UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(Mark One)

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
         SECURITIES EXCHANGE ACT OF 1934

                      For the Year Ended December 31, 1999

                                       OR

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
         SECURITIES EXCHANGE ACT OF 1934

         For the transition period from _______ to _______

         COMMISSION FILE NUMBER:            001-14753
                                            ---------
                       INTERNATIONAL SMART SOURCING, INC.
        (Exact Name of Small Business Issuer as specified in its charter)

                  Delaware                                 11-3423157
         (State or other jurisdiction of                   (I.R.S. Employer
         incorporation or organization)                    Identification No.)

                              320 Broad Hollow Road

                              Farmingdale, NY 11735

                    (Address of principal executive offices)

                                 (631) 293-4650

                           (Issuer's telephone number)

      Securities registered under section 12(b) of the Exchange Act: None.
         Securities registered under section 12 (g) of the Exchange Act:

                          COMMON STOCK, PAR VALUE $.001

                   REDEEMABLE COMMON STOCK PURCHASE WARRANTS.

         Check whether the Issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 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   ____

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of Regulation S-B is contained in this form, and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.

                  YES      ___                           NO    _X_

The  issuer's  net  sales  for  the  most recent  fiscal  year  were $4,919,095.

The aggregate market value of the voting stock held by non-affiliates based upon
the last sale price on March 20,  2000 was  approximately  $  27,064,000.  AS OF
MARCH 26, 2000, the Registrant had 3,382,500 shares of its Common Stock,  $0.001
par value, issued and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions  of  the  registrant's  definitive  Proxy  Statement  to be  issued  in
connection  with the 2000 annual meeting of  stockholders  are  incorporated  by
reference into Part III

                                     PART I

                                       1
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS

THE COMPANY

The Company, through its principal subsidiary,  Electronic Hardware Corp., a New
York  Corporation  ("EHC"),  has  over 29  years of  experience  in the  design,
marketing and manufacture of injection molded plastic components and assemblies,
including  consumer,  industrial  and military  knobs and custom and  mechanical
assemblies,  including  micro verniers,  push or  pull-to-turn  clutch knobs and
detent knobs. EHC also produces hardware items,  including shaft locks, mounting
brackets,  test jack covers,  cabinet  bumpers and captive  screws.  The Company
believes that EHC's long-term  success is due to the average 30-year  experience
of its management  team,  strategic  acquisitions  of  complementary  companies,
products  and  product  lines  and its  ability  to adapt new  technologies  and
advanced  manufacturing concepts to produce high-quality products at competitive
prices.

EHC meets a full  range of its  clients'  needs by  maintaining  early and total
involvement,  from the design and  development to the ultimate  manufacture  and
packaging of the product.  When a  custom-made  product is initially  requested,
experienced  EHC  application  engineers  assist the customer during the concept
design  stage,  which the  Company  considers  critical  to the  success  of the
manufacturing  process.  During this stage, EHC application  engineers draw upon
the  Company's  experience,  expertise  and  technological  innovation to assist
clients in reducing costs,  meet  accelerated  market  schedules and ensure high
quality workmanship.

The Company is currently having its facility certified for International Quality
Standard  ("ISO")  9002,  a  manufacturing  certification  required  by European
companies and looked upon favorably  throughout the world. ISO 9002 requires the
Company to meet certain stringent  requirements  established in Europe to ensure
that the facility's manufacturing  processes,  equipment, and associated quality
control  systems  will  satisfy  specific  customer  requirements.  The  Company
believes that obtaining ISO 9002  certification  will benefit the Company in the
plastic manufacturing  market, both nationally and internationally.  The Company
has contracted a registrar and will seek certification in 2000.

The Company's  factory is divided into  manufacturing  cells,  which the Company
believes accounts for a more efficient workplace and improved quality. Each cell
is responsible for a complete  manufacturing process, from machining to assembly
and from indicia marking to the ultimate packaging of the product. The cells are
operated by teams of cross-trained  employees  knowledgeable of both the product
and the manufacturing  process.  The cell teams meet regularly to solve problems
and develop more efficient manufacturing methods.

The Company believes that this  consolidated  manufacturing  approach results in
high quality, on-time delivery,  competitive pricing, and a loyal customer base.
Additionally,  the  Company  believes  that  it  has  created  a  cost-effective
workplace by decreasing  inventory  costs.  The Company's  "pull" (also known as
"JIT,"  which  stands for  Just-in-Time)  system is  designed to  introduce  raw
materials and components at the time necessary to fulfill customer orders.  This
system  eliminates  costs  associated  with the  storage  and  handling of large
amounts of  inventory.  The Company  believes  that it also  accounts for a more
timely rate of delivery.  The "pull" system  depends on long-term  relationships
with suppliers.  The Company believes that due to its strong  relationships with
suppliers and its  well-trained  workforce,  the system will continue to provide
efficient and prompt delivery.

The Company offers secondary operations on its molded products. Services such as
hand  painting,  pad  printing,  hot  stamping and  engraving  are provided at a
customer's  request.  These  marking  systems can be used on most  materials and
varying contours.  The Company believes that these extra manufacturing  services
allow for greater flexibility and increased customer satisfaction.

                                       2
<PAGE>

The Company was originally  formed in 1970 as EHC, a New York  corporation,  and
was  reorganized as of December 24, 1998 as a Delaware  holding  company for its
two wholly owned subsidiaries,  EHC and Compact Disc Packaging Corp., a Delaware
Corporation ("CDP"). As part of the Reorganization,  the stockholders of each of
the subsidiaries  exchanged the following percentage ownership in the respective
subsidiaries for the percentage of shares of the Company: David Kassel exchanged
33% of EHC and 90% of CDP for 46.3% of the company;  Andrew  Franzone  exchanged
33% of EHC for 25.7% of the  Company;  Harry  Goodman  exchanged  33% OF EHC FOR
25.7% of the  Company;  and  David  Cowan  exchanged  10% of CDP for 2.3% of the
Company.The  Company changed its name from International  Plastic  Technologies,
Inc. to International Smart Sourcing, Inc. on December 7, 1998. On May 7, 1999 a
newly formed company called International  Plastic Technologies Inc., a Delaware
Corporation  (IPT)  was  formed  for  the  purpose  of  developing  manufactured
injection  molded  plastic  products or assemblies,  redesigning  the product to
improve  function and  appearance,  by using its  relationships  with vendors in
China,  to manufacture  the products  offshore in order to deliver them at lower
prices and improve profit margins.

GROWTH STRATEGY

The  Company  through  IPT,  intends  to  expand  its  operations   through  (i)
specializing in assisting  small to mid-sized  companies to reduce their cost of
manufacture by outsourcing work to china, and (ii) developing the infrastructure
necessary to assist the companies outsourcing.  Through a consultant who is also
an  independent  director of the  Company  ("the  Consultant"),  the Company has
established  direct  contact  with  manufacturers  in  China  and has  initiated
overseas  manufacturing  projects  in China  of  full-scale  production  runs of
various products,  including  separate  projects through an affiliated  company,
AFC.  Additionally,  IPT has opened an office in Shanghai through the Consultant
to facilitate outsourcing.  Currently,  the Company has purchase orders with ten
different suppliers in China. There can be no assurance that the Company will be
able to consummate, maintain or establish additional manufacturing relationships
in China or achieve any of its growth strategies.

PRODUCTS

CONTROL KNOBS AND ASSEMBLIES

The Company, through EHC, a wholly owned subsidiary, manufactures a full line of
instrument control knobs, handles, value-added custom molding, dials and similar
devices for consumer, industrial and military electronics equipment. EHC's knobs
are used for precise setting of switches,  on/off switches,  volume controls and
critical setting of instrumentation switches. EHC manufactures many of the knobs
to order based on the customers' exacting specifications as well as its standard
line. Customers of EHC order the knobs by specifying particular descriptions and
features,  including the shaft diameter,  outer diameter,  overall size, height,
color,  illumination,  dials and markings,  such as lines, dots or numbers.  EHC
also has a standard  product line of  consumer,  industrial  and military  knobs
available for sale through catalogs.

Overall,  the number of  different  types of knobs EHC has  manufactured  in its
history is in the order of tens of thousands.  Some knobs are manufactured  with
mechanical  devices  built  into the knob.  For  example,  one of the  Company's
locking knobs turns freely and sets upon depression, resisting shock, vibration,
or accidental  movement.  A clutch knob is one that continues to turn even after
the device has reached a pre-set  limit so that the pressure of the turning knob
does not damage the equipment.  Most knobs are resin-based and injection molded.
Some knobs are painted and some are  delivered  "as molded."  Certain  knobs are
made with  aluminum  inlays,  caps,  dials,  or skirts and may have  fittings of
screws, bushings, springs, or set screws.

                                       3
<PAGE>

The knobs and  assemblies  can be sold in lots of as few as one knob or as large
as 500,000  units or more.  EHC requires a $150 per order minimum  charge.  Knob
prices to the customer range from as low as $.09 per unit to as much as $150 per
unit.

EHC has been awarded a government contract valued at an average of approximately
3 million dollars per year for a possible 5-year period.  The government has the
option to extend the contract on a yearly basis. The Company  believes,  with no
assurance that the contract will run for the full 5 years.

The Pull Pack TM

The  Company,  through  CDP, a  wholly-owned  subsidiary,  has  entered  into an
exclusive  international  licensing  agreement to manufacture,  market, sell and
sub-license the Pull Pack TM, a proprietary disc packaging system. The Pull Pack
TM is a redesigned  "jewel box," the packaging used currently for compact discs,
cd roms and dvd. the pull pack TM implements a drawer-like  mechanism,  avoiding
the problems  associated  with  currently  available  Disc  packaging  involving
fragile  hinges,  difficulty in opening and the removal of Discs and descriptive
literature.  The drawer  carries the Disc, and a tray above the drawer holds the
descriptive  booklet.  When the  drawer is  opened,  the tray is pushed  forward
one-half  inch beyond the outer  housing,  providing the user with the option of
removing  the Disc or the booklet or both.  The drawer also holds an inlay card,
which provides the graphics for the spine and the bottom of the package.

A prototype  version of the Pull Pack TM won the  International  Design Magazine
Award for Packaging in 1993.  Between 1993 and 1997, Inch, Inc., the inventor of
the Pull Pack TM, explored various design concepts and manufacturing methods and
processes  to reduce  production  costs in order to  enable  the Pull Pack TM to
become  economically  competitive.  Late in 1997, the Company  proposed to Inch,
Inc. a more cost-efficient method of producing the Pull Pack TM by utilizing the
company's  sources in China. the company believes that by utilizing its contacts
with Chinese manufacturers,  it can produce the Pull Pack TM on a cost-efficient
and competitive basis.

The Company  acquired  CDP by means of an agreement  and plan of  reorganization
effective  December 24, 1998,  whereby the Company  issued 445,000 shares of its
Common Stock for all of the issued and  outstanding  stock of CDP. The purchased
cost of such acquisition was $2,238,000,  based upon the proposed initial public
offering price of the shares issued.  The Company has allocated  $500,000 to the
value  of the  exclusive  license  agreement,  which  grants  CDP the  right  to
manufacture,  market and sell the Pull Pack TM. The  license  agreement  will be
amortized  over a period of 10 years.  Additionally,  the Company has  allocated
$1,738,000 to the value of the goodwill  attributed to the  acquisition  of CDP.
Such charge to goodwill will be amortized over a period of 10 years. As a result
of the amortization for both the license agreement and goodwill, there will be a
charge to the Company's  operating and net income in the  approximate  amount of
$225,000  for each year during the next 10 years.  Such  charge  will  adversely
affect the results of the Company's future operating and net income.

The company has negotiated to manufacture  the Pull Pack TM in China,  and plans
with no assurance,  to market the product as a specialty  packaging  system to a
targeted niche market, including CD ROM, special production,  retail replacement
packaging and rental and  institutional  markets such as video  stores,  lending
libraries and technical research facilities.

                                       4
<PAGE>

The  company  believes  that the Pull Pack TM is well  positioned  to be sold in
specialty  niche  markets.  The Company  believes that the Pull Pack TM receives
favorable  reviews  because it  complements  what has made the Compact  Disc the
preferred format in both the entertainment and educational  industries,  ease of
use and durability.

The company  intentionally  relies upon current  technologies and materials used
for the Pull Pack TM so that it can be interchangeable with current jewel boxes.
The Pull Pack TM is the same size as the standard Jewel Box and is made from the
same clear  plastic.  It also uses the same graphic  inserts as Jewel  Boxes,  a
booklet and inlay card,  which  allows  Compact Disc  distributors  to use jewel
boxes or the Pull Pack TM interchangeably  without requiring special graphics to
be printed.  The company  believes  that this complete  compatibility  will also
allow the Pull Pack TM to be sold  directly  to  consumers  who want To  replace
their  broken  jewel  boxes  with a  more  durable  and  convenient  package.  a
pre-production  model of the Pull Pack TM was  developed in june 1998 for market
research and small production runs. concurrently,  the production tooling of the
Pull  Pack  TM is  complete  and  the  product  has  been  produced  in  limited
quantities.  The Company  believes,  with no  assurance,  that it will  commence
commercial  production  of the Pull  PacK TM in the  second  quarter  of  2000.
However,  due to the early  manufacturing  stage of the product,  there are only
small  orders from  customers,  which are trying the product for the first TIME.
The Company will  initially  target  market  opportunities  such as  replacement
packaging,  CD ROM packaging,  rental and institutional  markets,  such as video
stores, lending libraries and technical research facilities,  special production
markets and newly developed  discs.  as consumers  become familiar with the Pull
Pack TM, the Company  intends to sell directly to the OEMs, who are the original
content providers in both the music and CD ROM industries.

Competition

Knob and Assembly Manufacturing/Injection Molding

The Company believes that its segment of the plastic  injection molding industry
is highly  fragmented  and that no one  participant is dominant in the industry.
The Company believes that the most important competitive factor in this industry
is  investment  in  tooling,  as the high cost of  tooling  relative  to the low
revenue of individual products is a barrier to entry in this market. The Company
currently  owns  approximately  1,500  tools,  which  gives  it the  ability  to
manufacture over 10,000 products and assemblies.  Other key competitive  factors
in this industry  include quality of products,  depth of industry  knowledge,  a
sizable customer base,  ability to provide products on a timely basis,  level of
experience, breadth of products and services offered, responsiveness to customer
requests  and ability to produce a wide  variety of projects in a timely  manner
and at a competitive  price.  The Company  believes that its main competitors in
the control knobs and components  segment of the injection  molding industry are
the following: Rogan Corporation,  which produces instrument and consumer knobs;
Philips Plastic Manufacturing Corporation, which produces consumer knobs; Davies
Molding Company,  which produces  instrument  knobs; and Aerospace Knob Company,
which produces military avionic knobs.  With its range of consumer,  instrument,
and military knobs,  EHC strives to provide the broadest and most extensive line
of knobs and assemblies in order to maintain an advantage over its competitors.

Pull Pack TM

The company  believes that the primary  competition for the Pull Pack TM is  the
current  Jewel  Box  manufactured  by  Atlanta  Precision  Molding,  Auriga  and
International Packaging Corp. Other companies have developed alternative Compact
Disc packaging, but the Company believes that none have proved to be a challenge
at this time because  production  costs are  prohibitive or the designs have not
been  accepted by the general  public or OEMs.  Three of these  packages are the
Laserfile,  from Laserfile  Inc., the Utmost Rotary CD Case, from Co-Joint Corp.
and the Alpha Pak, from Alpha Enterprise, Inc.

                                       5
<PAGE>

Suppliers And Raw Materials

EHC's principal raw materials consist of Lexan (polycarbonate),  nylon, ABS, and
polypropylene.  Such materials are generally  available  commodities sold to the
injection  molding industry by a variety of suppliers in China; the Company does
not have any oral or written contracts or agreements with any suppliers.  No one
vendor  accounts  for  more  than 10% of the  Company's  purchases,  except  for
Shanghai  Foodstuffs  Export  &  Import  Corporation  and  Royal  Screw  Machine
Products.  The loss of the Company's business relationship with either principal
supplier could have a material  adverse effect on the Company.  Notwithstanding,
while a shortage of a particular  supplier's raw materials  would not materially
affect the Company,  a general  shortage of raw materials could adversely affect
the Company.  The Company has never  experienced a shortage in raw materials and
does not anticipate any shortages to occur in the reasonably foreseeable future,
however,  there can be no  assurance  that there  will not be a shortage  of raw
materials.

The company is currently  manufacturing  products in China,  including  the Pull
Pack TM. in such manufacturing  projects the Chinese  manufacturers will arrange
for all raw  materials  from local  suppliers.  While the Company  believes that
there will be no shortage of such materials overseas and that prices will remain
comparatively  low, there can be no assurance  that no shortages will occur.  In
addition,  the  Company  is  subject  to  the  risk  of  political  or  economic
dislocation  in China,  which  could  affect  the  availability,  or cost of raw
materials. the company anticipates that the raw materials used for the Pull Pack
TM  will   consist  of  either   crystal   styrene,   general-purpose   styrene,
polypropylene or zylar.

Distribution methods

EHC sells its products solely to industrial customers either directly or through
major distributors. EHC never sells directly to retail consumers.  Approximately
20% of EHC's products are principally  sold through the following  distributors:
Newark  Electronics,  Allied Electronics,  Inc., Bisco Industries,  Inc., Alatec
Electronics,  Inc. and Peerless Electronics, Inc. The Company does not have oral
or written contracts or agreements with such distributors.

Research and development

The Company  believes  that its  commitment  to  research  and  development  has
distinguished  the Company  among its  competitors.  In 1999,  the Company spent
approximately  $  184,000  on  research  and  development  of  new  tooling  and
development  for a switch built into a knob,  Pull Pack, and a "Quick Draw" rack
system for the Pull Pack. The Company spent  approximately  $225,000 on research
and development in 1998,  including  expenditures on new knob designs,  computer
aided design  technology and  engineering  feasibility  studies on potential new
product  lines.  The Company's  customers do not bear  research and  development
costs, as all research and development is funded solely by the Company,  some of
which is through federal or state funding.

Patents, Trademarks, Licenses And Royalty Rights

The company,  through  CDP, a  wholly-owned  subsidiary,  entered into a minimum
five-year license agreement dated as of March 1, 1998 with inch, inc., to obtain
the exclusive  worldwide  licensing rights to make, use, sell and sublicense the
Pull Pack TM. In consideration of the exclusive  license,  the Company agreed to
pay Inch,  Inc.  royalties of (i) 2% of the annual gross sales OF Pull Pack less
any  returns,  credits  and  allowances;  (II) 25% of  sublicenses  or fees from
sublicenses payable within 30 days of receipt; and (iii) a $30,000 reimbursement
payment for expenses incurred in obtaining a patent.  The Company is entitled to
exclusive  license  rights  of Pull Pack TM for a  minimum  of five  years and a
maximum of the United  States life of the  patent,  which  expires in 2012.  The
Company  paid to Inch Inc a  royalty  payment  of $  30,000  for the  period  of
February 1, 1999 to February 1, 2000.  If  royalties  paid to Inch,  Inc. do not
equal or exceed a minimum  total of $40,000 from February 1, 2000 TO February 1,
2001 and $50,000 for each 12 month period  thereafter  Inch, Inc. shall have the
right to terminate the exclusive  license agreement upon 30 days' notice. in the
event that the exclusive  license is  terminated,  CDP shall  continue to hold a
non-exclusive  license at the above referenced royalty rate. Inch, Inc. has also
agreed to provide  consulting  services to CDP At the rate of $50 per hour prior
to the sale of 10,000  units and $110 per hour  after the sale of 10,000  units.
CDP has agreed to indemnify and hold harmless Inch, Inc. against all damages and
liabilities  arising out of the  manufacture of the Pull Pack.In 1995, Pull Pack
was issued Patent No.5,383,544, which expires in January 2012. On June 16, 1998,
EHC was issued  patent  no.5,765,449,  which  expires on June 16, 2015.  EHC has
submitted a patent application on a tactile detent knob.  However,  there can be
no assurance that such patent will issue.

                                       6

<PAGE>
The Company may apply for  additional  patents  relating to other aspects of its
production.  There can be no  assurance  as to the degree of  protection,  which
existing or future patents,  if any, may afford the Company, or that competitors
will not develop similar or superior  methods or products outside the protection
of any patent issued to the Company.

Employees

As of December  31,1999,  the Company had a total of 83  employees.  13 of these
employees  work  on a  part-time  basis.  38  of  the  Company's  employees  are
represented  in collective  bargaining  agreements  by Local 531,  International
Brotherhood of Teamsters, AFL-CIO. 14 employees work in Sales and Administration
while 64 employees are factory workers.

The Company believes it has a satisfactory relationship with its unionized labor
and has never  experienced a work stoppage.  The current  collective  bargaining
agreement was amended by means of a Memorandum of Agreement  dated as of May 10,
1998 and was extended until May 9, 2001. Union employees are covered by the Sick
& Welfare Fund,  Local 531, to which the Company  contributes a specified amount
each year.

Item 2. Property

The Company operates from an  approximately  20,000 square foot facility located
in  Farmingdale,  New York.  The  facility  is owned and  operated by K&G Realty
Associates,  a partnership owned by David L. Kassel, the Company's Chairman, and
Harry  Goodman,  the Company's Vice  President.  The mortgage on the facility is
guaranteed by EHC. The Company's  lease,  currently  under a 10-year  extension,
expires in December  2005.  The annual rent is currently  $146,000 per year, and
provides  for annual  adjustments  equal to the  greater of the  increase in the
Consumer Price Index or 5%.  Pursuant to a rider to the lease agreement dated as
of March 1, 1998,  EHC shall pay as additional  rent,  any and all real property
taxes for the demised premises in excess of $26,000 per annum. In 1999, the real
estate taxes were approximately  $34,000. The Company believes that the property
is suitable for its  presently  foreseen use. The Company  leases  approximately
1,000 square feet of office  space in Shanghai, China for $ 1,500 a month though
the Consultant on a month to month basis.

                                       7
<PAGE>


Item 3. Legal Proceedings

On or about April 20, 1999 a former non-officer  employee of the Company filed a
complaint against EHC with the Division of Human Rights of the State of New York
("Division")  charging violation of the Americans with Disabilities Act covering
disabilities  relating to  employment.  The Company  submitted  an answer to the
complaint on May 4, 1999.  The Company is vigorously  defending  this action and
believes,  with no assurance,  that it has a meritorious  defense.  Although the
ultimate  outcome of the action cannot be  determined at this time,  the Company
does not believe  that the outcome  will have a material  adverse  effect on the
Company's financial position or overall trends in results of operations.

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

Not Applicable.

                                       8

<PAGE>



                                     PART II

Item 5. Market for Common Equity and Related Matters

The Company  completed its initial  public  offering  pursuant to a Registration
Statement on Form SB-2 Registration No. 333-48701,  declared  effective on April
23, 1999. As of March 26,2000,  the Company had outstanding  3,382,500 shares of
its Common Stock $ .001 par value ("Common  Stock").  The Company's Common Stock
is traded on the Nasdaq Small Cap Market  ("Nasdaq  Small Cap") under the symbol
ISMT.  Effective  December 30 1999 the  Company's  Common Stock and Common Stock
Purchase  Warrants  were  delisted  from the Boston  Stock  Exchange  due to its
failure to obtain a minimum of 600 beneficial  stockholders within six months of
listing.The  following  table  sets  forth the high and low bid  prices  for the
Common  Stock as reported on the Nasdaq  Small Cap.  The high and low bid prices
reflect inter-dealer prices, without mark-up,  mark-down or commission,  and may
not represent actual transaction.

                                                     COMMON STOCK SALE PRICES
                                                     ---------------------------
FISCAL 1999                                          HIGH                LOW
--------------------------------------------------------------------------------

Second   Quarter (from April 23, 1999)               5.50                 3.9375
Third Quarter                                        7.063                4.188
Fourth Quarter                                       9.00                 5.50


On  March 26,  2000  there  were  approximately  175 holders  of  record  of the
company's  3,382,500  outstanding  shares of Common Stock.

On March 26,  2000,  the last sale price of the Common  Stock as reported on the
Nasdaq SmallCap Market was $ 8.00.

Dividend Policy

The Company intends,  for the foreseeable  future, to retain future earnings for
use in the Company's  business.  The payment of cash  dividends,  if any, in the
future is within the  discretion  of the Board of Directors and will depend upon
the Company's earnings, its capital requirements, financial condition, and other
relevant factors.

Item 6. Management's Discussion and Analysis

The  following  discussion  should be read in  conjunction  with the  historical
financial  statements,  including  the notes  thereto,  of the Company  included
elsewhere herein.

                                       9
<PAGE>

General

International  Smart  Sourcing,  Inc. was organized as a holding company for its
wholly-owned   subsidiaries  Electronic  Hardware  Corp.  ("EHC")  Compact  Disc
Packaging Corp.  ("CDP") and International  Plastic  Technologies,  Inc. ("IPT")
(collectively,  the  "Company").  IPT was formed for the  purpose of  developing
domestically  manufactured  injection  molded  plastic  products or  assemblies,
redesigning  the products to improve  function and  appearance  and by using its
relationships  with vendors in China,  to manufacture  the products  offshore in
order to deliver them at lower prices and improved profit margins.

EHC, the Company's principal subsidiary,  has over 28 years of experience in the
design, marketing and manufacture of injection molded plastic components used in
industrial,  consumer,  and military  products.  The Company  believes  that its
long-term experience in the manufacture and assembly of injection molded plastic
components,  coupled with direct  access to  manufacturing  facilities in China,
will  enable the  Company to provide  improved  products  at lower  prices  with
improved profit margins.

The Company,  through CDP. has entered into an exclusive international licensing
agreement  to  manufacture,  market,  sell and  sub-license  the Pull Pack TM, a
proprietary  Disc packaging  system.  The Pull Pack (TM) is a redesigned " Jewel
Box", the packaging currently used for Compact Discs, CD-ROMs and DVD.

Results of Operations

For the year ended  December  31, 1999  compared to the year ended  December 26,
1998:

Net Sales

Net Sales for the year ended December 31, 1999 were $ 4,919,095,  as compared to
net  sales of  $5,883,001  for the year ended December 26, 1998. The decrease of
$963,906 or 16 % for the period  was  attributed  to  generally  lower  industry
bookings and a major  customer  extending  deliveries  on purchase  orders until
their  inventory is reduced.  In addition,  the government  has delayed  placing
purchase orders in the third quarter, pending the fourth quarter commencement of
the new contract with the U.S.  government  Defense  Supply Center  Philadelphia
which was awarded to EHC in the second Quarter of 1999.

Gross Profits

The Company  realized an overall  gross profit  margin  percentage  for the year
ended  December  31,  1999 of 26 %, which  represents  a decrease  from the 29 %
experienced  during the year ended  December  26,  1998.  This  decrease  can be
attributed to the increased sales of molded plastic components that have a lower
gross profit than products that are molded and have value-added operations.

Selling, General, and Administrative Expenses

The increase in selling,  general, and administrative  expenses includes startup
costs associated with setting up sales,  marketing and operational  departments,
and systems to support future business.  Such departments  consist of personnel,
computer hardware and software, office space and furniture.

                                       10
<PAGE>


Selling,  general and  administrative  expenses for the year ended  December 31,
1999 were $ 3,306,930  as compared to $ 1,764,126,  for the year ended  December
26,  1998.  The  increase  of $  1,542,804  or 87% for the  period is  primarily
attributable to $ 248,000 used for promotional  activities for CDP, $213,000 for
legal and accounting  fees, $ 43,000 for  reimbursement of expenses CDP incurred
in  obtaining  a patent $ 56,000,  for travel to China to review and support the
manufacturing  and  engineering  facilities  and trade  shows for IPT  and  CDP,
$93,000 in costs associated with being a public company,  $ 36,000 in consulting
for  selecting and  qualifying  manufacturers  in China,  $ 59,000 on new office
staff to the Company's new business, and $ 63,000 in engineering consulting fees
for new products designed by EHC to compliment the knob line. In addition, there
was a non-cash charge to operations of $ 52,000 related to the issuance of stock
options.

Results of Operations

For the year ended December 26,1998 compared to the year ended December 27,1997:

Net Sales

Net sales decreased $171,746 or 3% to $5,883,001 for the year ended December 26,
1998 from  $6,054,747  for the year ended  December 27,  1997.  The decrease was
attributable to the redesigning of a key customer's product and generally slower
industry booking.

Gross Profits

The  Company  realized an overall  gross  margin  percentage  for the year ended
December  26, 1998 of 29%,  which  represents  a decrease  from 37%  experienced
during the year ended December 27, 1997.  The decrease in gross profit  occurred
because of a chance in the product mix. In 1998, the Company relied more heavily
on molded  products,  which do not have  secondary  operations.  These  types of
products  are  different  from the  standard  Product  line,  which  do  require
secondary  operations  such  as  assembly,  machining,  painting,  printing  and
finishing and consequently earn a higher profit.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $6,767 or less than 1% to
$1,764,126  for the year ended  December 26, 1998 from  $1,770,893  for the year
ended December 27, 1997.

Liquidity and Capital Resources

The Company's liquidity needs arise from working capital  requirements,  capital
expenditures,  and principal and interest payments.  Historically, the Company's
primary  source  of  liquidity  has been  cash flow  generated  internally  from
operations,  supplemented by bank borrowings and long term equipment  financing.
The Company's  cash  increased to $ 1,992,265 on December 31, 1999 from $ 16,146
on December 26, 1998.

Cash  flow used in  operating  activities  was $  1,596,687  for the year  ended
December  31,  1999 on a net  loss of $  1,969,368.  The  increase  in  accounts
receivable is the result of tooling  invoiced in December and collectable in the
following  quarter.  Working capital was used to reduce  accounts  payable to an
acceptable level. Cash used in investing  activities for the year ended December
31, 1999 was  $802,860,  which  consisted  of cash for the  purchase of tooling,
molds,  machinery  and  equipment and a loan to Azurel Ltd with whom the Company
entered  into  an exclusive supply  agreement.  In October the Company converted
$253,000 of trade  receivables from a related party to a 5 year  Promissory note
paying  principal and 8% annual  interest on a monthly  basis over 5 years.  The
note is current through the date of this filing.

                                       11
<PAGE>

Net cash provided by financing  activities  for the year ended December 31, 1999
was $ 4,375,666.  On April 23, 1999, the Company  offered for sale to the public
1,250,000 shares of its common stock at $4.50 per share and 1,250,000 redeemable
common stock  purchases  warrants at $0.10 to purchase one share of common stock
at $ 5.00 per share.  The Company  received  approximately  $  4,300,000  of net
proceeds from the initial public  offering.  Additionally,  on June 10, 1999 the
Underwriter  exercised  it's over allotment  option in full to purchase  187,500
additional  shares of the Company's common stock and 187,500  redeemable  common
stock purchase  warrants.  The Company  received  approximately  $750,000 of net
proceeds  from this  transaction.  Combined net proceeds to the Company from the
initial public offering and over allotment totaled approximately $ 4,900,000.

Cash of $ 1,536,520 was provided from borrowings on available credit lines. Cash
of $ 2,329,748 was used to make principal  payments on loans.  In December,  the
Company acquired bank financing from European American Bank (EAB). The financing
agreement includes a demand  note of $1,250,000and a term  loan of $500,000. The
loan is secured by accounts receivable, inventory  and a  $1,000,000 certificate
of deposit which is restricted from use until the Company earns $100,000 year to
date net profit. In addition, there is a maximum leverage  and  minimum  capital
base requirement. The minimum capital  base was  not met.  On March 30, 2000 EAB
issued  a  wavier for the  minimum  capital   base  requirement and amended such
requirement to $2,000,000. However, EAB has prohibited the Company from  drawing
any  additional funds from the lines of credit  until  further  review. With the
proceeds of the loans the $ 1,000,000, revolving line of  credit  with  Republic
National Bank was paid in full.

 Year 2000 Computer System Compliance

No problems were  encountered with the Company's  computer  hardware or software
due to the Year 2000 issue.

The Year 2000 readiness of certain major  suppliers and customers of the Company
is  unclear.  While the  Company  believes  that its own  systems  are Year 2000
compliant, if a significant number of the Company's suppliers and customers were
to  experience  business  disruptions  as a result  of their  lack of Year  2000
readiness,  their problems could have a material adverse effect on the financial
position and results of operations of the Company.

Exclusive Supply Agreement between the Company and Azurel ltd.

The Company entered into an exclusive supply agreement with Azurel Ltd. (Azurel)
dated July 7, 1999 ("the  Agreement").  Pursuant to the  Agreement,  the Company
loaned $ 500,000 to Azurel in exchange for the exclusive  right to supply Azurel
with any and all products imported by or on behalf of Azurel.  In addition,  the
Company  received  warrants,  expiring  December 31, 2004,  to purchase  100,000
shares of Azurel  common  stock at a  purchase  price of $ 1.50 per  share.  The
Company has not received any orders through March 26, 2000.

On December 23, 1999,  the terms of the loan  agreement  were extended  allowing
principal  payments to begin on January 15, 2000. In consideration for extending
the principal  payments,  the Company received an additional  50,000 warrants to
purchase  shares of Azurel Ltd.  Common stock at an exercise price of $ 1.50 per
share.  Interest continues to accrue at 8 % per year on all unpaid balances.  As
of the date of this filing,  no principal or interest  payments  have been made.
The note is past due and no repayments  have  been  made. The Company is in  the
process of negotiating new repayment terms.

Cautionary Factors Regarding Future Operating Results

The matters  discussed  in this form 10-QSB other than  historical  material are
forward-looking  statements.  Any such  forward-looking  statements are based on
current expectations of future events and are subject to risks and uncertainties
which could cause actual results to vary materially from those indicated. Actual
results could differ due to a number of factors, including negative developments
relating to unforeseen order cancellations or push outs, the company's strategic
relationships,  the impact of intense  competition  and changes in our industry.
The Company assumes no obligation to update any forward-looking  statements as a
result of new information or future events or developments.

                                       12
<PAGE>

ITEM 7. Financial Statements

Index to Consolidated Financial Statements

                                                                           PAGE

Independent Auditors' Report                                                 F-1
Consolidated Balance Sheet                                                   F-2
Consolidated Statement of Operations                                         F-3
Consolidated Statement of Changes in Stockholders Equity                     F-4
Consolidated Statement of Cash Flows                                         F-5
Notes to Consolidated Financial Statements                           F-6 to F-15
<PAGE>
                                       F-1

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
International Smart Sourcing, Inc.
Farmingdale, New York

We have audited the  accompanying  consolidated  balance sheet of  International
Smart Sourcing,  Inc. and Subsidiaries,  as of December 31, 1999 and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
the years ended  December 31, 1999 and December  26,  1998.  These  consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  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
misstatements.  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, the
financial position of International Smart Sourcing,  Inc. and Subsidiaries as of
December 31, 1999 and the results of their  operations  and their cash flows for
each of the years ended  December 31, 1999 and  December 26, 1998 in  conformity
with generally accepted accounting principles.

                                    /S/Feldman Sherb Horowitz & Co., P.C.
                                    Feldman Sherb Horowitz & Co., P.C.
                                    Certified Public Accountants

New York, New York
March 2, 2000

(March 30, with respect to
 the last paragraph of Note 7)

                                      F-1
<PAGE>

               INTERNATIONAL SMART SOURCING, INC. AND SUBSIDIARIES


                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 1999

                                     ASSETS

CURRENT ASSETS:

    Cash .....................................................  $       992,265
    Cash - restricted............................................     1,000,000
    Accounts receivable - net of allowance for
       doubtful accounts of $11,000  ............................       578,323
    Notes receivable ( including $42,894 from related party) ....       560,510
    Inventories .................................................       787,331
    Prepaid expenses and other current assets ...................       298,261
                                                                    ------------
       TOTAL CURRENT ASSETS .....................................     4,216,690


Property and Equipment - net ....................................       667,052
Goodwill - net ..................................................     1,564,352
License agreement - net .........................................       450,000
Note receivable-related party ...................................       210,256
Other assets ....................................................       310,817
                                                                    ------------

       TOTAL ASSETS ..........................................  $     7,419,167
                                                                    ============
                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

    Accounts payable and accrued expenses ..................... $       927,532
    Current portion of long tem debt ............................       714,479
    Current portion of obligations under capital lease ..........        53,437
                                                                    ------------
       TOTAL CURRENT LIABILITIES ................................     1,695,448


    Long tem debt ...............................................       644,832
    Obligations under capital lease .............................        54,312
                                                                    ------------

       TOTAL LIABILITIES ........................................     2,394,592
                                                                    ------------
STOCKHOLDERS' EQUITY:

    Common Stock, $0.001 par value, 10,000,000 shares authorized,
       issued and outstanding 3,382,500 .........................         3,383
    Additional paid-in capital ..................................     6,852,204
    Accumulated deficit .........................................    (1,831,012)
                                                                    ------------
       TOTAL STOCKHOLDERS' EQUITY ...............................     5,024,575
                                                                    ------------

                                                                $     7,419,167
                                                                   =============
                 See notes to consolidated financial statements.

                                       F-2
<PAGE>

               INTERNATIONAL SMART SOURCING, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                          Year Ended
                                                 -------------------------------
                                                 December 31,       December 26,
                                                    1999               1998
                                                 ------------       ------------

NET SALES ..........................             $  4,919,095       $ 5,883,001
COST OF GOODS SOLD .................                3,631,143         4,153,387
                                                 ------------       ------------
     GROSS PROFIT ..................                1,287,952         1,729,614
                                                 ------------       ------------
OPERATING EXPENSES

     Selling and shipping ..........                1,374,194           583,980
     General and administrative ....                1,932,736         1,180,146
                                                 ------------       ------------
        TOTAL OPERATING EXPENSES ...                3,306,930         1,764,126
                                                 ------------       ------------

LOSS FROM OPERATIONS ...............               (2,018,978)          (34,512)

     Interest income ...............                  180,793              --
     Interest expense ..............                 (201,493)         (190,074)
                                                 ------------       ------------
NET LOSS BEFORE TAXES ..............               (2,039,678)         (224,586)

BENEFIT (PROVISION) FOR INCOME TAXES                   70,310           (66,760)
                                                 ------------       ------------

NET LOSS ...........................             $ (1,969,368)     $   (291,346)
                                                 =============      ============

NET LOSS PER SHARE - BASIC .........             $      (0.68)      $     (0.19)
                                                 =============      ============

WEIGHTED AVERAGE COMMON SHARES .....                2,913,000         1,502,472
                                                 =============      ============
Net loss ...........................                                $  (291,346)
Pro forma income tax benefit .......                                     98,000
                                                                    ------------

Pro forma net loss .................                                $  (193,346)
                                                                    ============
Pro forma loss per share - basic ...                                $     (0.13)
                                                                    ============

Weighted average comon shares used .                                  1,502,472
                                                                    ============

                 See notes to consolidated financial statements.

                                       F-3
<PAGE>
                       INTERNATIONAL SMART SOURCING, INC.
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>


                                                   Common Stock          Additional      Retained
                                              -----------------------     Paid In        Earnings
<S>                                          <C>            <C>          <C>             <C>           <C>

                                               Shares        Amount       Capital        (Deficit)      Total

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

Balance December 28, 1997                     1,500,000 $       1,500 $     317,941 $     131,403 $     450,844

     Net Loss                                     -             -             -          (291,346)     (291,346)

     Distributions                                -             -             -          (114,900)     (114,900)

     Issuance of stock for acquisition of CDP   445,000           445     1,999,555          -        2,000,000

     Termination of S Corporation                 -             -          (413,199)      413,199         -
                                             ----------    ----------    -----------    ---------     ----------

Balance December 26, 1998                     1,945,000         1,945     1,904,297       138,356     2,044,598


     Net Loss                                     -             -             -        (1,969,368)   (1,969,368)
     Initial Public Offering                  1,437,500         1,438     4,895,707          -        4,897,145
     Issuance of stock options to consultants     -             -            52,200          -           52,200


                                            ===========   ===========   ===========   ===========   ===========
Balance December 31, 1999                     3,382,500 $       3,383 $   6,852,204 $  (1,831,012)$   5,024,575
                                            ===========   ===========   ===========   ===========   ===========


</TABLE>



                 See notes to consolidated financial statements.

                                       F-4


<PAGE>
               INTERNATIONAL SMART SOURCING, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
                                                                                                          Year Ended
                                                                                                  -------------------------
                                                                                                  December 31,  December 26,
                                                                                                     1999          1998
                                                                                                  ------------   -----------
<S>                                                                                                  <C>           <C>

Cash flows from operating activities:

    Net loss                                                                                     $(1,969,368)   $ (291,346)
                                                                                                  -----------     ---------
Adjustments to reconcile net loss to net
    cash (used in) provided by operating activities:

        Depreciation                                                                                 273,301       272,575
        Amortization                                                                                 223,800          -
        Non-cash compensation related
           to issuance of options                                                                     52,200          -
Changes in Assets and Liabilities:
    Decrease (increase) in accounts receivable                                                       (66,801)      169,949
    Decrease (increase) in accounts receivable from related parties                                  381,911      (635,061)
    (Increase) decrease in inventories                                                                (2,331)      258,011
    Increase in prepaid expenses and other current assets                                           (188,630)      (13,605)
    (Increase) decrease in other assets                                                             (236,997)       38,537
    (Decrease) increase in accounts payable and accrued expenses                                     (63,772)      572,334
                                                                                                  -----------   -----------
           Total adjustments                                                                         372,681       662,740
                                                                                                  -----------   -----------
Net cash (used in) provided by operating activities                                               (1,596,687)      371,394
                                                                                                  -----------   -----------
Cash flows from investing activities:

    Cash acquired in acquisition                                                                        -            2,611
    Expenditures for property and equipment                                                         (302,860)     (242,080)
    Loans to another company                                                                        (500,000)         -
                                                                                                  -----------   -----------
Net cash used in investing activities                                                               (802,860)     (239,469)
                                                                                                  -----------   -----------
Cash flows from financing activities:

    Deferred offering costs                                                                             -         (346,859)
    Increase in due from related parties                                                                -          (86,355)
    Distributions                                                                                       -         (114,900)
    Net proceeds from initial public offering                                                      5,244,004          -
    Capital lease repayments                                                                         (75,110)         -
    Proceeds from borrowings                                                                       1,536,520       320,000
    Principal payments on loans                                                                   (2,329,748)     (239,405)
                                                                                                  -----------   -----------

Net cash provided by (used) in financing activities                                                4,375,666      (467,519)
                                                                                                  -----------   -----------
Net increase (decrease) in cash                                                                    1,976,119      (335,594)

Cash - beginning of period                                                                            16,146       351,740
                                                                                                  -----------   -----------

Cash - end of period                                                                             $ 1,992,265   $    16,146
                                                                                                  ===========   ===========

Supplemental disclosure of cash flow information:
    Cash paid during the year for

        Interest                                                                                 $   170,757   $   215,903
                                                                                                  ===========   ===========

    Non-cash financing and investing activities:

        Issuance of common stock for acquisition of subsidiary                                   $     -       $ 2,000,000
                                                                                                  ===========   ===========
        Issuance of common stock options for services                                            $    52,200   $     -
                                                                                                  ===========   ===========
        Purchase of equipment through capital leases payable                                     $    44,773   $     -
                                                                                                  ===========   ===========
                 See notes to consolidated financial statements.

                                       F-5
</TABLE>
<PAGE>



                       INTERNATIONAL SMART SOURCING, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       BUSINESS OF THE COMPANY

          International Smart Sourcing, Inc.  ("International") was incorporated
          in February 1998 in  Delaware as a holding company for the  purpose of
          acquiring  the  common  stock of Electronic Hardware Corp. ("EHC") and
          Compact  Disc  Packaging Corp. ("CDP") in contemplation of  an initial
          public offering of International's stock (the  "Offering"),  which was
          completed in April 1999.

         Under an agreement and plan of reorganization,  dated December 24.1998,
         International  issued  1,500,000  shares  of its stock for the stock of
         EHC. After the  reorganization,  the shareholders of EHC owned the same
         proportionate  interest of  International  as was owned of EHC.  EHC, a
         company located in Farmingdale, New York, manufactures injection molded
         plastic  components used in consumer,  industrial and military products
         sold in the United States.  Accordingly,  the  reorganization  has been
         accounted for as a combination of commonly  controlled entities and the
         accompanying   financial   statements   presented  herein  present  the
         financial  position  and  results  of  operations  and  cash  flows  of
         International  and EHC as if they had  been  combined  for all  periods
         presented,

         Under another agreement and plan of reorganization,  dated December 24,
         1998, International issued 445,000 shares of its stock for the stock of
         CDP, a development  stage enterprise which was incorporated in Delaware
         on January 31, 1995 to  manufacture  and market a  proprietary  compact
         disc  packaging  system.  CDP was owned  prior to its  merger  with the
         Company by one of the  shareholders  of EHC and one other  shareholder.
         Such  transaction is being  accounted for under the purchase  method of
         accounting commencing on the date of the transaction.

         Under such method of accounting, an acquiring corporation allocates the
         cost of an  acquired  company to the assets  acquired  and  liabilities
         assumed  on the  basis of their  fair  value.  The  excess  of the cost
         acquired  over  the  amounts  assigned  to  identifiable   assets  less
         liabilities  assumed is recorded as goodwill.  International  based the
         value of the shares issued for the  acquisition  of CDP on the proposed
         initial public offering price of its shares and has substantiated  such
         cost and its  allocation  to  identifiable  assets,  as per  Accounting
         Principles Board Opinion No.16.  Accordingly,  International  allocated
         $500,000 to license cost and $1,738,000 to goodwill.

         The following  unaudited  pro-forma  summary  combines the consolidated
         results  of  operations  of  International,  EHC  and  CDP  as  if  the
         acquisition had occurred at the beginning of 1998,  after giving effect
         to certain adjustments, including amortization.

                                      F-6
<PAGE>

                                                                 Year Ended
                                                               December 26, 1998

                                                                 (Unaudited)

                     Net sales                             $           5,883,001

                     Net loss                              $           (492,072)

                     Net loss per common share             $              (0.25)


         The  pro-forma  results do not  necessarily  represent the results that
         would have  occurred  if the  acquisition  had taken place on the basis
         assumed  above,  nor are  they  indicative  of the  results  of  future
         combined operations.

         In May 1999,  International formed International  Plastic Technologies,
         Inc. ("IPT") d/b/a  International  Smart Sourcing.  This subsidiary was
         created  to  offer   services,   to  United   States  based   companies
         manufacturing  in the plastic  injection  mold  industry,  in acquiring
         molds and finished goods in the People's Republic of China.

         Hereinafter,  International, EHC, IPT and CDP are collectively referred
         to as the "Company".

         In April 1999 the Company  consummated the Offering of 1,250,000 shares
         of common stock at $4.50 per share and 1,250,000 redeemable warrants at
         $0.10 per  warrant to purchase  one share of common  stock at $5.00 per
         share. The warrants are exercisable for a five-year  period  commencing
         one year  from  the  date of  issuance.  In June  1999 the  underwriter
         exercised their right to sell 187,500 shares of common stock as part of
         an over-allotment as well as 187,500 redeemable warrants.  Net proceeds
         form the Offering and the subsequent over-allotment, after underwriting
         commissions and other related fees, was approximately $4,900,000.

         The Company  agreed to retain the  underwriter  as a  consultant  for a
         period of two years after the offering for a fee of $120,000, which was
         paid upon the consummation of the Offering.

2.       SIGNIFICANT ACCOUNTING POLICIES

         (a)      Fiscal Year - The Company operates on a "52-53 Week" reporting
                  year ending on the last Friday of the month.

         (b)      Use of Estimates -The  preparation of financial  statements in
                  conformity  with  generally  accepted  accounting   principles
                  requires  management to make  estimates and  assumptions  that
                  effect the  reported  amounts of assets  and  liabilities  and
                  disclosure of contingent assets and liabilities at the date of
                  the financial  statements and the reported  amounts of revenue
                  and expenses during the reporting period. Actual results could
                  differ from those estimates.

                                      F-7
<PAGE>



         (c)      Recognition of Revenue - Revenue is recognized upon completion
                  of the sale,  which  is  when  the  goods  are  shipped to the
                  customer.

         (d)      Principles  of  Consolidation  -  The  consolidated  financial
                  statements  include  the  accounts  of  the  Company  and  its
                  subsidiaries. All material intercompany transactions have been
                  eliminated.

         (e)      INVENTORIES -  INVENTORIES  ARE STATED AT THE LOWER OF COST or
                  market.  Cost  is  determined  by the  use  of  the  first-in,
                  first-out method.

         (f)      DEPRECIATION  AND  AMORTIZATION - FIXED assets are depreciated
                  on the straight line basis over the estimated  useful lives of
                  the related assets. Leasehold improvements are being amortized
                  on the straight  line basis over the shorter of the  estimated
                  useful  life of the  improvements,  which is 10 years,  or the
                  life of the lease.

         (g)      Income  Taxes - Prior  to  December  24,  1998 EHC had made an
                  election to be treated as an S Corporation. Accordingly, under
                  such election, income taxes were paid by their shareholders on
                  the shareholders' proportionate share of income. International
                  was  incorporated as a C corporation and,  accordingly,  taxes
                  have been  provided on income  generated by  International  in
                  1998.  Pro forma income taxes have been  calculated in 1998 as
                  if EHC was a C  corporation  for Federal and State  income tax
                  purposes.

                  The Company  recognizes  deferred  tax assets and  liabilities
                  based on the  difference  between  the  financial  statements'
                  carrying   amount   and  the  tax  basis  of  the  assets  and
                  liabilities,  using  the  effective  tax rates in the years in
                  which the  differences  are  expected to reverse.  A valuation
                  allowance related to deferred tax assets is also recorded when
                  it is  probable  that some or all of the  deferred  tax assets
                  will not be realized.

         (h)      Basic Net Income and Pro Forma Per Share Net  Income-Basic Net
                  income per share and pro forma  income per share are  computed
                  based  on  the  weighted   average  number  of  common  shares
                  outstanding  during  the  period.   Stock  options  have  been
                  excluded as common stock  equivalents in the diluted  earnings
                  per share because their effect would be anti-dilutive.

         (i)      Accounting   for   Long-Lived   Assets-The   Company   reviews
                  long-lived  assets for impairment  whenever  circumstances and
                  situations  change such that there is an  indication  that the
                  carrying  amounts may not be recovered.  At December 31, 1999,
                  the Company  believes that there has been no impairment of its
                  long-lived assets.

         (j)      Goodwill-Goodwill  resulting  from the  acquisition  of CDP is
                  amortized on a straight-line  basis over 10 years. The Company
                  periodically  assesses the  recoverability  of the cost of its
                  goodwill  based on a review  of  projected  undiscounted  cash
                  flows of CDP.  These cash flows are  prepared  and reviewed by
                  management in connection with the Company's  annual long range
                  planning process.

                                       F8
<PAGE>


         (k)      License  Fee-The  license fee  resulting  from the acquisition
                  of CDP is amortized on a straight line basis over 10 years.


         (l)      Stock Based  Compensation - The Company accounts for its stock
                  option plan under APB Opinion  No. 25,  "Accounting  for Stock
                  Issued to Employee,"  ("APB 25"). The Company has also adopted
                  Statement of  Accounting  Standards No. 123,  "Accounting  for
                  Stock-Based Compensation," (SFAS 123) for disclosure purposes,
                  and has adopted the proforma  disclosure  requirements of SFAS
                  123.

         (m)      Concentration  of credit  risk -  Financial  instruments  that
                  potentially subject the Company to significant  concentrations
                  of  credit  risk  consist  of cash and trade  receivables.  At
                  times, the cash in any one bank may exceed the Federal Deposit
                  Insurance Corporations $100,000 limit. As of December 31, 1999
                  the  Company  had  approximately  $1,800,000  in excess of the
                  limit.  The Company  places its cash with high credit  quality
                  financial  institutions.  In  regards  to  trade  receivables,
                  management  believes the risk is relatively limited due to the
                  credit assessment of its customers.

3.       INVENTORIES

         Inventories consist of the following at December 31, 1999:

                  Raw Materials                             $             56,811
                  Work in Process                                         80,140
                  Finished Goods                                         418,292
                  Components                                             232,088
                                                                ----------------
                                                            $            787,331
                                                                ================


4.       NOTES RECEIVABLE

         In July and August 1999 the Company loaned to another  company in which
         it has an exclusive  supply  agreement,  an aggregate of $500,000 at an
         interest rate of 8% per annum. The Company received 150,000 warrants to
         purchase  the  common  stock of the  company  to which it issued  these
         loans.  The original  terms of the loan were to have the loan repaid by
         November 15,  1999.  The note is past due and no  repayments  have been
         made.  The  borrower  has  requested  and the  Company  has  agreed  to
         negotiate new repayment  terms. As of December 31, 1999 the outstanding
         balance receivable is $517,616 including accrued interest.

                                      F-9
<PAGE>

5.       PROPERTY AND EQUIPMENT

         Property and  equipment  are comprised of the following at December 31,
1999:

                                                 Life
                                            -----------------
           MACHINERY AND EQUIPMENT            5-10 YEARS        $      3,175,104
           Tools, Dies and Molds              5-10 Years               1,618,824
           Leasehold Improvements             10 Years                   217,836
           Office Furniture and Fixtures      5 Years                    202,918
                                                                ----------------
                                                                       5,214,682

           Less: accumulated depreciation and
           amortization                                                4,547,630
                                                                ----------------
                                                               $         667,052
                                                                ================


6.       OBLIGATIONS UNDER CAPITAL LEASES

         The Company  leases  certain  equipment  under  various  capital  lease
         arrangements expiring through February 2002:
<TABLE>
         <S>                                                    <C>    <C>    <C>    <C>    <C>    <C>

                                                   Current  Long-
                                                   Portion  Term
                                                           Portion      Total
                                                  --------  ---------  ---------
         Total minimum lease payments            $ 62,569   $ 64,403   $ 126,972
         Less: Amounts representing interests       9,132     10,091      19,223
                                                  --------  --------   ---------
                                                 $ 53,437   $ 54,312   $ 107,749
                                                 =========  ========   =========
</TABLE>

        Future minimum lease payments are as follows:

           2000                                     $  53,437
           2001                                     $  48,214
           2002                                     $   6,098


7.       LONG-TERM DEBT

         In  September  1999,  the Company  repaid its term loan to their former
         primary commercial bank in the amount of $275,000, from the proceeds of
         the Offering.  In December  1999,  the Company  borrowed from their new
         primary  commercial bank $1,000,250 in the form of a line of credit and
         $500,000 in the form of a term loan. The Company used these proceeds to
         repay their prior  commercial bank, which had extended a revolving line
         of credit of $1,000,000. As of December 31, 1999 the Company owed their
         new  commercial  bank  $500,250 on their line of credit and $493,122 on
         their term loan.In  addition,  the Company is required  to  maintain on
         deposit with the bank a  $1,000,000  certificate  of deposit,  which is
         pledged  as  security  for the loans  until such time as the  Company's
         annual net income is $100,000 or greater.

                                      F-10
<PAGE>

         Long-term debt is comprised of the following at December 31, 1999:
<TABLE>
<CAPTION>
          <S>                                                                      <C>

     (a)  Term loan  payable,  bank,  due  December  2005,  payable  in  monthly
          installments of $10,382 of principal plus interest at prime plus 1/2 %
          (9.01% at December 31, 1999).  The loan is guaranteed by the Company's
          three  officers/shareholders  and  requires the Company to comply with
          certain
          covenants ............................................................    $     493,122

     (b)  Line of credit,bank (available up to $1,250,000), payable upon demand,
          bearing   interest  at  prime  plus  1/4  %  (8.75%  at  December  31,
          1999). The loan requires the Company to comply with certain covenants.          500,250

     (c)  Loan agreement payable in monthly  installments of $2,903 of principal
          and interest at 7% per annum due February 2007. The loan is guaranteed
          by the Company's three officers/shareholders..........................          195,857

     (d)  Various loans payable to officer/shareholders, all bearing interest at
          10% per annum,  payable in monthly installments ranging from $2,656 to
          $4,664 including interest.  The loans are due at various dates through
          July 2001.............................................................          170,082
                                                                                   ---------------
                                                                                        1,359,311
                  Less current maturities                                                 714,479
                                                                                   ----------------
                                                                                     $    644,832
                                                                                   ================
</TABLE>



         Long term debt matures as follows:

         2000 (including line of credit payable on demand).... $         714,479
         2001..................................................          175,881
         2002..................................................          125,025
         2003..................................................          136,225
         2004..................................................          138,055
         Thereafter............................................           69,646
                                                                    ------------
                                                                    $  1,359,311
                                                                    ============



         The loans are secured by  substantially  all the assets of the Company.
         The  Company   estimates  that  the  fair  value  of  the  above  loans
         approximates their carrying value.

         The Company was in violation of one of its covenants which requires  it
         to maintain a capital base, as defined, of $3,400,000  at  December 31,
         1999. On March 30,2000, the bank has issued a waiver for such  covenant
         and  amended  the  requirement  to  $2,000,000. However, the  bank  has
         restricted  the  Company  from  any  further  borrowings on its line of
         credit. Such restriction is subject to negotiation between the  Company
         and the bank.

                                      F-11
<PAGE>


8.       INCOME TAXES

         The (provision) benefit for income taxes consists of the following:

                                                        Year ended
                                          --------------------------------------
                                                December 31,        December 26,
                                                    1999                1998
                                          -------------------    ---------------
         (Current Taxes) Benefit:
              Federal                     $      55,000            $    (61,000)
              State                              15,000                  (6,000)

                                          -------------------   ----------------
                                          $      70,000            $    (67,000)
                                          ===================   ================

         The  (provision)  benefit  for  income  taxes  differs  from the amount
         computed by applying the  statutory  federal  income tax rate to income
         before (provision) benefit for income taxes as follows.


                                                          Year ended

                                          --------------------------------------
                                               December 31,         December 26,
                                                   1999                 1998
                                          -------------------   ----------------


         Income tax benefit(provision)computed
         at the Federal statutory rate           $   693,000      $       76,000

         Deductionsfor which no benefit is
         recognized                                 (638,000)          (137,000)

         State income tax benefit(provision)          15,000             (6,000)
                                           ------------------    ---------------
       Income tax benefit (provision)            $    70,000      $     (67,000)
                                           ==================    ===============

         The Company has a net  operating  loss carry  forward for tax  purposes
         totaling approximately  $1,500,000 at December 31, 1999 expiring in the
         year 2017. The resulting tax deferred asset of  approximately $ 510,000
         has been offset by a corresponding valuation allowance.

9.       RETIREMENT PLAN

         The Company  sponsors a 401(k)  savings  plan  covering  all  non-union
         employees who have  attained the age of 21 and have  completed 3 months
         of  service.  Participants  may  contribute  up to 15% of their  annual
         compensation,  subject to certain limitations. In addition, the Company
         may make contributions to the plan. During the years ended December 31,
         1999 and December 26, 1998, the Company did not make any  contributions
         to the plan.

10.    CASH GAIN SHARING PROGRAM

         The  Company's  full time,  non-union  employees  and other key company
         employees  receive  additional   compensation  as  determined  by  cash
         profits, as defined, under the Cash Gain Sharing Program. For the years
         ending  December 31, 1999 and December 26, 1998 there was no additional
         compensation earned.

                                      F-12
<PAGE>


11.      STOCK OPTION AND GRANT PLAN

         In March 1998, the Company adopted the Stock Option and Grant Plan (the
         "Plan") which provides for the aggregate grant of 300,000 shares of the
         Company's common stock or options to purchase shares of common stock.

         For disclosure  purposes the fair value of each stock option granted is
         estimated on the date of grant using the  Black-Scholes  option-pricing
         model with the following  weighted-average  assumptions  used for stock
         options  granted  during the year ended  December 31, 1999:  (i) annual
         dividends of $0.00,  (ii) expected  volatility of 81%, (iii)  risk-free
         interest rate of 5.7%, and (iv) option life of five years. The weighted
         average  fair  value of the stock  options  granted  for the year ended
         December 31, 1999 was $2.90.

         On August 5, 1999 the Company  granted  stock  options to key employees
         and consultants.  The number of options issued in aggregate was 136,000
         options  with the right to purchase the  Company's  common  stock,  par
         value  $0.01 per share,  for a purchase  price of $4.00 per share.  The
         options vest on the second  anniversary of the issue date and expire on
         the fifth anniversary of the issue date. Of these options issued 33,000
         were for  consultants,  for various  services  rendered during the year
         ended December 31, 1999. The Company has recorded $52,200 in consulting
         expenses related to these options.  The remaining  103,000 options were
         issued to employees of the Company. In accordance with SFAS No. 123, if
         the Company recognized compensation cost in the current year for theses
         options  the pro  forma  net loss and net  loss per  share  would be as
         follows:

                 Net loss to shareholders

                                      As reported  $         (1,969,368)
                                        Pro Forma  $         (2,044,043)

                 Net loss per share:

                                      As reported  $              (0.67)
                                        Pro Forma  $              (0.70)

                                      F-13
<PAGE>


         The following table summarizes the options and warrants outstanding and
         the related prices for the shares of the Company's common stock:

<TABLE>
<CAPTION>

                                                 Options                                            Warrants

                              -----------------------------------------------     ----------------------------------------------
                              ----------- --- ------------- -- --------------     ------------ --- -----------
<S>                          <C>              <C>               <C>               <C>             <C>              <C>

                                               Price Per         Number of                                          Number of
                              Number of       Share Range         Shares           Number of       Price Per          Shares

                                Shares                          Exercisable         Shares           Share         Exercisable

                              -----------     -------------    --------------     ------------     -----------     -------------
                              -----------     -------------    --------------     ------------                     -------------
Outstanding at

December 27, 1998                 -                -                 -                 -               -                -
      Granted                    161,000   $   4.00 - 4.50           -              1,427,500  $         5.00           -
                              -----------
                              ===========     =============    ==============     ============     ===========     =============
Outstanding at

December 31, 1999                161,000   $   4.00 - 4.50           -              1,427,500   $        5.00           -
                              ===========     =============    ==============     ============     ===========     =============

</TABLE>



12. KEY MAN LIFE INSURANCE

         The Company is the  beneficiary of a $500,000 life insurance  policy on
         the life of the President of the Company.

13. COLLECTIVE BARGAINING AGREEMENT

         The Company's factory employees and factory supervisors are represented
         by a collective  bargaining agreement between Local 531,  International
         Brotherhood  of  Teamsters,  AFL-CIO and the  Company.  Such  agreement
         expires in May 2001.

14. RELATED PARTY TRANSACTIONS

    a.            Sales  during the years ended  December  31, 1999 and December
                  26, 1998 included $631,000 and $1,227,000,  respectively to an
                  affiliated company owned by three  officer/stockholders of the
                  Company. Gross profit on such sales was approximately $125,000
                  and  $363,000  for the  years  ended  December  31,  1999  and
                  December  26,  1998,  respectively.  In  September  1999,  the
                  Company  converted  the  outstanding  accounts  receivable  of
                  $253,150 from the  affiliate  company into a term loan bearing
                  interest at 8% per annum,  with monthly  payments of principal
                  and interest of $5,133 commencing January 1, 2000 with a final
                  due date of January 1, 2005. Subsequent to the issuance of the
                  note,  additional  sales  resulted in accounts  receivable  of
                  $42,894 from this affiliated company at December 31, 1999.

    b.            The Company leases its premises from a company owned by two of
                  the officer/stockholders of the Company at an annual rental of
                  $146,000. Such lease expires in December 2005. The mortgage on
                  the premises in the amount of $515,284 at December 31, 1999 is
                  guaranteed by the Company.

    c.            During the year ended December 26, 1998,  the Company  entered
                  into    a    consulting    agreement    with    one   of   its
                  officer/stockholders.   The   Company   executed   a  $150,000
                  promissory note due within 30 days after the effective date of
                  the Offering with interest at 6% per annum for such  services.
                  This note was repaid in May 1999.

    d.            The Company  subleased part of its premises to another company
                  owned by two of the  officers/stockholders  for an annual rent
                  of $2,300 in 1998.  The  sublease was  terminated  in January,
                  1999 and no rent was received in 1999.

    e.            In March 1998, the Company entered into employment  agreements
                  with its three  officer/stockholders  for a period of 10 years
                  at an aggregate annual base salary of $325,000. Such agreement
                  provides  for  increases  at the greater of 5% or the consumer
                  price index and an annual bonus to be  determined by the Board
                  of Directors.

                                       F14
<PAGE>

   f.            In March 1998, the Company  entered into a ten year  consulting
                 agreement  with an  individual  who is also a  director  of the
                 Company  in  connection  with the  Company's  plans to  develop
                 manufacturing  resources  in the  People's  Republic  of  China
                 ("China").  Such  individual  will be paid at an hourly rate as
                 mutually  determined  and agreed  upon by the  Company  and THE
                 INDIVIDUAL,   AND  1.5%  OF  THE  NET  COST  OF  ALL   PRODUCTS
                 MANUFACTURED  IN CHINA (AS DEFINED) UP TO  $5,000,000  per year
                 and 1% of net costs in excess of  $5,000,000.  During  the year
                 ended December 31, 1999 such  individual  also RECEIVED  25,000
                 OPTIONS TO PURCHASE  SHARES OF COMMON STOCK AT $4.50 per share.
                 The options  vest on the second  anniversary  of the  effective
                 date of the issuance.

15.      LICENSE AGREEMENT

         In March 1998, the Company entered into an exclusive  license agreement
         with a corporation,  which grants the Company the rights to manufacture
         market and sell a compact disc packaging system.  The Company shall pay
         such  corporation  annual ROYALTIES OF 2% OF NET SALES AND 25% of other
         fees,  as  defined,  plus an  initial  fee of  $30,000.  The  exclusive
         provisions  of the  license  agreement  are subject to  termination  if
         certain  minimum royalty levels are not obtained or if the Company does
         not  obtain a  $1,000,000  cash  investment  within  24  months  of the
         agreement. During the year ended December 31, 1999 the Company incurred
         an expense of $30,000 in minimum royalty payments as per the agreement.

16.  PREFERRED STOCK

         The Board of Directors of the Company is  authorized,  without  further
         action of the  stockholders  of the  Company,  to issue up to 1,000,000
         shares of  Preferred  Stock in one or more classes or series and to fix
         the rights, preferences, privileges and restrictions thereof, including
         dividend rights, conversion rights, voting rights, terms of redemption,
         liquidation  preferences,  and the  number of shares  constituting  any
         series or the designation of such series.

17.      STOCKHOLDERS' AGREEMENTS

         In March 1998,  the Company  entered into an agreement with each of its
         three  officer/stockholders  which  provides  that in the  event of the
         death of the stockholder  within 24 months after the  consummation of a
         public offering of the Company's  stock,  the estate of the stockholder
         can  require  the  Company  to   repurchase   250,000   shares  of  the
         stockholder's  stock for $500,000.  The repurchase of stock can only be
         made though the use of insurance  proceeds  payable to the Company upon
         the death of the stockholder.

18.      OTHER

         In April  1999,  a former  employee  of the  Company  filed a complaint
         against EHC with the New York State  Division of Human Rights  charging
         violation of the Americans with Disabilities Act covering  disabilities
         relating to employment.  The Company  believes the complaint is without
         merit and is vigorously contesting this matter, the ultimate outcome of
         which cannot be determined at this time

                                      F-15
<PAGE>




<PAGE>

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

Not Applicable


<PAGE>



                                    PART III


ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
--------------------------------------------------------------------------------
WITH SECTION 16(A) OF THE EXCHANGE ACT
--------------------------------------
Incorporated by reference from the Registrant's  definitive proxy statement,  to
be filed in accordance  with rule 14a-101 with the Commission not later than 120
days after the end of the fiscal year covered by this form.

ITEM 10. EXECUTIVE COMPENSATION

Incorporated by reference from the Registrant's  definitive proxy statement,  to
be filed in accordance  with rule 14a-101 with the Commission not later than 120
days after the end of the fiscal year covered by this form.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Incorporated by reference from the Registrant's  definitive proxy statement,  to
be filed in accordance  with rule 14a-101 with the Commission not later than 120
days after the end of the fiscal year covered by this form.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Incorporated by reference from the Registrant's  definitive proxy statement,  to
be filed in accordance  with rule 14a-101 with the Commission not later than 120
days after the end of the fiscal year covered by this form.

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

(A) EXHIBITS (NUMBERED IN ACCORDANCE WITH ITEM 601 OF REGULATION S-B)

EXHIBIT

NO.      Description of Exhibit

2.1      Agreement  and Plan of  Reorganization  between  International  Plastic
         Technologies,  Inc. and CDP and Amendment No.1 effective as of December
         24, 1998  (Incorporated  by reference  to Exhibit 2.1 to the  Company's
         Registration  Statement  on  Form  SB-2  (Registration   Statement  No.
         333-48701 declared effective on April 23, 1999.)

2.2      Agreement  and Plan of  Reorganization  between  International  Plastic
         Technologies,  Inc. and EHC and Amendment No.1 effective as of December
         24, 1998  (Incorporated  by reference  to Exhibit 2.2 to the  Company's
         Registration  Statement  on  Form  SB-2  (Registration   Statement  No.
         333-48701 declared effective on April 23, 1999.)

3.1      Certificate of Incorporation of International  Plastic Technologies Inc
         and Amendment to the  Certificate  of  Incorporation  dated December 7,
         1998(Incorporated   by  reference  to  Exhibit  3.1  to  the  Company's
         Registration  Statement  on  Form  SB-2  (Registration   Statement  No.
         333-48701 declared effective on April 23, 1999.)

3.2      By-Laws of International  Plastic Technologies,  Inc.  (Incorporated by
         reference  to Exhibit 3.2 to the  Company's  Registration  Statement on
         Form SB-2  (Registration  Statement No. 333-48701 declared effective on
         April 23, 1999.)

4.1      Form of Common Stock Certificate  (Incorporated by reference to Exhibit
         4.1 to the Company's  Registration Statement on Form SB-2 (Registration
         Statement No. 333-48701 declared effective on April 23, 1999.)

4.2      Form of Warrant  Certificate  (Incorporated by reference to Exhibit 4.2
         to the  Company's  Registration  Statement  on Form SB-2  (Registration
         Statement No. 333-48701 declared effective on April 23, 1999.)

4.3      Form of Warrant  Agreement  between the Company and  Continental  Stock
         Transfer and Trust Company (Incorporated by reference to Exhibit 4.3 to
         the  Company's   Registration  Statement  on  Form  SB-2  (Registration
         Statement No. 333-48701 declared effective on April 23, 1999.)

4.4      Form of Underwriter's  Warrant Agreement  (Incorporated by reference to
         Exhibit  4.4 to the  Company's  Registration  Statement  on  Form  SB-2
         (Registration  Statement No. 333-48701  declared effective on April 23,
         1999.)

10.1     Employment   Agreement   between  the   Company  and  Andrew   Franzone
         (Incorporated   by  reference   to  Exhibit   10.1  to  the   Company's
         Registration  Statement  on  Form  SB-2  (Registration   Statement  No.
         333-48701 declared effective on April 23, 1999.)

10.2     Employment   Agreement   between   the  Company  and  David  L.  Kassel
         (Incorporated   by  reference   to  Exhibit   10.2  to  the   Company's
         Registration  Statement  on  Form  SB-2  (Registration   Statement  No.
         333-48701 declared effective on April 23, 1999.)

10.3     Employment   Agreement   between   the   Company   and  Harry   Goodman
         (Incorporated   by  reference   to  Exhibit   10.3  to  the   Company's
         Registration  Statement  on  Form  SB-2  (Registration   Statement  No.
         333-48701 declared effective on April 23, 1999.)

10.4     Consulting  agreement  between  the  company  and B.C.  China  Business
         Consulting,  Inc. and letter Agreement  between the Company and Bao-Wen
         Chen dated March 1, 1998,  as amended  (Incorporated  by  reference  to
         Exhibit  10.4 to the  Company's  Registration  Statement  on Form  SB-2
         (Registration  Statement No. 333-48701  declared effective on April 23,
         1999.)

10.5     Consulting  Agreement  between  the  Company  and  Network 1  Financial
         Securities,  Inc.  (Incorporated  by  reference  to Exhibit 10.5 to the
         Company's Registration  Statement on Form SB-2 (Registration  Statement
         No. 333-48701 declared effective on April 23, 1999.)

10.6     Lease  Agreement  between the Company and K&G Realty  Associates  dated
         December 19,  1989,  Rider to Lease  Agreement  Dated  January  1,1990.
         Letter  Agreement  between the Company and K&G Realty  Associates dated
         March 16,1995 and Riders to Lease Agreement dated March 1, l998 and May
         14,1998  (Incorporated  by reference  to Exhibit 10.6 to the  Company's
         Registration  Statement  on  Form  SB-2  (Registration   Statement  No.
         333-48701 declared effective on April 23, 1999.)

10.7     Licensing  Agreement  between  CDP  and  Inch,  Inc.  (Incorporated  by
         reference to Exhibit 10.7 to the  Company's  Registration  Statement on
         Form SB-2  (Registration  Statement No. 333-48701 declared effective on
         April 23, 1999.)

10.8     Promissory  Notes payable to David L. Kassel dated  September 13, 1994,
         August 1, 1996,  December 31, 1997,  and January 1, 1998, and Guarantee
         of CDP Promissory Note dated January 1, 1998 by  International  Plastic
         Technologies,  Inc.  (Incorporated  by reference to Exhibit 10.8 to the
         Company's Registration  Statement on Form SB-2 (Registration  Statement
         No. 333-48701 declared effective on April 23, 1999.)

10.9     Promissory  Notes payable to Harry Goodman dated  September 1, 1994 and
         August  1, 1996  (Incorporated  by  reference  to  Exhibit  10.9 to the
         Company's Registration  Statement on Form SB-2 (Registration  Statement
         No. 333-48701 declared effective on April 23, 1999.)

10.10    Demand Grid Note  between AFC and  Republic  National  Bank of New York
         dated December 1,1997, Term Loan Agreement  Promissory Note between AFC
         and Republic  National Bank of New York dated July 29,1996 and Guaranty
         and  Security  Agreement  by EHC dated July 25, 1996  (Incorporated  by
         reference to Exhibit 10.10 to the Company's  Registration  Statement on
         Form SB-2  (Registration  Statement No. 333-48701 declared effective on
         April 23, 1999.)

10.11    Term Loan Agreement  between EHC and Republic National Bank of New York
         dated July 29, 1996 and Term Loan Agreement  Promissory Note dated July
         29,  1996(Incorporated  by reference to Exhibit  10.11 to the Company's
         Registration  Statement  on  Form  SB-2  (Registration   Statement  No.
         333-48701 declared effective on April 23, 1999.)

10.12    Demand Grid Note  between  Republic  National  Bank of New York and EHC
         dated July 29, 1996  (Incorporated by reference to Exhibit 10.12 to the
         Company's Registration  Statement on Form SB-2 (Registration  Statement
         No. 333-48701 declared effective on April 23, 1999.)

10.13    Loan  Agreement  between  EHC and Long Island  Development  Corporation
         dated February 21, 1997,  Loan Promissory Note dated February 21, 1997,
         Security  Agreement  dated  February 21, 1997,  and Waiver Latter dated
         July 13,  1998  (Incorporated  by  reference  to  Exhibit  10.13 to the
         Company's Registration  Statement on Form SB-2 (Registration  Statement
         No. 333-48701 declared effective on April 23, 1999.)

10.14    Mortgage between K&G Realty  Associates and Long Island Commercial Bank
         dated  November 28, 1995,  Rider to Mortgage  dated  November 28, 1995,
         Mortgage Note, Guaranty of Mortgage Note by EHC and Assignment of Lease
         and Rent  (Incorporated  by reference to Exhibit 10.14 to the Company's
         Registration  Statement  on  Form  SB-2  (Registration   Statement  No.
         333-48701 declared effective on April 23, 1999.)

10.15    Collective   Bargaining   Agreement   between   EHC  and   Local   531,
         International  Brotherhood  of  Teamsters,  AFL-CIO and  Memorandum  of
         Agreement  dated  as of May 10,  1998  (Incorporated  by  reference  to
         Exhibit  10.15 to the  Company's  Registration  Statement  on Form SB-2
         (Registration  Statement No. 333-48701  declared effective on April 23,
         1999.)

10.16    Stockholders' Agreement between the Company, Andrew Franzone,  David L.
         Kassel  and  Harry  Goodman  and  Amendment  No.1 to the  Stockholders'
         Agreement  (Incorporated by reference to Exhibit 10.16 to the Company's
         Registration  Statement  on  Form  SB-2  (Registration   Statement  No.
         333-48701 declared effective on April 23, 1999.)

10.17    International Plastic  Technologies,  Inc., 1998 Stock Option and Grant
         Plan  (Incorporated  by  reference  to Exhibit  10.17 to the  Company's
         Registration  Statement  on  Form  SB-2  (Registration   Statement  No.
         333-48701 declared effective on April 23, 1999.)

10.18    Agreement  between  AFC and EHC to  engineer,  manufacture  and  import
         products(Incorporated  by reference to Exhibit  10.18 to the  Company's
         Registration  Statement  on  Form  SB-2  (Registration   Statement  No.
         333-48701 declared effective on April 23, 1999.)

10.19    Latter agreement  between EHC and Republic National Bank of New York to
         release the personal  guarantees of Andrew Franzone,  David Kassel, and
         Harry Goodman dated May 14, 1998  (Incorporated by reference to Exhibit
         10.19  to  the   Company's   Registration   Statement   on  Form   SB-2
         (Registration  Statement No. 333-48701  declared effective on April 23,
         1999.)

10.20    Demand  Negotiable  Promissory  Note  payable to David L. Kassel  dated
         October 27, 1998  (Incorporated  by reference  to Exhibit  10.20 to the
         Company's Registration  Statement on Form SB-2 (Registration  Statement
         No. 333-48701 declared effective on April 23, 1999.)

10.21    Demand  Negotiable  Promissory  Notes  payable to Harry  Goodman  dated
         October 22, 1998 and  December 7, 1998  (Incorporated  by  reference to
         Exhibit  10.21 to the  Company's  Registration  Statement  on Form SB-2
         (Registration  Statement No. 333-48701  declared effective on April 23,
         1999.)

10.22    Agreement  between EHC and David L. Kassel to extend  maturity  date of
         January 1, 1998 Promissory Note,  dated December 8, 1998  (Incorporated
         by reference to Exhibit 10.22 to the Company's  Registration  Statement
         on Form SB-2  (Registration  Statement No. 333-48701 declared effective
         on April 23, 1999.)

10.23    Agreement  between CDP and David L. Kassel to extend  maturity  date of
         January 1, 1998 Promissory Note,  dated December 8, 1998  (Incorporated
         by reference to Exhibit 10.23 to the Company's  Registration  Statement
         on Form SB-2  (Registration  Statement No. 333-48701 declared effective
         on April 23, 1999.)

10.24    Promissory  Note  payable by CDP to David Kassel dated May 29, 1998 and
         Guarantee of Promissory Note by the Company  (Incorporated by reference
         to Exhibit 10.24 to the Company's  Registration  Statement on Form SB-2
         (Registration  Statement No. 333-48701  declared effective on April 23,
         1999.)

10.25    Exclusive   Supply   Agreement   between  the   Company  and Azurel LTD
         (Incorporated by reference  to Exhibit 10 to the Company's 10-QSB filed
         on November 9,1999.)
10.26    Leter Agreeement with European American Bank regarding  borrowing  base
         line of credit and term loan.

21       List of Subsidiaries of the Company

27       Financial Data Schedule

99.1     Agreement by and between EHC and the U.S.  Government - Defense  Supply
         Center Philadelphia  (Incorporated by reference to Exhibit 99(I) to the
         Company's 10-QSB filed on August 9,1999.)

(B) REPORTS ON FORM 8-K

None


<PAGE>
              SIGNATURES

In accordance with Section 13 or 15 (d) of the Securities  Exchange Act of 1934,
the Registrant has duly caused this Annual Report on Form 10-KSB to be signed on
its behalf by the undersigned, thereunto duly authorized.

INTERNATIONAL SMART SOURCING, INC.

MARCH 30, 2000                                         /S/ ANDREW FRANZONE
--------------
Date                                                     Andrew Franzone
                                                       Chief Executive Officer
                                                          and President

In  accordance  with the Exchange  Act, this report has been signed below by the
following persons and in the capacities and on the dates indicated.

SIGNATURE                     TITLE                           DATE
---------                     -----                           ----

/S/ ANDREW FRANZONE           Chief Executive Officer         March 30, 2000
-----------------------       and President, Director

/S/ DAVID KASSEL              Chairman of the Board           March 30, 2000
-----------------------       of Directors

/S/ HARRY GOODMAN             Vice President and Secretary,   March 30, 2000
-----------------------       Director

/S/ STEVEN SGAMMATO           Chief Financial Officer         March 30, 2000
-----------------------

/S/ BAO-WEN CHEN              Director                        March 30, 2000
-----------------------

/S/ CARL SELDIN KOERNER       Director                        March 30, 2000
-----------------------

/S/ MITCHELL SOLOMON          Director                        March 30, 2000
-----------------------