SECURITIES EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                   FORM 10-KSB

                   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2000

                        Commission file number 000-26029

                          ASIAN STAR DEVELOPMENT, INC.
             (Exact name of registrant as specified in its Charter)

                                     Nevada
         (State of other jurisdiction of incorporation or organization)

                                   86-0866395
                      (I.R.S. Employer Identification No.)

                          Room 930, Block B, East Wing
                            New World Office Building
                         Tsimshatsui, Kowloon, Hong Kong
                    (Address of Principal Executive Offices)

       Registrant's telephone number, including area code:(852) 2721-0936
     Securities to be registered pursuant to Section 12(b) of the Act: None
 Securities to be registered pursuant to Section 12(g) of the Act: Common Stock

                                  Common Stock
                                (Title of Class)

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that  Registrant  was  required to file such  reports),  and (2) has been
subject to such filing requirements for past 90 days. Yes XX No _____

Securities registered under Section 12(g) of the Exchange Act:

There are 15,746,015 shares of common stock outstanding as of December 31, 2000.
The shares are traded on the OTC Bulletin Board.

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained  , to the  best of  Registrant's  knowledge,  in  definitive  proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10_KSB. X.

State issuer's revenues for its most recent fiscal year: $1,275,831

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified  date within the past 60 days. On March 9, 2001 the  aggregate  market
value was $2,346,746.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 15,746,015 shares of which 14,207,615
were restricted shares.





<PAGE>


                                TABLE OF CONTENTS

Part I

Item 1   Description of Business

Item 2   Description of Property

Item 3   Legal Proceedings

Item 4   Submission of Matters to a Vote of Security Holders


Part II

Item 5   Market for Common Equity and Related Stockholder Matters

         The  Company's shares of Common Stock are traded on the
         OTC Bulletin Board. The High/Low bid quotations for the
         year ended December 31, 2000, was $7.0/$0.2031

Item 6   Management's Discussion and Analysis of Plan of Operations.

Item 7   Financial Statements

Item 8   Changes in and Disagreement with Accountants on Accounting
         and Financial Disclosure.


Part III

Item 9     Directors, Executive Officers, Promoters and Control
           Persons; Compliance with Section 16(a) of the Exchange Act

Item 10    Executive Compensation

Item 11    Security Ownership of Certain Beneficial Owners and
           Management

Item 12    Certain Relationships and Related Transactions

Item 13    Exhibits, List and Reports on Form 8-K



                                      -2-

<PAGE>


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

BACKGROUND AND REORGANIZATION

Asian Star Development,  Inc.,  (Registrant) was incorporated  under the laws of
the State of Nevada  in the  United  States of  America  on  January  8, 1997 to
conduct  real  estate  development  business in the  People's  Republic of China
(PRC).

BUSINESS ACQUISITIONS

Years 1997 to 1999

On January 8, 1997, Registrant entered into an agreement with Honpar (Huangzhou)
Properties  Limited,  a Hong  Kong  corporation,  for the  purchase  and sale of
certain assets. Stephen Chow, an officer,  director and principal shareholder of
Registrant,  is also an officer,  director and principal  shareholder  of Honpar
(Huangzhou).  Pursuant to the terms of the Agreement,  Registrant issued a total
of 5,760,000  shares of its  restricted  Common Stock in exchange for all of the
rights and interests in and to the assets of Honpar  (Huangzhou),  consisting of
an 80% equity  interest in and to 2 projects  known as "Dragon Villa" and "Water
World".  A total of  4,885,700  of the shares  were  issued to 4 parties who are
officers, directors and/or principal share- holders of Registrant as follows:

NAME OF OFFICER/DIRECTOR/PRINCIPAL SHAREHOLDER                NUMBER OF SHARES
----------------------------------------------                ----------------

Stephen Chow                                                      4,322,700
Extensiview Ltd.                                                    503,000
Paul Tong (1)                                                        10,000
Paul Lam                                                             50,000

(1) These shares are held in the name of Sino Pride Group  Limited,  a Hong Kong
corporation  of  which  Mr.  Tong,  an  officer,  director  and  shareholder  of
Registrant, is an officer, director and principal shareholder.

The balance of 874,300 shares were issued to 81 unrelated third parties.

This transaction was a reverse acquisition in which the controlling Shareholders
of Honpar  (Huangzhou)  became the controlling  shareholders of Registrant.  The
number  of  shares  issued  was  based  on the  estimated  market  value  of the
properties at the time of acquisition, which was approximately US$14,164,000, or
approximately $2.46 per share.

On January 8, 1997,  Registrant entered into an agreement with Honpar Properties
Limited,  a Hong Kong corporation,  for the purchase and sale of certain assets.
Stephen Chow, an officer,  director and principal shareholder of Registrant,  is
also an officer, director and shareholder of Honpar Properties Limited. Pursuant
to the terms of the Agreement,  Registrant issued a total of 3,240,000 shares of
its  restricted  Common Stock in exchange for all of the rights and interests in
and to the  assets,  consisting  of all right,  title and  interest in a project
known as "Maple  City".  A total of  2,309,000  of the shares  were  issued to 5
parties who are officers,  directors,  advisors and/or principal shareholders of
Registrant as follows:

NAME OF OFFICER/DIRECTOR/PRINCIPAL SHAREHOLDER                NUMBER OF SHARES
----------------------------------------------                ----------------

Stephen Chow                                                      1,077,300
Extensiview Ltd.                                                    972,000
Sang Chan                                                           103,000
Paul Tong (1)                                                       100,000
Sam Chow (2)                                                         56,700


                                      -3-

<PAGE>


(1)   These shares are held in the name of Sino Pride Group Limited, a Hong Kong
      corporation  of which Mr. Tong, an officer,  director and  shareholder  of
      Registrant, is an officer, director and principal shareholder.

(2)   Sam Chow is a member  of Registrant's  Advisory Board and the  brother  of
      Stephen Chow.

The balance of 931,000  shares were issued to 19 unrelated  third  parties.  The
number  of  shares  issued  was  based  on the  estimated  market  value  of the
properties at the time of acquisition,  which was approximately US$6,524,000, or
approximately $2.01 per share.

On December  15, 1998,  Registrant  issued  2,590,730  shares of Common Stock at
$1.113  per share in  exchange  for 100%  equity  interest  in Honpar  (Shilong)
Properties  Limited (Honpar  Shilong),  a Hong Kong corporation of which Stephen
Chow,  an officer,  director and  principal  shareholder  of  Registrant,  is an
officer,  director and principal  shareholder.  The  2,590,730  shares issued by
Registrant  for the  exchange  of  Honpar  Shilong's  shares  was  based  on the
historical cost of the net assets and  liabilities of Honpar Shilong,  which was
$2,879,078  . The  price per share of $1.113  used to  determine  the  number of
Registrant's  shares to be issued (2,590,730 shares) was based on a 30% discount
on the weighted average trading price of Registrant's  shares 60 days before the
transaction date.  Honpar Shilong has one project,  the Shilong City Hall, which
has been under  construction  since 1996.  Registrant intends to sell all of the
above development projects once they are completed and fully operational.

NAME OF OFFICER/DIRECTOR/PRINCIPAL SHAREHOLDER                NUMBER OF SHARES
----------------------------------------------                ----------------
Stephen Chow (1)                                                    180,000

(1)  Immediately  upon his receipt of these shares,  Mr. Chow made a gift of all
180,000 shares,  in three (3) equal parts,  each consisting of 60,000 shares, to
his three  children,  Connie  Chow,  Conway  Chow and Melody  Chow.  Each of his
children is over 21 years of age and none of them reside in the same  house-hold
as Mr. Chow.

As  a  result  of  Registrant's  acquisitions  of  Honpar  (Huangzhou),   Honpar
Properties  Limited  and Honpar  (Shilong)  Properties  Limited,  the  officers,
directors  and  principal  shareholders  of  Registrant  received the  following
aggregate number of shares and percentage of outstanding shares of Registrant:

NAME OF OFFICER, DIRECTOR        AGGREGATE NUMBER         PERCENTAGE OF TOTAL
PRINCIPAL SHAREHOLDER          OF SHARES RECEIVED          OUTSTANDING SHARES
-------------------------      ------------------         -------------------

Stephen Chow                            5,400,000                         42%
Extensiview Ltd.                        1,475,000                         11%
Paul Tong                                 110,000                          1%
Sang Chan                                 103,000                          1%
Paul Lam                                   50,000                Less than 1%
Sam Chow                                   56,700                Less than 1%

Year 2000

In January  2000,  Registrant  acquired  100% equity  interests in two Hong Kong
companies which were owned by a consultant of Registrant.

Registrant issued 261,860 of Registrant's Restricted Common Stock valued at $1.7
per share as  consideration.  The fair value of the Restricted  Common Stock was
determined  based on the 7 days weighted  average  trading  prices quoted on the
stock exchange prior to the date of completion of the acquisition.


                                      -4-

<PAGE>


On March 28, 2000,  Registrant and a subsidiary company,  Asian Star (Hong Kong)
Limited entered into various  agreements with Harmonic Hall Investment  Holdings
Ltd,   ("HHI"),   whereby   Registrant  and  its  subsidiary   company  acquired
approximately 52% of the outstanding common stock of HHI for 2,313,625 shares of
Registrant's  Restricted  Common Stock at per value $0.001 and cash of $650,160.
The consummation date of the transaction was on April 15, 2000.

As of June 30,  2000,  Asian Star (Hong Kong)  Limited paid cash of $650,160 and
Registrant issued 2,313,625 shares of Registrant's  Restricted Common Stock at a
fair  value of  $9,288,000  The fair  value of the  Restricted  Common  Stock at
approximately  $4 per share was determined  based on the 7 days weighted average
trading share prices quoted on the stock exchange prior to the consummation date
of the transaction

In addition to the above, Registrant advanced a sum of approximately $323,000 to
HHI for its working capital.  The advance has no specific terms of repayment and
is recorded as other assets.

Including  business  combinations   described  above,   Registrant's   principal
subsidiaries and equity interests as of 31 December 2000 therein are as follows:

<TABLE>
<CAPTION>

                                                                            EQUITY
NAME                                              INCORPORTATED IN        INTEREST     NATURE OF BUSINESS
----------------------------------------------  ---------------------  ------------  ---------------------
<S>                                                <C>                        <C>      <C>
DONGGUAN DRAGON VILLA LTD - branch                      PRC                    80%             Water Park
HONSTAR ENTERTAINMENT CENTRE LTD                        PRC                   100%                Dormant
HONKING INTERNATIONAL LTD                            HONG KONG                100%                Dormant
HONPAR (SHILONG) PROPERTIES LIMITED                  HONG KONG                100%                Dormant
ASIAN STAR (HONG KONG) LIMITED                       HONG KONG                100%     Investment Holding
ASIAN STAR TECHNOLOGY DEVELOPMENT LIMITED            HONG KONG                100%        Sales agent for
                                                                                              China space
                                                                                       souvenirs products
LIBERAL INTERNATIONAL LTD                            HONG KONG                100%     Cafeteria business
UNITY WORLD ENTERPRISES LTD                          HONG KONG                100%     Cafeteria business
ABLE WEALTH INVESTMENT LTD                         BRITISH VIRGIN             100%     Investment Holding
                                                      ISLANDS
</TABLE>

GENERAL
-------

Registrant has a Web site at www.asianstardev.com.

Registrant's corporate offices are located at Suite 930, East Wing, Block B, New
World Office Building, Tsimshatsui, Kowloon, Hong Kong.

REGISTRANT'S BUSINESS STRATEGY
------------------------------

Registrant's business strategy is to complete and manage its current projects in
China,  while  seeking  purchasers  for the projects in their  current  stage of
development.  Once a project  is  completed  and fully  operational,  Registrant
intends to sell its interests in and to that project,  thereby  generating funds
for other business projects selected by Registrant. Registrant will also seek to
diversify  its  business by  expanding  into other  projects on a joint  venture
basis.  Registrant is currently  involved in discussions  and  negotiations  for
various pharmaceutical and technology-related projects.


                                      -5-

<PAGE>


REAL ESTATE PROJECT UNDER DEVELOPMENT
-------------------------------------

1.   MAPI (MAPLE CITY), GUANDONG, CHINA
     ----------------------------------

Honpar Properties Limited, a Hong Kong corporation, entered into a Joint Venture
Agreement with the Government of Mapi to develop Maple City, nicknamed the "City
of the Future".  Under the terms of the  agreement,  the  Government  of Mapi is
responsible  for  securing  all  necessary  government  approvals,  permits  and
licenses  for  all  aspects  of the  project  and  obtaining  financing  for all
infrastructure  improvements  (electricity,  drinking water,  sewer lines,  gas,
telecommunications,   etc.)  prior  to  commencement  of  construction.   Honpar
Properties  Limited is responsible for the  development and  construction of the
joint venture  projects.  On January 8, 1997,  Registrant  entered into an asset
purchase  agreement  with Honpar  Properties  Limited to acquire all of Honpar's
rights, titles and interests in the Maple City Joint Venture Agreement.

The Maple City project, which is developed by Registrant, comprises 3 parcels of
land which are close,  but not  adjacent  to each other.  The land usage  rights
certificates  for the Maple  City  project  stipulate  a lease  term of 70 years
commencing  from 1993 and the total area is  approximately  74,000 square meters
(approximately  111 acres). It was the original intention of Registrant to build
a hotel, commercial and entertainment complex on these parcels of land.

Registrant considers that the infrastructure in PRC is not ready yet and prefers
to hold the project  development until there are clear prospects in the property
market.

2.   SHILONG WATER WORLD, GUANGDONG, CHINA
     -------------------------------------

In October 1997,  Registrant entered into a co-operative joint venture agreement
in respect of the  development of Shilong Water World located in Shilong Town in
PRC through Dragon Villa.  The joint venture  constructed a water  entertainment
complex which  includes  facilities  such as a restaurant,  swimming pools and a
kiosk. Full operations of the water park commenced on August 1, 1998.

Registrant  entered into an agreement  with a third party whereby a third party,
contractor for the water world  construction has  sub-contracted  the Water Park
operation at a consideration  of $144,578 per annum for 7 years with effect from
June 1, 2000.

3.   CAFETERIA BUSINESS, HK
     ----------------------

In January, 2000, the sales and purchase transactions were completed between one
of Registrant's subsidiaries, Able Wealth Investments Limited, and the owners of
two Hong Kong  incorporated  companies.  Through  this  agreement,  Able  Wealth
Investments  Limited  acquires the entire  equity  shares of these two Hong Kong
companies which operate a cafeteria business in Hong Kong.

The cafeteria is operating under the trade name "Ocean Wealth Restaurant" in Nam
Tin,  Hong Kong.  It is located in a private  residential  estate  with a lot of
population.  The  restaurant  provides  customers  with all  ranges  of food and
catering services.

4.   AGENT AND MERCHANDISING BUSINESS, HK
     ------------------------------------

In June 2000, Registrant's newly established  subsidiary,  Asian Star Technology
Development Limited ("ASTD"),  was appointed as an agent for the Chinese Academy
of  Space   Technology  and  China  Space   Foundation   South  Agency  for  all
international commercial activities.  ASTD launched marketing programs for sales
of highly coveted China Space Souvenir Products during the year.


                                      -6-

<PAGE>


PROJECT FUNDING
---------------

The operating  activities of the above projects were  substantially  financed by
Stephen Chow, an officer,  director and principal shareholder of Registrant,  by
either  infusing  equity  capital or  providing  shareholder  loans.  Additional
financing  was derived from the sale of  Registrant's  equity  securities.  (See
"Certain Transactions" and "Financial Statements".)

Considering the condition that only limited funding is presently available,  the
completion of these projects on a timely basis will depend  significantly on the
additional  funding available to Registrant through debt and/or equity financing
in the near future. (See "Management's Discussion and Analyses")

GOVERNMENT REGULATIONS
----------------------

Registrant's  projects are subject to various laws and governmental  regulations
relating to its business  operations  and project  developments,  such as zoning
requirements. In these joint venture projects with Chinese state-owned entities,
the Chinese  partners are  responsible  for obtaining all licenses,  permits and
regulatory  approvals  for  the  projects.   Meanwhile,   Registrant  is  solely
responsible  for obtaining such licenses,  permits and regulatory  approvals for
any other projects not involving these state-owned entities. Registrant believes
it is currently in compliance with all laws, rules and regulations applicable to
its  projects  and such laws,  rules and  regulations  do not  currently  have a
material impact on its operations.

However, due to the increasing popularity and growth in development in the areas
of China where Registrant is currently operating,  it is possible that new laws,
rules and/or regulations may be adopted with respect to Registrant's projects or
proposed  projects.  The enactment of any such laws, rules or regulations in the
future may have a negative impact on Registrant's  projected growth, which could
in turn decrease  Registrant's  projected revenues or increase its cost of doing
business.

EMPLOYEES
---------

At the present  time,  Registrant  has 47  full-time  employees,  including  its
officers  and  directors.  Registrant  subcontracts  out all of the  work on its
development projects to unrelated third parties.


ITEM 2.    DESCRIPTION OF PROPERTY

The property held by Registrant consist of the following:

(a)      SHILONG WATER WORLD
         -------------------

The  Shilong  Water  World is  situated  in Shilong  Town,  Dongguan,  Guangdong
Province and consists of approximately  40,000 square meters.  This land will be
returned to the  Government  of Shilong  upon  expiration  of the joint  venture
agreement in 70 years.

(b)      MAPLE CITY RESORT
         -----------------

Registrant issued 3,240,000 shares of its restricted Common Stock to acquire the
Maple City Project through the acquisition of Honpar Properties  Limited,  which
was 80% owned by Honpar (Huangzhou) Properties Limited.


                                      -7-

<PAGE>


The Maple  City  project  consists  of 3 parcels of land which are close to each
other,  comprising  approximately  74,000 square  meters.  The land usage rights
certificates  of the  Maple  City  project  stipulate  a lease  term of 70 years
commencing  from 1993 and the total area is  approximately  74,000 square meters
(approximately  111 acres).  The land was  contributed  to Registrant at nominal
consideration.  It was the original  intention of  Registrant  to build a hotel,
commercial  and  entertainment  complex on these  parcels  of land.  A hotel and
entertainment  center is being built by a PRC wholly-owned  subsidiary,  Honstar
Entertainment Center Limited (Honstar), with structural work already completed.

LIMITED OPERATING HISTORY; ACCUMULATED DEFICIT; NEED FOR ADDITIONAL CAPITAL
---------------------------------------------------------------------------

There is limited historical financial information about Registrant upon which to
base an evaluation of Registrant's  performance or to make a decision  regarding
an investment in shares of  Registrant's  Common  Stock.  Registrant  has had an
accumulated  deficit of $16,652,120 as of December 31, 2000.  Registrant's  cash
and cash  equivalents  increased from $5,628 at December 31, 1999 to $114,832 at
December 31, 2000.

Registrant completed construction of its first project, Shilong Water World, and
commenced operations on August 1, 1998, generating gross revenues of $41,926 and
$97,117 for the years ended December 31, 1999 and 2000  respectively.  There can
be no assurance that Registrant will be successful in its business operations or
will achieve  significant  levels of market acceptance for its proposed property
development  ventures.  Registrant's  business could be subject to any or all of
the problems,  expenses, delays and risks inherent in the establishment of a new
business  enterprise  including  limited capital  resources,  possible delays in
construction and/or development of its properties, possible cost overruns due to
price and cost increases in raw products and manufacturing processes,  uncertain
market acceptance and the absence of an operating history.  Therefore, there can
be no  assurance  that  Registrant's  business  or  proposed  ventures  will  be
successful  or that  Registrant  will be able to achieve or maintain  profitable
operations.  Further,  there  can  be no  assurance  that  Registrant  will  not
encounter  unforeseen  difficulties  that may deplete its capital resources more
rapidly than anticipated.

To become and remain  profitable  and  competitive,  Registrant  will  likely be
required to make significant  investments in the construction and development of
its properties.  Registrant is seeking  additional  equity financing in order to
provide for the capital required to maintain or expand its business  operations.
To date,  Registrant has not been  successful in its attempts to find additional
equity financing and presently has no available sources of financing.

Upon completion of each project, Registrant intends to sell its interests in and
to that project,  thereby  generating funds for other business projects selected
by Registrant.

The timing and total amount of capital  requirements cannot be predicted at this
time.  There  can be no  assurance  that  any  financing  will be  available  on
acceptable  terms, if at all. If such financing is not available on satisfactory
terms,  Registrant may be unable to continue,  develop or expand its business or
develop new  properties  at the rate  desired and its  operating  results may be
adversely  affected.  Equity  financing  could result in additional  dilution to
existing shareholders.

ITEM 3.   LEGAL PROCEEDINGS

a    HARMONIC HALL INVESTMENT HOLDINGS LIMITED
     -----------------------------------------

On March 28, 2000,  Registrant and a subsidiary company,  Asian Star (Hong Kong)
Limited  entered into the following  agreements  with  Harmonic Hall  Investment
Holdings Ltd, ("HHI") and a director of HHI:


                                      -8-

<PAGE>


1.       Subscription agreement dated March 28, 2000  made  between  Registrant,
         HHI and a director of HHI.
         Asian Star (Hong  Kong)  Limited to  subscribe  for 35 new shares of $1
         each in HHI at a total subscription  price of $18,576  (HK$144,000) per
         share totaling $650,160 (HK$5,040,000).

2.       Sales and Purchase Agreement dated March 28, 2000.
         The director of HHI agreed to sell and transfer and  Registrant  agreed
         to purchase 500 existing  shares of $1 each in HHI for a  consideration
         of   $9,288,000   (HK$72,000,000)   to  be  paid  by   allotment.   The
         consideration  payable to the  director of HHI being the  allotment  of
         2,313,625 Restricted Common Stock at par value of $.001 each.

3.       Investment Agreement signed on March 28, 2000  providing  for injection
         of funds into HHI by the subsidiary company.

Following  the above  transfer,  Registrant  holds  51.69% of the  issued  share
capital of HHI.

Registrant  purchased 535 shares of HHI in total.  It was agreed that Registrant
would invest a further sum of  $9,288,000  (HK$72,000,000)  in four  tranches as
follows:

-        $1,935,000 (HK$15,000,000) within  2 weeks  of  the audited accounts of
         HHI for the period ended June 30, 1999/
-        3 tranches of $2,580,000 (HK$20,000,000) each became  payable at a date
         two calendar  months after the completion of the  subscription  for the
         shares under the previous tranche.

Registrant  and  its  subsidiary  company  acquired  approximately  52%  of  the
outstan`ding  common  stock  of  HHI  for  2,313,625  shares  of  the  Company's
Restricted  Common  Stock  at  par  value  $.001  and  cash  of  $650,160.   The
consummation date of the transaction was on April 15, 2000.

Pursuant  to various  investment  agreements  (Subscription  agreement,  Sales &
Purchase  agreement and investment  agreement) entered into between the Company,
one of its  subsidiary  company and HHI,  as of June 30,  2000,  the  subsidiary
company paid cash of $650,160  and the Company  issued  2,313,625  shares of the
Company's Restricted Common Stock at a fair value of $9,288,000.  The fair value
of the  Restricted  Common Stock at  approximately  $4 per share was  determined
based on the 7 days  weighted  average  trading share prices quoted on the stock
exchange prior to the consummation date of the transaction.

In addition to the above, Registrant advanced a sum of approximately $323,000 to
HHI for its working capital.  The advance has no specific terms of repayment and
is recorded as other assets.

Following the purchases,  management of Registrant has not been able to exercise
control over the  operation of HHI or obtain  financial  statements of HHI as of
June 30, 2000. In August 2000,  Registrant retained a legal counsel in Hong Kong
to prepare and file a writ with the Court  against HHI and a director of HHI for
breach of the agreements.

On September 26, 2000,  Registrant filed an action in the High Court of the Hong
Kong Special  Administrative  Region  seeking  return of all monies paid and all
shares  issued by  Registrant  in the  transaction,  together  with  damages  as
follows:

(a)  rescission of  a  Subscription Agreement entered into on March 28, 2000 and
     return of $650,160;

(b)  rescission  of an  Agreement in  relation  to Sales and  Purchase of Shares
     in HHI signed on March 28, 2000 and return of  the  2,313,625 issued shares
     or a sum of $9,288,000; and

(c)  rescission of an Investment Agreement.



                                      -9-

<PAGE>


Management of Registrant  considers  that it has a strong case against HHI and a
director of HHI. Although management is not sure whether HHI and the director of
HHI have the financial  ability to return the  investment and advances under the
various agreements,  management considers that the chances of Registrant with an
unfavourable outcome of the litigation,  significant  contingent liabilities and
losses as a result of the litigation are rather remote.

Based on the  information  pleaded  in the  pleading  filed and  served  and the
instructions  obtained by legal Counsel, the Counsel is of the view that, whilst
it appears  that HHI and the  director  of HHI managed to disclose a prima facie
defence, the claims against them have good prospects.

b    MAPLE CITY

Legal  proceedings  relating  to the  construction  work of Maple  City  project
between Registrant,  Honstar Hotel Co Ltd. of Boluo (a dormant company) and Mapi
Government and as a result of the delay in the construction:

a)   On  13/12/2000,  a verdict was handed down by the Civil  Intermediate Court
     of Huizhou  concluded  that  Honstar  Hotel Co.,  Ltd.  is  required to pay
     Construction  and  Engineering  Co.,  Ltd.  of Boluo  City for  outstanding
     construction  costs of $167,998 (Rmb 1,388,413)  plus legal costs.  Stephen
     Chow is a director of the company and legal representative of Honstar Hotel
     Co., Ltd.

b)   On 9/2/2001, a verdict was handed down by the Civil Court of Boluo in which
     Mapi  Government  is  required  to pay a sum of  $111,320  (Rmb920,000)  to
     Registrant for the advance to the Government of Mapi.

Based on advice of a legal firm, Honstar Hotel Co., Ltd. has no assets. The land
usage  rights  are now under the name of  Registrant.  It is  difficult  for the
Construction  and Engineering  Co., Ltd. to get hold of the land usage rights to
set off the debts.  The lawyer suggests  Registrant to set-off the debts between
the companies.

Registrant  considers that the claims are directly  relating to the  investments
and the best  method to resolve  the above  matters is by  compromising  between
parties.

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

During the fourth  quarter of the fiscal year covered by the report,  no matters
were submitted to a vote of security holders.

                                     PART II


ITEM 5.    MARKET FOR COMMON EQUITY STOCK AND OTHER SHAREHOLDER MATTERS

COMMON STOCK TRADING INFORMATION
--------------------------------

Registrant's  shares were  formerly  traded on the OTC Bulletin  Board under the
symbol  ASTV  and  commenced  trading  on July  1,  1998.  On  August  1,  1999,
Registrant's  shares were delisted from the Bulletin  Board because it failed to
comply  with  the OTC  Bulletin  Board  Eligibility  Rule,  which  requires  all
companies to be fully reporting  under the Securities  Exchange Act of 1934, and
for their Form 10SB to be in a "no comment"  stage with the SEC.  Registrant has
filed a Form 10-SB to comply with the  Eligibility  Rule,  and on  approximately
December 15, 1999, its shares  commenced  trading on the OTC BB under the symbol
ASTV.  The following  table sets forth the high and low bid  quotations  for the
Common Stock for the periods indicated.  These quotations reflect prices between
dealers,  do not include retail mark-ups,  mark-downs or commissions and may not
necessarily represent actual transactions.


                                      -10-

<PAGE>



Period                               High                   Low

December 31, 2000                  0.5625                0.2031
September 31, 2000                   2.25                  0.50
June 30, 2000                       5.125                1.5625
March 31, 2000                       6.75                  1.75
December 31,1999                     2.00                  1.00
September 30,1999                    1.50                  0.75
June 30,1999                         3.50                  1.25
March 31,1999                        2.25                  1.50
December 31,1998                     2.25                 1.125
September 30,1998                    2.25                  2.00
July 1, 1998                         2.00                  2.00

This information was obtained from the Internet  (Yahoo.com and Quicken.com) and
does not reflect  inter-dealer  prices,  without retail mark-up,  mark-down,  or
commission, and may not represent actual transactions.

As of December 31, 2000, there were 139 shareholders of record of the 15,746,015
shares of Common Stock issued and outstanding.  279,400  Restricted Common Share
were issued to Jiangmen Gold Crown  Hardware & Lock  Manufacturing  Co., Ltd. on
March 10, 2000. These shares were subsequently cancelled on February 22, 2001.

STOCK TRANSFER AGENT
--------------------

Transfer  Online,  227 S.W.  Pine Street,  Suite 300,  Portland,  Oregon  97204,
telephone  number (503) 227-2950,  is Registrant's  stock transfer agent for its
securities.

DIVIDENDS
---------

Registrant  has not paid  any cash  dividends  to any of its  shareholders.  The
declaration of any future cash  dividends will be at the sole  discretion of the
Board of  Directors  and will  depend  upon the  earnings,  if any,  the capital
requirements and financial position of Registrant,  general economic  conditions
and other  pertinent  conditions.  Unless  otherwise  determined by the Board of
Directors,  no dividends  shall be paid on any share which has been purchased or
redeemed  by  Registrant  while the shares are held by  Registrant.  Pursuant to
Registrant's  Articles of  Incorporation  (attached  hereto as Exhibit  3(I) and
incorporated  herein  by  reference),  the  Directors  may,  from  time to time,
capitalize any undistributed  surplus on hand of Registrant and may from time to
time issue  shares,  bonds,  debentures or debt  obligations  of Registrant as a
dividend  representing such undistributed  surplus on hand, or any part thereof.
It is the present  intention of Registrant  not to pay any cash dividends in the
foreseeable  future,  but rather to  reinvest  any  earnings  into its  business
operations.

The Securities and Exchange  Commission has adopted  regulations which generally
define "penny  stock" to be any equity  security that has a market price of less
than $5.00 per share,  subject to certain exceptions.  Registrant's Common Stock
may be deemed to be a penny  stock and thus will  become  subject  to rules that
impose additional sales practice  requirements on  broker/dealers  who sell such
securities to persons other than established customers and accredited investors,
unless the Common Stock is listed on The Nasdaq Small Cap Market.  Consequently,
the penny  stock  rules may  restrict  the  ability of  broker/  dealers to sell
Registrant's  securities  and may  adversely  affect  the  ability of holders of
Registrant's Common Stock to resell their shares in the secondary market.

ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSES

LIMITED OPERATING HISTORY; ACCUMULATED DEFICIT; NEED FOR ADDITIONAL CAPITAL
---------------------------------------------------------------------------

There is limited historical  financial  information about the Company upon which
to  base an  evaluation  of the  Company's  performance  or to  make a  decision
regarding an investment in shares of Company's  Common Stock. The Company has an
accumulated  deficit of  $16,652,120 as of December 31, 2000. The Company's cash
and cash  equivalents  increased from $5,628 at December 31, 1999 to $114,832 at
December 31, 2000.


                                      -11-

<PAGE>


SELECTED CONSOLIDATED FINANCIAL DATA
------------------------------------

The following historical financial data for the year ended December 31, 2000 and
the year ended  December 31, 1999 was derived from the  historical  consolidated
financial    statements    of    Registrant    that   have   been   audited   by
PricewaterhouseCoopers, independent auditors (the Financial Statements).

<TABLE>
<CAPTION>

BALANCE SHEET DATA:
-------------------

                                                                          12/31/99              12/31/00

<S>                                                                    <C>                  <C>
Cash and cash equivalents                                              $     5,628          $    114,832
Prepayments                                                                133,059               273,211
Inventories                                                                  3,905                20,123
Other assets                                                                43,690                45,888
                                                               -------------------- ---------------------

Total current assets                                                   $   186,282          $    454,054

Goodwill                                                                         -                80,459
Investment                                                                       -             9,938,160
Less: Provision for diminution in value of investment
                                                                                              (9,938,160)
Land usage rights                                                          469,814
Land improvement                                                         4,274,312             1,876,701
Construction in progress                                                 1,656,970               545,681
Property and equipment (net)                                             1,363,294             2,458,700
                                                               -------------------- ---------------------

Total assets                                                           $ 7,950,672          $  5,415,595

Due to a shareholder                                                   $   714,204             1,143,059
Accounts payable                                                           542,821               748,734
Other payable                                                              159,150               398,784
Accrued expenses                                                           180,890               261,659
                                                               -------------------- ---------------------

Total current liabilities                                              $ 1,597,065          $  2,552,236

Total shareholders equity                                              $ 6,353,607          $  2,863,359

<CAPTION>

STATEMENTS OF OPERATIONS DATA:
------------------------------

                                                               Year Ended December   Year Ended December
                                                                           31,1999              31, 2000

<S>                                                                    <C>                  <C>
Revenue                                                                     41,926             1,275,831
Cost of sales                                                             (104,214)           (1,172,790)

Selling, general and administrative expenses                            (1,156,257)           (1,762,352)
Other (loss)/Income, net                                                    60,400           (12,823,149)
                                                              --------------------- ---------------------

Loss before income tax                                                  (1,158,145)          (14,482,460)

Income tax                                                                       -                     -

Net loss                                                                (1,158,145)          (14,482,460)
                                                              ===================== =====================

Net loss per common share basic and diluted                            $     (0.09)         $      (0.96)

Basic and diluted weighted average number of common shares
outstanding                                                             12,955,530            15,023,317
                                                              ===================== =====================

</TABLE>

                                      -12-


<PAGE>


RECENT DEVELOPMENTS
-------------------

a)   LAWSUIT

 (i)   Harmonic Hall Investment Holdings Ltd.("HHI")

On March 28,  2000,  Registrant  entered  into  agreements  with  Harmonic  Hall
Investment Holdings Ltd, ("HHI"),  whereby Registrant acquired approximately 52%
of the  outstanding  common stock of HHI for  2,313,625  shares of  Registrant's
Restricted  Common  Stock  at  par  value  $.001  and  cash  of  $650,160.   The
consummation date of the transaction was on April 15, 2000.

As of June 30,  2000,  Registrant  paid cash of  $650,160  and issued  2,313,625
shares of  Registrant's  Common Stock at a fair value of  $9,288,000  which have
been  accounted for as an investment in the accounts at cost.  The fair value of
Restricted Common Stock was determined based on the average trading share prices
quoted on the stock exchange.

In  addition  to the  above,  Registrant  had  advanced  a sum of  approximately
$323,000  to a  subsidiary  of HHI for its working  capital.  The advance has no
specific terms of repayment and is recorded as other assets.

Following the purchase,  management of the Company has not been able to exercise
control over the  operation of HHI or obtain  financial  statements of HHI as of
June 30, 2000. In August 2000,  Registrant retained a legal counsel in Hong Kong
to prepare and file a writ in Court against HHI for breach of the agreements. On
September  26,  2000,  Registrant  filed an action in the High Court of the Hong
Kong Special  Administrative  Region seeking  rescission of the agreements.  The
action seeks return of all monies paid,  and all shares  issued by Registrant in
the  transaction,  together  with  damages.  Management  considers  that  it  is
uncertain to determine  the outcome of the lawsuit and is unable to estimate the
loss, if any.  However,  a full  provision  has been made for any  diminution in
value of the investment and advances to HHI.

(ii)   Maple City

Legal  proceedings  relating  to the  construction  work of Maple  City  project
between  Registrant,  Honstar  Hotel Co Ltd.  of Boluo (a dormant  company)  and
Government of Mapi and as a result of the delay in the construction:

a)   On  13/12/2000, a verdict was handed down by  the  Civil Intermediate Court
     of Huizhou  concluded  that  Honstar  Hotel Co.,  Ltd.  is  required to pay
     Construction  and  Engineering  Co.,  Ltd.  of Boluo  City for  outstanding
     construction  costs of $167,998 (Rmb 1,388,413)  plus legal costs.  Stephen
     Chow is a director of the company and legal representative of Honstar Hotel
     Co., Ltd.

b)   On 9/2/2001, a verdict was handed down by the Civil Court of Boluo in which
     Mapi  Government  is  required  to pay a sum of  $111,320  (Rmb920,000)  to
     Registrant for the advance to the Government of Mapi.

Based on advice of a legal firm, Honstar Hotel Co., Ltd. has no assets. The land
usage  rights  are now under the name of  Registrant.  It is  difficult  for the
Construction  and Engineering  Co., Ltd. to get hold of the land usage rights to
set off the debts.  The lawyer suggests  Registrant to set-off the debts between
the companies.

Registrant  considers that the claims are directly  relating to the  investments
and the best  method to resolve  the above  matters is by  compromising  between
parties.

b)   DISPOSAL OF INVESTMENTS
     -----------------------

     (i) Shilong Town Hall

         In July 2000, the Company  disposed of its 100% equity  interest in the
         Shilong Town Hall project to Dongguan Shilong  Properties  Limited at a
         loss of $1,746,809. The consideration included the release of all legal
         claims.


                                      -13-

<PAGE>


     (ii)Shilong Town

         The Shilong Town Project included Dragon Villa and Dragon Entertainment
         projects,  which were  developed  by  Dongguan  Dragon  Villa Ltd.  and
         Dongguan Dragon  Entertainment  Centre Ltd.  respectively.  The Company
         disposed  of its 80% equity  interest in these two  companies  in April
         2000 at a gain of $249,681.

c)   VARIOUS PROJECTS
     ----------------

(i)  Jiangmen Gold Crown Hardware And Lock Manufactory Co. Ltd.

In September  2000,  one of  Registrant's  subsidiaries,  Honking  International
Limited,  signed a  contract  with the  Employee  Union of  Jiangmen  Gold Crown
Hardware And Lock  Manufactory  Co.  Limited  ("JGC")  whereby  Registrant  will
acquire a 30% of the equity  interest in JGC in exchange  for 279,400  shares of
Registrant's  Restricted  Common Stock at a value of $4 per share.  The contract
also grants  Registrant an option to acquire an additional 50% of JGC shares. In
December  2000,  Registrant and JGC agreed to cancel the contract and all issued
shares were returned to Registrant.

(ii) 6-12 Convenience Store Chain, PRC

In September,  1998, Registrant entered into a letter of intent with Lin Tao Ge,
an unrelated third party, to form a new Hong Kong corporation to acquire 100% of
the  total  issued  and  outstanding  shares of two  China  corporations,  Super
Shopping  Channels Ltd. and Beijing  Kinetic Sales Network  Limited.  Registrant
will own 75% of the  newly-formed  corporation and Mr. Ge will own 25%. No costs
have been  incurred  on this  project  as of the date of the filing of this Form
10-KSB.

This plan has been  subsequently  changed  as only one PRC  corporation  will be
acquired.  The Company has no firm  commitment for this project.  Before China's
WTO accession,  there are still  restrictions to the Company to directly operate
chain  stores in China.  No cost was incurred on this project as at December 31,
2000.

(iii)   Superport Project

On January 25,  2000,  Registrant  entered  into a joint  venture  agreement  to
acquire an existing  LPG  cylinder  manufacturing  plant and an  associated  LPG
bottling plant in the State of Kelantan,  Malaysia. The Project also includes an
exclusive right to install a deep-water port for tankers. The total project cost
was approximately $2.3 billion.  However, the required approval from the Foreign
investment consulate of the Malaysian Government to develop this project has not
yet been obtained.  Registrant  considers that this project is unable to proceed
any  further  and  is in  process  of  preparing  documentation  to  cancel  the
agreement. All costs related to this project were written off.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999
---------------------------------------------------------------------

REVENUE AND OPERATING EXPENSES
------------------------------

Revenue from the operation of the Ocean Wealth Restaurant, Asian Star Technology
Development Limited and Shilong Water World for the year ended December 31, 2000
amounted to $1,137,246, $41,468 and $97,117 respectively and $41,926 for Shilong
Water World for the year ended December 31, 1999. The increase was mainly due to
revenue generated from the cafeteria business,  and management fee received from
contracting Shilong Water World to a third party.

Selling,  general and administrative  expenses  comprised mainly salary,  rental
expenses,  depreciation expenses,  commission and promotional expenses increased
from  $1,156,257 for the year ended December 31, 1999 to $1,762,352 for the year
ended  December 31, 2000 as a result of the running  costs of the  cafeteria and
merchandising business.


                                      -14-

<PAGE>


Payments  for  overheads,  representing  accumulated  indirect  costs  which are
related to projects, increased from $10,772 for the year ended December 31, 1999
to $61,717 for the year ended  December  31,  2000.  Payments  for  construction
materials  and fixed  assets in relation to Water Park and  cafeteria  increased
from  $163,296  for the year ended  December  31, 1999 to $891,533  for the year
ended December 31, 2000.

OTHER LOSS
----------

Other loss comprised mainly:

1.   a gain  on disposal of 80% equity interest in  Dongguan  Dragon  Villa  and
     Dongguan  Dragon  Entertainment  Centre Limited of $249,681 in March 2000.

2.   a loss on disposal of 100% equity interest in Shilong Town Hall  project of
     $1,746,809.

3.   a provision for diminution in value of investment in HHI of $10,261,160.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

Registrant  had  generated  positive  cash flows of $114,832  for the year ended
December 31, 2000 mainly due to issuance of its equity securities in conjunction
with the  options  exercised,  disposal  of  subsidiaries  and  advances  from a
shareholder.  Due to the infant  stage of its  operations,  substantial  ongoing
investment in properties and development efforts,  and expenditures  incurred to
build the appropriate infrastructure to support expected future growth, together
with the operation of a cafeteria, merchandising service and further investment,
Registrant has been substantially dependent on shareholder loan financing.

As of December 31, 2000,  Registrant's  total assets and total  liabilities were
$5,415,595 and $2,552,236 respectively.

Registrant's  investment  portfolio  comprised  the following as of December 31,
2000:

<TABLE>
<CAPTION>

PROJECT / SUBSIDIARY                           BUSINESS NATURE
--------------------                           ---------------
<S>                                            <C>
Maple City                                     Property Development
Ocean Wealth Restaurant                        Cafeteria Business
Dongguan Shilong Water World                   Water Park
Asian Star Technology Development Ltd          Merchandising and International agent for
                                               the Chinese Academy of Space Technology
</TABLE>


FINANCIAL POSITIONS AS OF DECEMBER 31, 2000 AS COMPARED TO DECEMBER 31,1999
---------------------------------------------------------------------------

INVENTORY
---------

Inventory as of December 31, 1999 and December 31, 2000 increased from $3,905 to
$20,123.  The  increase  was  mainly the result of highly  coveted  China  Space
souvenir products held for sales by one of the company's subsidiary:  Asian Star
Technology  Development Limited.  ASTD was appointed as an agent for the Chinese
Academy of Space  Technology  and China Space  Foundation  South  Agency for all
international commercial activities.

LAND USAGE RIGHTS, LAND IMPROVEMENT AND CONSTRUCTION IN PROGRESS
----------------------------------------------------------------

Total costs incurred for land usage rights, land improvement and construction in
progress as of December 31, 1999 and December 31, 2000 decreased from $6,401,096
to $2,422,382 was mainly due to disposals of the Dongguan Dragon Villa, Dongguan
Dragon Entertainment Centre and Shilong City Hall project during the year.


                                      -15-

<PAGE>


INVESTMENT
----------

Investment  as of December 31, 2000  consists of an  investment in Harmonic Hall
Investment Holdings Ltd. ("HHI"),  whereby Registrant acquired approximately 52%
of the  outstanding  common stock of HHI for  2,313,625  shares of  Registrant's
Restricted Common Stock at fair value of $9,288,000 and cash of $650,160.

ACCOUNTS PAYABLE
----------------

Accounts  payable as of December 31, 1999 and December 31, 2000  increased  from
$542,821 to $748,734 was mainly due to  significant  increase in inventory  from
suppliers.

COMMON STOCK AND PAID IN CAPITAL
--------------------------------

During the year,  Registrant  issued  180,000  additional  shares of  Restricted
Common Stock to  non-employees  at a share price of $1.25 per share  pursuant to
the share option exercised. In addition,  2,313,625 shares and 261,860 shares of
Restricted  Common  Stock were issued to acquire the equity  interest of HHI and
two subsidiaries. The Company issued 35,000 shares of Restricted Common Stock to
a consulting  company for the provision of consulting  services in relation to a
Superpot project in Malaysia.












                                      -16-


<PAGE>


ITEM 7.    FINANCIAL STATEMENTS AND EXHIBITS




ASIAN STAR DEVELOPMENT, INC.

FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999



























                                      -17-


<PAGE>

[COMPANY LOGO GOES HERE]




                                                18th Floor, Beijing Kerry Centre
                                                1 Guang Hua Lu
                                                Chao Yang District
                                                Beijing  100020
                                                People's Republic of China
                                                Telephone +86 (10)  6561 2233
                                                Facsimile +86 (10)  8529 9000



                        REPORT OF INDEPENDENT ACCOUNTANTS


TO THE BOARD OF DIRECTORS
AND STOCKHOLDERS OF ASIAN STAR DEVELOPMENT, INC.

In our opinion,  the  accompanying  consolidated  balance sheet and the related
consolidated statements of income, of cash flows and of changes in stockholders'
equity present fairly, in all material respects, the financial position of Asian
Star  Development,  Inc and its  subsidiaries at December 31, 2000, and
the results of their  operations  and their cash flows for the year
in conformity with accounting  principles
generally  accepted in the United  States.  These  financial  statements are the
responsibility of the Company's management;  our responsibility is to express an
opinion on these  financial  statements  based on our audit.  We conducted  our
audit of these  statements in  accordance  with  auditing  standards  generally
accepted in the United  States which  require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and  disclosures in the financial  statements,  assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall  financial  statement  presentation.  We believe that our
audit provide a reasonable basis for the opinion expressed above.

We draw your  attention to note 3 which  details a provision  for  diminution in
value of an investment.






/s/ PRICEWATERHOUSECOOPERS
--------------------------
    PricewaterhouseCoopers

March 15, 2001


Business is undertaken in the registered name of [CHINESE NAME GOES HERE]


                                     - 18 -

<PAGE>

<TABLE>
<CAPTION>

ASIAN STAR DEVELOPMENT, INC.

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2000 AND 1999


                                                                                        2000                  1999
ASSETS                                                            NOTES

<S>                                                                  <C>         <C>                   <C>
CURRENT ASSETS
        Cash and cash equivalents                                                $   114,832           $     5,628
        Prepayments                                                                  273,211               133,059
        Inventories                                                                   20,123                 3,905
        Other assets                                                 3                45,888                43,690
                                                                            -----------------------------------------

            Total current assets                                                     454,054               186,282

Goodwill                                                             4                80,459                     -
Investment                                                           3             9,938,160                     -
Less: Provision for diminution in value of investment                3            (9,938,160)                    -
Land usage rights                                                    5                     -               469,814
Land improvement                                                     5             1,876,701             4,274,312
Construction in progress                                             5               545,681             1,656,970
Property and equipment, net                                          6             2,458,700             1,363,294
                                                                            -----------------------------------------

Total assets                                                                     $ 5,415,595           $ 7,950,672
                                                                            =========================================

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
        Amount due to a shareholder                                  7           $ 1,143,059           $   714,204
        Accounts payable                                                             748,734               542,821
        Other payables                                                               398,784               159,150
        Accrued expenses                                                             261,659               180,890
                                                                            ------------------ --- ------------------

            Total current liabilities                                              2,552,236             1,597,065

COMMITMENTS AND CONTINGENCIES                                        8

SHAREHOLDERS' EQUITY Common stock, $0.001 par value:
        25,000,000 shares authorized, 15,746,015 shares issued
        and outstanding as of December 31, 2000 and 12,955,530
        shares issued and outstanding as of December 31, 1999                         15,746                12,956
Additional paid-in capital                                                        19,499,733             8,510,311
Accumulated deficit                                                              (16,652,120)            (2,169,660)
                                                                            ------------------ --- ------------------

        Total shareholders' equity                                                 2,863,359             6,353,607
                                                                            ------------------ --- ------------------

Total liabilities and shareholders' equity                                       $ 5,415,595           $ 7,950,672
                                                                            =========================================

</TABLE>

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


                                      -19-
<PAGE>

<TABLE>
<CAPTION>

ASIAN STAR DEVELOPMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999




                                                                                        2000                 1999
                                                                NOTES

<S>                                                                <C>          <C>                    <C>
Revenue, net                                                       9            $   1,275,831          $     41,926

Cost of sales                                                                      (1,172,790)             (104,214)
                                                                           -----------------------------------------

Gross profit / (loss)                                                                 103,041               (62,288)

Selling, general and administrative expenses                                       (1,762,352)           (1,156,257)

Other (loss)/income, net                                          10              (12,823,149)               60,400
                                                                           -----------------------------------------

Loss before income tax                                                            (14,482,460)           (1,158,145)

Income tax                                                        11                        -                    -
                                                                           -----------------------------------------

Net loss                                                                        $ (14,482,460)         $ (1,158,145)
                                                                           =========================================

Net loss per common share - basic and diluted                                   $       (0.96)         $      (0.09)
                                                                           -----------------------------------------

Basic and diluted weighted average number of
    common shares outstanding                                                     15,023,317           12,955,530
                                                                           =========================================
</TABLE>


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




                                      -20-

<PAGE>

<TABLE>
<CAPTION>

                          ASIAN STAR DEVELOPMENT, INC.

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999



                                            COMMON STOCK
                                     --------------------------
                                         COMMON                      ADDITIONAL        ACCUMULATED      STOCK      SHAREHOLDER'S
                                         STOCK        AMOUNT      PAID-IN CAPITAL         LOSSES      SUBSCRIBED       EQUITY
                                     -------------  -----------   ---------------   ---------------  ------------  --------------

<S>                                    <C>            <C>            <C>             <C>              <C>            <C>
Balance at December 31, 1998           12,955,530     $ 12,956       $  8,207,831    $ (1,011,515)    $ 91,980       $ 7,301,252

Stock subscription received                     -            -             91,980               -      (91,980)               -
Stock-based compensation (note 13)              -            -             90,500               -            -            90,500
CEO notional compensation (note 14)             -            -            120,000               -            -           120,000
Net loss                                        -            -                  -      (1,158,145)           -        (1,158,145)
                                     --------------------------------------------------------------------------------------------

Balance at December 31, 1999           12,955,530     $ 12,956       $  8,510,311    $ (2,169,660)    $      -       $ 6,353,607
Common stock issued for option
  exercised (note 13)                     180,000          180            224,820               -            -           225,000
Stock issued for purchase of a
  cafeteria (note 4)                      261,860          262            444,900               -            -           445,162
Stock issued for acquisition of
  an investment (note 3)                2,313,625        2,313          9,285,687               -            -         9,288,000
Stock issued for consultancy
  services *                               35,000           35            127,015               -            -           127,050
CEO notional compensation (note 14)             -            -            120,000               -            -           120,000
Notional compensation for stock
  options (note 13)                             -            -            787,000               -            -           787,000
Net loss                                        -            -                  -     (14,482,460)           -       (14,482,460)
                                     --------------------------------------------------------------------------------------------
Balance at December 31, 200            15,746,015     $ 15,746       $ 19,499,733   $ (16,652,120)    $      -       $ 2,863,359
                                     ============================================================================================
</TABLE>

  * The  company  paid  cash of  $52,000  and  issued  35,000  of the  Company's
    Restricted  Common  Shares to a  consultancy  company for the  provision  of
    consultancy  services in relation to a Superport  project in Malaysia  (note
    15). The fair value of the  Restricted  Common Shares at $3.63 per share was
    determined  based on 7 days weighted  average  trading  prices quoted on the
    Stock Exchange prior to the date of issuance of the shares.

    As at 31 December 2000, the total number of Restricted  Common Shares issued
    were 14,207,615.  These shares are restricted and will not be registered for
    trading  unless the Company,  in its sole  discretion,  files a registration
    statement and includes these designated shares.

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


                                      -21-

<PAGE>

<TABLE>
<CAPTION>

ASIAN STAR DEVELOPMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


                                                                                     2000                     1999
                                                                 NOTE
             CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                          <C>                      <C>
Net loss                                                                     $ (14,482,460)           $ (1,158,145)
Adjustments to reconcile net loss to
  net cash provided by/(used in) operating activities
      Depreciation and amortisation                                                222,547                 113,850
      Stock issued for consulting services                                         127,050                  90,500
      Non cash compensation expenses                                               907,000                 120,000
      Loss on disposal of subsidiaries                                           1,497,128                       -
      Provision for diminution in value of investment                           10,261,160                       -
      Changes in operating assets and liabilities:
      Prepayments                                                                 (140,152)                260,759
      Inventories                                                                  (16,218)                 25,140
      Other assets                                                                                         (23,285)
                                                                                    (2,198)
      Accounts payable                                                             205,913                 (36,468)
      Other payables                                                               239,634                  32,703
      Accrued expenses                                                              80,769                  85,153
                                                                         ------------------------------------------

             NET CASH USED IN OPERATING ACTIVITIES                              (1,099,827)               (489,793)
                                                                         ------------------------------------------


             CASH FLOWS FROM INVESTING ACTIVITIES
Payments for investment                                                           (973,160)                      -
Payments for  capitalized  overhead  costs in  connection  with                    (61,717)                (10,772)
   construction
Purchases of construction materials and fixed assets                              (891,533)               (163,296)
Proceeds from disposal of subsidiaries                                           2,481,586                       -
Proceeds from disposal of fixed assets                                                   -                  28,537
                                                                         ------------------------------------------

      NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES                          555,176                (145,531)
                                                                         ------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock subscription                                            225,000                  91,980
Advances from a shareholder                                                        428,855                 477,282
                                                                         ------------------------------------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                          653,855                 569,262
                                                                         ------------------------------------------

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                               109,204                 (66,062)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                       5,628                  71,690
                                                                         ------------------------------------------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                     $     114,832            $      5,628
                                                                         ==========================================

SUPPLEMENTAL DISCLOSURE OF SIGNIFICANT NON CASH INVESTING AND
FINANCING ACTIVITIES
     Issuance of 2,610,485 common stock for acquiring
     investments and consulting services                                     $   9,860,212            $          -
                                                                         ==========================================

</TABLE>

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



                                      -22-
<PAGE>


ASIAN STAR DEVELOPMENT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2000



1        BACKGROUND

         Asian Star  Development,  Inc., ("the Company") was incorporated  under
         the laws of the State of  Nevada in the  United  States of  America  on
         January 8, 1997 to conduct  real  estate  development  business  in the
         People's Republic of China ("PRC").

         The Company was originally  incorporated  to consolidate  two projects,
         the Maple City project and Shilong Town project,  previously  conducted
         by two Hong Kong companies, namely Honpar Properties Limited ("Honpar")
         and  Honpar  (Huangzhou)   Properties   Limited  ("Honpar   Huangzhou")
         respectively.  Honpar  and the  Company  are owned by the same group of
         shareholders.  Honpar Huangzhou is wholly owned by one of the Company's
         majority shareholders.

         MAPLE CITY AND SHILONG TOWN PROJECTS

         The interest in the Maple City project was transferred into Honpar from
         Brightstar  Investment Limited, a company in which an existing director
         of the Company  holds a majority  interest,  in 1993.  The  transfer-in
         value of the  project  at that  time  was  determined  on the  basis of
         historical cost.

         The Shilong Town project was conducted through two equity joint venture
         companies in the PRC,  Dongguan Dragon Villa Ltd.  ("Dragon Villa") and
         Dongguan Dragon Entertainment Centre Ltd. ("Dragon Entertainment"),  in
         which Honpar  Huangzhou owned an 80% interest.  Dragon Villa and Dragon
         Entertainment  were formed in December  1995,  for the sole  purpose of
         this project.

         The Company issued 9,000,000 shares of common stock in exchange for the
         entire  rights to and  interest  in the Maple City  project  and an 80%
         right to and  interest  in Dragon  Villa and  Dragon  Entertainment  on
         January 8, 1997.

         SHILONG WATER WORLD

         In October 1997, the Company entered into a co-operative  joint venture
         agreement in respect of the  development of Shilong Water World located
         in Shilong  Town in the PRC through  Dragon  Villa.  The joint  venture
         constructed a water  entertainment  complex which  includes  facilities
         such as a restaurant,  swimming pools and a kiosk. Operations commenced
         on August 1, 1998.

         SHILONG TOWN HALL

         In December 1998, the Company issued  2,590,730  shares of common stock
         at $1.113 per share in  exchange  for 100%  equity  interest  in Honpar
         (Shilong) Properties Limited ("Honpar Shilong"), a company incorporated
         in Hong Kong and  conducting  the Shilong Town Hall Project since 1996.
         Honpar  Shilong was owned by a major  shareholder  of the Company.  The
         price per share of $1.113 was calculated based on a 30% discount on the
         weighted  average trading price for 60 days before the transaction date
         (December 15, 1998).  The number of shares was determined  based on the
         historical  cost of the total assets and  liabilities of Honpar Shilong
         divided by the price per share as determined aforementioned.


                                      -23-
<PAGE>


ASIAN STAR DEVELOPMENT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2000


1        BACKGROUND (CONTINUED)

         The  above  transactions  were  accounted  for as a  reorganisation  of
         entities under common control by using the pooling of interest  method.
         Consequently,   the  consolidated   financial  statements  present  the
         financial positions,  the related results of operations,  shareholders'
         equity,  and cash flows of the Company by  consolidating  the entities'
         activities as if the reorganisation had taken place at the beginning of
         the years presented.

         As detailed in note (3),  the Company  issued  2,313,625  shares of the
         Company's  Restricted Common Stock and a subsidiary of the Company paid
         cash of  $650,160 to acquire a 52% equity  interest  in  Harmonic  Hall
         Investment Holdings Ltd. ("HHI") in April 2000.

         As  detailed  in note (4),  the Company  issued  261,860  shares of the
         Company's  Restricted  Common Stock to acquire 100% equity  interest in
         two  Hong  Kong  incorporated  companies,  which  operate  a  cafeteria
         business in Hong Kong, in January 2000.

         The  Company's  principal  subsidiaries  and  equity  interest  are  as
         follows:

<TABLE>
<CAPTION>

                                                         EQUITY
                    NAME                             INCORPORATED IN       INTEREST        NATURE OF BUSINESS
         ----------------------------------------- ---------------------- ----------- --------------------------------

         <S>                                         <C>                        <C>     <C>
         Dongguan Dragon Villa Ltd. - Branch                PRC                  80%            Water Park
         Honstar Entertainment Centre Ltd.                  PRC                 100%              Dormant
         Honking International Ltd.                      Hong Kong              100%              Dormant
         Honpar (Shilong) Properties Limited             Hong Kong              100%              Dormant
         Asian Star (Hong Kong) Limited                  Hong Kong              100%        Investment holding
         Asian Star Technology Development Ltd           Hong Kong              100%    Sales agent for China space
                                                                                            souvenir products
         Liberal International Ltd                       Hong Kong              100%        Cafeteria business
         Unity World Enterprises Ltd                     Hong Kong              100%        Cafeteria business
         Able Wealth Investment Limited               British Virgin            100%        Investment holding
                                                          Islands
</TABLE>


2        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         BASIS OF PREPARATION
         --------------------

         The accompanying  consolidated  financial statements as of December 31,
         2000 and 1999, of Asian Star Development, Inc and its subsidiaries have
         been  prepared  in  accordance  with  accounting  principles  generally
         accepted in the United States. All significant  inter-company  balances
         have been eliminated on consolidation. The balance sheet as of December
         31, 1999 was derived from audited financial  statements included in the
         Company's Form 10-K for the year ended December 31, 1999.

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         that affect the reported amounts of assets,  liabilities,  revenues and
         expenses  and the  disclosure  of  contingent  assets and  liabilities.
         Actual results could differ from these estimates.

         The consolidated financial statements are reported in US Dollars ("$").



                                      -24-


<PAGE>

ASIAN STAR DEVELOPMENT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2000


2        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         BASIS OF PREPARATION (continued)
         --------------------

         The Company and its  subsidiaries  suffered  losses of $14,482,460  and
         $1,158,145  in 2000  and 1999  respectively  and had  negative  working
         capital in both years. Historically, one of the Company's directors and
         major  shareholders  provided the Company with  substantial  sources of
         finance for the operations of the Company.

         The directors and major  shareholders have confirmed their intention to
         provide  continuing  financial  support so as to enable the  Company to
         meet  its  liabilities  as and  when  they  fall  due and  carry on its
         business  without  a  significant  curtailment  of  operations  for the
         foreseeable  future.  The  directors  believe  that  the  Company  will
         continue  as  a  going  concern  and  consequently  have  prepared  the
         financial statements on a going concern basis.

         FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS
         ---------------------------------------------

         The  financial  position  and  result of  operations  of the  Company's
         foreign  subsidiaries  are determined  using local  currency  (Renminbi
         ("Rmb")  and Hong Kong  Dollars  ("HKD")  as the  functional  currency.
         Assets  and  liabilities  of the  subsidiaries  are  translated  at the
         prevailing  exchange  rate in effect at each  period  end.  Contributed
         capital is translated at the historical  exchange rate when the capital
         was injected.  Income statement accounts are translated at the weighted
         average  rate of exchange  during the period.  Translation  adjustments
         arising from the use of different  exchange rates from period to period
         are included in cumulative  translation  adjustments  in  shareholders'
         equity.  However,  to date  there have been no  cumulative  translation
         adjustments.   Gains  and  losses   resulting  from  foreign   currency
         transactions  are  included  in other  income  or  expense.  There  are
         currently  no assets or  liabilities  that  would  give rise to another
         comprehensive income item.

         CASH AND CASH EQUIVALENTS
         -------------------------

         The Company considers all financial instruments purchased with original
         maturities of three months or less to be cash equivalents.

         INVENTORIES
         -----------

         Inventories  comprising purchased  merchandise and consumable items are
         stated at the lower of cost and net relisable value.

         PROPERTY, PLANT AND EQUIPMENT
         -----------------------------

         Fixed assets  purchased  or  constructed  by the company are  initially
         recorded at cost.

         Depreciation of fixed assets is calculated on the  straight-line  basis
         over the  following  useful  lives,  after  taking into  account  their
         residual value,  which is 3-10% of cost. The applicable useful lives of
         fixed assets are as follows:

         Building premises                                              25 years
         Water amusement park facilities                              8-25 years
         Office furniture, fixtures and equipment                     3-10 years
         Kitchen equipment and facilities                             3-10 years




                                      -25-

<PAGE>

ASIAN STAR DEVELOPMENT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2000


2        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         CONSTRUCTION IN PROGRESS
         ------------------------

         Construction in progress  represents  capital assets under construction
         and being installed and is stated at cost. Cost comprises original cost
         of plant and  equipment,  installation,  construction  and other direct
         costs which  include  interest  accrued on loans  financing the capital
         assets, prior to the date of completion of construction.

         LAND USAGE RIGHTS
         -----------------

         Land usage rights represent rights granted by the State to use the land
         on which the Company's facilities are located for a specified period of
         time.  Land usage rights are  amortized  using the straight line method
         over the term of the rights.


         LAND IMPROVEMENT
         ----------------

         Land improvement is stated at cost, including substantially capitalized
         interest and direct costs related to grading,  filling,  leveling,  and
         landscaping  activities.  Land  improvement  is  depreciated  over  the
         estimated  economic life of any project which is built on these parcels
         of improved land.

         GOODWILL
         --------

         Goodwill  represents  the excess of  consideration  given over the fair
         value  of the  net  assets  of the  acquired  company  at the  date  of
         acquisition. The carrying amount of goodwill is amortised over a period
         of 10 years on a straight-line basis.

         INCOME TAXES
         ------------

         The Company  accounts  for income  taxes under the asset and  liability
         method as required under  Statement of Financial  Accounting  Standards
         ("SFAS")  No. 109  "Accounting  for Income  Taxes".  Under this method,
         deferred tax assets and liabilities are recognized based on differences
         between  financial  statements and tax bases of assets and liabilities,
         subject  to  a  valuation   allowance  based  upon  the  likelihood  of
         realization.

         REVENUES
         --------

         Sales  revenue is  recognised  when goods have been  delivered  or upon
         performance  of  services,   and  the  right  to  collect   payment  is
         established.

         USE OF ESTIMATES
         ----------------

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



                                      -26-

<PAGE>

ASIAN STAR DEVELOPMENT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2000


3        OTHER ASSETS AND INVESTMENT

         On March 28,  2000,  the Company and a subsidiary  company,  Asian Star
         (Hong Kong) Limited entered into various  agreements with Harmonic Hall
         Investment   Holdings  Ltd,  ("HHI"),   whereby  the  Company  and  the
         subsidiary company acquired approximately 52% of the outstanding common
         stock of HHI for 2,313,625  shares of the Company's  Restricted  Common
         Stock at par value $.001 and cash of $650,160. The consummation date of
         the transaction was on April 15, 2000.

         As of June 30, 2000, the  subsidiary  company paid cash of $650,160 and
         the Company issued 2,313,625 shares of the Company's  Restricted Common
         Stock at a fair value of  $9,288,000.  The fair value of the Restricted
         Common Stock at  approximately $4 per share was determined based on the
         7 days  weighted  average  trading  share  prices  quoted  on the stock
         exchange prior to the consummation date of the transaction.

                                                             2000         1999

         Investment, at cost                            9,288,000            -
         Advances to HHI                                  650,160            -
                                                     ---------------------------
         Total investment                               9,938,160            -
         Less: Provision for diminution in value
         of investment                                 (9,938,160)           -
                                                     ---------------------------
                                                                -            -
                                                     ===========================

         In addition to the above,  the Company  advanced a sum of approximately
         $323,000  to HHI for its working  capital.  The advance has no specific
         terms of repayment and is recorded as other assets.  As detailed in the
         following paragraphs, a full provision of $323,000 has been made in the
         financial statements for the advances.

                                                            2000         1999

         Other assets                                    368,888       43,690
         Less: Provision for diminution in value        (323,000)           -
                                                      ------------------------
         Other assets, net                                45,888       43,690
                                                      ========================

         Following the purchase,  management of the Company has not been able to
         exercise  control  over  the  operation  of  HHI  or  obtain  financial
         statements  of HHI as of June  30,  2000.  Accordingly,  the  financial
         statements of HHI have not been included in the consolidated  financial
         statements.

         In August  2000,  the Company  retained  legal  counsel in Hong Kong to
         prepare  and file a writ with the Court  against  HHI and a director of
         HHI for breach of the agreements.

         On September 26, 2000, the Company filed an action in the High Court of
         the Hong  Kong  Special  Administrative  Region  seeking  return of all
         monies paid and all shares  issued by the  Company in the  transaction,
         together with damages as follows:

         (a)  rescission of a Subscription  Agreement  entered into on March 28,
              2000 and return $650,160;

         (b)  rescission  of an  Agreement  in relation to Sales and Purchase of
              Shares in HHI signed on March 28, 2000 and return of the 2,313,625
              issued shares or a sum of $9,288,000; and


                                      -27-


<PAGE>


ASIAN STAR DEVELOPMENT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2000


3        OTHER ASSETS AND INVESTMENT (CONTINUED)

         (c)  rescission  of an  Investment  Agreement  signed on March 28, 2000
              providing  for  injection  of  funds  into  HHI  by the subsidiary
              company.

         HHI and the  director  of HHI have  made  counter  claims  against  the
         Company  and  its   subsidiary   company  for  breach  of  the  various
         agreements. Based on the information pleaded in the pleadings filed and
         served and the  instructions  obtained by legal Counsel,  Counsel is of
         the view that, whilst it appears HHI and the director of HHI managed to
         disclose  a PRIMA  FACIE  defence,  the claims  against  them have good
         prospects.

         Management considers that the Company and its subsidiary company have a
         strong case against HHI and the director of HHI. Although management is
         not sure whether HHI and the director of HHI have the financial ability
         to  return  the cost of  investment  and  advances  under  the  various
         agreements,  management  considers that the chances of an  unfavourable
         outcome  to the  litigation,  significant  contingent  liabilities  and
         losses  as a  result  of  the  litigation  are  remote.  However,  full
         provisions for diminution in value of investment of $9,938,160, and the
         advances of $323,000, in all totaling $10,261,160, have been made.


4        GOODWILL

         In January 2000, the Company acquired 100% equity interests in two Hong
         Kong companies  which were owned by a consultant to the Company and are
         operating  a  cafeteria  business.  Details of the  acquisition  are as
         follows:

         Consideration (note a)                                   $  445,162
         Less: Fair value of net assets acquired                    (358,179)
                                                                --------------

         Goodwill (note b)                                            86,983
         Less: amortisation for the year                              (6,524)
                                                                --------------

                                                                   $  80,459
                                                                ==============

         (a) The Company issued 261,860 of the Company's Restricted Common Stock
             valued  at $1.7 per share as  consideration.  The fair value of the
             Restricted Common Stock was determined based on the 7 days weighted
             average trading  prices  quoted  on the stock exchange prior to the
             date of completion of the acquisition.

         (b) The Company  applies APB No.16 in accounting for the combination by
             using the purchase method.  The excess of consideration  given over
             the fair value of the net assets of the  acquired  companies at the
             date of acquisition has been accounted for as goodwill.






                                      -28-


<PAGE>

ASIAN STAR DEVELOPMENT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2000


4        GOODWILL (CONTINUED)

         (c) Had the cafeteria business been  acquired as from  January 1, 1999,
             the Company's operating results would be as follows:

                                                2000                 1999


         Revenue, net
         As reported                            1,275,831          41,926
                                          --------------------------------
         Pro-forma                              1,275,831       1,607,304
                                          --------------------------------

         Net loss
         As reported                          (14,482,460)     (1,158,145)
                                          --------------------------------
         Pro-forma                            (14,482,460)     (1,213,054)
                                          --------------------------------

         Net loss per common share
         As reported                                (0.96)          (0.09)
                                          --------------------------------
         Pro-forma                                  (0.96)          (0.09)
                                          --------------------------------


5        LAND USAGE RIGHTS, LAND IMPROVEMENT AND CONSTRUCTION IN PROGRESS

         Land usage  rights,  land  improvement  and  construction  in  progress
         comprise the following:

<TABLE>
<CAPTION>

                                            SHILONG TOWN **    SHILONG TOWN HALL ***   MAPLE CITY       TOTAL
                                          ------------------ ----------------------- ------------- ------------
         <S>                                    <C>                    <C>           <C>            <C>
         Accumulated cost

         Land usage rights                      $       -              $  469,814    $        -     $  469,814
         Land improvement                         217,800               2,179,811     1,876,701      4,274,312
         Construction in progress                 358,661                       -       139,920        498,581
         Overhead costs *                         202,378                 550,250       405,761      1,158,389
                                          ---------------------------------------------------------------------

         Balance at 12/31/1999                  $ 778,839              $3,199,875    $2,422,382     $6,401,096
                                          ---------------------------------------------------------------------

         Accumulated cost

         Land usage rights                              -                       -             -              -
         Land improvement                               -                       -     1,876,701      1,876,701
         Construction in progress                       -                       -       139,920        139,920
         Overhead costs  *                              -                       -       405,761        405,761
                                          ---------------------------------------------------------------------

         Balance at 12/31/2000                  $       -              $        -    $2,422,382     $2,422,382
                                          =====================================================================
</TABLE>

         * Overhead  costs  represent  all  accumulated  indirect  costs such as
           project  supervisors' salaries,  certain  travel  and  administrative
           expenses,  and legal fees  related  to the projects.  The accumulated
           overhead costs are allocated to the respective  projects based on the
           actual time spent on each project.


                                      -29-


<PAGE>

ASIAN STAR DEVELOPMENT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2000


5        LAND USAGE RIGHTS, LAND IMPROVEMENT AND CONSTRUCTION IN PROGRESS
         (CONTINUED)

         MAPLE CITY (LAND OCCUPANCY TERM: 70 YEARS)

         The Maple City  project,  which is developed by the Company,  comprises
         three  parcels  of land which are close to each  other.  The land usage
         rights certificates of the Maple City project stipulate a lease term of
         70 years  commencing  from  1993 and the  total  area is  approximately
         74,000  square  meters.  The land was  contributed  by a local  Chinese
         partner  to  the  Company  at no  consideration.  It was  the  original
         intention of the Company to build a hotel, commercial and entertainment
         complex on these parcels of land. The concrete  structural  work of the
         project was completed by a PRC registered and wholly-owned  subsidiary,
         Honstar  Entertainment  Centre Ltd..  During the year, no  construction
         costs were incurred for this project as management  prefers to hold the
         project  development  until a recovery of the property market in China.
         Management  considers that there is no impairment in the carrying value
         of the project.

         During the year,  the Company  disposed of two projects  resulting in a
         total net loss of $1,497,128. Details of major project disposals are as
         follows:

         **    DISPOSAL OF SHILONG TOWN

         The Shilong Town Project included Dragon Villa and Dragon Entertainment
         projects,  which were  developed  by  Dongguan  Dragon  Villa Ltd.  and
         Dongguan Dragon  Entertainment  Centre Ltd.  respectively.  The Company
         disposed  of its 80% equity  interest in these two  companies  in April
         2000. Details of the disposal are as follows:

         Sales consideration                             $ 1,028,520
         Less: Book Value of net assets disposed            (778,839)
                                                        -------------

         Gain on disposal                                $   249,681
                                                        =============

         ***   SHILONG TOWN HALL (LAND OCCUPANCY TERM: 70 YEARS)

         The Company  disposed of its 100% equity  interest in the Shilong  Town
         Hall  project  to  Dongguan  Shilong  Properties  Limited in July 2000.
         Details of the disposal are as follows:

         Sales consideration                             $ 1,453,066
         Less: Book value of net assets disposed          (3,199,875)
                                                        -------------

         Loss on disposal                                $(1,746,809)
                                                        =============





                                      -30-

<PAGE>

ASIAN STAR DEVELOPMENT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2000


6        PROPERTY AND EQUIPMENT, NET

         Property and equipment comprise the following:

<TABLE>
<CAPTION>

                                                               2000                 1999

         <S>                                             <C>                   <C>
         Building premises*                              $  821,077            $ 393,606
         Water amusement park facilities *                1,252,400              982,915
         Office furniture, fixtures and equipment           227,478               56,971
         Kitchen equipment and facilities                   216,961               96,265
         Leasehold improvements                             264,160                    -
                                                      ------------------------------------
                                                          2,782,076            1,529,757
         Less: Accumulated depreciation                    (323,376)            (166,463)
                                                      ------------------------------------
                                                         $2,458,700           $1,363,294
                                                      ====================================
</TABLE>


         *     SHILONG WATER WORLD

         The  Company  owns the rights to operate  the  Shilong  Water  World in
         Shilong Town.  Pursuant to an agreement between the Company and a third
         party, the Company sub-contracted its Water Park operation to the third
         party at a consideration  of $144,578 per annum for 7 years with effect
         from June 1, 2000.


7        AMOUNT DUE TO A SHAREHOLDER

         The Company,  from time to time,  received from or made repayments to a
         shareholder.  The  balance  due to the  shareholder  does  not bear any
         interest and does not have clearly defined terms of repayment.

         As of December 31, 2000 and 1999, the amount due to the shareholder was
         $1,143,059 and $714,204 respectively.

8        COMMITMENTS AND CONTINGENCIES

         Based on the joint venture contract and agreement,  the Company entered
         into a project in China as of December 31, 2000. Details of the current
         status of the project are as follows:

<TABLE>
<CAPTION>

                                       Total Investment
         Per                                Per Project                  Costs       Years Remaining to
         Project                          Per Agreement               Incurred       Complete the Project per
         Contract                           or Contract                to Date       Agreement or contract
         -----------------------------------------------------------------------------------------------------

         <S>                                 <C>                   <C>               <C>
         Maple City                          38,000,000            $ 2,422,382       No fixed period
                                         ========================================
</TABLE>

         Details of other projects are summarized in Note 5.

                          FINANCING RESOURCE DEPENDENCY

         The  operating  activities  of the  above  project  were  substantially
         financed  by one of the  Company's  directors  through  either  capital
         infusion or loans, and funds raised.


                                      -31-

<PAGE>

ASIAN STAR DEVELOPMENT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2000


8        COMMITMENTS AND CONTINGENCIES (CONTINUED)

         Management  believes  that the  completion  of the  project on a timely
         basis will depend  significantly on additional  funding being available
         to the Company through debt and/or equity  financing in the near future
         and a recovery of the property  market in China.  There is no assurance
         that such  financing will be available,  or if so, at terms  beneficial
         for the  Company.  No  development  of the  project was made during the
         year.

9        REVENUE, NET

                                                      2000            1999

         Cafeteria business                       1,137,246               -
         Water Park operation                        97,117          41,926
         Others                                      41,468               -
                                               -----------------------------
                                                  1,275,831          41,926
                                               =============================

         All operating revenue of the Company and its subsidiaries are generated
         in PRC and Hong Kong Special Administrative Region of PRC.

10       OTHER (LOSS)/INCOME

<TABLE>
<CAPTION>

                                                                               2000           1999

         <S>                                                            <C>                  <C>
         Gain on disposal of Shilong Town (note 5)                          249,681               -
         Loss on disposal of Shilong Town Hall (note 5)                  (1,746,809)              -
         Provision for loss on diminution in value of
           investment (note 3)                                          (10,261,160)              -
         Notional compensation for stock options (note 13)                 (787,000)              -
         Others                                                            (277,861)         60,400
                                                                     -------------------------------
                                                                        (12,823,149)         60,400
                                                                     ===============================
</TABLE>


11       INCOME TAXES

         No corporate  income tax has been provided for the years ended December
         31, 2000 and 1999 as the Company  suffered tax losses for the years and
         has no taxable profits.

         The Company  and its  subsidiaries  account for income  taxes using the
         asset and  liability  method,  which  require  an  entity to  recognise
         deferred tax  liabilities  and assets.  A full valuation  allowance was
         provided due to the  uncertainty  that  deferred  tax benefits  will be
         realized in future years.

         Significant  components of the Company's  estimated deferred tax assets
         as of December 31, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>

                                                                      2000            1999
         <S>                                                   <C>               <C>
         Deferred tax assets and liabilities:
         Net operating loss carry forward                      $ 1,398,641       $ 686,123
         Property and equipment                                    (42,102)        (38,937)
                                                              ------------------------------

         Net deferred tax assets                                 1,356,539         647,186

         Valuation allowance for deferred tax assets            (1,356,539)       (647,186)
                                                              ------------------------------

         Net deferred tax assets                               $         -       $       -
                                                              ------------------------------

</TABLE>


                                      -32-

<PAGE>

ASIAN STAR DEVELOPMENT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2000


12       MINORITY INTEREST

         The Company applies APB Opinion No. 16 and related  interpretations  in
         accounting for the minority share of  attributable  losses arising from
         the  operation of Shilong Water World under the entity of Dragon Villa.
         The 20% loss of $46,042 (1999:  $67,815)  attributable  to the minority
         shareholder  was  recognised  by the  Company as the joint  venture has
         deficiencies in assets and no capital contribution has been made by the
         minority shareholder as of the balance sheet date.


13       STOCK OPTIONS

         On July 1,1998,  the Board of Directors of the Company approved a Stock
         Option Plan. The Stock Option Plan provides  officers,  directors,  key
         employees  and  consultants  with options to purchase  shares of common
         stock  as  additional   compensation   for  services   rendered  and/or
         incentives  for  services  to be  rendered  to the  Company in the near
         future.  As a result of adopting  this Stock  Option  Plan,  a total of
         968,480 options were granted on July 14, 1998 and were  exercisable for
         one year.  During  the year  ended  December  31,  1999,  none of these
         options had been exercised and they expired.

         During 1999,  100,000 options with an exercise price of $1.25 per share
         and  50,000  options  with an  exercise  price of $1.50 per share  were
         granted  to   consultants.   The  options  vest   immediately  and  are
         exercisable  for one year.  Accordingly,  a total of 150,000  shares of
         common stock were reserved by the Company for issuance upon exercise of
         the granted stock options. Compensation expense of $90,500 was recorded
         related to these options. During the year ended December 31, 2000, none
         of these options had been exercised and they expired.

         On January 12, 2000,  1,300,000 options with an exercise price of $1.25
         per share were granted to key  employees and  consultants.  The options
         vest immediately and are exercisable for one year. Accordingly, a total
         of 1,300,000  shares of common  stock were  reserved by the Company for
         issuance upon exercise of the granted stock  options.  During 2000, the
         Company  issued 180,000  shares of Common Stock to  key-employees  at a
         share price of $1.25 per share upon exercise of these options.

         Each option is immediately exercisable after the granting date and will
         expire if not  exercised  within one year from the granting  date.  The
         shares acquired through exercise of the options shall be restricted and
         will not be  registered  for trading  unless the  Company,  in its sole
         discretion,   files  a   registration   statement  and  includes  these
         designated shares.

         A summary of the status of the  Company's  stock options as of December
         31, 2000 and 1999 is presented as follows:

<TABLE>
<CAPTION>

                                                                  SHARES     WEIGHTED AVERAGE
                                                                               EXERCISE PRICE

         <S>                                                   <C>                      <C>
         At January 1, 1999                                      968,480                $1.50
         Options granted to non-employees                        150,000                $1.33
         Options expired                                        (968,480)               $1.50
                                                            ------------------------------------

         At December 31, 1999                                    150,000                 $1.33
         Options expired                                        (150,000)                $1.33
         Options granted to key employees and consultants      1,300,000                 $1.25
         Options exercised                                      (180,000)                $1.25
                                                            ------------------------------------

         As at December 31, 2000                               1,120,000                 $1.25
                                                            ====================================
</TABLE>



                                      -33-

<PAGE>

ASIAN STAR DEVELOPMENT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2000


13       STOCK OPTIONS (CONTINUED)

         The Company  adopted Statement of Financial Accounting Standards No 123
(SFAS No 123),  "Accounting for Stock based Compensation".  As permitted by SFAS
123 the Company  applies the intrinsic value method of accounting per APB No. 25
to employee  stock options and  discloses  the pro-forma  impact on net loss and
loss per share as if the fair value based  method had been  applied.  During the
year the Company  granted  460,000  options to key  employees  and  recognized a
compensation  charge  of  $283,320  representing  the  intrinsic  value of those
options at the date of grant.  Had  compensation  cost been determined using the
fair value based  methodology of SFAS No. 123, there would have been no material
change in the  Company's  net loss and loss per  share as the fair  value of the
options approximated their intrinsic value at the date of grant.

<TABLE>
<CAPTION>

                                                          2000                  1999

         <S>                                            <C>                   <C>
         Net loss attributed to common shares
                As reported                             $ (14,482,460)        $ (1,158,145)
                Pro forma                               $ (14,482,460)        $ (1,158,145)

         Basic loss per share
                As reported                             $       (0.96)        $      (0.09)
                Pro forma                                       (0.96)               (0.09)
                                                        ===================================
</TABLE>

         The  following  table  summarizes   information   about  stock  options
         outstanding as of December 31, 2000:

<TABLE>
<CAPTION>

                                  OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
                     ------------------------------------------------     --------------------------
                          NUMBER          REMAINING        EXERCISE            NUMBER       EXERCISE
                        OUTSTANDING    CONTRACTUAL LIFE     PRICE           EXERCISABLE      PRICE
         --------------------------------------------------------------------------------------------

                         <S>                 <C>            <C>                <C>           <C>
                         1,120,000           11 days        $1.25              1,300,000     $1.25
                       =============                                         =============
</TABLE>

         The Company  accounts for options  granted to consultants in accordance
         with SFAS 123 and EITF 96-18,  Accounting for Equity  Instruments  That
         Are Issued to Other Than  Employees for  Acquiring,  or in  Conjunction
         with Selling,  Goods or Services. By using Black Scholes Option Pricing
         Model,  the Company  determined  that the fair value of 840,000 options
         granted to consultants during 2000 was %503,680. Since the options vest
         immediately,  are  non-forfeitable  and  are not in  consideration  for
         future  services the entire amount has been charged to the current year
         profit and loss account.

         The  following  assumptions  were used to  determine  the fair value of
         options :

                                                     2000             1999

         Expected life                             1 year           1 year
         Volatility                                   80%              80%
         Expected dividend yield                       -                -
         Risk free rate                                5%            4.82%


14       CEO NOTIONAL COMPENSATION

         The CEO of the Company  waived his personal  salary of $120,000 in each
         of the fiscal  years  ended  December  31,  2000 and 1999.  The Company
         recorded this amount as part of additional paid-in capital.


                                      -35-


<PAGE>

ASIAN STAR DEVELOPMENT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2000


15       OTHER PROJECTS

         a)    Superport Project

         On January 25, 2000, the Company entered into a joint venture agreement
         to  acquire  an  existing  LPG  cylinder  manufacturing  plant  and  an
         associated LPG bottling plant in the State of Kelantan,  Malaysia.  The
         Project also includes an exclusive  right to install a deep-water  port
         for tankers. The total project cost was approximately $2.3 billion.

         However,  the required approval,  from the Foreign Investment Consulate
         of the Malaysian  Government,  to develop this project has not yet been
         obtained.  Management  considers that this project is unable to proceed
         any further and is in the process of preparing  documentation to cancel
         the agreement.

         As conditions in the joint venture agreement have not been fulfilled by
         the partners,  the agreement stipulated that the rights and obligations
         of the partners under the agreement shall  automatically  lapse without
         any  liability  whatsoever  to the  others and the  Agreement  be of no
         further force and effect.

         Consultancy  services fees of $179,050 in relation to this project were
         written off during the year.

         b)    "6-12" Convenience Store Chain

         According to a letter of intent  entered into in  September  1998,  the
         Company  planned to acquire  100% of the total  issued and  outstanding
         shares of two PRC  corporations  through a 75% owned  newly-established
         Hong Kong subsidiary.  This plan has been subsequently  changed as only
         one  PRC  corporation  will  be  acquired.  The  Company  has  no  firm
         commitment for this project.  Before  China's WTO accession,  there are
         still  restrictions for the Company to directly operate chain stores in
         China. No cost was incurred on this project as at December 31, 2000.

         c)    Jiangmen Gold Crown Hardware And Lock Manufactory Co Limited

         In  September  2000,  one  of  the  Company's   subsidiaries,   Honking
         International  Limited,  signed a contract  with the Employee  Union of
         Jiangmen Gold Crown Hardware And Lock  Manufactory  Co. Limited ("JGC")
         whereby the Company intended to acquire a 30% equity interest in JGC in
         exchange  for  279,400   Restricted   Common  Stock  of  the  Company's
         Restricted Common Stock at a value of US$4 per share. The contract also
         granted  the  Company  an option to acquire  an  additional  50% of JGC
         shares.

         On 3 October 2000,  279,400  Restricted Common Stock were issued to JGC
         for the  acquisition.  However,  the  acquisition  was not  approved by
         Jiangmen City Government. Consequently, the contract was terminated and
         all issued shares to JGC were canceled.


16       RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board, or FASB, issued
         Statement  of  Financial  Accounting  Standards  No.  133, or SFAS 133,
         Accounting for Derivative Instruments and Hedging Activities.  SFAS 133
         establishes  new standards of accounting  and reporting for  derivative
         instruments  and  hedging  activities.   SFAS  133  requires  that  all
         derivatives  be  recognized at fair value in the statement of financial
         position, and that the corresponding gains or losses be reported either
         in the  statement  of  operations  or as a component  of  comprehensive
         income,  depending  on the type of hedging  relationship  that  exists.
         Management does not currently hold derivative  instruments or engage in
         hedging activities.

17       The  Company  has  signed  a  letter  of  intent to merge with Shanghai
         Baolong  Pharmaceutical  Co Ltd ("Baolong"),  a pharmaceutical  company
         located in Technological  Development Zone in Shanghai, China. Pursuant
         to the letter of intent, all assets and liabilities of the Company will
         be  transferred  to a  director  of  the  Company  who  has  guaranteed
         execution of the rights and obligations of the assets and liabilities.

         As  consideration,  Baolong  will pay a total  sum of  $600,000  to the
         Company by instalments. In addition, Baolong will inject all the assets
         of Baolong  into the  Company.  Following  the merger,  Baolong and the
         current  shareholders of the Company will hold equity  interests of 80%
         and 20% of the enlarged capital in the Company respectively.

         Formal  agreement of the above  arrangement  is subject to approvals by
         the Board of Directors of the Company and the Chinese  government on or
         before  20 March  2001.  As of March  15,  2001,  the  Company  has not
         received  any  instalment  payments  and the time  period has  expired.
         Management is still  negotiating  with Baolong and the outcome of which
         is uncertain.


                                      -35-

<PAGE>


ASIAN STAR DEVELOPMENT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2000


16       RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

         In July  1999,  the  FASB  issued  Statement  of  Financial  Accounting
         Standards  No.  137,  or  SFAS  No.  137,   Accounting  for  Derivative
         Instruments and Hedging  Activities - Deferral of the Effective Date of
         FASB No. 133.  SFAS 137 deferred the  effective  date of SFAS 133 until
         the first fiscal quarter beginning after June 15, 2000.

         In December 1999, the Securities and Exchange Commission ("SEC") issued
         Staff Accounting  Bulletin No. 101, or SAB 101, Revenue  Recognition in
         Financial Statements.  SAB 101 summarizes certain of the SEC's views in
         applying   generally   accepted   accounting   principles   to  revenue
         recognition in financial  statements.  In June 2000, the SEC issued SAB
         101B which  defers the  implementation  of SAB 101 to no later than the
         fourth  quarter of fiscal  years  beginning  after  December  15, 1999.
         Management  does not expect the  adoption of SAB 101 to have a material
         effect on the financial position or results of operations.

         In March 2000,  the  Financial  Accounting  Standards  Board,  or FASB,
         issued FASB  Interpretation  No. 44, or FIN 44,  Accounting for Certain
         Transactions  Involving  Stock  Compensation an  Interpretation  of APB
         Opinion No. 25. FIN 44 clarifies the  application of Opinion 25 for (a)
         the definition of employee for purposes of applying Opinion 25, (b) the
         criteria for determining whether a plan qualifies as a non-compensatory
         plan, (c) the accounting  consequence of various  modifications  to the
         terms  of a  previously  fixed  stock  option  or  award,  and  (d) the
         accounting for an exchange of stock  compensation  awards in a business
         combination.  FIN 44 is effective July 1, 2000, but certain conclusions
         cover  specific  events that occur after either  December  15,1998,  or
         January 12, 2000.  Management  believes  that the impact of FIN 44 will
         not have a material effect on the  consolidated  financial  position or
         results of operations of the Company.







                                      -36-

<PAGE>



Audited financial statements of Registrant for the years ended December 31, 2000
and  1999,  were  audited  by   PricewaterhouseCoopers   and  BDO  International
respectively. Address of auditors:

[PricewaterhouseCoopers Logo Appears Here]
                                           PricewaterhouseCoopers-Beijing office
                                           18 Floor, Beijing Kerry Centre
                                           1 Guang Hua Lu
                                           Chao Yang District
                                           Beijing 100020
                                           People's Republic of China
                                           Telephone: +86 (10) 6561 2233
                                           Facsimile: +86 (10) 8529 9000

[BDO International Logo Appears Here]
                                           BDO International
                                           29 Floor, Wing On Centre
                                           111 Connaught Road Central
                                           Hong Kong
                                           Telephone: (852)  2541 - 5041
                                           Facsimile:   (852)  2815 - 0002


ITEM 8.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

On May 9, 2000, PricewaterhouseCoopers was appointed as Registrant's Independent
Accountant.  Registrant has no  disagreement  with the  Independent  Accountants
since the appointment.


                                    PART III


ITEM 9.    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
           COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

The  following  table sets forth the names,  ages and positions of the Directors
and Executive Officers of Registrant:

NAME AND ADDRESS                AGE                  POSITION(S) HELD (1)
----------------                ---                  ----------------------

Stephen Chow                     60                  President, CEO and
                                                     Chairman of the Board
Room 930, Block B,
East Wing
New World Office Bldg.
Tsimshatsui, Kowloon,
Hong Kong

Sang Chan                        64                  Director and Treasurer

Room 930, Block B,
East Wing
New World Office Bldg.
Tsimshatsui, Kowloon,
Hong Kong


                                      -37-
<PAGE>



Paul Lam                         59                  Director and Secretary
Room 930, Block B,
East Wing
New World Office Bldg.
Tsimshatsui, Kowloon,
Hong Kong

Dr. Paul Tong                    59                  Director
Room 930, Block B,
East Wing
New World Office Bldg.
Tsimshatsui, Kowloon,
Hong Kong

Each director of Registrant is elected by the  stockholders to a term of one (1)
year and serves until his  successor is elected and  qualified.  Each officer of
Registrant  is elected by the Board of  Directors  to a term of one (1) year and
serves until his successor is duly elected and qualified, or until he is removed
from office. The Board of Directors has no nominating,  auditing or compensation
committees.

BACKGROUND OF OFFICERS AND DIRECTORS
------------------------------------

Stephen  Chow - Mr. Chow has been the Chief  Executive  Officer,  President  and
Chairman of the Board of Directors of Registrant since  inception.  For the past
six years,  he has also been the Managing  Director of Honpar  group  companies,
Hong Kong and Vice  President of Enrich  Ventures,  Ltd.,  a public  corporation
traded on the Vancouver  Stock  Exchange.  From 1983 to 1990, he was Senior Vice
President of Hip Shing Land Development  Ltd., USA and from 1972 to 1994, he was
President of Consolidated Investment & Construction Ltd. in Canada.

He is  currently  the  Advisor  of  Economic  Affairs  in the  City of  Taishan,
Guandong,  China  and has  been  appointed  an  Honorable  Citizen  of  Shilong,
Dongguan, Guandong, China. His past appointments/affiliations  include Director,
Community  Redevelopment Agency of the City of Los Angeles;  Director/Officer of
Windsor  Builders  Association  of  Ontario,  Canada;  President,  Essex  County
Chinese-Canadian  Association of Ontario,  Canada; and Director,  Multi-Cultural
Council of Canada.  He graduated from Hong Kong Technical College in 1959. He is
the  brother of Sam Chow,  a member of  Registrant's  Advisory  Board.  Mr. Chow
devotes full time to the business of Registrant.

Sang Chan - Mr. Chan has been a Director and the Treasurer of  Registrant  since
inception.  From  1993 to the  present,  he has also  been  Chairman  of Po Sang
Construction  Co.,  Ltd.  of  China;   General  Manager  of  Honpar  (Huangzhou)
Properties  Co.,  Ltd.;   General  Manager  of  the  China  Division  of  Honpar
Properties,  Ltd. and the  Owner/Manager of Po Sang Construction Co., Ltd., Hong
Kong. From 1961 to 1993 he was a  Consultant/Designer  for various architectural
firms in Hong Kong.  Mr.  Chan has a Major  Degree in  Accounting  from Yuet Hoi
University of Macau and devotes full time to the business of Registrant.

Paul Lam - Mr. Lam has been a Director  and the  Secretary of  Registrant  since
inception.  From 1992 to the present,  he has been the Managing  Director of CNT
Group Ltd., a Hong-Kong  publicly-traded paint manufacturing  company. From 1975
to 1992, he was Managing  Director of The China Paint Mfg.  (1946) Co., Ltd. Mr.
Lam graduated  from the  University of  California-Berkeley  in 1966 with a B.A.
Degree in Chemistry.  He is currently a committee  member of the Chinese  People
Political  Consultative  Conferences (CPPCC) of Shenyang City, Liaoling Province
and Chengdu City, Sichuan, respectively. He devotes his time as necessary to the
business of Registrant.



                                      -38-

<PAGE>


Dr. Paul Tong - Dr. Tong has been a Director of Registrant  since March 2, 1998.
From 1995 to September 1997, he has been the Chief Executive  Officer of Pacific
Century Regional  Developments Ltd., with  responsibility for infrastructure and
property  developments.  From 1978 to 1994, he was General  Manager of New World
Development  Co.,  Ltd.,  where he supervised the design and  administration  of
commercial,  residential and  infrastructural  projects in the Asian Pacific and
North America.  Dr. Tong has gained  extensive  experience in civil  engineering
having worked as a  geotechnical  engineer for a British  consultancy as a civil
engineer for a Hong Kong engineering consultancy and as a director and technical
manager  of a Hong  Kong  construction  company.  Dr.  Tong  graduated  from the
University of  Manchester,  U.K. in 1970 with a PhD. He is currently a member of
the  Institution  of Civil  Engineers,  London and the Hong Kong  Institution of
Engineers. He devotes his time as necessary to the business of Registrant.

EMPLOYMENT AGREEMENTS
---------------------

None of  Registrant's  officers or directors are  currently  party to employment
agreements  with  Registrant.  Registrant  presently  has  no  pension,  health,
annuity, bonus, insurance,  profit sharing or similar benefit plans; however, it
may adopt such plans in the future.  There are  presently  no personal  benefits
available for directors, officers or employees of Registrant, except for options
granted by the Board of Directors to certain officers, directors and consultants
to Registrant.

ADVISORY BOARD
--------------

The following professional engineers comprise Registrant's Advisory Board:

Brian Poon - Mr. Poon, a Canadian  residing in Vancouver,  B.C., is a structural
engineer by  profession  with  extensive  building  and  structural  engineering
experience in Canada and Hong Kong for over 30 years. He was the chairman of the
Structural  Division of the Hong Kong  Institution  of Engineers  1984-1985  and
served  as  Council  member  for  several  years.  He  co-founded  Ng Chun Man &
Associates,   Architects   and  Engineers   (H.K.)  Ltd.,  one  of  the  largest
architectural  and engineering firms in Hong Kong. In a wide and varied spectrum
in building  development  field,  his major  projects  include the Asia Terminal
Limited Building,  the Hong Kong Exhibition  Centre,  Central Plaza in Hong Kong
and Shantou  University in China.  He took up residence in Vancouver in 1991 and
is the President of Jet Fast Consultants Ltd. in Vancouver.  He is also involved
in food, hotel, travel and tour business and property  developments in Southeast
Asia.

Sam  Chow  -  Mr.  Chow  resides  in  San  Francisco,  California,  where  he is
professionally  licensed in Civil  Engineering by the State of  California.  Mr.
Chow has 35 years of experience in  construction,  structural  engineering,  and
civil  engineering  involving  various  low-rise and  high-rise  commercial  and
residential   buildings.   Mr.  Chow  is  the  Founder  and   President  of  ECD
Construction,  Inc.,  which provides  contracting  and  construction  management
services to both  public and  private  sector.  As a licensed  General  Building
Contractor,  his  projects  include  commercial,   residential,  and  industrial
construction.  Prior to founding ECD  Construction,  Inc.,  Mr. Chow was at Davy
McKee  Corporation,  where he was  responsible  for all  aspects  of  civil  and
structural work on several multi-million dollar mining projects. Mr. Chow is the
brother of Stephen  Chow,  an officer,  director and  principal  shareholder  of
Registrant.  Mr. Chow is the brother of Stephen Chow,  an officer,  director and
principal shareholder of Registrant.


ITEM 10.   EXECUTIVE COMPENSATION

The Company pays no annual  remuneration  to its officers and  directors in year
2000.

Mr. Stephen Chow, CEO of Registrant,  waived his annual compensation of $120,000
for the fiscal year ended December 31, 2000.

Mr. Chan Sang, Director of Registrant, received salary of $16,770 for the fiscal
year ended December 31, 2000.



                                      -39-

<PAGE>


The other  officers and directors of  Registrant  do not currently  receive cash
remuneration  or salaries  for their  efforts.  Upon  successful  completion  of
Registrant's  proposed business projects, or receipt of revenues from operations
of  Registrant,  of  which  there  can  be  no  assurance,  salaries  and  other
remuneration will be established by the Board of Directors as appropriate.

There are no employment  contracts between Registrant and any of its officers or
directors.

Registrant does not have any plan or arrangement with respect to compensation to
its executive  officers which would result from the  resignation,  retirement or
any other  termination of employment with Registrant or from a change in control
of Registrant, or a change in the executive officers' responsibilities following
any change in control,  where in respect of an executive  officer,  the value of
such compensation exceeds $120,000.

OPTION/SAR GRANTS IN LAST FISCAL YEAR
-------------------------------------

On January 12, 2000,  Registrant  granted a total of 1,300,000  stock options to
key employees and  consultants  as additional  compensation  and  incentives for
services rendered to Registrant.

The above options  issued and  exercised by a director of Registrant  during the
year ended December 31, 2000 was as follows:

<TABLE>
<CAPTION>

                        PERCENT OF TOTAL
                     NUMBER OF SECUITIES        OPTIONS/SARS GRANTED                           DATE OF
NAME OF HOLDER      UNDERLYING GRANTED (#)            FISCAL YR          EXERCISE PRICE       EXERCISE

<S>                         <C>                         <C>                <C>                 <C>  <C>
Sam Chow                    50,000                      6.1%               $1.25/share         3/31/00

<FN>
(1) These percentages are based on the total number of option shares (1,300,000).
</FN>
</TABLE>

Each of the above options allow the holder to purchase one share of Registrant's
restricted  Common Stock at an exercise price of $1.25 per share for a period of
one (1) year from the date of issue of the Option.  Any shares acquired  through
exercise of these  options  shall be  restricted  shares and may not,  under any
circumstances,  be  registered or in any way become free trading until two years
from the date the  shares are  acquired  through  exercise  of the  option.  The
records of the stock transfer agency,  as well as any  certificates  issued upon
exercise of these options shall contain said restrictive legend.

There are no other bonus, pension,  deferred  compensation,  long-term incentive
plans or  awards,  or any other  similar  plans for  executive  officers  and/or
directors of Registrant.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information  regarding the shares of Registrant's
Common Stock, par value $.001, beneficially owned for (i) each stockholder known
by Registrant to be the beneficial  owner of 5% or more of  Registrant's  issued
and outstanding Common Stock; (ii) each of Registrant's  officers and directors;
and (iii) all officers and directors as a group. At December 31,2000, there were
15,746,015 shares of Common stock outstanding.


                                      -40-


<PAGE>

<TABLE>
<CAPTION>


                                                       Amount &Nature of
                                                    Beneficial Ownership                      Percent of
Name and address                 Common Stock                  Option(1)           Total           Class

<S>                                 <C>                          <C>           <C>                 <C>
Stephen Chow (2)                    5,400,000                          -       5,400,000           34.3%
Room 930, Block B,
East Wing
New World Office Bldg.
Tsimshatsui, Kowloon,
Hong Kong




Sang Chan                             103,000                     50,000         153,000           0.97%
Room 930, Block B,
East Wing
New World Office Bldg.
Tsimshatsui, Kowloon,
Hong Kong

Paul Lam                               50,000                     80,000         130,000           0.83%
Room 930, Block B,
East Wing
New World Office Bldg.
Tsimshatsui, Kowloon,
Hong Kong

Dr. Paul Tong                         110,000                     80,000         190,000           1.21%
Room 930, Block B,
East Wing
New World Office Bldg.
Tsimshatsui, Kowloon,
Hong Kong

Sam Chow (2)                           71,300                          -          71,300           0.45%
2535 Irving Street
San Francisco, Ca. 94122

As a group                          5,734,300                    210,000       5,944,300          37.76%

<FN>
(1)   Stock Options  which were granted to the officers and  directors  under a
      Stock Option  Agreement,  dated January 12, 2000.  (See "Management"
      "Principal Stockholders" and "Certain Transactions").

(2)   Sam Chow,  a member of  Registrant's  Advisory  Board,  is the  brother of
      Stephen  Chow,  an  officer,   director  and  principal   shareholder   of
      Registrant.
</FN>
</TABLE>

There are no  arrangements,  known to  Registrant,  including  any pledge by any
person of securities of Registrant, which may, at a subsequent date, result in a
change in control of Registrant.


                                      -41-


<PAGE>


FUTURE SALES BY EXISTING STOCKHOLDERS
-------------------------------------

All shares of Common Stock of Registrant are  "restricted  securities",  as that
term is defined in Rule 144 of the Rules and  Regulations of the SEC promulgated
under the Act ("Rule 144"), save and except the 361,800 shares which were issued
under a public  offering  in the State of New  York,  pursuant  to an  exemption
provided by Rule 504 of Regulation D,  promulgated  under the  Securities Act of
1933, as amended,  which are not "restricted  securities" under Rule 144 and can
be  publicly  sold,  except  for  those  Shares  purchased  by  "affiliates"  of
Registrant, as that term is defined in Rule 144.

Under  Rule 144,  restricted  shares  can be  publicly  sold,  subject to volume
restrictions and certain restrictions on the manner of sale,  commencing one (1)
year after their  acquisition.  Sales of shares by  "affiliates"  are subject to
volume  restrictions and certain other restrictions  pertaining to the manner of
sale, all pursuant to Rule 144.


ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On January 8, 1997,  Registrant  entered  into two separate  agreements  for the
purchase  and sale of certain  assets,  one with Honpar  (Huangzhou)  Properties
Limited  and one with  Honpar  Properties  Limited.  Stephen  Chow,  an officer,
director and principal  shareholder of Registrant,  is an officer,  director and
principal  shareholder of both of these companies.  Registrant issued a total of
9,000,000  shares of its  restricted  Common  Stock in  exchange  for all of the
rights and interests in and to the assets as follows:  (i)  5,760,000  shares in
exchange for an 80% equity interest in the Dragon Villa and Water World projects
in Guandong Province, China, and (ii) 3,240,000 shares in exchange for the Maple
City project. Of the total 9,000,000 shares,  5,755,800 were issued to officers,
directors,  advisors  and/or  control  person of Registrant  and 3,244,200  were
issued to unrelated third parties. (See Item 1, Description of Business and Item
3, Description of Property.)

On June 20, 1998, Registrant sold, in a private placement  transaction,  a total
of  323,000  shares  of its  restricted  Common  Stock to  Extensiview  Ltd.,  a
principal shareholder of Registrant and an unrelated third party, for the sum of
$646,000 U.S., or $2.00 per share.

On December 15, 1998,  Registrant  acquired a city hall  development  project in
Shilong Town by issuing 2,590,730 shares of its Common Stock to Honpar (Shilong)
Properties Limited, a Hong Kong corporation,  of which Stephen Chow, an officer,
director and principal  shareholder of Registrant,  is an officer,  director and
shareholder, in exchange for 100% equity interest in Honpar (Shilong).


ITEM 13.    EXHIBITS, LISTS AND REPORTS ON FORM 8-K.

EXHIBITS

a) All required exhibits, including the Company's Articles of Incorporation, and
   Bylaws,  are attached to the Company's Form 10-SB, filed on December 1, 1999.
   All previously filed exhibits are incorporated herein by reference.

b) Reports on Form 8-K:  No reports  were on filed on Form 8K during the quarter
ended December 31, 1999.




                                      -42-


<PAGE>



EXHIBIT NO.             DOCUMENT DESCRIPTION
-----------             ---------------------

3.1                     Articles of Incorporation and any Amendments-
                        Incorporated by reference to the Form 10-KSB, filed
                        December 1, 1999

3.2                     Bylaws- Incorporated by reference to the Form 10-KSB,
                        filed December 1, 1999













                                      -43-


<PAGE>



                                   SIGNATURES
                                   ----------


In accordance with Section 12 of the Securities Exchange Act of 1934, Registrant
caused the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized.


ASIAN STAR DEVELOPMENT, INC., a
Nevada corporation


By: /s/ STEPHEN CHOW                            Dated:
    -----------------------------------------
        Stephen Chow
        Chief Executive Officer and President


By: /s/ SANG CHAN                               Dated:
    -----------------------------------------
        Sang Chan
        Chief Financial Officer











                                      -44-