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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               -------------------
                                   FORM 10-KSB

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   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

                        Commission file number: 1-15597

                                 LandStar, Inc.
             (Exact name of registrant as specified in its charter)


             Nevada                                            86-0914051
 (State of jurisdiction of                                  (I.R.S. employer
incorporation or organization)                             identification no.)



                         15825 N. 71st Street, Suite 205
                            Scottsdale, Arizona 85254
          (Address of Principal Executive Offices, including zip code)

                                 (480) 596-8400
              (Registrant's Telephone Number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

        Securities to be registered pursuant to Section 12(g) of the Act:
                     Common Stock, $.001 par value per share
                                (Title of Class)

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 proceeding 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. [_]

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 31, 2001 was $8,534,827. This calculation does not
reflect a determination that persons are affiliates for any other purposes.

Number of shares of common stock outstanding as of March 31, 2001:  45,354,524.

Documents Incorporated by Reference:  none

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                                 LandStar, Inc.
                    Fiscal Year 2000 Form 10-K Annual Report

                    ----------------------------------------

                                TABLE OF CONTENTS
                                                                          PAGE

PART I

Item 1.  Business                                                           1

Item 2.  Properties                                                        13

Item 3.  Legal Proceedings                                                 13

Item 4.  Submission of Matters to a Vote
         of Security Holders                                               13

PART II

Item 5.  Market for Registrant's Common Equity                             14
         and Related Stockholder Matters

Item 6.  Selected Financial Data                                           16

Item 7.  Management's Discussion and Analysis
         of Financial Condition and Results of                             16
         Operations

Item 8.  Financial Statements and                                          19
         Supplementary Data

Item 9.  Changes In and Disagreements with                               F-10
         Accountants on Accounting and
         Financial Disclosure

PART III

Item 10. Directors and Executive Officers of                               20
         the Registrant

Item 11. Executive Compensation                                            22

Item 12. Security Ownership of Certain
         Beneficial Owners and Management                                  23

Item 13. Certain Relationships and                                         24
         Related Transactions

PART IV

Item 14. Exhibits, Financial Statement Schedules                           26
         and Reports on Form 8-K

         Signatures

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FORWARD-LOOKING STATEMENTS

In addition to historical information, this Annual Report contains
forward-looking statements. These forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those reflected in these forward-looking statements. Factors
that might cause such a difference include, but are not limited to, those
discussed in the section entitled "Management's Discussion and Analysis of
Financial Position and Results of Operations--Factors That May Affect Future
Results and Market Price of Stock". Readers are cautioned not to place undue
reliance on these forward-looking statements, which reflect management's
opinions only as the date hereof. The Company undertakes no obligation to revise
or publicly release the results of any revision to those forward-looking
statements. Readers should carefully review the risk factors described in other
documents the Company files from time to time with the Securities and Exchange
Commission, including the Quarterly Reports on Form 10-Q to be filed by the
Company in fiscal year 2001.

                                            PART I

Item 1.  Business

Background and Business Development

LandStar, Inc. was incorporated as a Nevada corporation on May 4, 1998, for the
purpose of purchasing, developing and reselling real property, with its
principal focus on the development of raw land. From incorporation through
December 31, 1998, LandStar had no business operations and was a
development-stage company. LandStar did not purchase or develop any properties
and subsequently determined to change its business plan and operations. On March
31, 1999, the Company acquired approximately 98.5% of the common stock of
Rebound Rubber Corp. pursuant to a share exchange agreement with Rebound Rubber
Corp. and substantially all of Rebound Rubber's shareholders. The acquisition
was effected by issue of 14,500,100 shares which constituted 14.5% of the
100,000,000 authorized shares of LandStar and 50.6% of the 28,622,100 issued and
outstanding shares on completion of the acquisition. The acquisition was treated
for accounting purposes as a continuation of Rebound Rubber under the LandStar
capital structure. LandStar originally issued 1,000,000 founders shares and sold
1,600,000 shares to initial subscribers for a total of 2,600,000. Due to the
consolidation method the attached consolidated statements record these initial
LandStar shares as "Shares issued in March 1999 to acquire net assets of
LandStar". If viewed from a non-consolidated perspective, on March 31, 1999
LandStar issued 14,500,100 shares for the acquisition of the shares of Rebound
Rubber. At the same time LandStar issued 8,500,000 shares for acquisition of the
joint venture interest of United Trans-Western, Inc., issued 2,762,000 shares
for cash and issued 260,000 shares for finders fees. The cumulative effect of
the four issues increased the shares outstanding in LandStar from 2,600,000 to
28,622,100. Rebound Rubber Corp. owns an exclusive North American license
granted by the Guangzhou Research Institute for the Utilization of Reusable
Resources, P.R. of China, pursuant to a technology for the reclamation and
de-vulcanizing of recycled rubber.

Rebound Rubber Corp. was originally formed on December 13, 1996 in the Province
of Alberta, Canada under the name 721097 Alberta Ltd. as a private limited
liability corporation, and subsequently changed its name to Rebound

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Rubber Corp. on May 20, 1997. Rebound Rubber was initially formed as a corporate
vehicle to acquire certain rubber recycling technology from the Guangzhou
Research Institute for the Utilization of Reusable Resources, P.R. of China
(hereinafter the Guangzhou Research Institute). The Guangzhou Research Institute
is a research institute owned by the Government of the P.R. China. The P.R. of
China central government mandates the Guangzhou Research Institute to research
recycling of waste rubber products. In early 1996, the principal officers and
directors of Rebound Rubber met with members of the Guangzhou Research
Institute. The proponents conducted a thorough technology review and due
diligence examination of the rubber recycling technology throughout 1996 and
early 1997. This review included but was not limited to the following: (1)
de-vulcanizing testing procedures and test results; (2) observing the complete
processing of used tires to "crumb", (the granular material produced by the
shredding and grinding of recycled rubber is called crumb rubber) the activation
of the crumb and the processing of the activated modified rubber powder ("AMR")
in substantial ratios with new rubber back into new tires; (3) visiting a number
of manufacturing operations and observing AMR being used in a variety of new
rubber products; (4) research into other claims of de-vulcanizing technologies
to determine whether there were any other true de-vulcanizing processes in
commercial production anywhere in the world; (5) review of proprietary rights,
Chinese patents/registrations pursuant to the technology; (6) review of
chemicals used in activation process pursuant to environmental and workplace
hazards; and (7) review of availability and pricing of reactivation chemicals
and crumb rubber supplies.

Following the due diligence process, Rebound Rubber entered into three contracts
with the Guangzhou Research Institute. The three agreements were signed on March
12, 1997 with a series of payments being made in 1997 and 1998. The payment
schedules provided for in the agreements were altered by verbal agreements
without amendments in writing to the contracts being affected. The final payment
and official declaration of completion of the technology acquisition was
announced in a public news conference in Guangzhou P.R. China on May 12, 1998
and was reported in local and official media in China.

The three agreements are as follows:

Rebound Rubber acquired a license to the exclusive North American rights to the
AMR (30-40 mesh crumb) technology and the scrap latex reactivation technology,
in exchange for a one-time license fee of $500,000. This technology was assigned
the process identification name of "AMR", an apparent acronym for "activated
modified rubber". The license is perpetual and no further fees are required. The
license also grants Rebound Rubber non-exclusive rights to establish production
operations anywhere in the world.

Rebound Rubber acquired a license to the exclusive North American rights and
non-exclusive operating rights in other parts of the world to a new activation
technology that uses 4-28 mesh crumb rubber and achieves a high level of
de-vulcanization, in exchange for a one-time license fee of $400,000. This
technology was assigned the process identification name of "RU" rubber. There is
no apparent significance to the letters "RU" and the letters are not an acronym.
The license is perpetual and no further fees are required. Rebound Rubber also
funded some research and development efforts for this technology.

Rebound Rubber entered into an agency agreement with the Guangzhou Research
Institute in which Rebound Rubber is authorized to market the rubber recycling
technologies throughout the world. This agreement provides for a revenue sharing
between Rebound Rubber and the Guangzhou Research Institute for licensing
agreements with third parties negotiated by Rebound Rubber. The agreements with
the Guangzhou Research Institute provide for the Company having exclusive rights
of usage of the technologies throughout North America

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and non-exclusive rights wherever else in the world the Company sets up
manufacturing operations, without any further payment. Under the terms of the
Letter of Appointment, the Company is appointed to market the technologies in
areas outside China. The terms of the Letter of Appointment provide that in
these markets the revenues derived from such contracts shall be shared between
the Company and the Guangzhou Research Institute in accordance with the Letter
of Appointment.

In May 1997, United Trans-Western, Inc., a Delaware corporation, acquired 100%
of the shares of Rebound Rubber Corp. from D.Elroy Fimrite for a purchase price
of $1,000 and assumed responsibility for market development. United
Trans-Western also conducted extensive research into tire collection, shredding
and crumb production operations, product quality, crumbing methods and
profitability. In conjunction with the acquisition of Rebound Rubber by United
Trans-Western, D. Elroy Fimrite and Michael C. Pinch were appointed to the board
of directors of United Trans-Western, and assumed the positions of president and
chief financial officer, respectively. During the period that United
Trans-Western, Inc. owned the shares of Rebound Rubber Corp., Kentucky Financial
Inc. (a company related to D. Elroy Fimrite) provided debt financing to Rebound
Rubber Corp. in the amount of $750,000. In March, 1998 United Trans-Western,
Inc. sold all of its shares of Rebound Rubber Corp. to Kentucky Financial Inc.
for $1,000 with a requirement that Kentucky Financial Inc. convert its loans to
Rebound Rubber Corp. into shares of Rebound Rubber Corp. and United
Trans-Western retained an interest in a joint venture agreement with Rebound
Rubber, for the development, implementation and exploitation of the rubber
recycling technology in the United States market. Subsequently, in connection
with the share exchange agreement between Rebound Rubber and LandStar, on
December 31, 1998 LandStar entered into a purchase agreement with United
Trans-Western to acquire all of United Trans-Western's interest in the joint
venture. The acquisition was effective March 31, 1999 and LandStar issued
8,500,000 shares of its common stock and paid $100,000 cash to United
Trans-Western in the transaction.

The share exchange with Rebound Rubber and the joint venture acquisition from
United Trans-Western were effective on March 31, 1999 and resulted in a change
of control of LandStar and the appointment of new officers and directors of the
Company. These transactions also redefined the focus of the Company on the
development and exploitation of the technology to de-vulcanize and reactivate
recycled rubber for resale as a raw material in the production of new rubber
products. The Company's business strategy was to demonstrate to potential
customers that activated modified rubber powder (AMR) and RU rubber can be
produced in substantial quantities on a consistent basis and that AMR and RU
chemical and physical properties confirm AMR and RU materials as viable rubber
substitutes. The Company intends to develop operational facilities that will
apply the AMR and RU technologies to vulcanized crumb rubber and sell the
resulting de-vulcanized material (and compounds using the materials) to
manufacturers of rubber products. The Company constructed and operated a
production prototype demonstration plant in Dayton, Ohio for the purpose of
producing commercial quantities of de-vulcanized materials and demonstrating the
process to potential customers. The Company has not completed a sale to any
potential customer, as the Company has not produced sufficient volume in the
pilot plant to provide goods for sale. The demonstration plant is being
dismantled and relocated at this time. In addition, the Dayton facility
contained a lab, which will be used in the future for the development of rubber
compounds using substantial quantities of AMR and RU materials in combination
with various plastics, natural rubber and synthetic rubbers.

LandStar relocated its executive offices to 15825 N. 71st Street, Suite 205,
Scottsdale, Arizona 85254 in January 2001 in conjunction with the acquisition of
Polytek Rubber & Recycling, Inc. The Company also maintains a web site at
www.ldsr.com. Information accessed on or through the Company's web site does

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not constitute a part of this Annual Report.

Rubber Recycling Industry

The Company believes that the market for new raw rubber or equivalent is
enormous, with North America alone using over 10 billion pounds every year. The
auto industry consumes approximately 79% of new rubber and 57% of synthetic
rubber. To date, recycled rubber in significant quantities has not been used as
a replacement for new or synthetic rubber, largely because required properties
could not be achieved. The rubber industry has focused on the disposal of waste
rubber rather than on recapturing the economic value of the resources
incorporated in the waste. As a consequence, the uses for waste rubber have been
of low economic value resulting in low volumes of recycling, accumulation of
tire stockpiles, and an industry characterized by low profitability and business
failures. Tires are the most visible of waste rubber products; the accumulation
of discarded rubber tires is increasing worldwide at an alarming rate with very
few cost-effective ways of recycling the resources. North America alone
generates approximately 300 million waste tires annually, with over half of them
being added to the already huge stockpiles. It is estimated that less than 10%
of waste rubber is reused in any kind of new product. The United States, the
European Union, Eastern Europe, Latin America, Japan and the Middle East
collectively produce about one billion tires annually with large accumulations
stockpiled in Europe and North America. This provides a significant source of
raw materials for a viable recycling application.

In general, the rubber recycling process commences with the collection and
shredding of discarded tires. Numerous types of equipment and processes exist
for the shredding, grinding and separating of tires. A shredding process reduces
the rubber to a granular material with some steel and other fibers removed.
Secondary grinding reduces the granular material to a desired mesh size with all
steel and other fibers removed. The resulting rubber powder is then ready for
product remanufacture. However, the volume of applications that can utilize this
inert material in substantial ratios is limited to products that do not require
vulcanization. There have been significant prior attempts at recycling rubber.
It is estimated that a waste tire contains approximately 75% rubber, which has
been changed only about 15-20% from its original properties. The difficulty in
recycling rubber has traditionally been with de-vulcanizing the rubber without
compromising its properties. Vulcanization is the process by which an agent,
such as sulfur, is added to rubber in the manufacturing process to give the
product certain required characteristics, such as strength, hardness and
elasticity. Generally, the more vulcanizing agent that is used, the harder the
resultant rubber product will be. Likewise, in the rubber recycling process,
de-vulcanization is the process by which the sulfur molecules are de-linked from
the rubber molecules, thereby facilitating the formation of new cross-linking
structures. Two general rubber recycling processes have been developed: modified
oil process and water-oil process. With each of these processes, oil and a
reclaiming agent are added to the reclaimed rubber powder, treated at high
temperatures and under high pressure for a long period (5-12 hours) in special
equipment, and require strong mechanical post-processing efforts. The reclaimed
rubber from these processes has degraded properties and is generally not
suitable for use in many products, including tire compounds. Typically, these
alternative de-vulcanization processes have resulted in low levels of
de-vulcanization, have failed to produce consistent quality or have been
prohibitively expensive. The Company believes that its AMR and RU processes
produce new polymer compounds with consistent properties that approach the
properties of natural and synthetic rubber, with a significant price advantage.

The LandStar Strategy

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The Company's strategy is to be a leading provider of activated modified rubber
(AMR and RU) through its proprietary processes and de-vulcanization and
reactivation technology, and to be a recognized supplier of reusable recycled
rubber for use in rubber manufacturing applications. The Company's process is
simple and facilitates the de-vulcanization of the rubber, while maintaining
much of the rubber's original properties.

The Company also expects to be the leading provider of crumb rubber in the
world. The Company initiated this strategy with the acquisition of Polytek
Rubber & Recycling, Inc. on January 8, 2001. This is discussed in more detail
under "Acquisitions".

LandStar's Business

LandStar's Process - De-vulcanization and Reactivation

The reactivation technology licensed by the Company exploits the molecular
characteristics of vulcanized rubber powder in conjunction with the use of an
activator, a modifier and an accelerator reacting homogeneously with each
particle of rubber. The chemical reaction that occurs in the mixing process
facilitates the de-linking of the sulfur molecules thus enabling a re-enactment
of the characteristics of natural or synthetic rubber. A mixture of chemical
additives are added to the rubber crumb in a mixer and mixed for approximately
five minutes, after which the reactivated crumb passes through a cooling process
and is then ready for packaging.

In the production of the RU rubber, the material is further processed on a
mixing mill with an additional agent. The Company's reactivation process is
simple, and does not release any toxins, by-products or contaminants. The
Company does not require special equipment, but intends to use standard North
American high intensity mixers in its reactivation process. Reactivated rubber
may be compounded and processed in accordance with specific customer
requirements.

To successfully market activated modified rubber (AMR and RU rubber) as
activated crumb or as a component part of a compound, the Company concluded that
it needed to demonstrate an ability to supply a consistent quality material with
specific properties at a competitive price. To this end, the Company completed a
demonstration plant facility and research/quality control lab in Dayton, Ohio.
Considerable development and construction of the plant was effected in January
and February 2000 and the plant was not deemed complete until February 2000 for
accounting purposes. The purpose of the pilot plant was to demonstrate the
reactivation and de-vulcanization technology which is technology applied to
"crumb rubber". Accordingly, the plant did not include the equipment or
facilities and licensing to process whole tires or other post-consumer and
post-industrial rubber into "crumb rubber". The equipment to process whole tires
into crumb rubber typically costs about $2,000,000 for a basic operation capable
of production of 15-25 ton of crumb rubber per day. The pilot plant was a
recycling facility to the extent that crumb rubber is the material processed
into de-vulcanized rubber and crumb rubber is derived from the recycling of
post-consumer and post-industrial rubber. The plant was capable of producing 600
pounds of AMR per hour but currently production was initiated for demonstration
and testing purposes.

AMR produced at the Dayton, Ohio facility, is currently being tested by an
independent lab to establish its physical and chemical properties. The
properties profile and production demonstration capability facilitate
commencement of marketing of AMR. Marketing staff have initiated customer
contact with the numerous manufacturers that have expressed an interest in AMR.
The Company believes that this marketing initiative may result in orders

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requiring installation of a large production facility although there are no
assurances that the Company will receive such orders, if any.

Principal Products and Markets

The Company had initially identified the activated modified rubber (AMR) and
compounds using AMR in conjunction with natural rubber, synthetic rubber or
plastics as its initial product line. However, during the research of the rubber
recycling process it became clear that in order for LandStar to go forward with
the AMR and RU production on a full scale, the crumb rubber market had to be
stabilized. Without a steady, high quality and properly priced crumb rubber
supply, the viability of AMR and RU production greatly diminishes. The Company
therefore decided to recast its original business plan and invest in and
consolidate the crumb rubber market

The Company's strategic plan focuses on building and maintaining a solid revenue
generating position through aggressive sales management and acquisitions of
leading players in the rubber recycling industry. The first entree into the
crumb rubber business was the acquisition of PolyTek Rubber & Recycling, Inc.
(PolyTek) on January 8, 2001. The transaction was valued at approximately
$30,000,000 and was an all stock transaction. PolyTek is the world's largest
producer of crumb rubber, the basic material used in the manufacture of recycled
rubber products and applications. PolyTek operates four manufacturing facilities
located in Arizona, Michigan, Pennsylvania and Oklahoma. The facilities use all
three processing technologies: ambient grinding, cryogenic and wet-grind
systems. PolyTek had revenues of $14.6 million for the latest fiscal year ended
September 30, 2000 and total assets of $25.4 million.

On January 31, 2001, LandStar acquired Modified Asphalt Technologies, Inc., a
leader in the development of asphalt rubber. This acquisition positions the
Company for enhancing the growth and development of the industry and creating
new and substantial demand for the Company's products.

The Company has also executed a letter on intent for the purchase of Rouse
Polymerics International, Inc. (Rouse). Rouse is the recognized leader in the
production of high quality grind powder. Rouse brings acknowledged research and
development staff and facilities, as well as a wide customer base to build upon.
Rouse maintains a stature as the most respected player in the industry and moves
LandStar ahead with the integration of acquired wet-grind processes in other
plants.

An understanding for the purchase also exists with Rad-Tec Industries, Inc.
(Rad-Tec). The Company plans to utilize the acquired manufacturing capacity and
product lines to commence production of products employing de-vulcanized
material.

The Company will begin manufacture of activated modified rubber (AMR) and
compounds using AMR in conjunction with natural rubber, synthetic rubber or
plastics. The Company intends to sell these materials to rubber product
manufacturers as a raw material for processing into rubber based manufactured
goods. AMR is essentially a new polymer that has chemical and physical
properties facilitating integration of substantial quantities of AMR as an
active polymer in most rubber based products. Initially, the Company intends to
target its marketing efforts to manufacturers of products that have low consumer
liability and that do not have strict specifications for raw materials (i.e.,
that can accept small deviations in certain specifications for its rubber
components). The Company has targeted markets with low consumer liability
concerns not because of any concern with quality of the product produced by the
Company, but rather because the markets with higher

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consumer liability involve longer product testing and verification times that
delay the procurement of sales orders. The Company has targeted markets that can
accommodate small consistency variations to accommodate the evolution of some
historical statistics of the effectiveness of the Company's quality assurance
procedures. The Company is not aware of any concerns with quality and
performance of the Company's products but cannot guarantee that quality and
performance defects will not occur. The largest markets for AMR are in
automotive products, a market that accounts for about two thirds of demand for
natural and synthetic rubber (AMR has been extensively used in new and retread
tires in ratios of up to 40% of raw polymer).

Following successful commercial implementation of the AMR and RU product lines
described above, the Company expects to develop a product line based on recycled
latex materials that the Company will activate to produce either thin rubber
sheet or liquid latex. Additional applied research and development will be
conducted on these products to establish physical and chemical characteristics
and to determine market opportunities. This technology has been applied on
small-scale laboratory based production levels and has not been produced in any
facilities of the Company. The technology has not been developed to commercial
levels and the Company does not intend to initiate such development until sales
and production of AMR and RU rubber have been established.

The Company believes that activated modified rubber powder, as a feedstock, will
be a strong competitor with natural and synthetic rubber that is currently used
by rubber manufacturers in the production of a variety of products. The price of
natural and synthetic rubber is variable and, as a commodity, price is driven by
supply and demand. The Company believes that once it successfully establishes a
production facility, its price of AMR and RU products may be significantly less
than the price of natural and synthetic rubber. In addition, the Company intends
to develop specialized compounds with unique characteristics to compete with
high-priced compounds of neoprene, EPDM and similar high-end products.
Development of these products will be customer driven, but the Company expects
fierce competition from established suppliers seeking to retain market share in
this high margin, high price sector of the rubber market. To the extent that
there are other compounding facilities that supply to the rubber industry the
Company will be competing with other rubber compound material suppliers. The
competitive advantage in these markets will be the use of low cost AMR and RU
rubber resulting in a price advantage to users as well as the ability to recycle
the customers' scrap that typically goes to landfill at the present time. There
are some current uses for recycled crumb rubber that has been treated or
processed in some manner for use in low-end products. The Company does not
intend to participate in this market except as a means of disposing of material
that the Company does not consider of an appropriate quality for AMR or RU
rubber production.

Distribution

The Company's activation process currently focuses on crumb rubber (30 -40 mesh)
with the output being activated crumb rubber. This material can be bagged and
sold as is or compounded with natural or synthetic rubber and plastics.
Packaging will include bagging in 50 pound bags or in super sacks, or the
material (and compounds thereof) can be sheeted or pelletized. The Company
intends to enter into strategic relationships or agency agreements to establish
a marketing group, and intends to sell its products directly to manufacturers
capable of ordering large quantities under long-term supply contracts.

Competition

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The rubber industry has been researching the de-vulcanization of rubber for many
years. The process of de-vulcanization is "the treatment of rubber granulate
with heat and /or softening agents to return its elastic qualities to enable the
rubber to be reused". We are aware of several processes that have met with
varying degrees of success at the laboratory level but are less successful at
commercial production levels. Also, different processes result in different
levels of de-vulcanization, for example the use of a very fine granulate and a
process which results in surface de-vulcanization will yield a product with some
of the desired qualities of rubber. Typically, alternative de-vulcanization
processes have resulted in low levels of de-vulcanization, have failed to
produce consistent quality or have been prohibitively expensive. The Company
believes that its AMR and RU's processes produce a new polymer with consistent
properties that approach the properties of natural and synthetic rubber, with a
significant price advantage.

Pursuant to evaluation of the Company's de-vulcanized material, the Company has
conducted tests of its material at a world renowned independent rubber
laboratory and have had the results of the tests interpreted by accredited
rubber industry consultants. While this information is proprietary and the
process is ongoing, results to date support the unique physical and chemical
characteristics of material produced with the licensed technology. The chemical
and physical properties create a unique product, a complete mix of polymers,
reinforcing agents (such as carbon black), anti-oxidants and other additives and
processing aids complete with a curing (vulcanizing) package, in a stable
chemical state. This material can, because of its processing state, reduce
processing time and provide competitive cost advantages on the multiple levels
of reducing or eliminating the use of virgin materials for the various
ingredients and eliminating the processing cost of blending materials.

There are currently no direct competitors of the Company, as the technology
licensed to the Company is unique. However, other participants in both the
natural rubber and synthetic rubber areas may be considered competitors. The
Company is aware of several development stage and established companies,
including The Goodyear Tire and Rubber Company, which are exploring rubber
de-vulcanization.

Technology Rights

The Company purchased the rights to three technologies: 1. The AMR technology is
a surface activation de-vulcanization technology. In this technology proprietary
chemical agents are applied to the surface of 30-40 mesh crumb rubber particles
and react chemically to sever vulcanization bonds which are exposed on the
surface of the particles. As the interior material in the particles also
contains bonds formed in vulcanization, surface de-vulcanization only partially
de-vulcanizes the material. By this process the surface of the particle becomes
reactive and can bond with other particles in a new vulcanization process to
form new vulcanized products. There are other technologies that create a
reactive surface, but the Company believes that the AMR technology is unique and
superior in terms of the chemical structure created, the low heat involved in
the reaction and the low cost of production. The AMR process is a production
level technology as it has been used in production operations in China for over
four years. AMR has been used in significant quantities in the production of
tires and other rubber goods during those four years. Management is not aware of
any other surface activation technology that has produced material that has been
used in the proportion or volume of AMR. The Dayton pilot plant produced AMR by
a fully automated process. The Company expects to develop variations of the AMR
technology in the future that will expand this materials market opportunity.

2. The latex reactivation technology is the only technology known to the Company
or referenced in available data sources that reactivates or de-

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vulcanizes latex post-consumer and post-industrial materials creating a "new"
rubber material that can be used in new rubber products. This unique technology
is not in commercial production at the present time, however the Company
believes that no further research is required prior to initiating production.
While the Company can commence production, applied research and development will
be required to prepare verified product characteristics and to interface the
characteristics of the product with manufacturers specifications. The applied
research and development will be conducted using equipment and resources
acquired in the development of the AMR and RU product lines and accordingly will
involve minimal incremental costs. The Company is deferring implementation of
the latex technology until the AMR and RU technologies are operational rather
than allocate resources and manpower during the development of the Company. The
Company believes that this technology has significant value as it is unique in
the world and essentially all latex waste currently is land filled or burned.
The Company has not produced any reactivated latex product or conducted any
market research and accordingly cannot verify that this product line will be
viable.

3. The RU technology is a unique penetrating de-vulcanization technology. The
proprietary chemical compounds applied in the RU process penetrate the crumb
rubber particles and sever vulcanization bonds internal to the crumb rubber
particle. As a result of this penetrating effect the process works better with
larger particle crumb, typically 4-28 mesh. The use of larger crumb reduces the
grinding costs and improves the quality of the de-vulcanized material. The
effect of the more complete de-vulcanization is creation of a material that
costs less to process, becomes plastic at a lower temperature and has a greater
capacity to melt into and bond with other ingredients in a new rubber compound.
Preliminary test data from potential customers is extremely positive and the
Company believes that this material will revolutionize the rubber recycling
industry. The production of this material uses the same materials and equipment
as the AMR process with the addition of a standard rubber mixing mill attached
at the end of the process to blend in the proprietary RU special agent.

The RU product line is a more advanced state of the AMR technology with benefits
of being a more complete de-vulcanization by virtue of penetration and severing
of cross-links within the crumb rubber particle. The additional advantage of the
RU technology over the AMR technology is that it is applied to a larger size of
crumb rubber which means that the raw materials (4-28 mesh crumb rubber than
30-40 mesh crumb rubber), are less expensive to produce and more readily
available.

Raw Materials

The Company's AMR and RU processes requires that there be an adequate supply of
rubber for recycling and requires the availability of several chemical compounds
developed by the Institute. The Company has been advised of the ingredients and
processes involved in the production of the reactive proprietary compounds and
has verified the source of the ingredients from multiple North American sources.
The Company believes that there is an abundance of raw material in the form of
used tires, factory scrap and inventories of partially processed crumb rubber
for supply of crumb rubber to make AMR and RU rubber. North America generates
approximately 300 million used tires per year and billions more are stockpiled
throughout the world. Numerous existing shredding and crumbing operations exist
that produce the crumb rubber products needed for AMR and RU. In addition, the
Company has become actively involved in this sector of the business by acquiring
key producers or forming strategic partnerships with processors of tire crumb to
supply the Company with its raw materials.

Customers

                                       9
<PAGE>   12

With the acquisition of PolyTek Rubber & Recycling, Inc. and pending acquisition
of Rouse Polymerics International, Inc. the Company has a stellar customer list.
Major tire manufacturers, rubber asphalt construction companies, field turf
suppliers and other leading manufacturers in their areas of rubber recycling are
all customers of LandStar, Inc. and its subsidiaries.

In the AMR and RU markets, the Company has no production operations to date and
has not sold any product to any customers. However, the Company's pre-market
research efforts have indicated significant expressions of interest from
manufacturers of various rubber products for the Company's technology and
products. Activated modified rubber (AMR and RU rubber) are an alternative
feedstock that can be used in various compounds depending on the product being
manufactured and can replace natural or synthetic rubber in varying percentages.
The Company believes that there are potential significant cost savings from the
use of AMR and RU rubber in rubber manufacturing processes. The Company believes
that the versatility of activated modified rubber allows most manufacturers of
rubber products to use AMR and RU rubber as raw materials, and expects to offer
its products to a broad range of potential customers.

Research and Development Activities

The AMR technology licensed by the Company has been in commercial production for
over four years in Asia. Accordingly, the Company believes that its AMR
technology is operationally complete and the Company intends to initiate
production without substantial further research and development efforts. This
initial production will apply standard chemical formulation of the AMR process
to whole tire crumb rubber to produce standard AMR. Standard AMR has a myriad of
applications and markets which the Company intends to explore.

The Company does not intend to restrict its business activity to the standard
AMR market and intends to conduct research and development activities to enhance
its array of products and applicable markets. The Company intends to do
extensive applied research and development pursuant to the development of new
products incorporating AMR in polymer compounds. This research will focus on
three primary areas: reactivation formula modification, compound development and
processing formulas:

Reactivation Formula Modification: The Company at inception will base all
production on whole tire crumb rubber. The Company will develop streaming
methods to isolate types of rubber waste by similar rubber type such as
separating bead rubber and side-wall rubber from tread material. The Company
will research activation formula modifications to improve the characteristics of
AMR produced from each type of waste rubber.

Compound Development: Many manufacturers use raw materials that are compounds of
various types of natural and synthetic rubber and plastics. The Company will
conduct an ongoing research program to develop a matrix of compounds reflecting
various physical and chemical properties.

Processing Formulas: The introduction of AMR as a substitute for virgin material
affects the proportions of other additives and vulcanizing agents. The Company
will research the alterations to processing formulas necessary for manufacturers
to use AMR and RU rubber based compounds.

The Company's initial research and development efforts will focus on development
of compounds and manufacturing formulations using AMR and RU rubber. Generally,
rubber product manufacturers process raw materials according to different
formulations of polymers, fillers and extenders, processing agents, additives
such as anti-oxidants, and vulcanizing agents in

                                       10
<PAGE>   13





a specified combination of time, temperature and pressure. Often the polymer
component will include premixed compounds of several polymers that are supplied
by external suppliers. The Company intends to develop premixed compounds with
suitable physical and chemical characteristics to facilitate substitution of AMR
and RU rubber based compounds in these formulations. Due to the fact that AMR
and RU rubber retain the fillers, extenders, additives and vulcanizing agents
that are resident in the crumb rubber, the "formula" used by the manufacturer
will change when a de-vulcanized compound is used. The Company intends to
develop amended formulations for customers, determining the reductions in the
additives and agents and amending the time, temperature and pressure parameters.
The Company believes that each such compound and processing formula will
constitute a new product and will open a potentially new market segment.

Intellectual Property and Other Proprietary Rights

The Company relies on a combination of registration in the Peoples Republic of
China, strict secrecy of the formula, confidentiality procedures and contractual
provisions to protect its proprietary rights. The technologies are not protected
by patent but the AMR and latex technologies have been registered with the
Science and Technology Quality Bureau of Domestic Trading Ministry, P.R. China
under #85-911-04-01 on October 28, 1994. The Chinese registration process does
not provide protection equivalent to a patent, but does provide documentation of
prior art. The Chinese patent for the RU technology has been applied for by the
Guangzhou Research Institute. Upon completion of the Chinese patent, that patent
will be extended by application for patent in the United States, Canada and
parts of Europe. In addition, the Company has entered into Non-Disclosure and
Non-Analysis agreements with third parties with respect to the technology. The
Company also relies on a combination of common law and statutory law to protect
its trade secrets, proprietary information, know-how and trademarks. The AMR and
latex technologies were complete and the AMR technology was in commercial
production when licensed to the Company in 1998. The RU technology was not
complete at that time and the Company provided capital pursuant to the contract
with the Guangzhou Research Institute to fund the completion of the technology.
The RU technology has subsequently been completed and was to be officially
registered with the Science and Technology Quality Bureau of Domestic Trading
Ministry, P.R. of China. The Company also believes that factors such as the
technological and creative skills of its personnel, new product developments,
frequent product enhancements, name recognition and reliable product maintenance
are essential to establishing and maintaining a technological leadership
position. There can be no assurance that others will not develop technologies
and products that are similar or superior to the Company's technology. Despite
the Company's efforts to protect its proprietary rights, unauthorized parties
may attempt to copy aspects of the Company's products or to obtain and use
information that the Company regards as proprietary. There can be no assurance
that the Company's means of protecting its proprietary rights in the United
States or abroad will be adequate or that competition will not independently
develop similar technology.

The Company is not aware that it is infringing on any proprietary rights of
third parties. There can be no assurance that third parties will not claim
infringement by the Company of their intellectual property rights. The Company
expects that product developers will increasingly be subject to infringement
claims as the number of products and competitors in the Company's industry
segment grows and the functionality of products in different industry segments
overlaps. Any such claims, with or without merit, could be time consuming to
defend, result in costly litigation, divert management's attention and
resources, cause product shipment delays, or require the Company to enter into
royalty or licensing agreements. Such royalty or licensing agreements, if
required, may not be available on terms acceptable to the

                                       11
<PAGE>   14


Company, if at all. In the event of a successful claim of product infringement
against the Company and failure or inability of the Company to license the
infringed or similar technology, the Company's business, operating results and
financial condition would be materially and adversely affected.

Government Regulations

Government approval is not required for use of crumb rubber, AMR or RU rubber in
manufactured goods except to the extent that particular manufactured goods may
be subject to requirements for government approval. Through the Company's market
development activities to date, it is not aware of any applicable governmental
requirements for manufacturers that the Company is currently targeting. Although
AMR and RU rubber have been used in the manufacture of new tires outside of
North America, it is expected that significant testing by tire manufacturers
will be required before they are used in North America for this purpose. At that
time, all necessary safety standards and related regulations will have to be
met.

Environmental Compliance

The Company constructed its Dayton, Ohio facility as a prototype for a full size
production plant. This development process included addressing all applicable
environmental regulations and requirements. The Company has developed material
safety data sheets for all materials related to the process and the Company
believes that it is in compliance with all federal, state and local
environmental laws and regulations. The AMR and RU rubber processes do not
produce any residual solid waste as all components of the manufacturing process
remain in the product. Gases that are emitted in the process have been tested
and demonstrated to be organic in nature and are controlled by standard
filtering and venting systems.

Employees

As of March 31, 2001, the Company had a total of one hundred and ninety (190)
full-time employees, including the employees from the PolyTek Rubber &
Recycling, Inc. and Modified Asphalt Technologies, Inc. acquisitions. The future
success of the Company depends in significant part upon the continued service of
its key management personnel and its ability to attract and retain highly
qualified technical and marketing personnel. Competition for highly qualified
personnel is intense and there can be no assurance that we will be able to
retain key managerial and technical employees or that we will be able to attract
and retain additional highly qualified technical and managerial personnel in the
future.

Reports to Security Holders

The Company is required to comply with the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company
will file annual, quarterly and other reports with the Securities and Exchange
Commission, and will also be subject to the proxy solicitation requirements of
the Exchange Act and, accordingly, will furnish an annual report with audited
financial statements to our stockholders.

Available Information

Copies of this Annual Report may be inspected, without charge, at the SEC's
Public Reference Room at 450 Fifth Street N.W., Washington D.C. 20549 and at the
Northeast Regional offices of the SEC located at 7 World Trade Center, Suite
1300, New York, New York 10048. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0300. The
SEC maintains an Internet site that contains reports, proxy and

                                       12
<PAGE>   15


information statements, and other information regarding issuers that file
electronically with the SEC at http://www.sec.gov.

Item 2.  Properties

The Company leases approximately 3,330 square feet of office space in the
LandStar Building, Victoria, British Columbia, Canada where the corporate head
office was located. The lease agreement is with Carey Holdings Ltd., a company
in which Mr. D. E. Fimrite, president and director of LandStar, has a financial
interest. See "Certain Relationships and Related Transactions" below. The lease
agreement, effective January 1, 2000, is for a term of five years through
December 31, 2004, at a monthly lease rate of $4,163 plus applicable additional
rent for common costs. The building is a multi-tenant facility and the rental
rate is equivalent to rental rates paid by other tenants within the facility for
comparable space.

The Company also leased a demonstration plant and laboratory facility, which
contains approximately 12,800 square feet of office and manufacturing space, in
Dayton, Ohio. The Company has terminated this lease effective on April 30, 2001.

Item 3.  Legal Proceedings

LandStar, Inc. was a Plaintiff with Rebound Rubber Corp., and D.E. Fimrite (the
"Plaintiffs") seeking damages from Walter Brandl, Dr. Kui Lim Lu, Peter
Lochhead, Pollutec Resources Inc., Gwn Pyrolytic Corp., and Jan Fikkert (the
"Defendants"). Plaintiffs alleged various acts of fraud and tortuous
interference with technology and intellectual property belonging to the
Plaintiffs. The Settlement Agreement dated January 12, 2001 between the parties
provides for return of LandStar, Inc. stock to various parties in settlement of
the Plaintiffs claims, detailed as follows:

         -

         -        LandStar shall deliver to McCarthy T'etrault in trust 3
                  million shares of LandStar, Inc. stock beneficially owned by
                  Lu (pursuant to a share exchange agreement dated March 31,
                  1999 wherein Lu agreed to exchange 3 million shares of Rebound
                  Rubber Corp. for 3 million shares of LandStar),
         -        Lu shall cause to be transferred to LandStar the 3 million
                  shares in Rebound Rubber beneficially owned by LandStar
                  (pursuant to a share exchange agreement dated March 31, 1999
                  wherein Lu agreed to exchange 3 million shares of Rebound
                  Rubber for 3 million shares of LandStar) but held in the name
                  of Lu,
         -        Brandl shall cause to be transferred to LandStar the 100,000
                  shares of Rebound Rubber controlled by Brandl,
         -        Lochhead shall cause to be transferred 240,000 shares under
                  his control in Rebound Rubber to LandStar, Inc. Lu shall
                  endorse under gold medallion the 3 million shares of LandStar
                  to Manhattan Transfer & Registrar,
         -        McCarthy T'etrault shall submit the 3 million shares to
                  Manhattan Transfer to be reissued to:
                  -        500,000 shares in the name of Kui Lim Lu
                  -        500,000 shares in the name of Pollutec.

Item 4.  Submission of Matters to a Vote of Security Holders

No matters have been submitted to a vote of security holders up to date.


                                       13
<PAGE>   16


                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder
         Matters

The Company common stock resumed trading on the Over The Counter Bulletin Board
under the symbol "LDSR." The common stock first began trading on the OTC
Bulletin Board on October 2, 1998, trading was terminated on the OTC BB on
January 20, 2000 due to the failure of the Company to be a reporting company
under the Securities Exchange Act of 1934.The table below sets forth, the high
and low bid prices for the common stock as reported by the OTC Bulletin Board
for the period ending December 31, 1999 as reported by the National Trading
Bureau's Pink Sheets for the quarters ending March 31 and June 30, 2000 and
again by the OTC Bulletin Board for the periods ended September 30 and December
31, 2000. These prices reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.

LandStar, Inc.
Common Stock

                                             High                   Low


1999              First Quarter              $2.00                 $0.41
                  Second Quarter             $1.56                 $0.91
                  Third Quarter              $0.42                 $0.24
                  Fourth Quarter             $0.77                 $0.23

2000              First Quarter              $0.75                 $0.17
                  Second Quarter             $0.60                 $0.35
                  Third Quarter              $0.625                $0.30
                  Fourth Quarter             $0.62                 $0.27



On March 31, 2001, there were approximately 259 shareholders of record. The
Company has not declared dividends on the common stock and does not anticipate
paying dividends on the common stock in the foreseeable future.

OTC Trading Market

The common stock is currently traded on the Over The Counter Bulletin Board
under the symbol "LDSR".

Penny Stock Regulation

For as long as the common stock is traded on a system other than a national
securities exchange or The Nasdaq Stock Market quotation system, and the trading
price of the common stock is below $5.00 per share, trading in such securities
will be subject to the requirements of certain "penny stock" rules promulgated
under the Exchange Act. These rules require additional disclosure to investors
by broker-dealers in connection with any trades involving a stock defined as a
penny stock (generally, any equity security that has a market price of less than
$5.00 per share, subject to certain exceptions). Such rules require that, prior
to any penny stock transaction, the broker-dealer deliver to the investor a
disclosure statement explaining the penny stock market and the associated risks
with the market. The rules also impose sales practice requirements on
broker-dealers who sell penny stocks to persons other than to established
customers or accredited investors (generally institutions). For these types of
transactions, the broker-dealer must make a special suitability determination
for the purchaser and have received the

                                       14
<PAGE>   17


purchaser's written consent to the transaction prior to sale. The additional
burdens imposed upon broker-dealers by such requirements may discourage
broker-dealers from effecting transactions in the Company's securities, which
could severely limit the market price and liquidity of such securities and the
ability of investors to dispose of any shares of common stock in the secondary
market.

RECENT SALES OF UNREGISTERED SECURITIES

In January 2000, the Company sold and issued in a private placement to nine
accredited and/or sophisticated, U.S. purchasers an aggregate of 740,000 share
of common stock at a purchase price of $.25 per share for a total offering price
of $185,000. The private offering was made in reliance on Regulation 504 under
the Securities Act and the Company filed a Form D for the offering in April
2000.

In June 2000, the Company issued 400,000 shares to 2 accredited and/or
sophisticated U.S. purchasers at a purchase price of $.25 per share for a total
offering price of $100,000 being the value of services provided. The private
offering was made in reliance on Regulation D under the Securities Act and the
certificates for the shares bear the appropriate restrictive legends.

In July 2000, the Company sold and issued in a private placement to 3 foreign
investors an aggregate of 1,342,500 units, each unit consisting of one share of
common stock and one stock purchase warrant to purchase an additional share of
common stock. The total offering price was $335,625, or a price per unit of
$.25. The stock purchase warrants had a term of one year and were exercisable at
a price of $2.00 at any time during the year from the date of issue. The private
offering was made in reliance on Regulation S under the Securities Act and the
certificates for the shares bear the appropriate restrictive legends.

In August 2000, the Company sold and issued in a private placement to 3 foreign
investors an aggregate of 2,228,900 units, each unit consisting of one share of
common stock and one stock purchase warrant to purchase an additional share of
common stock. The total offering price was $557,225, or a price per unit of
$.25. The stock purchase warrants had a term of one year and were exercisable at
a price of $2.00 at any time during the year from the date of issue. The private
offering was made in reliance on Regulation S under the Securities Act and the
certificates for the shares bear the appropriate restrictive legends.

In August 2000, the Company issued 500,000 shares to an accredited and/or
sophisticated U.S. purchaser at a purchase price of $.20 per share for a total
offering price of $100,000 being the value of services provided. The private
offering was made in reliance on Regulation D under the Securities Act and the
certificates for the shares bear the appropriate restrictive legends.

In August 2000, the Company issued 20,000 shares to an accredited and/or
sophisticated U.S. purchaser at a purchase price of $.25 per share for a total
offering price of $5,000 being the value of services provided. The private
offering was made in reliance on Regulation D under the Securities Act and the
certificates for the shares bear the appropriate restrictive legends.

In August 2000, the Company issued 100,000 shares to an accredited and/or
sophisticated U.S. purchaser at a purchase price of $.25 per share for a total
offering price of $25,000 being the value of services provided. The private
offering was made in reliance on Regulation D under the Securities Act and the
certificates for the shares bear the appropriate restrictive legends.

In October 2000, the Company sold and issued in a private placement to 2 foreign
investors an aggregate of 1,920,000 units, each unit consisting of one share of
common stock and one stock purchase warrant to purchase an additional share of
common stock. The total offering price was $480,000, or a price per unit of
$.25. The stock purchase warrants had a term of one year and were exercisable at
a price of $2.00 at any time during the year from the date of issue. The private
offering was made in reliance on Regulation S under the Securities Act and the
certificates for the shares bear the appropriate restrictive legends.


                                       15
<PAGE>   18
Item 6.  Selected Financial Data

<TABLE>
<CAPTION>
                                              Year Ended December
                                              -------------------

                                2000                  1999                 1998
                                ----                  ----                 ----
<S>                          <C>                   <C>                  <C>
Revenues                        $ -                   $ -                  $ -

Operating Income (loss)         (2,434,396)           (1,474,531)          (1,550,190)

Net Income (loss)               (2,434,396)           (1,474,531)          (1,550,190)

Earnings (loss) per
Share-basic and diluted         (.06)                 (.05)                (.16)

Total Assets                    1,426,018             1,475,327            823,497

Short-Term Debt                 1,093,366             563,129              175,768

Long-Term Deb                   -----                 -----                -----

Stockholder's Equity             332,652              912,198              647,729
</TABLE>




Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

Results of Operations

As in past years, the year 2000 was a research, fact finding and strategic
planning year for the Company. Continued evaluation of the worldwide rubber
recycling industry yields valuable information. This information was used to
formulate the strategic direction of the Company with the first initiative on
January 8, 2001, with the acquisition of PolyTek Rubber & Recycling, Inc. Since
that time, the Company has acquired two other companies and has letters of
intent for the acquisitions of another. All identified acquisitions are part of
the vertical integration resident in the Company's overall strategic plan.

The year 2000 produced no revenues. Total expenses for the year were $2,434,396
which is a 65% increase over the 1999 total of $1, 474,531. The year 2000 was a
year the Company positioned itself for the planned launch of its strategic plan
in 2001. Research and development costs increased five

                                       16
<PAGE>   19


fold from $48,221 in 1999 to $247,309 in 2000. The increased costs are due to
the pilot plant becoming fully operational in Dayton, Ohio. The plant started
production of limited quantities of activated modified rubber powder (AMR) early
in the year and had approximately seven full-time employees. The plant was
established to prove that the characteristics of the AMR were conducive to use
by identified potential customers of the product. It also tested that the
various chemicals needed for the process were readily available in the U.S.
marketplace. All tests were very positive and proved that the technologies
acquired through the licensing agreements were viable for use in the rubber
manufacturing process.

General and administrative expenses increased 45% from $1,316,688 in 1999 to
$1,911,521 in the year 2000. The two major reasons for this were: 1) addition of
personnel into the senior management area, and 2) increased travel expenses to
further the research of the recycling industry and formulate the strategy to be
taken by the Company. Senior management has visited and researched all developed
regions of the world and had discussions with all major companies and
individuals in all fields and segments of the rubber recycling industry. The
senior management staff is 90% in place based on the segments of the market the
Company presently operates in.

Depreciation and amortization basically doubled from 1999 due to the start-up of
the Dayton facility. Expenses in 2000 were $188,198 compared to $92,496 in 1999.

The Company wrote off the remaining balance of the leasehold improvements in the
Dayton facility due to the move of the plant in April 2001.

As disclosed earlier in this document, on January 8, 2001 the Company moved from
being a development stage enterprise to being an operating manufacturing entity
with the acquisition of PolyTek Rubber & Recycling, Inc. With the other
acquisitions completed and letters of intent signed, the Company is progressing
with the strategic plan developed over the past several years. Much work must be
done to integrate the companies being acquired. Managements and philosophies
must be melded. A dysfunctional industry has to be organized to make the
industry work for suppliers, operators and customers.

Seasonality

Traditionally, the crumb rubber business has been seasonal in nature. Normal
yearly activity reflects the strongest shipping months are April through October
with slower months being November through March. The stronger shipping months
are due to the volumes of crumb rubber used in the asphalt rubber business. This
application is normally only done in the warmer months with the states of
Arizona, California, Texas and Florida being the main users. In slower months,
companies normally build the inventory stockpiles to ready themselves for the
next asphalt rubber season. During the heavy months, there are many times when
the supply is much less than the demand.

There are however, many other manufacturing segments that can and/or should be
using crumb rubber. It is the Company's task to market to all potential
customers in order to try and smooth out the seasonality aspect of the business.

Capital Expenditures

With the advancement of the Company to a manufacturing entity, the capital
expenditure needs have multiplied many fold. All plants acquired are in need of
upgrading of some equipment, major overhauls of others and regularly scheduled
maintenance programs in all of them. The Company is also anticipating a major
upgrade to the Company's systems requirements, both for


                                       17
<PAGE>   20

hardware and software. With the Company envisioning international operations,
the software used must be capable of handling all data, process and convert the
data to a common language and be fully supportable in each country. The Company
plans to expand each plant in order to meet the demands of the market year
round. The plan is to double the size of several of the plants to meet the
demands of their regional customers. The current cash flow of the Company will
not allow all of the capital expenditures requirements to take place. The
Company is actively seeking outside funding to meet these needs.

Factors That May Affect Future Results and Market Price of Stock

The Company operates in a dysfunctional industry and a rapidly changing
environment that involves numerous risks, some of which are beyond the Company's
control. The following discussion highlights some of these risks.

Revenue Growth and Economic Conditions - The revenue growth and profitability of
the Company's business depends on the overall demand for recycled rubber
materials, be it crumb rubber or activated modified rubber powder. The tire
industry is a significant user of recycled rubber and has the potential to
become more so. The tire industry is directly affected by the automobile
industry. Therefore, the Company's business also depends on general economic and
business conditions. A softening of demand in the automobile industry caused by
a weakening in the economy may result in decreased revenues or lower growth
rates. One of the challenges the Company faces is having the auto market become
a larger customer of the recycled rubber industry for the many components that
make an automobile.

Pricing - In the past, most manufacturers in the recycled rubber industry have
been unprofitable year after year. Much of this is due to the capital intensity
nature of the business and their unwillingness to pass these increased
operational costs through as price increases to their customers. Whether real or
merely perceived, there was reluctance to increase prices due to the fear of
loss of customers. With the overall condition of this industry, the Company
believes that the selling price of the products have to be increased to varying
degrees in order for the remaining companies to survive. The Company has no
guarantee that price increases will be accepted by their present customers. Some
of these customers may defect to rivals of the Company. Eventually, though the
Company believes there will be an equalization in the market between suppliers
and customers. The market has to work for all parties involved or eventually
there can be no market.

Hiring and Retention of Employees - The Company's continued growth and success
depends to a significant extent on the continued service of its senior
management and other key employees and the hiring of new qualified employees.
Competition for highly skilled business, research, technical and other personnel
is becoming more intense due to lower overall unemployment rates. The Company
expects to experience some increase in compensation costs but nothing to a
material degree. There can be no assurances the Company will be successful in
continuously recruiting new personnel and in retaining existing personnel. In
general, the Company does not have long-term employment or non-competition
agreements with its personnel. The loss of one or more key employees or the
Company's inability to attract additional qualified employees or retain other
employees could have a material adverse effect on the continued growth of the
Company.

Competitive Environments - The rubber recycling industry is a competitive
industry composed of many small producers that are highly regionalized. The
Company faces these competitors on a daily basis with our customer contacts. The
Company, however, believes that a national/international rubber recycling
operation will greatly enhance their ability to market to the larger
international customers of the recycling industry. There are no guarantees to

                                       18
<PAGE>   21

this, but the Company is firmly committed to this approach.

Uneven Patterns of Quarterly Operating Results - As previously stated, the
Company's revenues and incomes are truly seasonal as presently existing in the
PolyTek Rubber & Recycling, Inc. business. The Company is working towards
smoothing those cyclical trends. Vertical diversification is the approach the
Company has identified as one means to level out the revenues. Long-term
contracts with existing customers, contracts with non-asphalt rubber users and
the Company as an end user of the recycled rubber products are all approaches
being developed.

Future Acquisitions - As part of its business strategy, the Company has started
to make and expects to continue to make acquisitions, or significant investments
in, businesses that offer complementary products, services and technologies. Any
acquisition of a business is accompanied by certain risks. Those risks can
include disruption of the Company's ongoing business, distraction of management
from the Company's business, overpaying for the company or assets acquired,
difficulty of melding the operations and personnel of the acquired business into
the Company. Other risks are maintenance of standards, controls and policies and
procedures and possible alienation of customers with the integration of new
management personnel. Stock, rights to purchase stock, cash or any combination
thereof could be used in future acquisitions. Existing shareholder's stock
positions and earnings per share could be diluted as a result of future
acquisitions.

New Business Areas - The Company has done extensive research in the area of
activated modified rubber (AMR). To date, the Company has only prepared and
tested small amounts of the product in the Dayton, Ohio pilot plant. Although
the tests were all promising and presentation about the product have been made,
no full production orders have been received. The Company has full intentions of
moving forward with the development of a full-scale production facility for the
AMR product. There are no assurances the Company will generate adequate revenues
to sustain this operation even though tests may tell us otherwise.

Enforcement of the Company's Intellectual Property Rights - The Company relies
on a combination of patent, trademark, trade secrets, confidentiality procedures
and contractual procedures to protect its intellectual property rights. It may
still be possible for unauthorized third parties to copy certain portions of the
Company's products or to reverse engineer or obtain and use technology or other
information the Company considers proprietary. There are also no guarantees that
the intellectual property rights would survive legal challenge as to their
validity. As the Company moves into international markets, it must be understood
that certain countries do not offer the same level of protection to the
proprietary rights as do the laws of the United States. Therefore, there are no
assurances the Company can protect its proprietary technology against
unauthorized third parties copying or use. This could adversely affect the
Company's competitive position.

Possible Volatility of Stock Price - The market price of the Company's common
stock experiences fluctuations and will continue to fluctuate. The market price
can be significantly affected by factors such as new product announcement,
acquisition disclosures, quarterly variations in the Company's or its
competitors results of operations, price changes of the Company's products,
signing of long-term contracts, changes in growth rates of the Company and
general market conditions.

Item 8.  Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES


                                       19




<PAGE>   22
FINANCIAL STATEMENTS                                                     PAGE

Independent Auditor's Report                                             F-1

Consolidated Balance Sheet-December 31, 2000                             F-2

Consolidated Statements of Operations-December 31, 2000
and 1999 and For The Period From December 13, 1996                       F-3
(Date of Incorporation) to December 31, 2000

Consolidated Statements of Shareholders' Equity-For
The Period From December 13, 1996 (Date of Incorporation)                F-4
Through December 31, 2000.

Consolidated Statements of Cash Flows-Years Ended
December 31, 2000 and 1999 and For The Period From                       F-6
December 13, 1996 (Date of Incorporation) To
December 31, 2000

Notes to Consolidated Financial Statements                               F-7


<PAGE>   23





INDEPENDANT AUDITOR'S REPORT




Board of Directors
Landstar, Inc.
Scottsdale, Arizona

We have audited the accompanying consolidated balance sheet of Landstar, Inc. (a
development stage enterprise) as of December 31, 2000, and the related
statements of operations, shareholders' equity and cash flows for the years
ended December 31, 2000 and 1999 and the period from incorporation (December 13,
1996) through December 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 Landstar, Inc. (a development
stage enterprise) as of December 31, 2000, and the results of its operations and
its cash flows for the years ended December 31, 2000 and 1999 and the period
from incorporation (December 13, 1996) through December 31, 2000, in conformity
with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1, the Company is
in the development stage, has incurred significant losses since inception and
will require additional amounts of funding to fully implement its business plan.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. Management's plans in regard to these matters are also
described in Note 1. The accompanying financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

Hein + Associates LLP

Dallas, Texas
April 5, 2001


                                      F-1
<PAGE>   24


<TABLE>
<CAPTION>
                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 2000

                                     ASSETS
                                     ------

CURRENT ASSETS:
<S>                                                               <C>
   Cash                                                             $    29,542
   Accounts receivable                                                   10,371
   Prepaid expenses and deposits                                          5,942
                                                                    -----------
                  Total current assets                                   45,855

PLANT AND EQUIPMENT, net:
   Plant and laboratory equipment                                       785,956
   Office equipment                                                      31,425
   Less accumulated depreciation                                        (86,842)
                                                                    -----------
                                                                        730,539

INTANGIBLE ASSET - technology rights, net of
  accumulated amortization of $235,380                                  649,624
                                                                    -----------
                  Total assets                                      $ 1,426,018
                                                                    ===========

                   LIABILITIES AND SHAREHOLDERS' EQUITY
                   -------------------------------------

CURRENT LIABILITIES:
   Accounts payable and accrued expenses                            $   842,416
   Advances from related parties                                        250,950
                                                                    -----------
                  Total current liabilities                           1,093,366

COMMITMENT (Note 3)

SHAREHOLDERS' EQUITY:

   Common stock, $.001 par value, 100,000,000 shares
     authorized; 44,547,524 shares issued and
     outstanding                                                         44,547
   Additional paid-in capital                                         6,029,499
   Common stock subscriptions, 468,000 shares                           117,000
   Deficit accumulated in the development stage                      (5,858,394)
                                                                    -----------
                  Total shareholders' equity                            332,652
                                                                    -----------

                  Total liabilities and shareholders' equity        $ 1,426,018
                                                                    ===========
</TABLE>




See accompanying notes to these consolidated financial statements.

                                      F-2

<PAGE>   25



                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                        FOR THE PERIOD FROM
                                                                         DECEMBER 13, 1996
                                                                              (DATE OF
                                                                          INCORPORATION) TO
                                             YEAR ENDED DECEMBER 31,
                                          ---------------------------
                                               2000           1999        DECEMBER 31, 2000
                                          ------------    ------------    -----------------
<S>                                      <C>             <C>           <C>
REVENUE                                   $       --      $       --      $       --

EXPENSES:

    Research and development                   247,309          48,221         295,530
    General and administrative               1,911,521       1,316,688       3,909,348
    Depreciation and amortization              188,198          92,496         338,822
    Write off of leasehold improvements         66,424            --            66,424
    Interest, net                               20,944          17,126       1,148,270
                                          ------------    ------------    ------------
                   Total expenses            2,434,396       1,474,531       5,758,394
                                          ------------    ------------    ------------

                   NET LOSS                 (2,434,396)     (1,474,531)   $ (5,758,394)
                                          ============    ============    ============

NET LOSS PER SHARE
(basic and diluted)                        $      (.06)   $      (.05)
                                           ===========    ===========


 WEIGHTED AVERAGE SHARES OUTSTANDING        41,324,457      30,298,000
                                          ============    ============
</TABLE>



See accompanying notes to these consolidated financial statements.


                                      F-3
<PAGE>   26




                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
         FOR THE PERIOD FROM DECEMBER 13, 1996 (DATE OF INCORPORATION)
                            THROUGH DECEMBER 31, 2000
<TABLE>
<CAPTION>
                                                                                ADDITIONAL      DEFICIT
                                                                                 PAID-IN      ACCUMULATED
                                                         COMMON STOCK          CAPITAL AND      IN THE
                                                 ---------------------------  COMMON STOCK   DEVELOPMENT
                                                   SHARES         AMOUNT      SUBSCRIPTIONS      STAGE          TOTAL
                                                 -----------    -----------    -----------    -----------    -----------
<S>                                            <C>             <C>            <C>             <C>           <C>
Shares issued upon incorporation
  at $.68 per share                                      100    $      --      $        68    $      --      $        68
Net loss for year                                       --             --             --         (299,277)      (299,277)
                                                 -----------    -----------    -----------    -----------    -----------
BALANCES, December 31, 1997                              100           --               68       (299,277)      (299,209)

Shares issued to founders for
  pre-incorporation and start-up phase
  services for cash at $.0068 per share in
  March, July and September 1998                   7,260,000          7,260         42,108           --           49,368



Shares issued in March 1998 for reduction in
  related party advances made during 1997 at
  $.102 per share                                  5,000,000          5,000        505,000           --          510,000


Shares issued for cash at $.34 per share
  during April through June 1998                   2,464,000          2,464        835,296           --          837,760

Value of beneficial conversion feature
  associated with debenture                             --             --        1,100,000           --        1,100,000
Net loss for year                                       --             --             --       (1,550,190)    (1,550,190)
                                                 -----------    -----------    -----------    -----------    -----------

BALANCES, December 31, 1998                       14,724,100         14,724      2,482,472     (1,849,467)       647,729

Shares issued for cash in February and March
  1999 at $.25 per share                           2,762,000          2,762        687,738           --          690,500


Shares issued in March 1999 to acquire net
  assets of Landstar                               2,600,000          2,600         (2,600)          --             --

Adjustment for RRC shareholders not
  participating in reverse acquisition of
  Landstar                                          (224,000)          (224)           224           --             --


Shares issued in March 1999 to acquire U.S.
  Joint Venture technology rights                  8,500,000          8,500         (8,500)          --             --

Payment to related party for technology rights          --             --             --         (100,000)      (100,000)


Shares issued in March 1999 as finder's
  fee at $.25 per share                              260,000            260         64,740           --           65,000


Shares issued in September 1999 to retire
  debenture due related party at $.067 per
  share; valued at total of $.25 per share in
  1998                                             6,000,000          6,000        394,000           --          400,000
</TABLE>


                                      F-4
<PAGE>   27

<TABLE>
<S>                                            <C>             <C>            <C>             <C>           <C>
Shares issued in September 1999 upon
  exercise of warrants for cash at $.25 per
  share                                              934,000            934        232,566           --          233,500

Shares issued in September 1999 for cash
  at $.333 per share                                 300,000            300         99,700           --          100,000

Shares issued in December 1999 for cash
  at $.208 per share                               1,440,024          1,440        298,560           --          300,000

Common stock subscriptions received at
  $.25 per share                                        --             --           50,000           --           50,000

Net loss for year                                       --             --             --       (1,474,531)    (1,474,531)
                                                 -----------    -----------    -----------    -----------    -----------

BALANCES, December 31, 1999                       37,296,124         37,296      4,298,900     (3,423,998)       912,198




Shares issued to subscribers                         200,000            200           (200)          --             --
Shares issued for cash during
  2000 at $.25 per share                           5,591,400          5,591      1,392,259           --        1,397,850
Shares issued in settlement of accounts
  payable during 2000 at $.25 per share              540,000            540        134,460           --          135,000
Shares issued for services during
  2000 at $.20 per share                             500,000            500         99,500           --          100,000
Shares issued for services during
  2000 at $.25 per share                             420,000            420        104,580           --          105,000
Common stock subscriptions received at
  $.25 per share                                        --             --          117,000           --          117,000
Net loss for year                                       --             --             --       (2,434,396)    (2,434,396)
                                                 -----------    -----------    -----------    -----------    -----------

BALANCES, December 31, 2000                       44,547,524    $    44,547    $ 6,146,499     (5,858,394)   $   332,652
                                                 ===========    ===========    ===========    ===========    ===========
</TABLE>


See accompanying notes to these consolidated financial statements.

                                      F-5

<PAGE>   28


                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                      FOR THE PERIOD FROM
                                                                                       DECEMBER 13, 1996
                                                                                           (DATE OF
                                                              YEAR ENDED DECEMBER 31,    INCORPORATION) TO
                                                            -------------------------     DECEMBER 31,
                                                                 2000          1999           2000
                                                            -----------    -----------    -----------
<S>                                                          <C>            <C>           <C>
OPERATING ACTIVITIES:
    Net loss                                                 (2,434,396)    (1,474,531)   $(5,758,394)
    Adjustments to reconcile net loss to net cash used
      in operating activities:
        Depreciation and amortization                           188,198         92,496        338,822
        Value of beneficial conversion feature                     --             --        1,100,000
        Shares issued for services                              205,000         65,000        270,000
        Write off of leasehold improvements                      66,424           --           66,424
        Changes in operating assets and liabilities:
          Current assets                                         17,675        (27,021)       (16,313)
          Accounts payable and accrued expenses                 662,117        292,761        842,416
                                                            -----------    -----------    -----------
        Net cash used in operating activities                (1,294,982)    (1,051,295)    (3,157,045)
                                                            -----------    -----------    -----------

INVESTING ACTIVITIES:
    Acquisition of technology rights                               --          (10,672)      (885,004)
    Payment to related party for technology rights                 --         (100,000)      (100,000)
    Additions to plant and equipment                           (203,488)      (696,917)      (900,405)
                                                            -----------    -----------    -----------
        Net cash used in investing activities                  (203,488)      (807,589)    (1,885,409)
                                                            -----------    -----------    -----------

FINANCING ACTIVITIES:
    Proceeds from debenture                                        --          284,400        400,000
    Advances from related parties                                 3,120        244,200        918,118
    Repayment of loan                                              --          (34,000)          --
    Proceeds from issuance of common stock                    1,514,850      1,374,000      3,753,878
                                                            -----------    -----------    -----------
        Net cash provided by financing activities             1,517,970      1,868,600      5,071,996
                                                            -----------    -----------    -----------

NET INCREASE IN CASH                                             19,500          9,716         29,542

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                 10,042            326           --
                                                            -----------    -----------    -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                  $    29,542    $    10,042    $    29,542
                                                            ===========    ===========    ===========

SUPPLEMENTAL INFORMATION - cash paid during the period
    for interest                                            $    20,944    $    17,159    $    20,944
                                                            ===========    ===========    ===========

NON-CASH TRANSACTIONS -
Shares issued to retire liabilities                         $   135,000    $   400,000    $ 1,067,168
                                                            ===========    ===========    ===========
</TABLE>

See accompanying notes to these consolidated financial statements.

                                      F-6
<PAGE>   29


1.       ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------------

ORGANIZATION AND PRESENTATION
Landstar, Inc. ("Landstar") was incorporated on May 4, 1998 as a Nevada
corporation. Landstar was basically inactive until it acquired approximately
98.5% of the common stock of Rebound Rubber Corporation ("RRC") on March 31,
1999. RRC is involved in the development of certain technology rights for the
recycling of rubber. In the acquisition of RRC, the shareholders of RRC obtained
the controlling interest of the combined entity, and RRC's management became the
management of the combined entity. For accounting purposes, the merger is
treated as a recapitalization of RRC under the capital structure of Landstar and
an acquisition of the net assets of Landstar. Therefore, the historical
financial statements included herein are those of RRC, but reflect the legal
capital structure of Landstar. RRC, Landstar and a wholly-owned subsidiary,
Landstar (Ohio) L.L.C., are referred to collectively as "the Company". The
Company has had no revenues from operations and is considered to be in the
development stage at December 31, 2000.

The accompanying financial statements have been prepared in accordance with U.S.
generally accepted accounting principles.

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany accounts and transactions have
been eliminated in consolidation.

FOREIGN CURRENCY TRANSLATION
Gains and losses from the effects of exchange rate fluctuations on transactions
denominated in foreign currencies are included in results of operations. Assets
and liabilities of the Company's Canadian operations are translated into U.S.
dollars at period-end exchange rates, and their revenues and expenses are
translated at average exchange rates for the period. Translation adjustments are
accumulated in a separate component of stockholders' equity until a foreign
operation is sold or substantially liquidated.

LOSS PER COMMON SHARE
Basic loss per common share is based upon the weighted average number of common
shares outstanding. Diluted loss per share also considers common stock
equivalents in the determination of weighted average shares, unless the common
stock equivalents would be anti-dilutive.

PLANT AND EQUIPMENT
Plant and equipment is recorded at cost, less accumulated depreciation.
Depreciation is calculated using the straight-line method over the estimated
useful lives of the assets, generally five to ten years.

CASH EQUIVALENTS
For purposes of reporting cash flows, the Company considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents.

INCOME TAXES
The Company accounts for deferred income taxes on the liability method, whereby
deferred income taxes are provided for temporary differences between financial
statements and income tax reporting amounts. The Company files a Canadian tax
return for RRC and U.S. tax returns for LandStar and LandStar (Ohio) L.L.C.

                                      F-7
<PAGE>   30

FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash, accounts receivable, accounts payable and advances
from related parties approximate fair value because of the short maturity of
those instruments.

USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Company's management to make estimates and
assumptions that affect the amounts reported in these financial statements and
accompanying notes. Actual results could differ from those estimates.
Significant estimates are required in the selection of useful lives for
amortization of intangible assets. It is at least reasonably possible these
estimates could be revised in the near term and the revisions could be material.

COMPREHENSIVE INCOME (LOSS)
Comprehensive income is defined as all changes in shareholders' equity,
exclusive of transactions with owners, such as capital investments.
Comprehensive income or loss includes net income or loss, changes in certain
assets and liabilities that are reported directly in equity such as translation
adjustments on investments in foreign subsidiaries, and certain changes in
minimum pension liabilities. The Company's comprehensive loss was materially
equal to its net loss for all periods presented.

LONG-LIVED ASSETS
In the event that facts and circumstances indicate that the cost of long-lived
assets may be impaired, an evaluation of recoverability would be performed. If
an evaluation is required, the estimated future undiscounted cash flows
associated with the asset would be compared to the asset's carrying amount to
determine if a write-down to market value or discounted cash flow value is
required.

TECHNOLOGY RIGHTS
The acquisition costs of the Company's technology rights for the recycling of
rubber have been capitalized and are being amortized over ten years.

CONTINUATION AS A GOING CONCERN
The accompanying financial statements and related footnotes have been prepared
assuming the Company will continue as a going concern. The Company is in the
development stage, has incurred significant losses since inception and will
require additional funding to fully implement its business plan. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. The ability of the Company to continue as a going concern and carry out
its business plan is dependant on the Company raising capital and achieving
projections of sales and earnings reflected in the business plan. The Company
intends to raise capital through private placements and through a public
offering, but there is no assurance that the Company will be successful in
raising additional capital by these means.

2.       ACQUISITION OF TECHNOLOGY RIGHTS

In 1997 and 1998, the Company paid a total of approximately $874,000 to the
Guangzhou Research Institute for Reclaimed Resources ("GRI"), a state owned
enterprise in the Peoples Republic of China, for the rights to use certain
technology for the recycling of rubber. In March 1999, simultaneous with the
merger with LandStar described in Note 1, the Company paid $100,000 and issued
8,500,000 shares of common stock to acquire certain rights to the rubber
recycling technology, which were held by United Trans-western, Inc. ("UTW"). Two
officers and directors of the Company are also officers and directors of UTW. In
addition, the Company paid certain costs associated with this acquisition to a
third party of $138,750. Due to the non-arms length nature

                                      F-8
<PAGE>   31


of the transaction, the stock issued UTW was recorded based on the historical
cost of UTW in the technology rights which was zero. The cash payment of
$100,000 to UTW was accounted for as a capital distribution.

3.       COMMITMENT

The Company leases office space from an entity affiliated with an officer and
director of the Company for $4,750 per month. The term of the lease is through
December 2004. The Company also leases warehouse space for its plant facility on
a month-to-month basis. Rental expense was $114,020 and $60,355, respectively
for the years ended December 31, 2000 and 1999.

Future minimum lease payments as of December 31, 2000 were as follows:

<TABLE>
<CAPTION>
                Year ending December 31,
                ------------------------
<S>                                                      <C>
                          2001                                 $       57,000
                          2002                                         57,000
                          2003                                         57,000
                          2004                                         57,000
                                                               --------------
                                                               $      228,000
                                                               --------------
</TABLE>

The Company has employment agreements with two individuals that require total
annual salaries of $228,000. The agreements expire August 2005 if not terminated
earlier by either party. The agreements require that the employees be paid one
year salary if terminated without cause.

4.        INCOME TAXES

     The components of the Company's deferred tax accounts at December 31, 2000
are as follows:

<TABLE>
<S>                                                               <C>
Deferred tax asset - net operating loss carryforwards                $ 2,200,000
Deferred tax liability - development costs capitalized for tax and
    expensed for book                                                   (140,000)
Deferred tax asset valuation allowance                                 2,060,000
                                                                     -----------
Net deferred tax asset                                               $      --
</TABLE>

At December 31, 2000, the Company had net operating loss carryovers of
approximately $3,600,000 for United States tax purposes and approximately
$1,900,000 for Canadian tax purposes. If not utilized, the United States net
operating loss will expire in 2018 through 2020; and the Canadian tax loss will
expire in 2005 through 2007. The Company's United States net operating loss may
be subject to certain annual limitations.

5. RELATED PARTY TRANSACTIONS

The Company has received funding from Kentucky Financial, Inc. ("KFI") since
inception. KFI is a major shareholder of the Company and one of KFI's principals
is an officer and director of the Company. Amounts advanced by KFI during 1997
of $510,000 were converted to common stock in March 1998, based on a prior
understanding, at $.102 per share. The shares were recorded at the conversion
price of $.102 per share based on the estimated value of the shares during the
period of the advances. A debenture payable to KFI and other investors of
$400,000 for loans made in mid to late 1998, was converted to 6,000,000 shares
of common stock in September 1999 at $.067 per share that allowed conversion to
common stock at $0.67 per share. The conversion was made pursuant to an
agreement dated September 15, 1998 anytime until September 1999. The estimated
value of the common stock at the issuance of the debenture was $0.25 per share.
The excess of the estimated value over the


                                      F-9

<PAGE>   32

conversion price was deemed to be a beneficial conversion feature. This amount,
which totaled $1,100,000 was recorded as interest expense in 1998.

In March, July and September 1998, the Company issued a total of 7,260,000
shares of common stock, based on prior agreements, at $.0068 per share to
founders of the Company, who are currently directors and other affiliated
parties. The shares were issued for services related to the formation and
start-up of the Company. The shares were sold at the estimated value of the
stock at the time the services were performed.

The Company acquired certain technology rights from UTW, a related party, as
described in Note 2. A substantial amount of UTW's funding has been provided by
shareholders of the Company.

At December 31, 2000, the Company had $138,960 of advances due KFI, $51,990 due
an entity affiliated with another director of the Company and $60,000 to another
director. These advances are non-interest bearing and contain no specific
repayment terms.

The Company incurred approximately $250,000 of costs with an engineering firm
which is owned by a relative of a director for project management and
engineering services during 2000 and $145,000 during 1999.

6. COMMON STOCK WARRANTS

In connection with a sale of stock in December 1999, the Company granted the
investors warrants to purchase a total of 1,440,024 shares of common stock at
$2.00 per share anytime through December 2000. All these warrants expired during
2000 without being exercised. In connection with stock sales in 2000, the
Company granted warrants to investors to purchase a total of 5,491,400 shares of
common stock at $2.00 per share, within one year of issue. All these warrants
will expire by October 2001 if not exercised.

7. SUBSEQUENT EVENTS

In January 2001, the Company agreed to acquire all the capital shares of a
company engaged in rubber recycling for a $30,000,000 promissory note. The
agreement requires the Company to replace the promissory note in March 2001 with
newly-authorized preferred stock, $4,000,000 of which may be "put" back to the
Company under certain conditions.

In February 2001, the Company entered into a letter of intent to acquire another
company engaged in rubber recycling for $16,000,000. Consummation of this
transaction is subject to completion of a formal purchase and sale agreement and
the Company arranging the necessary financing.

Item 9.  Changes In and Disagreements with Accountants
         on Accounting and Financial Disclosure

None

                                      F-10
<PAGE>   33




                                    PART III

Item 10. Directors and Executive Officers of the Registrant

The names, ages and positions of all directors and executive officers of the
Company as of March 31, 2001 are listed below, followed by a brief account of
their business experience during the past five years. The Company's Board of
Directors currently consists of six directors, three of whom are employees of
the Company. Each director serves a term of one year until the next annual
meeting of shareholders and until the election and qualification of his
successor, or his death, resignation or removal. The executive officers of the
Company are appointed by the Board of Directors and serve until the appointment
and qualification of their successors and until their death, resignation or
removal. There are no family relationships between any of the directors and
executive officers. There are no voting agreements or other agreements by which
any director is to be elected as a director. There are no arrangements or
understandings between any director or executive officer and any other person
pursuant to which any person was selected as director or executive officer. The
directors of the Company are as follows:

Directors

<TABLE>
<CAPTION>
                    NAME                  AGE                                POSITION
<S>                                    <C>       <C>
        D. Elroy Fimrite                  51       President, Chief Executive Officer and Chairman of the Board

        Philip Pimlott                    52       Vice President of Information Technology and Director

        Dr. Ian Hadfield                  56       Director

        Scott B. Randolph                 47       Director

        Daniel N. McVicker, Jr.           40       Executive Vice President & General Counsel, Director and
                                                   Secretary

        Carl Buccellato                   58       Director
</TABLE>


D. Elroy Fimrite has served as President, Chief Executive Officer and Chairman
of the Board since January 29, 1999. Mr. Fimrite is a professional accountant
with a business degree with over 26 years of diverse business experience
including auditing, controller, treasury, commercial real estate development and
general management. Since January 1996, Mr. Fimrite has served as President and
Director of Kentucky Financial, Inc., a private company that has provided
management and financial services to the Company (see "Certain Relationships and
Related Transactions"). He is President and Director of Rebound Rubber Corp. and
served as an officer and Director of United Trans-Western, Inc., a Delaware
public company, from May 1997 to June 1999.

Philip Pimlott, was appointed to the Board of Directors and appointed as
Executive Vice President of the Company in November 1999. From August 1989 to
November 1999, Mr. Pimlott served as a partner and a co-owner of Syscom
Consulting Inc., a company located in Victoria, British Columbia providing
computer systems support. He has been active in that business for the past ten
years and has broad management experience.

Dr. Ian Hadfield, was appointed to the Board of Directors of the Company in
November 1999. Dr. Hadfield has practiced periodontal dentistry since

                                       20
<PAGE>   34


September 1970 in Victoria, British Columbia. He is currently President of Dr. K
Ian Hadfield, Inc. which is the professional corporation in which the dental
practice is operated.

Scott B. Randolph, was appointed to the Board of Directors of the Company in
November 1999. Mr. Randolph also currently serves as Vice-President of
Consulting Services for Oil and Gas Consultants, Inc. in Tulsa Oklahoma and has
been in that position since November 1994. Mr. Randolph has served as a director
of United Trans-Western, Inc., a Delaware public company, since May 1997.

Daniel N. McVicker, Jr. was appointed to the Board of Directors of the Company
in October 2000. He also serves the Company as an executive officer in the
capacity of Executive Vice President and General Counsel. Prior to joining the
Company, Mr. McVicker was President and Chief Operating Officer of Rubber
Recovery, Inc., a tire recycling concern. Prior to that, he was the Law
Department Manager with Bridgestone/Firestone, Inc., the principal subsidiary of
Bridgestone Corporation, the world's largest tire and rubber company.


Carl Buccellato joined the Board of Directors of the Company in October 2000.
Mr. Buccellato was co-founder, Chief Executive Officer and President of the
Homeowners Association of America and Chief Executive Officer, President and
Chairman of the Board of Homeowners Group, Inc. These companies developed the
largest member organization in the real estate industry with 27,000
participating firms and 247,000 real estate agents. This group participated in
one of every four home resale transactions in the United States. Mr. Buccellato
serves on a number of corporate Board of Directors and also the Board of
Trustees of St. Thomas University.


EXECUTIVE OFFICERS

In addition to Meesrs. Fimrite, Pimlott and McVicker, the Company's executive
officers are as follows:

       NAME                 AGE                         POSITION

Michael C. Elles            41        Executive Vice President - Operations

Michael F. Jones            50        Vice President and Chief Financial Officer

Mr. Mike Elles, 41, joined the Company as Vice President of Business Development
in August 2000. He has past experience in business start-up, operations, human
resource management and business development. Mr. Elles has ten years experience
in the rubber recycling industry. He was Director of Sales for Granutech-Saturn
Systems Corporation and was also Chief Executive Officer, Partner and Vice
President of SPM Texas Tire Recyclers, Inc. Mr. Elles was promoted to the
executive Vice President position in March 2001.

Mr. Jones, joined the Company on January 1, 2001 as Vice President and Chief
Financial Officer. Prior to that, Mr. Jones was the Vice President of Finance,
Planning and Control for Bayer Clothing Group, Inc., the largest privately held
manufacturer of men's tailored clothing in the United States. He initially
served as the Vice President of Strategic Planning for Bayer. Prior to Bayer, he
served in senior accounting and strategic planning roles with Homeowners Group,
Inc., a public company serving the real estate industry.

                                      21
<PAGE>   35

Information Regarding the Board of Directors

During 2000, the Company's Board of Directors met or took action by written
consent four times and convened one formal meeting. The non-formal meetings were
conducted by telephone and fax and documented by consent resolutions signed by
all directors as physical distance restricted attendance at formal meetings for
all directors. All directors in office at the time of the meetings attended all
meetings. The Company does not currently have an audit committee or a
compensation committee, although it intends to establish them during the 2001
fiscal year.

Compensation of Directors

During 2000, Company directors were not compensated for their service on the
Company's Board of Directors. Expenses to attend meetings were reimbursed to the
directors.

Compliance with Section 16(A) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers and any persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all forms they file pursuant to
Section 16(a). To the Company's knowledge, based solely on review of the copies
of such reports furnished to the Company and written representations that no
other reports were required during the year ended December 31, 2000, all Section
16(a) filing requirements applicable to its officers, directors and greater than
ten percent beneficial owners were complied with. Form 3 was filed late for all
executive officers and directors. A Form 4 for Phillip Pimlott and another for
Ian Hadfield were also filed late. At this time all required forms have been
filed to the Company's knowledge.

Item 11. Executive Compensation

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth all compensation paid to or earned by the
Company's Chief Executive Officer for the fiscal years ended December 31, 2000,
1999 and 1998. No other executive officer of the Company received compensation
in salary and bonus in excess of $100,000 during 2000.

<TABLE>
<CAPTION>
 Name and Principal       Year       Annual           Bonus        Other
       Position                    Compensation      --------       Annual
       --------                      Salary                      Compensation
                                     ------                      ------------
<S>                      <C>        <C>               <C>       <C>
D. Elroy Fimrite         2000       $     -               -            -
Chairman, Chief          1999         90,000              -            -
Executive Officer        1998         90,000              -            -
and President
</TABLE>

Stock Options

The Company does not presently have any type of stock option plans in place.
Therefore no options have been issued at this time.


                                       22
<PAGE>   36

Employment Agreements

Effective August 15, 2000, the Company entered into a five-year employment
agreement with Michael C. Elles to serve as Vice President Business Development.
Under the terms of such Agreement, Mr. Elles was entitled to an initial base
salary of $96,000 subject to annual reviews and increases. Mr. Elles is entitled
to participate in bonus plans and any senior management stock option plan
approved by the Board of Directors. Effective January 1, 2001, Mr. Elles' base
salary was adjusted to $132,000 to align his compensation with other members of
the senior management team.

Effective January 1, 2001, the Company entered into a five year employment
agreement with Michael F. Jones to serve as Vice President and Chief Financial
Officer. Under the terms of such Agreement, Mr. Jones is entitled to an initial
base salary of $132,000 subject to annual reviews and increases. Mr. Jones is
entitled to participate in bonus plans and any senior management stock option
plan approved by the Board of Directors.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth as of March 31, 2001, the name and the number of
shares of Company common stock, $.001 par value per share, held of record or
beneficially by the following persons: (1) each director of the Company; (2) the
Company's Chief Executive Officer; (3) executive officers of the Company; (4)
all directors and executive officers of the Company as a group; and (5) each
person who is known by the Company to beneficially own more than 5% of the
common stock. Except as otherwise noted, the address of each such person is c/o
LandStar, Inc., 15825 N. 71st Street, Suite 205, Scottsdale, AZ 85254.
Shares of Common Stock Beneficially Owned (1)

<TABLE>
<CAPTION>
Beneficial Owner                               No. of Shares        Percent of Total (2)
----------------                               -------------        --------------------
<S>                                          <C>                      <C>
D. Elroy Fimrite (3)                              16,100,100               35.5%

Dr. Ian Hadfield (4)                                 515,000                1.1

Philip Pimlott   (5)                                 290,000                 *

Scott B. Randolph                                         --                 --

Daniel N. McVicker                                        --                 --

Carl Buccellato                                           --                 --

United Trans-Western Inc.(6)                       8,500,000                18.7

Kentucky Financial Inc. (8)                        5,600,100                12.3

All executive officers and directors as a         16,905,100               37.3%
group(eight persons) (8)
* Less than 1%
</TABLE>

(1) This table is based on information supplied by executive officers, directors
and shareholders. Subject to applicable community property laws, each
shareholder named in the table has sole voting and investment power with respect
to the shares set forth opposite such shareholder's name.

                                       23
<PAGE>   37

(2) Based on 45,354,524 shares of common stock issued and outstanding as of
March 31, 2001.
(3) Includes 5,600,100 shares of common stock held of record by Kentucky
Financial, Inc., a company owned by members of Mr. Fimrite's family and for
which Mr. Fimrite serves as an officer and director; Mr. Fimrite disclaims
beneficial ownership over all of such shares except to the extent of his
pecuniary interest therein. The amount beneficially owned by Mr. Fimrite does
not include 8,500,000 shares held by United Trans-Western, Inc., a public
company for which Mr. Fimrite formerly served as an officer and director. Mr.
Fimrite disclaims beneficial ownership over all of such shares except to the
extent of his pecuniary interest therein. All of the shares beneficially owned
by Mr. Fimrite are subject to the terms of a voluntary pooling agreement,
pursuant to which he has agreed to certain transfer restrictions on the shares
over a two-year period following closing of the acquisition of Rebound Rubber on
March 31, 1999. See "Certain Relationships and Related Transactions."
(4) Of the shares beneficially owned by Dr. Hadfield, 480,000 shares are subject
to the terms of a voluntary pooling agreement, pursuant to which he has agreed
to certain transfer restrictions on the shares over a eighteen month period
following closing of the acquisition of Rebound Rubber on March 31, 1999. See
"Certain Relationships and Related Transactions."
(5) Includes 35,000 shares of common stock held of record by Five Star Systems,
Ltd., a company for which Mr. Pimlott serves as an officer, director and
shareholder; Mr. Pimlott disclaims beneficial ownership over all of such shares
except to the extent of his pecuniary interest therein. Of the shares
beneficially owned by Mr. Pimlott, 140,000 shares are subject to the terms of a
voluntary pooling agreement, pursuant to which he has agreed to certain transfer
restrictions on the shares over an eighteen month period following closing of
the acquisition of Rebound Rubber on March 31, 1999. See "Certain Relationships
and Related Transactions."
(6) The shares beneficially owned by United Trans-Western, Inc. were issued in
connection with the acquisition by LandStar in March 1999 of United
Trans-Western's joint venture rights to the rubber de-vulcanization technology,
and are subject to the terms of a voluntary pooling agreement, pursuant to which
the holder has agreed to certain transfer restrictions on the shares over a
two-year period following closing of the acquisition on March 31, 1999. See
"Certain Relationships and Related Transactions." Mr. Fimrite is a former
officer and director of United Trans-Western, Inc.
(7) All of the shares beneficially owned by Kentucky Financial Inc. are subject
to the terms of a voluntary pooling agreement, pursuant to which the holder has
agreed to certain transfer restrictions on the shares over a two-year period
following closing of the acquisition of Rebound Rubber on March 31, 1999.Mr.
Fimrite serves as president and director of Kentucky Financial Inc. See "Certain
Relationships and Related Transactions."
(8) Consists of Messrs. Fimrite, Hadfield, Pimlott, McVicker, Buccellato,
Randolph, Michael C. Elles and Michael F. Jones. See "Directors and Executive
Officers."

Item 13. Certain Relationships and Related Transactions

On December 28, 1998, the Company entered into a share exchange agreement with
Rebound Rubber Corp. and substantially all of the shareholders of Rebound Rubber
Corp. This agreement provided for the issuance of 14,500,100 shares of Company
common stock in exchange for substantially all of the issued and outstanding
shares of Rebound Rubber Corp., at a deemed value of $.25 per share or a total
purchase price of $3,681,025. The acquisition was effective on March 31, 1999.

On December 28, 1998, the Company entered into a purchase agreement with United
Trans-Western, Inc. to acquire certain joint venture rights held by United
Trans-Western, Inc. under a joint venture agreement between it and

                                       24
<PAGE>   38



Rebound Rubber Corp. relating to rubber recycling technology. On March 31, 1999,
effective upon the share exchange with Rebound Rubber, the Company closed on the
transaction with United Trans-Western, Inc. and issued 8,500,000 share of common
stock (valued at $.25 per share) and paid $100,000 cash. United Trans-Western,
Inc. further agreed that all shares would be subject to transfer restrictions
pursuant to a two-year voluntary pooling agreement (in addition to any
restrictions imposed by law). Mr. Fimrite, the Company's Chief Executive
Officer, is a former officer and director of United Trans-Western, Inc.

On December 28, 1998, in connection with the share exchange agreement, the
shareholders of Rebound Rubber Corp. who received shares of Company common stock
also entered into a voluntary pooling agreement. Under the voluntary pooling
agreement, each shareholder agreed to certain restrictions on the transfer of
their shares (in addition to any transfer restrictions imposed on them by
applicable law) for a period of 18 months following March 31, 1999, the date on
which the share exchange became effective. Under the voluntary pooling
agreement, each shareholder's shares are to be released from the transfer
restrictions at the following rate: 10% released six months after the closing on
March 31, 1999; an additional 15% to be released nine months after the closing
on March 31, 1999; an additional 20% to be released 12 months after the closing
on March 31, 1999; an additional 25% to be released 15 months after the closing
on March 31, 1999; and the remainder to be released 18 months after the closing
on March 31, 1999. In addition, certain affiliates of Rebound Rubber Corp. and
United Trans-Western Inc. orally agreed to be bound by a further voluntary
pooling agreement, pursuant to which each holder agreed to additional transfer
restrictions on their shares for a period of two years through March 31, 2001.

The Company, and its predecessor-in-interest Rebound Rubber Corp., have
previously received funding from Kentucky Financial, Inc., a corporation owned
by members of Mr. Fimrite's family and for which Mr. Fimrite serves as an
officer and director. On September 15, 1998, Kentucky Financial, Inc. entered
into a standby financing agreement with Rebound Rubber Corp. pursuant to which
Kentucky Financial, Inc. provided interim financing to Rebound Rubber Corp. in
the amount of $300,000, evidenced by a convertible debenture. In consideration
for the financing, Rebound Rubber Corp. paid to Kentucky Financial, Inc. a fee
of $15,000, representing five percent of the financing amount. The convertible
debenture had a term of one year and was convertible into units (each unit
consisting of one share of common stock and one stock purchase warrant to
purchase an additional share of common stock) at the following rates: if
converted prior to September 30, 1999, a conversion rate of $.10 per share for a
maximum of 3,000,000 shares plus 3,000,000 warrants with an exercise price of
$.10 per share; if converted after September 20, 1999 and prior to September 30,
2001, a conversion rate of $.20 per share for a maximum of 1,500,000 shares plus
1,500,000 warrants with an exercise price of $.20 per share; and if converted
after September 20, 2001 and prior to September 30, 2003, a conversion rate of
$.30 per share for a maximum of 1,000,000 shares plus 1,000,000 warrants with an
exercise price of $.30 per share. As a result of the share exchange with Rebound
Rubber Corp. in March 1999, the Company assumed Rebound Rubber Corp.'s
obligations under the convertible debenture. Subsequently, in September 1999 the
holders of the convertible debentures converted the outstanding principal into
3,000,000 shares of Company common stock at a conversion rate of $.10 per share
and exercised in full their stock purchase warrants for an additional 3,000,000
shares of Company common stock at an exercise price of $.10 per share.

The Company leases approximately 3,300 square feet of office space in the
LandStar building, Victoria, British Columbia, Canada where offices are located.
The lease agreement is with Carey Holdings Ltd., a company in which Mr. D.E.
Fimrite, president and director of LandStar, has a financial

                                       25
<PAGE>   39


interest. The lease agreement, effective January 1, 2000 is for a term of five
years through December 31, 2004, at a monthly lease rate of $4,163 plus
applicable additional rent for common costs. The building is a multi-tenant
facility and the rental rate is equivalent to rental rates paid by other tenants
within the facility for comparable space. The Company believes that the terms of
its office lease are at least as favorable as those the Company could obtain
from an independent third party.

During 1998 and 1999, the Company was obligated under a management services
agreement entered into by Rebound Rubber Corp. with Kentucky Financial Inc., a
corporation owned by members of Mr. Fimrite's family and for which Mr. Fimrite
serves as president and director. Under this agreement, Kentucky Financial
provided management services to the Company and it's subsidiaries at a rate of
$11,625 (CDN) per month (representing approximately $7,500 (US) per month or
$90,000 (US) annually based on current exchange rates). The management services
include supplying the Company with a full-time Chief Executive Officer, a
position filled by Mr. Fimrite throughout the term of the agreement. This
agreement terminated on December 31, 1999 Currently, the Company has an oral,
at-will agreement present pursuant to which it is paying $12,000 US per month
($144,000 annualized) for Mr. Fimrite's services.

On March 31, 1999, the Company closed on the transactions contemplated by the
share exchange agreement with Rebound Rubber Corp., resulting in the issuance of
14,500,100 shares of Company common stock to substantially all of the former
shareholders of Rebound Rubber Corp. The issuance of 14,500,100 shares of
Company common stock in the share exchange represented approximately 87% of the
Company's issued and outstanding shares outstanding immediately following the
transaction, resulting in a change of control of the Company.

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

FINANCIAL STATEMENTS

The following consolidated financial statements of LandStar, Inc. (a development
stage enterprise) are included in PART II, Item 8. of this Annual Report.

Independent Auditor's Report

Consolidated Balance Sheet-December 31, 2000

Consolidated Statements of Operations-December 31, 2000
and 1999 and For The Period From December 13, 1996 (Date
of Incorporation) to December 31, 2000

Consolidated Statements of Shareholders' Equity-For
The Period From December 13, 1996 (Date of Incorporation)
Through December 31, 2000.

Consolidated Statements of Cash Flows-Years Ended
December 31, 2000 and 1999 and For The Period From
December 13, 1996 (Date of Incorporation) To
December 31, 2000

Notes to Consolidated Financial Statements


                                       26
<PAGE>   40

EXHIBITS

<TABLE>
<CAPTION>
Exhibit No.                          Description                                    Filing
-----------                          -----------                                    ------
<S>      <C>                                                                       <C>
3.1      Articles of Incorporation filed May 4, 1998                                   *

3.2      By-Laws                                                                       *

4.1      Specimen Common Stock Certificate                                             *

10.1     Lease Agreement between Carey Holdings Ltd. and LandStar, Inc. dated          *
         January 1, 2000

10.2     Management Services Agreement between Rebound Rubber Corp. and Kentucky       *
         Financial Inc. dated April 1, 1998,as amended January 4, 1999.

10.3     Management Services Agreement between Rebound Rubber Corp. and Shina          *
         Investments Ltd. Dated April 1, 1998 as amended January 4, 1999.

10.4     Agreement on the Transfer of Technological Achievements between               *
         Guangzhou Research Institute for the Utilization of Reclaimed
         Resources and Rebound Rubber Corp. dated March 12, 1997 as amended
         November 28, 1998.

10.5     Agreement on the Transfer of Technological Achievement between                *
         Guangzhou Research Institute for the Utilization of Reclaimed
         Resources and Rebound Rubber Corp. dated March 12, 1997 as amended
         November 28, 1998.

10.6     Letter of Appointment between Guangzhou Research Institute for the            *
         Utilization of Reclaimed Resources and Rebound Rubber Corp. dated March
         12, 1997.

10.7     Share Exchange Agreement between LandStar, Inc., Rebound Rubber               *
         Corp.,Manhattan Transfer & Registrar and the shareholders named therein
         dated December 331, 1998.

10.8     Voluntary Pooling Agreement between Rebound Rubber Corp., Manhattan           *
         Transfer & Registrar and the shareholders named therein dated December
         31, 1998.

10.9     Purchase Agreement between LandStar, Inc. and United Trans-Western,           *
         Inc. dated December 31, 1998

10.10    Employment Agreement between the Company and Michael C. Elles                **

10.11    Employment Agreement between the Company and Michael F. Jones                **
</TABLE>

                                       27


<PAGE>   41

* Incorporated by reference to the 10-SB filed with the Commission on January
10, 2000.

** Form 10-K, Year Ended December 31, 2000.


                                       28
<PAGE>   42


SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the registrant has duly caused this Annual Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                                 LANDSTAR, INC.


Dated as of the 16th day of April, 2001          /s/ D. Elroy Fimrite
                                                 --------------------
                                                 D. Elroy Fimrite, Chairman
                                                 Of the Board, President and
                                                 Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual
Report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated:

Dated as of the 16th day of April, 2001          /s/ D. Elroy Fimrite
                                                 --------------------
                                                 D. Elroy Fimrite, President,
                                                 Chief Executive Officer and
                                                 Director


Dated as of the 16th day of April, 2001          /s/ Michael F. Jones
                                                 --------------------
                                                 Michael F. Jones,
                                                 Vice President and Chief
                                                 Financial Officer


Dated as of the 16th day of April, 2001          /s/ Phillip Pimlott
                                                 -------------------
                                                 Phillip Pimlott, Director
                                                 and Vice President

Dated as of the 16th day of April, 2001
                                                -----------------------------
                                                 Dr. Ian Hadfield, Director


Dated as of the 16th day of April, 2001
                                                -----------------------------
                                                 Scott B. Randolph, Director


Dated as of the 16th day of April, 2001          /s/ Daniel N. Mcvicker
                                                 ----------------------
                                                 Daniel N. McVicker, Jr.,
                                                 Executive Vice President and
                                                 General Counsel, Director and
                                                 Secretary


Dated as of the 16th day of April, 2001          /s/ Carl Buccellato
                                                 ------------------------
                                                 Carl Buccellato, Director

                                       29