for the nine months ended June 30, 2004 included net after tax earnings of $384,854 compared to net earnings after tax of $394,766 for the comparable period of 2003.

Third quarter revenues from continuing operations were comparable to revenues 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.

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.

US Operations

Second quarter revenue from continuing operations of Cdn $5.9 million grew 16%, while revenue at Cdn $15.1 million for the first nine months of 2004, increased 10% over the comparable periods of last year while being unfavourably affected by currency translation differences.

Our core business from local municipal work as well as revenue derived from 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 flows from operating activities for the third quarter were similar to that of fiscal 2003’s third quarter with the exception of unfavourable currency translation differences. Cash flows from operating activities after changes in non-cash working capital for the nine months ended June 30, 2004 increased by Cdn $288,000 compared to the nine months ended June 30, 2003. Cash and cash equivalents were $1 million higher than June 30, 2003 when cash was being used to construct its new facilities.

Canadian Operations

Revenues declined 35% in the third quarter and 21% for the nine 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.

Liquidity and Capital Resources

The 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 and equivalents more than double that of June 30, 2003.

Outlook

As anticipated, weather patterns, rising costs, competition and comparative Canadian and U.S. exchange rates have impacted operations throughout the first three quarters of this fiscal year and should continue to do so in the remaining quarter. We will continue to focus on operating level adjustments as events unfold.


[signed]		[signed]

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

Table of Contents

Table of Contents

Filing Compare · CONSOLIDATED ENVIROWASTE INDUSTRIES INC