<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 (FEE REQUIRED)
         For the fiscal year ended December 31, 2000

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from            to
                               ----------    ----------

                        Commission file number: 001-14171

                                    C2, INC.
             (Exact name of registrant as specified in its charter)

          Wisconsin                                         39-1915787
(State of other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                          Identification No.)


700 N. Water Street, Suite 1200, Milwaukee, Wisconsin           53202
   (Address of principal executive office)                    (Zip Code)

Registrant's telephone number, including area code    (414) 291-9000
                                                   ---------------------

Securities registered pursuant to Section 12(b) of the Act:

     Title of Each Class               Name of Each Exchange on Which Registered
     -------------------               -----------------------------------------

Common Stock - $1.00 par Value                            Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  X  No
                                       ---   ---

Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K. [X]

The aggregate market value (based on $6.75 closing price) of voting stock less
stock owned by all executive officers and directors as a group: $13,407,221

Number of Shares of Common Stock Outstanding at March 9, 2001:  5,081,864
The Index to Exhibits is located on page 35.


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<PAGE>   2

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2001 Annual Meeting of Shareholders (to
be filed with the Commission under Regulation 14A within 120 days after the end
of the registrant's fiscal year and, upon such filing, to be incorporated by
reference into Part III.)

                                     PART I
ITEM 1.    BUSINESS

C2, INC.

           C2, Inc. ("C2" or "the Company") was formed on December 11, 1997 for
the purpose of acquiring a 66.67% ownership interest in Total Logistic Control,
LLC ("TLC") for $10.67 million in cash, plus the assumption of TLC's
liabilities, and the assumption of contingent liabilities attributable to the
historic operations or assets of Christiana Companies, Inc. ("Christiana").

           The Company's growth strategy anticipates that a substantial part of
future growth will come from acquiring, either directly or through TLC, other
businesses, which may or may not be related to TLC's current business. In line
with that strategy, on March 12, 1999, the Company announced the purchase of
Zero Zone, Inc., a Wisconsin-based manufacturer of refrigerated and freezer
display cases. The Company invested $4.5 million in equity and capital notes for
70.6% of the outstanding common stock of Zero Zone. The remaining 29.4% of Zero
Zone is held by its President and other members of its management team.

           C2 completed its initial public offering on March 4, 1999. The
offering resulted in the sale of 5,202,664 shares of common stock, par value $1
per share ("Common Stock"), at $4.00 per share raising $20,410,000 of initial
equity capital, net of offering costs. From these proceeds, the Company used
$10.67 million to acquire 666.67 membership units, representing a 66.7%
ownership interest in TLC as part of the merger transaction between Christiana
and Weatherford International, Inc. ("Weatherford"). On September 30, 2000, the
Company, through a wholly-owned subsidiary, acquired the remaining 33.3% of TLC
from Weatherford in a cash purchase in the amount of $8.28 million.

TOTAL LOGISTIC CONTROL, LLC

           TLC was formed on June 30, 1997 through a combination of the
operations of two wholly-owned subsidiaries of Christiana: Wiscold, Inc.
("Wiscold") and Total Logistic Control Inc. On September 1, 1992, Christiana
acquired the assets of Wiscold, a company formed in 1915, which engaged in
providing public refrigerated warehousing services, vegetable processing and
individual quick freeze ("IQF") services, automated poly bag and bulk packaging
services, and transportation services into and out of its facilities. On January
4, 1994, Christiana acquired Total Logistic Control, Inc., a Zeeland,
Michigan-based firm engaged in providing fully integrated third-party logistic
services, including warehouse, distribution and transportation services in both
refrigerated and non-refrigerated facilities. On September 1, 2000, TLC acquired
the ProSource Group, Inc., located in Aurora, Illinois. ProSource provides
dedicated third-party management to operate both manufacturing and distribution
centers primarily for Fortune 500 consumer products companies.

           Today, TLC provides integrated third-party logistic services as well
as full service public and contract warehousing and facility and operations
management in all ranges of frozen, refrigerated and ambient temperatures.
Integrated logistic services generally combine transportation, warehousing and
information services to manage the distribution channel for a customer's
products from the point of manufacture to the point of consumption. TLC's
transportation and distribution services include full service truckload,
less-than-truckload and pooled consolidation in both temperature controlled and
dry freight equipment, dedicated fleet services and specialized store-door
delivery formats. Transportation and


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<PAGE>   3

logistic management services are provided utilizing company-owned equipment as
well as through carrier management services utilizing third party common and
contract carriers. TLC also provides product fulfillment services, international
customs house brokerage and freight forwarding, food distribution, kitting,
repackaging and just-in-time production supply services.

           TLC's transportation fleet consists of 245 tractors, 310 refrigerated
trailers and 95 dry trailers providing transportation services nationally.

           TLC's Logistics Management Services ("LMS") offers logistics
consulting and supply chain management solutions utilizing optimization software
to design and operate integrated distribution programs. LMS typically contracts
with third-party warehouse and transportation companies to provide the most cost
and service effective program for its customers.

            TLC believes it is the nation's seventh largest provider of public
refrigerated warehouse space. All of TLC's refrigerated facilities are modern
and efficient single story buildings at dock height elevation and are fully
insulated. TLC's refrigerated logistic centers are as follows:

            -  Rochelle Logistic Center campus, located in Rochelle, Illinois,
               is TLC's newest and largest refrigerated warehouse operation,
               initially constructed in 1986. Currently this location is
               comprised of 14,100,000 cubic feet of capacity in two separate
               buildings having undergone four capacity expansions in 1988,
               1990, 1993 and 1996. All space is capable of temperatures of
               -20(degree)F to ambient. Rochelle Logistic Center is
               strategically located at the intersection of two main line
               East-West railroads, the Burlington Northern and the Chicago
               Northwestern, and the cross roads of two interstate highways,
               I-39 and I-88. Rochelle Logistic Center serves primarily
               distribution customers in the Midwest.

            -  Beaver Dam Logistic Center, located in Beaver Dam, Wisconsin, was
               originally constructed in 1975. Since 1975, this facility has
               undergone three freezer additions, the most recent in 1991, and
               today is comprised of 7,200,000 cubic feet of freezer storage
               space. Beaver Dam Logistic Center serves distribution related
               customers as well as vegetable and cranberry processors. This
               facility's unique capabilities involve value added services for
               vegetable processors including IQF, blanching, slicing, dicing
               and food service and retail poly bag packaging operations. Beaver
               Dam Logistic Center's IQF tunnels have the capacity to freeze
               30,000 pounds of product per hour. This facility is served by the
               Wisconsin and Southern Railroad.

            -  Milwaukee Logistic Center, located in Wauwatosa, Wisconsin, was
               originally constructed in 1954. There have been six expansions of
               this facility, and today the Milwaukee Logistic Center facility
               comprises 4,300,000 cubic feet of which 3,754,000 cubic feet is
               freezer capacity and 546,000 cubic feet is cooler space. This
               facility has multi-temperature refrigerated storage ranging from
               -20(degree)F to +40(degree)F and daily blast freezing capacity of
               300,000 pounds. An additional 3 million cubic feet of
               company-owned refrigerated and processing space adjacent to the
               Milwaukee Logistic Center facility is leased on a long term basis
               to a third-party retail grocery company.

            -  Kalamazoo Logistic Center, located in Kalamazoo, Michigan, has
               two distribution centers. Facility #1 is a 3,300,000 cubic foot
               facility with 1,100,000 cubic feet of freezer capacity, 400,000
               cubic feet of cooler capacity and 1,800,000 cubic feet of dry
               storage capacity. This location services a number of distribution
               customers in the Midwest and is strategically located at the
               crossroads of I-94 and US 31 in Michigan, equal distance between
               Chicago and


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<PAGE>   4

               Detroit. Facility #2 is located adjacent to Facility #1 and is
               comprised of 2,800,000 cubic feet of cooler capacity, 75% of
               which is dedicated to one large distribution customer under a
               six-year operating agreement.

            -  Also located at the Kalamazoo Logistic Center is a company-owned
               10,000 square foot transportation equipment maintenance center.
               Approximately 50% of TLC's fleet of over-the-road transportation
               units is domiciled in Kalamazoo, Michigan.

            -  Holland Logistic Center, located in Holland, Michigan, has
               undergone a number of expansions over the years, with a major
               reconstruction in 1983 after a fire destroyed approximately 50
               percent of the facility. Today, this refrigerated facility
               comprises 2,100,000 cubic feet of storage capacity of which
               1,300,000 cubic feet is freezer capacity, 400,000 cubic feet is
               cooler capacity and 400,000 cubic feet is convertible between
               freezer and cooler capacity. Holland Logistic Center services
               both distribution customers as well as fruit growers in Western
               Michigan. This location is situated on a CSX rail spur with two
               refrigerated rail docks. This facility is held under a new
               long-term lease which expires April, 2011.

            -  On January 5, 2000, Paw Paw Logistics Center, a 2,500,000 cubic
               foot refrigerated facility located in Paw Paw, Michigan, was
               acquired by TLC. This multi-temperature facility is located 15
               miles west of the Kalamazoo facilities on Interstate 94. This
               site has 15 acres of land and the warehouse can be expanded by an
               additional 300,000 cubic feet. In addition as a part of the
               acquisition, TLC received an option to purchase 90 additional
               acres of land contiguous to the facility. The Paw Paw Logistics
               Center was initially constructed in 1991 and under went two
               expansions in 1984 and 1990. In early 2000, TLC completed an
               extensive upgrading and re-racking of this facility.

            In addition to the refrigerated distribution centers described
above, TLC operates a network of owned and leased dry (non-refrigerated)
distribution centers comprising approximately 1.0 million square feet of storage
capacity. Dry distribution centers are located in Zeeland (2) and Kalamazoo,
Michigan; Munster, Indiana and Dayton, New Jersey.

            TLC's customers consist primarily of national, regional and local
firms engaged in food processing, consumer and industrial product manufacturing,
wholesale distribution and retailing. During 2000, TLC's top 10 customers
accounted for approximately 29.9% of total consolidated revenues. TLC currently
services approximately 1,400 customers.

            Competition in integrated logistic services is on both a national
and local basis with a predominant emphasis on transportation services. At
present, there are no direct competitors providing the full scope of
warehousing, transportation, logistic management and facility management
services across the full range of temperatures provided by TLC. However, each of
TLC's individual business subsegments is highly fragmented with many local,
regional and national competitors, especially in the transportation and dry
warehousing industries. TLC believes it has a competitive edge in its ability to
provide fully integrated logistic services designed to its customers'
distribution needs which may, but would not necessarily, include utilizing TLC's
network of strategically located refrigerated and dry distribution centers,
transportation equipment, and logistic management services. TLC's revenues and
earnings can be affected by changes in competitive pricing in both
transportation and warehousing operations, particularly at the local level;
harvest yields of certain vegetable and fruit crops grown in the Upper Midwest;
changes in customers distribution patterns or channels, general economic
conditions, and energy costs, particularly diesel fuel and electric power.



                                       4
<PAGE>   5

            TLC holds a trademark on its name and logo. No other trademarks,
patents, licenses, franchises or concessions are considered material to its
business.

            Expenditures for research and development and compliance with
environmental regulations have not been, and are not anticipated to be,
significant.

ZERO ZONE

            Zero Zone, headquartered in North Prairie, Wisconsin, manufactures
frozen and refrigerated glass door and open-faced reach-in display cases used by
grocery, convenience and drug store chains for retail merchandising of food,
beverage and floral products.

            Zero Zone currently operates two manufacturing facilities and uses
one warehouse for offsite storage of finished goods. Zero Zone's headquarters
was built in 1995. The original facility consisted of 61,000 square feet and was
expanded during 1999 by an additional 52,000 square feet. Zero Zone's operations
consist of light manufacturing, primarily heat exchange equipment fabrication,
panel molding and assembly operations.

            Zero Zone's second manufacturing facility is located four miles east
of North Prairie in Genesee, Wisconsin. This 34,000 square foot Genesee facility
is primarily utilized for production of display casements with self-contained
refrigeration equipment.

            In 2000, Zero Zone purchased a 6,300 square foot building and 2.47
acres of land directly adjacent to its North Prairie facility to facilitate
additional storage space and a customer display center to exhibit products.

            Zero Zone currently leases a warehouse in Waukesha, Wisconsin. The
current arrangement includes 79,200 square feet of space with an option to add
60,000 additional square feet.

            Competition in commercial refrigeration equipment manufacturing
varies depending on the market segment being served. Zero Zone is primarily a
supplier to retailers engaged in grocery, drug and convenience stores. Zero Zone
also sells to refrigeration contractors, dealers, and food wholesalers. Zero
Zone's top 10 customers accounted for approximately 25.5% of total consolidated
revenues. Zero Zone's active customer list includes approximately 500 customers.

            Zero Zone's competition consists of larger companies that supply a
complete line of refrigerated equipment while Zero Zone's specialty is glass
door and open-faced, reach-in display cases. Zero Zone believes it has a
competitive advantage in its product quality and performance, along with a
flexible manufacturing process that allows for shorter lead times and quicker
response to its customers' construction and refurbishment schedules.

            Zero Zone revenues and earnings can be affected by a loss of a
significant customer, industry consolidation in both customers and competitors,
changes in competitive pricing, raw material cost changes, changes in
distribution channels, new construction and refurbishment of grocery and chain
store retailers, availability of skilled labor and general economic conditions.


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<PAGE>   6


                                    EMPLOYEES

            The following table shows the number of full-time C2, TLC and Zero
Zone employees at the dates indicated.

<TABLE>
<CAPTION>


                                     FULL-TIME EMPLOYEES AT FEBRUARY 28,
                                   --------------------------------------
                                       2001         2000          1999
                                   ----------    ----------    ----------
<S>                               <C>           <C>          <C>
         C2                              11            11           10
         TLC                          1,005           913          743
         ZERO ZONE                      185           162           --
                                      -----         -----        -----
            TOTAL                     1,201         1,086          753
</TABLE>

                        EXECUTIVE OFFICERS OF THE COMPANY

<TABLE>
<CAPTION>

                                                   POSITION AND PRINCIPAL OCCUPATION
                 NAME                   AGE           DURING THE LAST FIVE YEARS
         ----------------------------- ------ ------------------------------------------------------
<S>                                  <C>      <C>
         William T. Donovan             49     President and Chief Executive Officer of C2, Inc. (1)

         David J. Lubar                 46     Chairman of C2, Inc. (2)

         Oyvind Solvang                 42     Vice President of C2, Inc. (3)
</TABLE>

         (1) Mr. Donovan served as Chairman and Chief Financial Officer of the
             Company from December 1997 to July 24, 2000, when he was named the
             Company's President and Chief Executive Officer. He has served in
             the capacity listed or in another capacity as an executive officer
             of Christiana for more than the last five years. He was a principal
             of Lubar & Co. (venture capital and investments) for more than five
             years. Mr. Donovan is a director of Grey Wolf, Inc.
         (2) David Lubar served as President of the Company from December 1997
             to July 24, 2000, when he was named the Company's Chairman. Mr.
             Lubar has been a principal of Lubar & Co. (venture capital and
             investments) located in Milwaukee, Wisconsin since 1983.
         (3) Oyvind Solvang has been Vice President of C2, Inc. since December
             1997. Mr. Solvang has served as President of Cleary Gull Rieland &
             McDevitt, Inc., an investment banking firm, located in Milwaukee,
             Wisconsin from January 1996 to October 1996 and Chief Operating
             Officer from October 1995 to January 1996.

         Sheldon B. Lubar, a director of the Company, is the father of David J.
Lubar and father-in-law of Oyvind Solvang. None of the other directors or
executive officers are related to each other. The term of office of each of the
executive officers expires at the annual meeting of directors.

ITEM 2.      PROPERTIES

             WAREHOUSING FACILITIES

             At December 31, 2000, TLC owned or leased thirteen warehouse
facilities in five states, of this total, eight are public refrigerated with the
balance being non-refrigerated facilities. Refrigerated warehousing operations
are conducted through eight public logistic centers located in Wisconsin (2),
Michigan (4), and Illinois (2). TLC's refrigerated facilities are large
single-story buildings constructed at dock height with full insulation and vapor
barrier protection. Refrigeration is provided by screw-type compressors all of
which employ ammonia-based cooling systems. The facilities are strategically
located and well served by rail and truck.



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<PAGE>   7


            TLC's refrigerated warehouse facilities are described in the
following table:

<TABLE>
<CAPTION>

                                                 TOTAL STORAGE SPACE
                 LOCATION                     (CUBIC FEET IN MILLIONS)                TYPE OF FACILITY
----------------------------------------    ------------------------------   ----------------------------------
<S>                                         <C>                             <C
Rochelle Logistic Center I                               10.6                 Distribution
Rochelle Logistic Center II                               3.5                 Distribution
Beaver Dam Logistic Center                                7.2                 Distribution/Production
Milwaukee Logistic Center                                 4.3                 Distribution
Paw Paw Logistic Center                                   2.5                 Distribution
Kalamazoo Logistic Center I (1)(2)                        3.3                 Distribution
Kalamazoo Logistic Center II (1)                          2.8                 Distribution
Holland Logistic Center (1)                               2.1                 Distribution/Production
                                                        -----
    TOTAL                                                36.3
                                                        =====
</TABLE>

(1) Leased Facility
(2) Includes 1.8 million cubic feet of
non-refrigerated storage capacity.

            At both the Rochelle and Beaver Dam Logistic Centers, the Company
owns substantial additional acreage available for expansion. In addition, the
Company has an option to purchase 90 additional acres of contiguous land for
future expansion and development at the Paw Paw Logistic Center.

            At December 31, 2000, TLC operated 5 public non-refrigerated or dry
warehouse distribution facilities located in Michigan (3), Indiana and New
Jersey. Zeeland Distribution Center II, located in Zeeland, Michigan is a
company-owned facility. All other dry facilities are held under leases the terms
of which generally match underlying contracts with major customers served at
each facility. These facilities are single story block or metal construction
buildings. All dry facilities are constructed at dock height and are approved as
food grade storage facilities.

            TLC's dry warehouse facilities are described on the following table:

<TABLE>
<CAPTION>

                                                                        TOTAL STORAGE
                                                                            SPACE
                                                                         (SQ. FT. IN                 TYPE OF
                  FACILITY                         LOCATION               THOUSANDS)                 FACILITY
---------------------------------------    -----------------------   ---------------------    -----------------------
<S>                                      <C>                        <C>                        <C>
Zeeland Logistic Center I (1)              Zeeland, MI                          202                   Public
Zeeland Logistic Center II                 Zeeland, MI                          220                   Public
Michigan Distr. Center I (1)               Kalamazoo, MI                         88                   Public
Munster Logistic Center (1)                Munster, IN                          400                   Public
Dayton Logistic Center (1)                 Dayton, NJ                            90                   Public
                                                                     ---------------------
    TOTAL                                                                     1,000
                                                                     ---------------------
</TABLE>

(1) Leased facility.


            TLC owns and operates a 10,000 square foot truck maintenance
facility located at the Kalamazoo Logistic Center. This facility is used for the
maintenance of TLC transportation equipment.

            Through ProSource, a wholly-owned subsidiary of TLC, the Company
operates on behalf of a customer, a 200,000 square foot ambient fulfillment
center located in Hurlock, Maryland. The Company is not a party to the lease on
this facility.

            Zero Zone currently operates two manufacturing facilities and uses
one warehouse for offsite storage of finished goods. Zero Zone's headquarters
was built in 1995. The original facility consisted of


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<PAGE>   8

61,000 square feet and was expanded during 1999 by an additional 52,000 square
feet. Zero Zone is a light manufacturing environment consisting primarily of
heat exchange equipment fabrication, panel molding and assembly operations.

            Zero Zone's second facility is located four miles to the east of
North Prairie in Genesee, Wisconsin. This facility consists of 34,000 square
feet. The Genesee facility is primarily utilized for production of display
casements with self-contained refrigeration equipment including the Open
Merchandiser Cooler (OMC) line.

            Zero Zone renovated the Genesee location during 2000 to accommodate
the OMC product line. This new product line maintains safe product temperatures
of 41(degree)F or lower, as required by food regulatory authorities. The
Company also introduced in 2000 a new wrap-around end case to give back-to-back
freezer lineups a continuous product presentation from aisle-to-aisle. The
Maximizer(R) product line added a new reach-in model. A single door freezer is
available in addition to 2-, 3-, 4- and 5-door units as previously offered.

            In 2000, Zero Zone purchased a 6,300 square foot building and 2.47
acres of land directly adjacent to its North Prairie facility to facilitate
additional storage space and a customer display center to exhibit product.

            Zero Zone currently leases a warehouse in Waukesha, Wisconsin. The
current arrangement includes 79,200 square feet of space with an option to add
an additional 60,000 square feet.

ITEM 3.     LEGAL PROCEEDINGS.

            From time to time, TLC and Zero Zone, in the normal course of
business, are involved in litigation incidental to the conduct of their
businesses. The Company does not believe that the ultimate disposition of any
currently pending claims, individually or in the aggregate, would have a
material adverse effect on the Company's consolidated financial condition or
results of operations.

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

            No matters were submitted to a vote of shareholders during the
quarter ended December 31, 2000.

                                     PART II

ITEM 5.     MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
            MATTERS.

            The common stock of the Company was originally listed on the Nasdaq
Small Cap Market effective March 5, 1999. On June 4, 1999 the Company's common
stock was listed on the Nasdaq National Market. The table below sets forth the
reported high and low sales prices as reported by Nasdaq for the quarters ended
March 31, 1999 through March 9, 2001.

<TABLE>
<CAPTION>

                                         2001                       2000                      1999
------------------------------------------------------------------------------------------------------------

QUARTER ENDED                      HIGH        LOW           HIGH           LOW         HIGH            LOW
------------------------------------------------------------------------------------------------------------
<S>                             <C>        <C>          <C>            <C>           <C>            <C>
March 31*                         $7.750     $6.625       $  6.500       $ 4.125       $6.000         $5.500
June 30                                                      7.750         4.750        6.438          5.000
September 30                                                17.813         6.000        6.250          5.500
December 31                                                 10.000         7.250        6.000          4.250
</TABLE>

                         * Ten weeks ended March 9, 2001



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<PAGE>   9


            At March 9, 2001, there were approximately 129 shareholders of
record and over 400 round lot holders. There have been no dividends paid, and
based on the Company's strategic business plan of reinvesting cash flow, none
are anticipated in the foreseeable future.

ITEM 6.     SELECTED FINANCIAL DATA.

            Selected Financial Data is provided under the caption "Five Year
Financial Information" which is included on page 33.

ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS.

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

            Prior to 2000 logistics revenue included all of TLC's revenue. In
2000, the Company has reclassified certain of TLC's revenue to product sales as
it involves the purchase and resale of products as well as transportation and
warehousing expenses related to product sales. As a result, certain revenues and
expenses in prior years have been reclassified to conform to the 2000
presentation.

            The Company's consolidated revenues for fiscal 2000 totaled
$183,450,000 compared to $145,676,000 as reported in fiscal 1999, an increase of
$37,774,000, or 25.9%. C2's consolidated revenues in fiscal 2000 included
$113,376,000 of logistics service revenue, which reflected year-to-year growth
of 17.9%, and product sales of $70,074,000, which grew 41.4% in fiscal 2000. The
increase in revenue was primarily driven by strong revenue growth at both TLC
and Zero Zone and the inclusion of a full year's operations of Zero Zone in
fiscal 2000 compared to only 9 1/2 months in fiscal 1999. For the year, TLC
reported revenue growth of 18.6% driven in large part by new logistic management
service relationships, increased utilization of warehouse facilities and larger
fleet operations. Zero Zone reported sales growth of 46.6%, reflecting a full
year's operations in 2000 versus only 9 1/2 months in fiscal 1999, as well as
full year comparative growth of 26.8%.

            The direct margin attributable to logistics services was 16.3% in
fiscal 2000, down from 19.4% in fiscal 1999 reflecting higher growth in lower
margin logistic management services than in warehousing operations. However,
non-asset based logistic management services have substantially lower capital
requirements to fund growth than asset-intensive warehousing operations.

            The direct margin attributable to product sales in fiscal 2000 was
23.1% reflecting an increase over last year's level of 22.1%. The increase in
margin is largely attributable to including a full year of Zero Zone operations
compared to only 9 1/2 months in fiscal 1999.

            Depreciation and amortization expense in fiscal 2000 was $7,895,000
compared to $7,519,000 reported in fiscal 1999, reflecting an increase of
$376,000, or 5.0%. The increase is primarily attributable to the inclusion of
Zero Zone operations for the entire year in 2000.

            Selling, general and administrative expenses in fiscal 2000 totaled
$15,623,000, or 8.5% of total revenues compared to $13,087,000, or 9.0%, for the
same period in 1999. The increase in selling, general and administrative expense
in fiscal 2000 of $2,536,000, or 19.4%, was primarily attributable to higher
volume at Zero Zone and the inclusion of a full-year of Zero Zone's operations
in fiscal 2000. Selling, general and administrative expense attributable to TLC
declined 3.7% in fiscal 2000.

            Consolidated earnings from operations for fiscal 2000 totaled
$11,153,000 compared to $9,044,000 in fiscal 1999, an increase of $2,109,000, or
23.3%, but reflected a consistent margin on revenues year-to-year.


                                       9
<PAGE>   10

            Consolidated net interest expense in fiscal 2000 was $5,899,000
compared to $4,644,000 reported for fiscal 1999. The increase of $1,255,000 is
primarily attributable to a full period of increased debt in fiscal 2000
compared to last year, the acquisition of a refrigerated warehouse facility
which was funded by an increase in TLC's revolving credit facility, the
acquisition of the remaining 33.3% of TLC on September 30, 2000, funded through
borrowings under C2's line of credit and generally higher interest rates on
variable rate borrowings.

            In fiscal 2000, consolidated net earnings totaled $1,995,000, or
$0.39 basic earnings per share, up 59.0% from last year's net earnings of
$1,255,000, or $0.24 per share. Included in last year's results was an
extraordinary charge of $153,000, net of tax, incurred by Zero Zone related to
refinancing its senior debt. Excluding the extraordinary charge in fiscal 1999,
net earnings increased 41.7% year-to-year. The increase in fiscal 2000 net
earnings excluding the extraordinary charge, was primarily attributable to
higher sales volume at Zero Zone, the inclusion of Zero Zone's operations for a
full-year period this year and incurring certain one-time expenses in fiscal
1999 related to the Christiana Weatherford merger and transaction.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

            The Company's consolidated financial results for fiscal 1999 include
a full 12 months of operations for TLC and a 9 1/2 month period for Zero Zone.
Accounting convention requires the consolidated financial results reported by C2
for fiscal 1999 be compared to the financial results of TLC alone reported for
fiscal 1998, even though TLC was a wholly-owned, limited liability company
subsidiary of Christiana Companies, Inc. and therefore did not provide for
minority interest or a tax provision.

            The Company's consolidated revenues for fiscal 1999 totaled
$145,676,000 compared to $90,610,000 reported by TLC in fiscal 1998 reflecting
an increase of 60.8%. Revenue growth was primarily attributable to increased
volume in logistics services, which increased 18.3% to $96,132,000, and growth
in product sales, which increased 430% year-to-year due primarily to the
acquisition of Zero Zone and the inclusion of Zero Zone's operations in C2's
consolidated financial results for 9 1/2 months in fiscal 1999. Revenue growth
at TLC was driven primarily by new customers, increased volume in Logistics
Management Services and increased capacity utilization in refrigerated
warehousing. Revenue growth at Zero Zone, which on a full year-to-year basis
totaled 48.2%, resulted from increased volume from both new and existing
customers. In fiscal 1999, one customer represented 16% of consolidated
revenues.

            Depreciation and amortization expense in fiscal 1999 was $7,519,000
compared to $6,254,000 reported by TLC in fiscal 1998, reflecting an increase of
$1,265,000 or 20.2%. The increase was primarily attributable to the acquisition
of Zero Zone in fiscal 1999.

            Selling general and administrative expenses in fiscal 1999 totaled
$13,087,000 compared to $7,140,000 reported by TLC in fiscal 1998, or an
increase of 83%. The increase was due entirely to the inclusion of Zero Zone as
this expense category at TLC declined $71,000 in fiscal 1999 due to aggressive
cost management. Also included in this expense category for fiscal 1999 was
$847,000 of corporate related expense.

            Consolidated earnings from operations for fiscal 1999 totaled
$9,044,000 compared to $6,850,000 reported for TLC in fiscal 1998, or an
increase of 32%. Growth in earnings from operations was attributable primarily
to the inclusion of Zero Zone for the period. Earnings from operations
contributed by TLC in fiscal 1999 declined by 17% from the prior year due
primarily to increased labor and warehousing costs for much of the year at two
refrigerated warehouse facilities. The increase in labor and warehousing costs
resulted from the Company significantly expanding the distribution programs with
two accounts. Earnings from operations in fiscal 1999 also include $847,000 of
corporate related expenses which are not reflected in the prior year's results.


                                       10
<PAGE>   11

            Consolidated net interest expense in fiscal 1999 was $4,644,000
compared to $2,586,000 reported by TLC in fiscal 1998. Increased interest
expense was primarily related to two factors: increased debt at TLC related to
the $20 million dividend and the repayment of a $3,000,000 note to Christiana in
connection with the merger transaction between Christiana and Weatherford, and
secondly, the inclusion of Zero Zone in fiscal 1999. Corporate activities
contributed $312,000 of interest income for the year.

            In the third quarter of fiscal 1999, Zero Zone refinanced its senior
debt which both reduced its average rate of interest and significantly extended
its average maturity. Related to this debt refinancing transaction, Zero Zone
incurred a one-time, extraordinary charge of $153,000, net of tax and minority
interest.

            Consolidated net earnings for fiscal 1999 before an extraordinary
charge as previously described, totaled $1,408,000 or $0.27 basic earnings per
share compared to net earnings reported by TLC in fiscal 1998 of $4,375,000 or
$0.84 per share. The decline in earnings is attributable to increased interest
expense as previously noted, the inclusion of minority interest and a tax
provision in fiscal 1999 related to both TLC and Zero Zone, and lower earnings
from operations at TLC. Consolidated net earnings after the extraordinary item
in fiscal 1999 were $1,255,000, or $0.24 basic earnings per share.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

            Cash and cash equivalents at December 31, 2000 totaled $2,294,000
compared to $4,953,000 at December 31, 1999. The Company's working capital at
December 31, 2000 was $1,366,000 compared to $8,835,000 at December 31, 1999.
The decline in working capital was primarily attributable to the purchase of the
remaining 33.3% interest in TLC from Weatherford for $8,284,000 which was funded
by using $1,284,000 of Company cash and borrowing $7,000,000 under the Company's
line of credit.

            Operating activities in 2000 provided cash of $8,569,000 derived
primarily from net earnings of $1,995,000, depreciation and amortization of
$7,895,000, offset by a net increase in working capital accounts of $3,144,000.

            Net cash used in investing activities in fiscal 2000 totaled
$17,567,000 and included capital expenditures of $9,845,000, the major
components of which were: $6,861,000 related to the purchase of a refrigerated
warehouse, $1,101,000 of transportation equipment and $1,632,000 for capital
additions at Zero Zone primarily related to the expansion of its manufacturing
capacity. Businesses acquired represents the 33.3% purchase of TLC for
$8,284,000.

            Cash flows from financing activities in fiscal 2000 totaled
$6,339,000 the major components of which were $1,060,000 in borrowings under
Zero Zone's line of credit to finance its growth in working capital and
$7,000,000 in borrowings under C2's line of credit to finance the acquisition of
the remaining 33.3% of TLC. The cash flow was partially reduced by payments on
long-term debt and the purchase of treasury stock

            At December 31, 2000, TLC had a secured revolving credit facility
that provided for borrowings up to $64,350,000. Outstanding indebtedness under
this facility totaled $53,300,000 at December 31, 2000. During the third quarter
of 1999, Zero Zone refinanced its senior debt issuing a $3,420,000 tax exempt
Industrial Revenue Bond and a $6,000,000 taxable Industrial Revenue Bond both of
which were credit enhanced by a major commercial bank's letter of credit. In
addition, Zero Zone has a $7,500,000 secured line of credit facility which, at
year end, had outstanding borrowings of $3,830,000. Zero Zone issued $4,401,000
of subordinated notes in connection with its acquisition by C2 on March 12,
1999.


                                       11
<PAGE>   12

            At year end, the Company had in place a $15,000,000 unsecured line
of credit facility for general corporate purposes. There were $7,000,000 in
borrowings outstanding under this facility at December 31, 2000.

            The Company's current sources of capital include: cash generated
from operations, existing cash resources which, at year end, totaled $2,294,000
and unused borrowings under existing credit facilities totaling approximately
$23,000,000. The Company believes these resources are sufficient to fund
projected cash requirements of its current operations.

            TLC has received commitments from its current lenders to refinance
its existing revolving credit facility. The refinancing will include the
$7,000,000 outstanding borrowings under C2, Inc.'s line of credit. The
refinancing will entail extending the existing term of the facility by three
years. It is expected that the refinancing will be completed in the second
quarter of fiscal 2000 and include similar covenants but a higher spread over
LIBOR than its existing credit facility reflecting the increased leverage and
extended maturity.

            The Company continues to evaluate new acquisitions in areas
strategic to existing operations as well as in new lines of business. Future
acquisitions may be funded through cash flows from operations, existing credit
facilities and the issuance of equity securities under a rights offering to
shareholders or otherwise, if desirable.

            As of December 31, 2000, the Company had no material capital
commitments.

            Certain matters discussed in this Report are "forward-looking
statements" intended to qualify for the safe harbor from liability established
by the Private Securities Litigation Reform Act of 1995. These forward-looking
statements can generally be identified as such because the context of the
statement includes phrases such as the Company "believes," "expects" or other
words of similar import. Similarly, statements that describe the Company's
future plans, objectives or goals are also forward-looking statements,
including, among other, discussions of growth in the market and demand for
services in third party logistics, the outlook for growth in the market for new
construction or refurbishment of grocery, drug and convenience stores, and thus
demand for Zero Zone's products. Such forward-looking statements are subject to
certain risks and uncertainties which could cause actual results or outcomes to
differ materially from those currently anticipated. Although the Company
believes its expectations are based on reasonable assumptions, it can give no
assurance that its goals will be achieved. Important factors that could affect
actual results or outcomes include, without limitation:

         -  Demand for and profitability of warehousing, transportation logistic
            services and refrigerated display cases may be adversely affected by
            increases in interest rates, adverse economic conditions, increased
            energy costs, loss of a material customer or other factors.
         -  Growth in volume of services or products may be adversely affected
            by reduced ability to identify and hire qualified employees.
         -  The Company's profitability may be adversely affected by increases
            in interest rates because a significant portion of the Company's
            debt bears interest at variable rates.
         -  Consolidations within the food industry or food retailers could
            impact the Company's customers
         -  Company's market share may be adversely affected as a result of new
            or increased competitive conditions in warehousing, transportation
            or display case manufacturing.

            Shareholders, potential investors and other readers are urged to
consider these factors in evaluating the forward-looking statements and are
cautioned not to place undue reliance on such forward-looking statements. The
forward-looking statements included are made only as of the date of this Report.
The Company is not obligated to publicly update such forward-looking statements
to reflect subsequent events or circumstances.


                                       12
<PAGE>   13

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

            C2, Inc. had minimal, if any, holdings in long-term fixed income or
debt instruments, derivatives or foreign exchange transactions in 2000 or 1999
which would give rise to exposure to market risk related to interest rate
fluctuations. Any exposure to market risk related to interest rate fluctuation
is considered to be immaterial.

ITEM 8.     FINANCIAL STATEMENT AND SUPPLEMENTARY DATA.

            See Index to Financial Information on page 17.

ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURE.

            None

                                    PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT.

            The information required by this Item with respect to directors and
Section 16 compliance is included under the captions "Election of Directors" and
"Section 16(a) Beneficial Ownership Reporting Compliance", respectively, in the
Company's definitive Proxy Statement for its 2001 Annual Meeting of Shareholders
("Proxy Statement") and is hereby incorporated herein by reference. Information
with respect to the executive officers of the Company appears in Part I, page 6
of the Annual Report on Form 10-K.

ITEM 11.    EXECUTIVE COMPENSATION.

            The information required by this Item is included under the captions
"Board of Directors -- Directors Compensation" and "Executive Compensation" in
the Proxy Statement and is hereby incorporated herein by reference; provided,
however, that the subsection entitled "Executive Compensation -- Report on
Executive Compensation" shall not be deemed to be incorporated herein by
reference.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

            The information required by this Item is included under the caption
"Principal Shareholders" in the Proxy Statement and is hereby incorporated
herein by reference.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

            The information required by this Item is included under the caption
"Certain Transactions" in the Proxy Statement and is hereby incorporated herein
by reference.


                                       13
<PAGE>   14


                                     PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

           (a) (1) Financial Statement and Schedules -- The financial statements
and financial statement schedules listed in the accompanying index to financial
statement and financial statement schedules are filed as part of this Annual
Report on Form 10-K and are incorporated herein by reference. See Index on page
17.

               (2) Exhibits -- The exhibits listed in the accompanying index to
exhibits are filed as part of this Annual Report on Form 10-K. See Index on page
35.

           (b) Reports on Form 8-K:

           No reports on Form 8-K were filed by the Company during the quarter
           ended December 31, 2000.


                                       14
<PAGE>   15

                                   SIGNATURES

           Pursuant to the requirement of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                             C2, Inc.

Date:      March 13, 2001                    By: /s/ William T. Donovan
                                             -----------------------------------
                                             William T. Donovan, President & CEO

           Pursuant to the requirements of the Securities Exchange Act of 1934
this 10-K report has been signed below on March 13, 2001 the following persons
on behalf of the Registrant and in the capacity indicated.

                                             Signature


/s/ William T. Donovan                       President & Chief Executive Officer
---------------------------------------      a Director
William T. Donovan


/s/ David J. Lubar                           Chairman and a Director
---------------------------------------
David J. Lubar


/s/ Nicholas F. Brady                        Director
---------------------------------------
Nicholas F. Brady


/s/ Sheldon B. Lubar                         Director
---------------------------------------
Sheldon B. Lubar


/s/ William H. Lacy                          Director
---------------------------------------
William H. Lacy


/s/ John A. Becker                           Director
---------------------------------------
John A. Becker


/s/ Betty J. White                           Treasurer
---------------------------------------
Betty J. White



                                       15
<PAGE>   16

















                                    C2, INC.


                              FINANCIAL INFORMATION


                   FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K

                          YEAR ENDED DECEMBER 31, 2000










                                       16
<PAGE>   17


                                    C2, INC.
                         INDEX TO FINANCIAL INFORMATION


                                                                        Page No.

Report of Independent Public Accountants....................................18

C2, Inc. Consolidated Balance Sheets as of December 31, 2000 and 1999.......19

C2, Inc. Consolidated Statements of Income for the years ended
  December 31, 2000, 1999 and 1998..........................................20

C2, Inc. Consolidated Statements of Shareholders' Equity
  For the years ended December 31, 2000, 1999 and 1998......................21

C2, Inc. Consolidated Statements of Cash Flows for the years
  ended December 31, 2000, 1999 and 1998....................................22

Notes to Consolidated Financial Statements..................................23

Selected Financial Data.....................................................33



                                       17
<PAGE>   18

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of C2, Inc.:


         We have audited the accompanying consolidated balance sheets of C2,
Inc. and subsidiaries (a Wisconsin Corporation) as of December 31, 2000 and
1999, and the related consolidated statements of income, shareholders' equity
and cash flows for each of the three years in the period ended December 31,
2000. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards 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. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of C2, Inc. and
subsidiaries as of December 31, 2000 and 1999, and the results of its operations
and its cash flows for each of the years in the three year period ended December
31, 2000, in conformity with accounting principles generally accepted in the
United States.


                                           ARTHUR ANDERSEN LLP





February 7, 2001
Milwaukee, Wisconsin




                                       18
<PAGE>   19
                            C2, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>

                                                                                     2000                    1999
                                                                                -------------           -------------
<S>                                                                           <C>                     <C>
ASSETS:
Current Assets:
    Cash and cash equivalents                                                   $   2,294,000           $   4,953,000
    Accounts receivable, net                                                       21,701,000              18,016,000
    Inventories                                                                     8,575,000               6,428,000
    Prepaids and other assets                                                       3,630,000               1,821,000
                                                                                -------------           -------------
        Total current assets                                                       36,200,000              31,218,000
                                                                                -------------           -------------

Long-Term Assets:
    Property, plant and equipment, net                                             76,567,000              73,495,000
    Goodwill, net                                                                  15,579,000              17,102,000
    Other assets                                                                    1,554,000               1,812,000
                                                                                -------------           -------------
        Total long-term assets                                                     93,700,000              92,409,000
                                                                                -------------           -------------

        Total assets                                                            $ 129,900,000           $ 123,627,000
                                                                                =============           =============

LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
    Current maturities of long-term debt                                        $     500,000           $     500,000
    Line of credit                                                                 10,830,000               2,770,000
    Accounts payable                                                               12,873,000               8,764,000
    Accrued liabilities                                                            10,631,000              10,349,000
                                                                                -------------           -------------
        Total current liabilities                                                  34,834,000              22,383,000
                                                                                -------------           -------------

Long-Term Liabilities:
    Long-term debt, less current maturities                                        65,713,000              66,373,000
    Other liabilities                                                               1,853,000               1,059,000
                                                                                -------------           -------------
        Total long-term liabilities                                                67,566,000              67,432,000
                                                                                -------------           -------------
        Total liabilities                                                         102,400,000              89,815,000
                                                                                -------------           -------------
Minority interests                                                                         --               7,742,000

SHAREHOLDERS' EQUITY:
    Preferred stock, par value $.01 per share                                              --                      --
         10,000,000 shares authorized, none issued or outstanding
    Common stock, par value $.01 per share; 50,000,000 shares
        authorized, 5,206,064 and 5,202,664 shares
issued respectively                                                                    52,000                  52,000
     Additional paid-in capital                                                    20,371,000              20,358,000
     Treasury Stock at cost (124,200 shares)                                         (578,000)                     --
     Retained Earnings                                                              7,655,000               5,660,000
                                                                                -------------           -------------
Total Shareholders' Equity                                                         27,500,000              26,070,000
                                                                                -------------           -------------
                                                                                $ 129,900,000           $ 123,627,000
                                                                                =============           =============
</TABLE>


                 See notes to consolidated financial statements.



                                       19
<PAGE>   20

                            C2, INC. AND SUBSIDIARIES
                         CONSOLIDATED INCOME STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>

                                                                      2000                  1999                 1998
                                                                -------------         -------------         -------------
<S>                                                           <C>                   <C>                   <C>
Revenues:
    Logistics Revenue                                           $ 113,376,000         $  96,132,000         $  81,267,000
    Product Sales                                                  70,074,000            49,544,000             9,343,000
                                                                -------------         -------------         -------------
                                                                  183,450,000           145,676,000            90,610,000
                                                                -------------         -------------         -------------
Costs and Expenses:
    Logistics Expenses                                             94,870,000            77,443,000            61,507,000
    Cost of Product Sales                                          53,909,000            38,583,000             8,859,000
    Depreciation and Amortization                                   7,895,000             7,519,000             6,254,000
    Selling, General and Administrative                            15,623,000            13,087,000             7,140,000
                                                                -------------         -------------         -------------
                                                                  172,297,000           136,632,000            83,760,000
                                                                -------------         -------------         -------------
       Earnings from Operations                                    11,153,000             9,044,000             6,850,000

Other Income (Expense):
    Interest Expense, net                                          (5,899,000)           (4,644,000)           (2,586,000)
    Merger-Related Expenses                                                --              (343,000)                   --
    Other Income (Expense), net                                        58,000               (18,000)              111,000
                                                                -------------         -------------         -------------
                                                                   (5,841,000)           (5,005,000)           (2,475,000)

Earnings before Income Taxes, Minority Interest
    and Extraordinary Item                                          5,312,000             4,039,000             4,375,000

Provision for Income Taxes                                          2,270,000             1,619,000                    --
                                                                -------------         -------------         -------------

Net Earnings before Minority Interest and
    Extraordinary Item                                              3,042,000             2,420,000             4,375,000

Minority Interest                                                   1,047,000             1,012,000                    --
                                                                -------------         -------------         -------------

Net Earnings before Extraordinary Item                              1,995,000             1,408,000             4,375,000

Extraordinary Item, net of Tax and Minority Interest                       --               153,000                    --
                                                                -------------         -------------         -------------

Net Earnings                                                    $   1,995,000         $   1,255,000         $   4,375,000
                                                                =============         =============         =============

Basic Earnings per Share before Extraordinary Item              $        0.39         $        0.27         $        0.84
                                                                =============         =============         =============

Basic Earnings per share                                        $        0.39         $        0.24         $        0.84
                                                                =============         =============         =============

Diluted Earnings per Share before Extraordinary Item            $        0.38         $        0.27         $        0.82
                                                                =============         =============         =============

Diluted Earnings per Share                                      $        0.38         $        0.24         $        0.82
                                                                =============         =============         =============
</TABLE>

                 See notes to consolidated financial statements.



                                       20
<PAGE>   21


                            C2, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>


   ($000)                             Common Stock       Additional       Treasury  Stock
                                ---------------------      Paid-in    ----------------------    Retained      Members
                                 Shares       Amount       Capital      Shares       Amount     Earnings       Equity       Total
                                ---------    --------    ----------   ---------    ---------   ----------    ---------    ---------
<S>                           <C>         <C>          <C>           <C>         <C>          <C>          <C>          <C>
Balance December 31, 1997              --          --           --           --           --           --    $  42,839    $  42,839

Net Earnings                           --          --           --           --           --           --        4,375        4,375

Distribution to Christiana             --          --           --           --           --           --       (1,757)      (1,757)
    For Income Taxes

Distribution to Christiana             --          --           --           --           --           --      (10,000)     (10,000)
                                ---------   ---------    ---------    ---------    ---------    ---------    ---------    ---------

Balance, December 31, 1998             --          --           --           --           --           --       35,457       35,457

Distribution to Christiana             --          --           --           --           --           --      (13,312)     (13,312)

Sale of Common Stock            5,202,664   $      52    $  20,358           --           --           --           --       20,410

Adjustments Related
    to the Acquisition of
    Total Logistic Control             --          --           --           --           --    $   4,405      (22,145)     (17,740)

Net Earnings                           --          --           --           --           --        1,255           --        1,255
                                ---------   ---------    ---------    ---------    ---------    ---------    ---------    ---------

Balance, December 31, 1999      5,202,664          52       20,358           --           --        5,660           --       26,070

Purchase of Treasury Stock             --                              (124,200)   $    (578)          --           --         (578)

Exercise Stock Options              3,400          --           13           --           --           --           --           13

Net Earnings                           --          --           --           --           --        1,995           --        1,995

                                ---------   ---------    ---------    ---------    ---------    ---------    ---------    ---------
Balance, December 31, 2000      5,206,064   $      52    $  20,371     (124,200)   $    (578)   $   7,655           --    $  27,500
                                =========   =========    =========    =========    =========    =========    =========    =========
</TABLE>





                 See notes to consolidated financial statements.



                                       21
<PAGE>   22


                            C2, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

<TABLE>
<CAPTION>


                                                                        2000                1999                1998
                                                                   ------------        ------------        ------------
<S>                                                              <C>                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                         $  1,995,000        $  1,255,000        $  4,375,000
Adjustments to Reconcile Net Income to
    Net Cash Provided by Operating Activities:
    Depreciation and amortization                                     7,895,000           7,519,000           6,254,000
    (Gain) loss on disposal of assets                                  (139,000)            (64,000)            212,000
    Minority interest in income of subsidiaries                       1,047,000             944,000                  --
    Deferred income tax provision                                       915,000            (728,000)                 --
Changes in Assets and Liabilities:
     (Increase) in accounts receivable                               (3,685,000)         (6,688,000)           (717,000)
     (Increase) in inventories                                       (2,147,000)         (4,082,000)         (1,643,000)
     (Increase) decrease in prepaids and other assets                (1,703,000)          2,407,000             (67,000)
     Increase in accounts payable and accrued liabilities             4,391,000           3,811,000           2,746,000
                                                                   ------------        ------------        ------------
        Net cash provided by operating activities                     8,569,000           4,374,000          11,160,000

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of fixed assets                                        (9,845,000)         (7,435,000)         (2,845,000)
     Businesses acquired, net of cash received                       (8,284,000)        (13,089,000)                 --
     Proceeds from sale of fixed assets                                 562,000             908,000             801,000
                                                                   ------------        ------------        ------------
        Net cash used in investing activities                       (17,567,000)        (19,616,000)         (2,044,000)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from sale of stock                                          13,000          20,410,000                  --
    Borrowings on line of credit, net                                 8,060,000           2,769,000                  --
    Proceeds from issuance of long-term debt                                 --          18,276,000          10,000,000
    Payment of amounts due to Christiana                                     --          (3,000,000)                 --
    Payment of long-term debt                                          (775,000)         (4,823,000)         (7,738,000)
    Purchase of treasury stock                                         (578,000)                 --                  --
    Distribution for income taxes                                      (381,000)           (134,000)         (1,757,000)
    Distribution to Christiana related to merger agreement                   --         (13,312,000)        (10,000,000)
                                                                   ------------        ------------        ------------

        Net cash provided by (used in) financing activities           6,339,000          20,186,000          (9,495,000)
                                                                   ------------        ------------        ------------

NET INCREASE (DECREASE) IN CASH AND
        CASH EQUIVALENTS                                             (2,659,000)          4,944,000            (379,000)

BEGINNING CASH AND CASH EQUIVALENTS                                   4,953,000               9,000             388,000
                                                                   ------------        ------------        ------------

ENDING CASH AND CASH EQUIVALENTS                                   $  2,294,000        $  4,953,000        $      9,000
                                                                   ============        ============        ============

Supplemental Disclosures of Cash Flow Information
    Interest paid                                                  $  5,977,000        $  4,791,000        $  2,915,000
    Amounts paid for income taxes                                  $  3,924,000        $  1,922,000        $  1,757,000
</TABLE>

                 See notes to consolidated financial statements.


                                       22
<PAGE>   23


C2, INC AND SUBSIDIAIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000, 1999 AND 1998

A.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

    DESCRIPTION OF BUSINESS: C2, Inc. is a Milwaukee-based public company
principally engaged in third-party product distribution services and equipment
manufacturing. C2, Inc.'s operating units include Total Logistic Control, LLC, a
provider of refrigerated and non-refrigerated third-party integrated logistic
services, and Zero Zone, Inc., a manufacturer of refrigerated and freezer
display cases used in grocery, convenience and drug store chains for retail
merchandising of food, beverage and floral products.

    INITIAL PUBLIC OFFERING: On March 4, 1999, C2, Inc. common shares were
issued to subscribers contemporaneous with the distribution of the cash merger
consideration attributable to the Christiana Companies, Inc. (formerly NYSE:CST)
("Christiana") and Weatherford International, Inc. (NYSE:WFT) ("Weatherford")
transaction which closed on February 8, 1999. The stock offering was fully
subscribed and 5,202,664 shares were issued at $4.00 per share. Total proceeds
to the Company were $20,410,000, net of offering costs of $400,000.

    CONCENTRATION OF CREDIT RISK: In 2000 and 1999, one customer represented
approximately 21.9% and 16%, respectively of total consolidated revenues.

    PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of C2, Inc. and its subsidiaries, Total Logistic Control LLC and
Zero Zone, Inc. All material intercompany transactions have been eliminated in
consolidation.

    ACQUISITIONS: In connection with the above-mentioned merger, on February 8,
1999, C2, Inc. acquired a two-thirds interest in Total Logistic Control, LLC
("TLC") for $10,667,000. TLC provides integrated third-party logistic services
which include refrigerated and non-refrigerated warehousing, transportation,
logistic management services, facilities and operations management, food
distribution, product fulfillment, international customs house brokerage and
freight forwarding and packaging.

    On March 12, 1999, C2, Inc. purchased 70.6 percent of the common stock of
Zero Zone, Inc. ("Zero Zone") in connection with a $19,500,000 recapitalization
plan for Zero Zone. C2, Inc. invested $3,000,000 in common stock and $1,500,000
in capital notes.

    On September 1, 2000, TLC acquired substantially all the assets of the
ProSource Group, Inc. located in Aurora, Il. ProSource provides dedicated
third-party management to operate both manufacturing and distribution centers
primarily for Fortune 500 consumer products companies.

    On September 30, 2000, C2, Inc. purchased the remaining 33.3% of TLC for
$8,284,000. As of September 30, 2000, TLC was a wholly-owned subsidiary of C2,
Inc. The premium over the carrying value of minority interest was $992,000 all
of which was allocated to TLC's fixed assets.

    These acquisitions have been accounted for as purchase transactions.

    REVENUE RECOGNITION: Logistic service revenues are recognized when goods are
delivered to the customer or when services are provided. Costs and related
expenses are recorded as incurred. Revenues and costs related to product sales
are recognized when products are shipped to customers.



                                       23
<PAGE>   24


    Prior to fiscal 2000, all of TLC's business was reflected as logistics
revenue and logistics expense. A portion of TLC's business includes the purchase
of product for resale. As a result, 2000 and prior periods have reclassified
certain product related activities of TLC from logistics revenue and expenses to
product sales and cost of product sales.

    USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported 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.

    CASH AND CASH EQUIVALENTS: Cash and cash equivalents consist of cash and
U.S. Treasury securities having a maturity of less than 12 months.

    ACCOUNTS RECEIVABLE: Accounts receivable are presented net of an allowance
for uncollectible accounts of $415,000 and $330,000 at December 31, 2000 and
1999, respectively. The provision for bad debts was $110,000, $82,000, and
$145,000 for the years ended December 31, 2000, 1999, and 1998, respectively.

    INVENTORIES: Inventories at TLC consist of repair parts and commodities held
for distribution under an exclusive logistic contract. These items are carried
at their lower of FIFO (first-in, first-out) cost or market value. At Zero Zone,
inventories are stated at the lower of FIFO cost or market value and include
materials, labor and manufacturing overhead. As of December 31, 2000 and 1999,
inventories are comprised of the following:

<TABLE>
<CAPTION>

                                                    2000           1999
                                                 ----------    ----------
<S>                                            <C>           <C>
Repair parts                                     $  130,000    $  113,000
Commodities and other                             2,377,000     2,611,000
Raw materials and work in process                 3,292,000     2,639,000
Finished goods                                    2,776,000     1,065,000
                                                 ----------    ----------
                                                 $8,575,000    $6,428,000
                                                 ==========    ==========
</TABLE>

    PROPERTY, PLANT AND EQUIPMENT: Fixed assets are carried at cost, less
accumulated depreciation, which is computed using both straight-line and
accelerated methods for financial reporting purposes. The cost of major renewals
and improvements are capitalized; repair and maintenance costs are expensed as
incurred. Tires related to new equipment are included in the capitalized
equipment cost and depreciated using the same methods as equipment. Replacement
tires are expensed when placed in service. A summary of the cost of fixed
assets, accumulated depreciation and the estimated useful lives for financial
reporting purposes is as follows:

<TABLE>
<CAPTION>

                                                           AT DECEMBER 31,
                                                ----------------------------------       ESTIMATED
                                                      2000                1999          USEFUL LIVES
                                                -------------        -------------    ----------------
<S>                                           <C>                  <C>              <C>
Land                                            $   4,665,000        $   4,332,000               --
Machinery and equipment                            36,386,000           30,737,000        3-7 years
Buildings and improvements                         78,504,000           77,166,000      30-40 years
Construction in progress                              501,000              128,000               --
                                                -------------        -------------
                                                  120,056,000          112,363,000
Less:  Accumulated depreciation                   (43,489,000)         (38,868,000)
                                                -------------        -------------
                                                $  76,567,000        $  73,495,000
                                                =============        =============
</TABLE>

    GOODWILL: Goodwill is amortized on a straight-line basis over 40 years
($550,000 in 2000, $469,000 in 1999 and $157,000 in 1998, respectively). The
accumulated amortization at December 31, 2000 and



                                       24
<PAGE>   25

1999 was $1,777,000 and $1,227,000, respectively. C2, Inc. continually evaluates
whether events and circumstances have occurred that indicate the remaining
useful life may warrant revision or that the remaining balance of goodwill may
not be recoverable. When factors indicate that goodwill should be evaluated for
possible impairment, C2, Inc. uses an estimate of the undiscounted cash flows
over the remaining life of the goodwill to measure whether the goodwill is
impaired. If impaired, a loss is recognized for the amount by which the carrying
value exceeds the fair value.

    EXTRAORDINARY ITEM: During the third quarter of 1999, Zero Zone completed a
refinancing of its senior debt which entailed the issuance of both non-taxable
and taxable industrial revenue bonds and an increase in its bank credit
facility. An extraordinary charge of $362,000 related to the debt refinancing
was incurred during that quarter. The charge to C2, Inc. was $153,000, net of
tax and minority interest.

    PRO FORMA RESULTS: C2, Inc was organized to acquire 66.7 percent of Total
Logistic Control, LLC in connection with a merger transaction between Christiana
and Weatherford completed on February 8, 1999. On March 12, 1999, C2, Inc.
acquired 70.6 percent of Zero Zone, Inc. On September 30, 2000, C2, Inc.
acquired the remaining 33.3% of TLC. The consolidated financial statements for
the year ended December 31, 1999 included herein reflect the results of TLC from
January 1, 1999 and of Zero Zone from March 12, 1999. Because the controlling
ownership of TLC is deemed to be substantially the same before and after its
acquisition by C2, Inc., comparable historical financial statements for the
years ended December 31, 1999 included herein present the results of operations
of TLC only, without regard to minority interest or capital structure changes.
The following unaudited pro forma results of operations have been prepared
assuming these acquisitions had occurred on January 1, 1999. This pro forma
information is not necessarily indicative of those results of operations that
would have occurred had the acquisitions been made on those dates, or of results
which may occur in the future.

<TABLE>
<CAPTION>

             PRO FORMA OPERATING RESULTS                                            (UNAUDITED)
                                                                                  AT DECEMBER 31,
                                                                          ------------------------------
                                                                              2000              1999
                                                                          ------------      ------------
<S>                                                                     <C>               <C>
Revenues                                                                  $183,450,000      $151,540,000
Earnings from operations                                                    11,054,000         9,531,000
Net earnings before extraordinary item                                       1,703,000         1,290,000
Extraordinary item                                                                  --           153,000
Net earnings                                                                 1,703,000         1,137,000
Basic earnings per share before extraordinary item                                0.33              0.25
Basic earnings per share                                                          0.33              0.22
Diluted earnings per share before extraordinary item                              0.32              0.24
Diluted earnings per share                                                        0.32              0.21
</TABLE>

    EARNINGS PER SHARE: Following is a reconciliation of basic and diluted
earnings per share for the years ended December 31, 2000, 1999, and 1998. The
proforma calculations for 1998 are based on the common shares outstanding since
the offering and assumes that such shares were issued and outstanding for the
period ended December 31, 1998.



                                       25
<PAGE>   26

<TABLE>
<CAPTION>

                                                           YEAR ENDED DECEMBER 31,
                                                -------------------------------------------
                                                    2000            1999            1998
                                                ----------       ----------      ----------
<S>                                           <C>              <C>             <C>
Basic Earnings per Share:
Net earnings available to common
    shareholders before extraordinary
     item                                       $1,995,000       $1,408,000      $4,375,000
Net earnings available to common
    shareholders                                $1,995,000       $1,255,000      $4,375,000
Average shares of common stock
    outstanding                                  5,106,043        5,202,664       5,202,664

Basic earnings per share before
    extraordinary item                          $     0.39       $     0.27      $     0.84

Basic earnings per share                        $     0.39       $     0.24      $     0.84

Diluted Earnings per Share:
Average shares of common stock
    outstanding                                  5,106,043        5,202,664       5,202,664
Incremental common shares applicable
    to common stock options                        160,746          109,807         109,807
                                                ----------       ----------      ----------
Average common shares assuming full
    dilution                                     5,266,789        5,312,471       5,312,471

Diluted earnings per share before
    extraordinary item                          $     0.38       $     0.27      $     0.82

Diluted earnings per share                      $     0.38       $     0.24      $     0.82
</TABLE>

    ADVERTISING COSTS: The Company expenses advertising costs as incurred. Total
advertising expense was $505,000, $426,000 and $308,000 for 2000, 1999 and 1998,
respectively. Advertising costs are charged to selling, general and
administrative expenses.

    LONG-LIVED ASSETS: The Company continually evaluates whether events and
circumstances have occurred that may indicate the remaining useful life of
long-lived assets may warrant revision or that the remaining balance may not be
recoverable. When factors indicate that long-lived assets should be evaluated
for possible impairment, the Company uses an estimate of the undiscounted cash
flows over the remaining life of the long-lived assets to measure whether the
long-lived assets are impaired. If impaired, a loss is recognized for the amount
by which the carrying value exceeds the fair value.

    OTHER ASSETS: Other assets represent primarily deferred charges and cash
surrender value of officer's life insurance.

    RECLASSIFICATIONS: Certain reclassifications have been made in the 1999 and
1998 statements to conform with 2000 presentation.

B.  RELATED PARTY TRANSACTIONS:

         The Company's headquarters shares offices with Lubar & Co.
Incorporated. The office building in which C2, Inc. is headquartered is owned by
700 North Water LLC which is owned by Sheldon B. Lubar, David J. Lubar, the
Lubar Family (90%) and William T. Donovan (5%). Sheldon B. Lubar and David J.
Lubar are officers and directors of Lubar & Co. Incorporated, and each own 50%
of its stock. The Company pays its pro rata share of the rent, utilities and
other expenses of these premises (approximately $6,000 per month). A total of
$71,000 was paid in 2000.



                                       26
<PAGE>   27

         In 2000 and 1999 TLC made contractual distributions to Christiana for
income taxes of $381,000 and $134,000, respectively. Also during 1999 and 1998,
TLC made distributions related to dividends, note retirements and interest to
Christiana of $13,312,000 and $10,000,000, respectively. These distributions to
Christiana are reflected as reductions to Members' Equity in 1999 and 1998 as
applicable.

C. INDEBTEDNESS:

         The following is a summary of long term indebtedness as of December 31:

<TABLE>
<CAPTION>

                                                              2000               1999
                                                         ------------       ------------
<S>                                                    <C>                <C>
         Revolving credit agreement                      $ 53,300,000       $ 53,552,000
         Bonds payable                                      8,920,000          9,420,000
         Subordinated note                                  3,993,000          3,901,000
                                                         ------------       ------------
                                                           66,213,000         66,873,000
         Less:  Current portion of long-term debt            (500,000)          (500,000)
                                                         ------------       ------------
                                                         $ 65,713,000       $ 66,373,000
                                                         ============       ============
</TABLE>

    TLC has a revolving credit agreement that provides for borrowings at
December 31, 2000 of up to $64,350,000. Borrowings under this agreement mature
on November 2, 2003 and bear interest, payable monthly at either LIBOR plus 175
basis points, or a floating rate at the bank's prime rate (9.5% at December 31,
2000) and are secured by substantially all of TLC's assets. The interest rate
will vary over the term of the credit agreement pursuant to a pricing grid based
on the ratio of funded debt to EBITDA (earnings before interest, taxes,
depreciation, amortization and other non-recurring items) as defined. The
weighted average interest rate on these borrowings was 8.42% in 2000. The
revolving credit agreement requires, among other things, that defined levels of
net worth and debt service coverage be maintained and restricts certain
activities including limitation on new indebtedness and the disposition of
assets. As of December 31, 2000, TLC was in compliance with, or has secured
waivers, relating to all required covenants. No compensating balances are
required under the terms of this credit facility.

    Zero Zone completed a new financing package August 31, 1999 with a major
commercial bank. The package contains two bond issues and a demand line of
credit. The first is a tax exempt Industrial Revenue Bond issue for $3,420,000
that was issued through the State of Wisconsin for the company's building
addition. The bond has a 20 year life with no annual amortization and has a
seven day variable interest rate, which was 5.1% at December 31, 2000. The
second issue is a taxable Industrial Revenue Bond issued through a bank and at
December 31, 2000, $5,500,000 was outstanding. This bond has a 20 year maturity
schedule with annual principal repayments of $500,000. The effective life of
this bond is 12 years. The interest rate on the second bond is also a seven day
variable interest rate, which was 6.75% at December 31, 2000. Both bonds are
secured by Letters of Credit issued by a major commercial bank. The interest
rate on the line is based on LIBOR plus an amount that varies according to a
pricing grid determined by the ratio of funded debt to EBITDA. Zero Zone has
$3,993,000 of subordinated notes outstanding which include $2,350,000 of notes
to former shareholders of Zero Zone and bear the rate of 8%. The balance of
$1,643,000 is a capital note bearing interest at 8.5% to a member of its
management. At December 31, 2000 and 1999 borrowings under a line of credit at
Zero Zone were $3,830,000 and $2,770,000, respectively. Interest on this line is
at LIBOR plus an amount that varies determined by a ratio of funded debt to
EBITDA. This rate was 8.06% at December 31, 2000. The interest rate on this line
can also be based on Prime less an amount that varies according to a pricing
grid determined by the ratio of funded debt to EBITDA. Zero Zone's revolving
credit line requires that the company maintain a defined level of net worth in
addition to required levels of debt service coverage. These ratios are computed
quarterly and provided to the bank. The agreement also restricts new
indebtedness and disposition of assets. Other covenants include restrictions on
investment/acquisition activity, restrictions on guarantees and pledges and
standard requirements for business existence,




                                       27
<PAGE>   28


insurance, and compliance with the law. Zero Zone was in compliance with all
covenants at December 31, 2000.

    C2, Inc. has a $15,000,000 unsecured line of credit, renewable annually.
Borrowings under this line bear interest at either the LIBOR plus 150 basis
points, or prime at the Company's option. No compensating balances are required
under the terms of this credit facility.

    As of December 31, 2000, the future maturities of consolidated indebtedness
are as follows:

<TABLE>

<S>                                        <C>
                        2001                $      500,000
                        2002                     1,500,000
                        2003                    54,800,000
                        2004                       850,000
                        2005                     1,500,000
                        Thereafter               7,063,000
</TABLE>


         At December 31, 2000, the fair value of the long-term debt was not
materially different from the carrying value.

D.  INCOME TAXES:

    Effective June 20, 1997, TLC converted from a C-Corporation to a Limited
Liability Company. For purposes of taxation, all earnings of TLC are passed
through to its members and taxed at the member level. As a result, there is no
tax provision on earnings from June 30, 1997 to the February 1999 merger. C2,
Inc. is taxed as a C-Corporation.

    The tax provision recorded by C2, Inc. for 2000 and 1999 represents taxes
booked at the C2, Inc. level for corporate activity, operations related to Zero
Zone and for its share of TLC income.

The summary of the provision for income taxes is as follows:

<TABLE>
<CAPTION>

                          2000           1999          1998
                      -----------    -----------   -----------
<S>                  <C>            <C>           <C>
Current:
  Federal             $   846,000    $ 1,961,000            --
  State                   124,000        277,000            --
Deferred                1,300,000       (619,000)           --
                      -----------    -----------   -----------
                      $ 2,270,000    $ 1,619,000            --
                      ===========    ===========   ===========
</TABLE>

The net deferred tax asset is classified in the consolidated balance sheet as
follows:

<TABLE>
<CAPTION>

                                                AT DECEMBER 31,
                                       --------------------------
                                           2000           1999           1998
                                       -----------    -----------    -----------
<S>                                  <C>            <C>            <C>
Current net deferred income
  tax asset                            $ 1,067,000    $   859,000             --
Non-current net deferred
  income tax liability                  (1,254,000)      (131,000)            --
                                       -----------    -----------    -----------
                                       $  (187,000)   $   728,000             --
                                       ===========    ===========    ===========
</TABLE>


                                       28
<PAGE>   29


    The components of deferred income taxes are:

<TABLE>
<CAPTION>

                                                                   AT DECEMBER 31,
                                                       ------------------------------------
                                                           2000                    1999
                                                       -----------              -----------
<S>                                                  <C>                      <C>
           Deferred Tax Assets:
              Accrued Vacations                        $   159,000              $   284,000
              Workers Compensation                         178,000                  141,000
              Health Insurance Reserve                     190,000                  147,000
              Bad Debt Reserve                              77,000                  113,000
              Other                                        463,000                  174,000
                                                       -----------              -----------
              Total Deferred Tax Assets                $ 1,067,000              $   859,000
                                                       -----------              -----------

           Deferred Tax Liabilities:
              Tax Over Book Depreciation               $ 1,250,000              $   131,000
              Other                                          4,000                       --
                                                       -----------              -----------
              Total Deferred Tax Liability             $ 1,254,000              $   131,000
                                                       -----------              -----------

           Net Deferred Tax Liability                  $  (187,000)             $   728,000
                                                       ===========              ===========
</TABLE>

    A reconciliation of the statutory Federal income tax rate for years ended
December 31, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>

                                                                           AT DECEMBER 31,
                                                                      ------------------------
                                                                        2000           1999
                                                                      ----------    ----------
<S>                                                                 <C>           <C>
         Statutory Federal income tax rate                                34%           34%
         Increase in taxes resulting from state income tax, net            6%            4%
         Non-deductible goodwill amortization                              4%            1%
         Other, net                                                       (1)%           1%
                                                                      ----------    ----------
                                                                          43%           40%
                                                                      ==========    ==========
</TABLE>

E.  STOCK OPTIONS AND EMPLOYEE BENEFIT PLANS:

    The Company has 520,000 shares of its common stock reserved for issuance
under a stock option plan, which permits the granting of options as well as
appreciation rights and awards. During 1999, the first year of the stock option
plan, options totaling 348,000 were granted at an exercise price of $4.00. At
December 31, 1999, no options were exercisable or cancelled. At December 31,
2000, 66,200 of the total options granted were exercisable. These options vest
ratably over five years.

    The weighted-average exercise price of total stock options outstanding at
December 31, 2000 was $4.08. Additionally, the weighted average contractual life
of stock options outstanding at December 31, 2000 was 3.2 years.

    Changes in stock options outstanding are summarized as follows:

<TABLE>
<CAPTION>

                                                          NUMBER              EXERCISE
                                                            OF               PRICE PER
                                                         OPTIONS              OPTION
-------------------------                               ----------           ---------
<S>                                                     <C>               <C>
Options granted in 1999                                    348,000           $   4.00
Balance December 31, 1999                                  348,000                 --
     Options granted                                        12,000               5.00
     Options granted                                        12,000               5.25
     Options cancelled                                     (13,600)             (4.00)
     Options exercised                                      (3,400)             (4.00)
                                                        ----------
Balance December 31, 2000                                  355,000
                                                        ==========
</TABLE>


                                       29
<PAGE>   30

    Pro forma information regarding net income and earnings per share is
required by Statement of Financial Accounting Standards No. 123 and has been
determined as if the Company had accounted for its stock options under the fair
value method as provided therein. The fair value of each option is estimated on
the date of the grant using an option pricing model with the following
weighted-average assumptions used for options issued in 1999: risk-free interest
rate of 6.5%, expected remaining life of 5 years, expected volatility of 57.6%,
and no expected dividends; for options issued in 2000 the expected volatility is
83.6%. The weighted average fair value of options granted in 2000 was $1.05 per
share.

    For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period of 5 years. Set
forth below is a summary of the Company's net earnings and earnings per share as
reported and pro forma, as if the fair value based method of accounting defined
in SFAS No. 123 had been applied.

<TABLE>
<CAPTION>

                                        December 31, 2000                 December 31, 1999
                                   --------------------------         --------------------------
                                    As Reported    Pro Forma           As Reported    Pro Forma
                                   ------------   -----------         ------------   -----------
<S>                              <C>            <C>                 <C>            <C>
Net earnings                       $  1,995,000   $ 1,855,000         $  1,255,000   $ 1,127,000
Basic earnings per share           $       0.39   $      0.36         $       0.24   $      0.22
</TABLE>

    The Company has 401(k) plans covering substantially all of its employees.
The costs under these plans have not been material. The Company does not provide
post employment medical or life insurance benefits.

F.  COMMITMENTS:

    TLC and Zero Zone have operating leases for warehouse and office facilities
and transportation equipment. Rental expense under these leases was $9,098,000,
$6,606,000 and $6,017,000 in 2000, 1999 and 1998, respectively. At December 31,
2000, future minimum lease payments under operating leases are as follows:

<TABLE>


<S>                                 <C>
                    2001               $7,092,000
                    2002                5,860,000
                    2003                4,447,000
                    2004                3,191,000
                    2005                2,759,000
                  Thereafter            6,621,000
</TABLE>

G.  ACCOUNTING PRONOUNCEMENTS:

    Since June 1998, the Financial Accounting Standards Board ("FASB") has
issued SFAS Nos. 133, 137 and 138 related to "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133, as amended" or
"Statements"). These Statements establish accounting and reporting standards
requiring that every derivative instrument be recorded on the balance sheet as
either an asset or liability measured at its fair value. The Statements require
that changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met, in which case the gains or
losses would offset the related results of the hedged item. The Company adopted
these Statements on January 1, 2001. These Statements require that, as of the
date of initial adoption, the impact of adoption be recorded as a cumulative
effect of a change in accounting principle. As C2 Inc. does not use derivatives
nor engage in hedging activities, this statement will not have an impact on C2,
Inc.'s financial position at January 1, 2001.

    In May 2000, the Emerging Issues Task Force ("EITF"), a subcommittee of the
FASB, issued EITF No. 00-10 "Accounting for Shipping and Handling Revenues and
Costs." EITF No. 00-10 requires that amounts billed to customers related to
shipping and handling costs be classified as revenue and all


                                       30
<PAGE>   31


expenses related to shipping and handling be classified as a cost of products
sold or selling expenses. Historically, these revenues and costs have been
netted together and deducted from gross sales to arrive at net sales. The net
sales and cost of products sold have been restated for this change. The impact
of this change increased net sales and cost of products sold by $3,185,000 and
$1,847,000 for the years ended December 31, 2000 and 1999, respectively. The
year ended December 31, 1998 includes only TLC and is not affected by this
restatement. There is no impact on earnings from operations resulting from this
change in 1998.

    In July 2000, the EITF issued EITF No. 99.19 "Reporting Revenue Gross as
Principal versus Net as an Agent." EIFT No. 99.19 prescribes guidance regarding
whether to recognize revenue based on (a) the gross amount billed to a customer
because revenue was earned from the sale of goods or services or (b) the net
amount retained because the revenue earned represents a commission or fee. The
guidance provides indicators for both gross and net revenue reporting and a
determination should be made by considering the relative strength of each
indicator. A small portion of TLC's logistics revenue is generated from services
performed for several customers who have elected to outsource a portion of their
logistics function to TLC. As part of the contract, TLC pays for the freight and
other cost and is reimbursed by the customer for such costs as well as other
fees.

    TLC's past and current accounting practice is to report such logistic
revenues using the gross method as TLC believes its arrangements are not
commission or fee-based.

    Also in May 2000, the EITF issued EITF No. 00-14 "Accounting for Certain
Sales Incentives." The EITF subsequently amended the transition provisions of
this issue in November 2000. EITF No. 00-14 prescribes guidance regarding timing
of recognition and income statement classification of costs incurred for certain
coupons, rebate offers and free products offered concurrently with a single
exchange transaction to be recognized when incurred, and reported as a reduction
of revenue.

    In January 2001, the EITF issued EITF No. 00-22 "Accounting for Points and
Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for
Free Products or Services to be Delivered in the Future". EITF No. 00-22
prescribes guidance regarding timing of recognition and income statement
classification of costs incurred in connection with offers of "free" products or
services that are exercisable by an end consumer as a result of a single
exchange transaction with the retailer which will not be delivered by the vendor
until a future date. This guidance requires certain rebate offers and free
products that are delivered subsequent to a single exchange to be recognized
when incurred, and reported as a reduction of revenue.

    The effective dates of EITF No. 00-14 and EITF No. 00-22 are March 31, 2001
and June 30, 2001, respectively. The Company will adopt both EITF No. 00-14 and
EITF No. 00-22 on the effective dates. The Company does not anticipate any
impact on the results of operations, because the Company's past and current
accounting policy is to report such costs as reductions of revenue.

H.  SEGMENT INFORMATION:

    C2, Inc. historically divided its operations into three discrete segments --
warehousing services, logistic services and product sales. In recent years C2,
Inc.'s subsidiary, TLC, has operated increasingly as a fully integrated logistic
service provider which has resulted in a change in the composition of its
reportable segments in conformance with SFAS No. 131. TLC's integrated logistic
services include providing warehousing, transportation, distribution services,
international freight forwarding and customs house brokerage, packaging and food
processing and facility management services. Because of these changes, C2, Inc.
will present its operations in two discrete segments, logistic services and
product sales. C2, Inc.'s operating segment, product sales, includes the
purchase for resale of certain food products by TLC and open and glass-door
refrigerated and frozen display cases manufactured are sold by Zero Zone.
Products within this segment are sold primarily to grocery, municipal school
districts, convenience and drug store chains throughout the United States. These
operating segments are determined based upon the primary services


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<PAGE>   32

and product lines provided to customers. These operating segments are restated
for fiscal 1999 to conform with the changes in segment composition for 2000.

    The accounting policies used by C2, Inc.'s business segments are the same
accounting policies used in the preparation of its financial statements. Segment
profit for 2000 and 1999 is revenues less direct and allocable operating
expenses. Corporate items include interest income, amortization expense,
selling, general and administrative expenses, other income/expense and income
taxes. All corporate depreciation and amortization has been included as a
component of logistic services segment profit. Corporate assets are principally
cash and cash equivalents, goodwill, prepaid items and certain non-operating
fixed assets. Corporate capital expenditures consist primarily of computer
equipment and software and other non-operating fixed assets.

Financial information by business segment is as follows:

<TABLE>
<CAPTION>

                                             Logistic        Product
                                             Services         Sales        Corporate          Total
                                          ------------    ------------    ------------    ------------
<S>                                     <C>             <C>             <C>             <C>
2000
----
Revenues                                  $113,376,000    $ 70,074,000    $         --    $183,450,000
Interest expense                             4,814,000       1,128,000         148,000       6,090,000
Segment net earnings                           852,000       1,997,000        (854,000)      1,995,000
Total assets                                82,940,000      25,094,000      21,866,000     129,900,000
Capital expenditures                         7,962,000       1,632,000         251,000       9,845,000
Depreciation and amortization                6,134,000         741,000       1,020,000       7,895,000

1999
----
Revenues                                  $ 96,132,000    $ 49,544,000              --    $145,676,000
Interest expense                             3,885,000       1,070,000              --       4,955,000
Extraordinary item, net                             --         153,000              --         153,000
Segment net earnings                           261,000       1,384,000        (390,000)      1,255,000
Total assets                                74,697,000      27,113,000      21,817,000     123,627,000
Capital expenditures                         3,091,000       1,531,000       2,813,000       7,435,000
Depreciation and amortization                5,841,000         759,000         919,000       7,519,000

1998
----
Revenues                                  $ 81,267,000    $  9,343,000    $         --    $ 90,610,000
Interest expense                             2,586,000              --              --       2,586,000
Segment net earnings                         6,366,000         484,000      (2,475,000)      4,375,000
Total assets                                79,367,000              --       7,694,000      87,061,000
Capital expenditures                         2,184,000              --         661,000       2,845,000
Depreciation and amortization                6,254,000              --              --       6,254,000
</TABLE>



                                       32
<PAGE>   33

C2, INC AND SUBSIDIARIES
QUARTERLY FINANCIAL INFORMATION (1)
(unaudited)

<TABLE>
<CAPTION>

                                                                   QUARTER ENDED
                                          -----------------------------------------------------------------------------------
                                             MARCH             JUNE           SEPTEMBER          DECEMBER            TOTAL
                                          -----------------------------------------------------------------------------------
<S>                                     <C>             <C>               <C>                <C>              <C>
2000
----
Revenues                                  $ 46,507,000    $ 43,929,000      $ 45,081,000       $ 47,933,000     $ 183,450,000
Earnings from operations                     2,825,000       3,176,000         2,543,000          2,609,000        11,153,000
Earnings before taxes                        1,447,000       1,686,000         1,111,000          1,068,000         5,312,000
Net earnings                                   546,000         636,000           426,000            387,000         1,995,000
Basic earnings per share                          0.11            0.13              0.08               0.08              0.39(1)
Diluted earnings per share                        0.10            0.12              0.08               0.08              0.38


1999
----
Revenues                                  $ 25,874,000    $ 35,568,000      $ 37,400,000       $ 46,834,000     $ 145,676,000
Earnings from operations                       974,000       2,500,000         2,310,000          3,260,000         9,044,000
Earnings (loss) before income taxes,
       extraordinary item and
       minority interest                      (179,000)      1,205,000         1,030,000          1,983,000         4,039,000
Net earnings (loss) before                    (178,000)        440,000           411,000            735,000         1,408,000
       extraordinary item
Extraordinary item, net of tax                                                   153,000                              153,000
Net earnings (loss)                           (178,000)        440,000           258,000            735,000         1,255,000
Basic and diluted earnings (loss) per
       share before Extraordinary item           (0.03)           0.08              0.08               0.14              0.27
Basic and diluted earnings (loss) per
       per share                                 (0.03)           0.08              0.05               0.14              0.24
</TABLE>


FIVE YEAR FINANCIAL INFORMATION (2)

<TABLE>
<CAPTION>

                                                                         YEAR ENDED DECEMBER 31
                                          -----------------------------------------------------------------------------------
                                              2000             1999              1998              1997               1996
                                          -----------------------------------------------------------------------------------
<S>                                     <C>              <C>                <C>              <C>                <C>
Revenues                                  $183,450,000     $145,676,000       $90,610,000      $90,100,000        $78,349,000

Net Earnings                                 1,995,000        1,255,000         4,375,000       13,571,000            416,000

Basic Earnings Per Share                          0.39             0.24              0.84             2.61               0.08

Total Assets                               128,633,000      123,627,000        87,061,000       89,434,000         94,823,000

Long-Term Liabilities                       67,566,000       67,432,000        38,607,000       36,967,000         58,037,000

Shareholders' Equity                        27,500,000       26,070,000        35,457,000       42,839,000         36,786,000
</TABLE>


 (1) Difference due to rounding.
 (2) The fiscal years ended December 31, 1998, 1997 and 1996 reflect the
     historical financial information of TLC alone.



                                       33
<PAGE>   34
CORPORATE INFORMATION

DIRECTORS
---------

John A. Becker                                  William H. Lacy
   Retired Vice Chairman & COO                     Retired Chairman & CEO
   Firstar Corporation                             MGIC Investment Corporation

Nicholas F. Brady                               David J. Lubar
   Chairman                                        Chairman
   Darby Overseas Investments, LTD.                C2, Inc.

William T. Donovan                              Sheldon B. Lubar
   President & CEO                                 Chairman
   C2, Inc.                                        Lubar & Co.

OFFICERS
--------

William T. Donovan                              Betty J. White
   President and Chief Executive Officer           Treasurer, Controller and
                                                   Assistant Secretary

David J. Lubar                                  Gary R. Sarner
   Chairman                                        Chief Executive Officer
                                                   Total Logistic Control, LLC

Oyvind Solvang                                  Jack Van der Ploeg
   Vice President                                  Chief Executive Officer
   Business Development                            Zero Zone, Inc.

David E. Beckwith
   Secretary

TRANSFER AGENT AND REGISTRAR                    CORPORATE HEADQUARTERS
----------------------------                    ----------------------
Firstar Trust Company                           700 N. Water, Suite 1200
P.O. Box 2077                                   Milwaukee, WI 53202
Milwaukee, Wisconsin 53201                      Telephone:  (414) 291-9000
                                                Facsimile:    (414) 291-9061
WEB SITE (www.C2-inc.com)
The C2, Inc. web site contains detailed company information, news releases, and
print-formatted SEC-filing financials. To receive e-mails with C2 news releases,
sign up via the Inquiry Section of the website.

EXCHANGE LISTING
C2, Inc. common stock trades on the Nasdaq Stock Market(R) under the symbol:
CTOO

ANNUAL MEETING
C2, Inc. Annual Meeting of Shareholders will be held at 1:00 p.m. on April 26,
2001 at the Galleria Conference Room, Firstar Center, 777 East Wisconsin Avenue,
Milwaukee, Wisconsin.


                                       34
<PAGE>   35


                                INDEX TO EXHIBITS

EXHIBIT NO.                BRIEF DESCRIPTION OF EXHIBIT

       2.1     Amended and Restated Agreement and Plan of Merger, dated as of
               October 14, 1998, by and among Christiana Acquisition Co.,
               Weatherford International, Inc., Christiana Companies, Inc. and
               C2, Inc. [Incorporated by referenced to Exhibit 2.1 to C2, Inc.'s
               Form S-1 Registration Statement (Reg. No. 333-460270)].

       2.2     Purchase Agreement dated as of December 12, 1997, as amended by
               amendment No. 1 dated May 26, 1998 and Amendment No. 2 dated
               October 13, 1998, by and among Weatherford International, Inc.,
               Total Logistic Control, LLC, Christiana Companies, Inc. and C2,
               Inc. [Incorporated by referenced to Exhibit 2.2 C2, Inc.'s Form
               S-1 Registration Statement (Reg. No. 333-46027)].

       2.3     Recapitalization Agreement by and among C2, Inc., Zero Zone, Inc.
               and the shareholders of Zero Zone, Inc. [Incorporated by
               referenced to Exhibit 2.1 to C2, Inc.'s Current Report on Form
               8-K dated March 12, 1999 and filed on March 29,1999].

       3.1     C2, Inc.'s Amended and Restated Articles of Incorporation.
               [Incorporated by reference to Exhibit 3.1 to C2, Inc.'s Form S-1
               Registration Statement (Reg. No. 333-46027)].

       3.2     C2, Inc.'s Amended and Restated Bylaws. [Incorporated by
               reference to Exhibit 3.2 to C2, Inc.'s Form S-1 Registration
               Statement (Reg. No. 333-46027)].

      10.1     Form of Credit Agreement, by and among Total Logistic control,
               LLC, Firstar Bank, N.A., individually and as agent, and the
               lenders that are a party thereto. [Incorporated by reference to
               Exhibit 10.1 to C2, Inc.'s Form S-1 Registration Statement (Reg.
               No. 333-46027)].

      10.2     Form of First Amended and Restated Operating Agreement, by and
               between C2, Inc. and Christiana companies, Inc. [Incorporated by
               reference to Exhibit 10.2 to C2, Inc.'s Form S-1 Registration
               Statement (Reg. No. 333-46027)]

      10.3     C2, Inc. 1998 Equity Incentive Plan [Incorporated by reference to
               Exhibit 10.2 to C2, Inc.'s Form S-1 Registration Statement (Reg.
               No. 333-46027)].

      10.4     Asset Purchase Agreement between Total Logistic Control, LLC and
               the ProSource Group, Inc.

      10.5     Amendment of Asset Purchase Agreement between Total Logistic
               Control, LLC and the ProSource Group, Inc.

        21     Company's Subsidiaries.

        99     The Proxy Statement for the 2001 Annual Meeting of Shareholders
               will be filed with the Securities and Exchange Commission under
               Regulation 14A within 120 days after the end of the company's
               fiscal year. Except to the extent specifically incorporated by
               reference, the Proxy Statement for the 2001 Annual Meeting of
               Shareholders shall not be deemed to be filed with the Securities
               and Exchange Commission as part of this Annual Report on Form
               10-K].


                                       35