LandStar, Inc. ("LDSR" on OTC-BB)
Phone: (250) 475 - 6000 Fax: (250) 475 – 0176
Toll-Free: (888) 285 - 8355
website: ldsr.com
A new company with exclusive North American rights to a revolutionary,
low-cost and extremely-profitable rubber recycling technology
LDSR is significantly undervalued - current share price is less than 2x
future earnings
Demonstration plant in Dayton Ohio nearing completion – the first step in
creating an entirely new industry!
COMPANY PROFILE
LandStar, Inc. ("LDSR" on OTC-BB) of Dayton, Ohio is an emerging growth
company that has recently acquired the exclusive North American rights to a
proven rubber recycling process that reprocesses rubber from a variety of
sources (principally, used tires) into a compound that can be used to
manufacture new vulcanized rubber products. LDSR owns this technology
free and clear, forever - there are no royalties, commissions or future
payments of any type at all.
LDSR's technology is a clean, quality-controlled and
environmentally-friendly chemical process which reactivates recycled rubber
for integration with natural and synthetic rubber. LandStar's product,
which performs equal to or better than new rubber, can be used in the
manufacture of a wide variety of new vulcanized rubber products (including
automobile tires) at substantially lower costs than new or synthetic
rubber.
LandStar is currently establishing a demonstration plant and compounding
lab in Dayton (Ohio) which is expected to be fully operational by the end
of July. The company has already targeted some very substantial customers
in the Midwest, where LandStar will focus its initial marketing efforts.
CAPITAL STRUCTURE & TRADING RANGE (as of June 25, 1999)
Issued & Outstanding: ~ 5.6 million
Fully Diluted: ~ 31.9 million shares
Restricted Stock: ~ 27.4 million shares (until May 2000)
Est'd Float: ~ 750,000 million shares
1999 Trading Range: US$0.25 (low) by US$2.00 (high)
Current Bid & Ask: US$0.41 by US$0.50
Last Trade (June 25, 1999): US$0.44
To acquire the exclusive rights to the rubber recycling technology, LDSR
issued approximately 27.4 million shares; all of this stock is subject to
both a minimum one year hold period (thru May 2000) and voluntary pooling
agreements for at least one additional year.
LDSR is debt-free. Upon completion of a financing now in progress, LDSR
will have approximately US$500,000 in working capital.
LANDSTAR's REVOLUTIONARY NEW TECHNOLOGY
LandStar's rubber recycling technology was developed by Dr. Li Xing-Ru,
Director of the Guangzhou Research Institute for Reclaimed Resources. In
March 1999, LandStar completed the acquisition of Rebound Rubber Corp., a
private Canadian company that previously owned the exclusive North American
rights to the technology. LDSR is now actively engaged in the commercial
development of this unique and proprietary technology.
LandStar's technology has been established in a proven production
environment - this is not an experimental process.
LandStar's rubber reactivation technology is an environmentally-safe and
economically-feasible de-vulcanization process that makes true rubber
recycling possible. The durability and performance specifications of
LDSR's reactivated rubber products are equal to or better than those of raw
(new) or synthetic rubber. Recycled rubber can now be used far beyond its
present use as fillers in non-vulcanized products. LDSR's process is the
only known process in the world that achieves full de-vulcanization and
reactivation of rubber.
RUBBER CONSUMPTION & RECYCLING IN THE UNITED STATES
The U.S. automobile industry is by far the largest consumer of rubber,
accounting for 79% of all natural rubber and 57% of synthetic rubber
consumed each year. Much of this rubber goes into tires. The United
States consumes roughly four million tons of natural and synthetic rubber
each year, out of total world production of slightly more than seven
million tons. A huge market, to say the least!
Every year, an estimated 300 million tires in the United States and Canada
are discarded, winding up in dumps, or being added to stockpiles estimated
to contain more than 3 billion used tires. Used tire waste has created
major environmental problems, and the need for an economical tire recycling
program grows stronger with each passing year.
The tire / rubber recycling industry is in its infancy, with only about 7%
of U.S. rubber production being recycled / reused in any kind of new
products.
The main reason for this has been that until LDSR's technological
breakthrough, previous tire recycling methods tended to be very complex and
expensive, and focused more on disposing of waste than creating anything of
value. Until now, the industry has been characterized by low volumes of
recycling and marginal profitability at best. Prior technologies produced
an inert rubber powder product that was limited to use in new products that
did not require vulcanization (e.g., doormats, irrigation hoses, additive /
filler for asphalt paving).
LandStar's technology is radically different from any other recycling
method – LDSR actually re-manufactures the raw material to make it
competitive with synthetic and natural rubber but at 40% of the cost of
synthetic or natural rubber.
LDSR's exclusive reactivation process is efficient, economical and
environmentally-friendly, and will revolutionize the industry by allowing
recycled rubber to be used in vulcanized products.
DEMONSTRATION PLANT NEARLY COMPLETE!
LandStar is currently building a 12,800 ft2 demonstration plant in Dayton,
Ohio which will be fully-operational by the end of July. The plant is
intended to demonstrate to potential customers (rubber manufacturers,
including the major U.S. manufacturers, who have already expressed great
interest in the process) how a standard, commercially-viable product can be
produced in a profitable manner.
LDSR's plant will have an initial production capacity of 10 tons per day
(expandable to 50 ST/day), and will serve markets in the Midwest. A
fully-equipped compounding lab is also under construction in Dayton to
facilitate research and patenting of other rubber recycling technologies
currently under development by LandStar.
LANDSTAR's PRODUCTS HAVE VERY HIGH PROFIT MARGINS
LandStar estimates that it will earn an average profit margin of 30% on
sales of its recycled rubber products, based on a projected wholesale price
of US$0.30/lb (less than half the current market price for natural rubber).
Maintaining or even increasing these sizable profit margins should not be a
problem, as the various materials that LDSR's products will replace sell
for between US$0.70 to US$3/lb.
LDSR is deliberately moving into markets with strong demand, high margins
and no barriers. LandStar's marketing efforts are targeting small and
mid-tier rubber manufacturers, companies that generally pay higher prices
for smaller volume sales.
PRO FORMAS INDICATE STRONG FUTURE EARNINGS FOR LDSR
The potential profit margins available for LDSR's are enormous.!
To illustrate, we have been told that LandStar is in discussions with one
prospective customer to supply 160 million pounds of recycled rubber
products annually. At 30 cents per pound, this would mean $48 million in
annual revenues to LDSR - or, about US$14.4 million in income before taxes.
How likely is LandStar to land this contract? We think that the odds are
pretty good, based on our understanding that this particular buyer would
save about US$70 million per year by switching from raw rubber to LDSR's
recycled rubber product.
Based on LDSR's 32 million shares outstanding, this one contract would
generate pre-tax earnings of 45 cents per share. In other words, the
markets are currently valuing LDSR at only a bit more than 1x future
earnings…from just one contract!
WHY YOU SHOULD CONSIDER ADDING LDSR TO YOUR INVESTMENT PORTFOLIO !!
There are a lot of things that we like about this company, and why we are
so excited about this stock. First and foremost, there is an experienced
management team. The LandStar people are no-nonsense, straight-shooting,
well-focused and confident.
Additionally, the engineers and scientists responsible for development of
the rubber recycling process over a 20 year period will remain actively
involved in continuing research and development; LDSR expects that there
will be a number of spin-off products, including specialty products for
particular customers, which the R & D team will develop using the LDSR
technology.
Secondly, we believe that LandStar has a significant competitive advantage
in its exclusive rubber reactivation process, which creates a compound
equal to or better than new or synthetic rubber for many applications.
LandStar owns full and exclusive North American rights to the only
successful rubber reactivation process in the world.
With this new technology, LDSR has no real competition in the rubber
recycling industry. The markets are strong, the sources of raw materials
are endless, and LandStar's recycled rubber product can substitute for new
or synthetic rubber at less than half the cost!
Thirdly, we like the company's business strategy of moving into markets
with great demand, higher margins and no barriers to entry. LandStar is
wisely targeting smaller rubber manufacturers / consumers where it can
achieve higher margins so as to get higher returns.
The corporate strategy is designed to produce substantial but controlled
growth over the coming years. LandStar's management understands that they
are creating an entirely new industry, not building a business, and, we
believe, have designed the proper strategy to successfully realize their
goals.
Lastly, LandStar is a company where the story is only now just beginning to
unfold, starting with the Dayton (Ohio) demonstration plant that is nearing
completion. With an operational plant to demonstrate the commercial
viability and huge environmental advantages of the process, we expect that
we might see some concrete evidence of the oft-rumored interest of major
U.S. tire manufactures in the LDSR technology. No company consuming large
quantities of natural or synthetic rubber can ignore the fact that LandStar
can supply a superior product at less than half the cost!
Landstar was also an exhibitor at the ITRA Conference in Nashville,
Tennessee in June, and there are rumors that major corporate announcements
may be forthcoming. With cash in the till, a demonstration plant in a
prime market area about ready to start operations, and exclusive North
American rights to a revolutionary technology, we view LDSR as a STRONG
BUY at current prices, with exceptional potential for capital appreciation
over both the immediate and longer term. As industry and investor awareness
of LandStar increase, LDSR's shares should move higher.
For more information, please contact:
Investor Relations - Toll-Free: (888) 285 – 8355
E-mail: LDSR@LDSR.com
DISCLAIMER
Patagonia Capital Corp. ("Patagonia Capital") is not a Registered
Investment Advisor or a Broker / Dealer. Patagonia Capital has
independently prepared this report, drawing upon a range of public news and
information sources. This report reflects opinions from LandStar, Inc. (the
"Company"). Readers are advised that this report is issued solely for
information purposes and is not to be construed as an offer to sell or the
solicitation of an offer to buy. The opinions and analysis included herein
are based on sources believed to be reliable and in good faith but no
representation or warranty, expressed or implied, is made as to their
accuracy, completeness or correctness. This information is not intended to
be used as the sole basis of any investment decisions, nor should it be
construed as advice designed to meet the investment needs of any particular
investor. The foregoing discussion contains forward-looking statements
that are based on current expectations and differences can be expected.
The information contained herein has been provided by the Company to
Patagonia Capital for information purposes only; in addition, the
information contained in this report is not intended to be a complete
discussion of information regarding some of the current and/or intended
business activities of the Company. Readers are urged to consult with
independent financial advisors with respect to an investment in the shares
mentioned herein. Investors should review a complete information package
on the Company which should include, but not be limited to, the Company's
annual report, quarterly report, press releases, as well as all regulatory
filings. All information contained in this report should be independently
verified with the Company mentioned herein. Any opinions expressed in this
report are statements of judgment as of the date of publication (25 June
1999) and are subject to change without further notice, and may not
necessarily be reprinted in future publications or elsewhere. Neither
Patagonia Capital nor its officers, directors, partners or employees /
consultants accept no liability whatsoever for any direct or consequential
loss arising from any use of this report or its contents.
In order to be in full compliance with the Securities Act of 1933, Section
17(b), Patagonia Capital advises the readers of this document that has
received a fee of 2,500 free-trading common shares of LDSR from Enright &
Associates as compensation for its efforts in researching, writing and
presenting the information contained herein. Prior to Patagonia Capital
issuing this report, the Company reviewed and approved the contents hereof.
Patagonia Capital, its officers, directors, partners and employees /
consultants may profit in the event the shares of the Company increase in
value. These positions may be liquidated from time to time even after
Patagonia Capital, its officers, directors, partners and employees /
consultants have made positive comments on the Company.
THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE
INVESTING IN ANY SECURITIES MENTIONED. INVESTING IN SECURITIES IS
SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. We encourage U.S. readers
to review the investing information available with the Securities and
Exchange Commission ("SEC") at sec.gov and/or the National
Association of Securities Dealers ("NASD") at nasdr.com The
NASD has published information on how to invest carefully at its website.
LandStar is in the process of filing a Form SB-2 with the SEC. Upon
approval, LDSR will be a fully reporting company. The process is expected
to be completed later this year, at which time, readers can review all
public filings (including financial information) at the SEC's EDGAR page
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