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 29, 2000

                                       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
                                            ---------

                           CHINAB2BSOURCING.COM, INC.
                  (FORMERLY 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 $
8,101,634.

The aggregate market value of the voting stock held by non-affiliates based upon
the last sale price on March 15,  2001 was  approximately  $  15,835,000.  As of
March 15, 2001, the Registrant had 3,725,934 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 2001 annual meeting of  stockholders  are  incorporated  by
reference into Part III


<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

THE COMPANY

ChinaB2Bsourcing.com,  Inc. (formerly  International  Smart Sourcing,  Inc.) was
organized  as  a  holding  company  for  its  three  wholly-owned   subsidiaries
International   Plastic   Technologies,   Inc.  (IPT)  which  does  business  as
International  Smart Sourcing and  ChinaB2Bsourcing,  Electronic  Hardware Corp.
(EHC) and Compact Disc Packaging Corp. (CDP) (collectively, the "Company").

IPT specializes in assisting small to mid-size  companies  substantially  reduce
their cost of manufacturing  by out sourcing work to China.  Through its offices
in the  United  States  and  China,  IPT has  put in  place  the  infrastructure
necessary  to simplify the  transition  of moving work to China.  The  Company's
product  specialization  includes  tooling,   injection  molding  and  secondary
operations,  castings,  mechanical assemblies,  electromechanical assemblies and
metal stampings.

The Company has established an office in Shanghai,  with  engineering,  quality,
production control and administrative  personnel who provide project management,
source selection,  engineering  coordination,  quality assurance,  logistics and
cost reduction. There are twenty-four manufacturers in China presently providing
products for our clients.  The Company  believes  that its service  provides its
clients with  significant  competitive  advantages.  Savings for customers range
from  fifteen  percent  to as much as  seventy  five  percent.  The  more  labor
intensive the product, the more savings realized. Due to the low cost of tooling
the  client's  return on  investment  is improved,  and its  overhead  costs are
reduced.  However,  there can be no  assurance  that the Company will be able to
consummate,  maintain or establish  additional  manufacturing  relationships  in
China,  continue to experience  cost savings for its clients,  or achieve any of
its growth strategies.

Electronic Hardware Corporation, the Company's principal subsidiary, has over 29
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.

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,  meeting  accelerated  market  schedules and ensuring
high quality workmanship.

The  Company's  facility was certified in January  2001,  for the  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.

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<PAGE>

The Company  believes that its  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 timelier
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.

Over  the  past  year  EHC has  increased  its  sales  by 35% due to  aggressive
marketing  efforts and to a new government  contract.  EHC has received an Award
from the  United  States  government  based on this  contract,  for  "Innovative
Business  Performer of the Year Award for Small Business".  Based on the success
of the  government  contract,  management  believes that it has put in place the
necessary  infrastructure to provide superior service to the government not only
on this contract but on other  contracts the  government  might look to place in
2001. This same infrastructure  will also provide the Company's  commercial knob
business with many advantages in our ability to provide  superior  service.  The
Company anticipates a user-friendly  website which will allow customers to order
directly  and  obtain  stock and  delivery  information  on the web by the third
quarter of the year.

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

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 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. On May 7, 1999,IPT,  a Delaware  Corporation
was formed.  On June 15, 2000, the Company  changed its name from  International
Smart Sourcing, Inc. to ChinaB2Bsourcing.com, Inc.

GROWTH STRATEGY

The Company  through IPT is expanding its  operations  through  specializing  in
assisting  companies to reduce their cost of manufacture by outsourcing  work to
China.  The  Company  has  developed  the  infrastructure  necessary  to  assist
companies in outsourcing.  The Company has established an office in Shanghai and
has engineering,  quality,  production control and  administrative  personnel in
place to assist in the  manufacture of our client's  products.  Our China office

                                       3
<PAGE>

utilizes an intensive  vendor  selection  process before placing purchase orders
with factories;  presently we have 24 factories  manufacturing  products for our
clients.  The following  products are being  manufactured  for clients,  stamped
parts and stamped assemblies, and electronic assemblies.

Manufacturers  in  the  USA  are  faced  with  the  challenge   associated  with
globalization,  as shown by the reduction in the number of  manufacturers in the
U.S. Based on our experience to date we are able to reduce the cost of a clients
products,  improve  their return on  investment  and lower their  overhead.  The
Company believes that outsourcing provides clients with a competitive advantage.
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

OUTSOURCING

The Company's  outsourcing  operations produce products directly for the clients
of the  Company.  All  products  are special  order and are not produced for the
Company's own inventory.

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.

EHC is in the  process  of  moving  manufacturing  to China in order to  improve
profits.  The company expects to have 60% of its  manufacturing  in China by the
first quarter of 2002. The balance of the  production  should be complete by the
end of 2002. This should significantly increase gross profits.

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.

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.


                                       4
<PAGE>

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 had 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 had  allocated
$1,738,000 to the value of the goodwill  attributed to the  acquisition  of CDP.
During  December 2000 the Company  evaluated its carrying  value for the license
and  goodwill  and  determined  that  impairment  in value had  occurred for the
remaining  unamortized  balance of the  license and  goodwill  of  $400,000  and
$1,390,000 respectively.

A pre-production model of the PULL PACK TM was developed in June 1998 for market
research and small production  runs.  Currently,  the production  tooling of the
PULL  PACK  TM is  complete  and  the  product  has  been  produced  in  limited
quantities.

During  year 2000,  the Company  believes  it has solved most of its  production
problems and is now able to take steps to market the Pull Pack.  The company has
entered into a  distribution  arrangement  with Pull Pack Inc. to handle all the
distribution   and  marketing.   PULL  PACK  INC.  has  developed  a  web  site,
www.pullpack.com, which allows for E-commerce and distribution of the Pull Pack.
The preliminary results have been disappointing,  however,  the Company believes
that this type of product  will take a long time to find its market  niche,  but
has many unique uses and applications.

COMPETITION

OUTSOURCING

The  Company  believes  that the market of  off-shore  manufacturing  sources is
highly  fragmented and that no one  participant or small number of  participants
dominates the market. The Company considers all manufacturers, both domestic and
foreign,  generally to be its  competition.  The  principal  direct  competition

                                       5
<PAGE>

experienced  by the  Company  is  from  factories  in  China  and  manufacturers
representatives and brokers acting on behalf of those factories. The Company has
identified only one domestic  company  engaged in a similar  business to that of
the Company and the competitor  relies upon its direct ownership of a factory in
China for its competitive  advantage.  The Company believes that its competitive
strengths  are  the  knowledge  and  experience  of  its  domestic  and  Chinese
engineering and administrative  staffs, their experience working together across
two cultures  and the network of 24  qualified  factories in China with whom the
Company has already placed orders.  The Company  intends to expand the number of
qualified factories with to whom it can place orders on behalf of its customers.

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  dominates 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.

SUPPLIERS AND 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.

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

                                       6
<PAGE>

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.

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.

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.  Inch,
Inc.  did not earn any  royalties  in the  period.  CDP has not made the minimum
royalty payment required under the contract. Inch, Inc., has not given notice of
its  intentions  to terminate  the  agreement.  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.

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  29,  2000,  the  Company  had a  total  of 85  employees  based
domestically.  13 of  these  employees  work  on a  part-time  basis.  32 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


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<PAGE>

and  Administration  while 64 employees are factory workers.  The Shanghai China
office  had a total  of 18  employees  in  sales  marketing  and  administrative
support.

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.

SEGMENT INFORMATION

Segment  information  is set  forth  in  Note 21 to the  Consolidated  Financial
Statements  referred to in the  "Financial  Statements and  Supplementary  Data"
section hereof and incorporated herein by reference.

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  $153,000 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 2000, 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.

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 15, 2000, the Company had outstanding  3,725,934 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 transactions.

                                                    Common Stock Sale Prices

Fiscal 2000                                      High                      Low

First Quarter                                    7.625                     5.50
Second   Quarter                                 8.3125                    5.00
Third Quarter                                    7.00                      5.50
Fourth Quarter                                   6.9375                    2.50


On March  15,  2001  there  were  approximately  175  holders  of  record of the
Company's 3,725,934 outstanding shares of Common Stock.

On March 15,  2001,  the last sale price of the Common  Stock as reported on the
Nasdaq SmallCap Market was $ 4.25.

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>

RESULTS OF OPERATIONS

For the year ended  December  29, 2000  compared to the year ended  December 31,
1999:

NET SALES

Net Sales for the year ended December 29, 2000 were $ 8,101,634,  as compared to
net sales of $4,919,095  for the year ended  December 31, 1999.  The increase of
$3,182,539,  OR 65 % for the period was  attributed to the  commencement  of the
contract with the Defense Supply Center in  Philadelphia  (DSCP) and an increase
in volume by IPT.

GROSS PROFITS

The Company  realized an overall  gross profit  margin  percentage  for the year
ended  December  29, 2000 of 32%,  which  represents  an  increase  from the 26%
experienced  during the year ended  December  31,  1999.  This  increase  can be
attributed to the increase in sales related to the contract with DSCP.  Products
sold to DSCP include charges for the acquisition,  handling, and distribution of
products manufactured by the Company and outside suppliers. In addition products
sold to DSCP are generally  more complex with more value added  operations  than
molded plastic components and generate a higher gross profit margin.

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.

Selling,  general and  administrative  expenses for the year ended  December 29,
2000 were  $3,984,326 as compared to $3,306,930  for the year ended December 31,
1999.  The increase of $677,396 or 21% for the period is primarily  attributable
to $206,000 for promotional activities,  $177,000 for legal and accounting fees,
$98,000,  for  travel to China to  review  and  support  the  manufacturing  and
engineering  facilities  and  trade  shows  for IPT and  CDP,  $80,000  in costs
associated with being a public company,  $89,000 in consulting for selecting and
qualifying  manufacturers  in  China  and for new  products  designed  by EHC to
compliment the knob line.

IMPAIRMENT CHARGE - LONG LIVED ASSETS

During  December 2000 the Company  evaluated its carrying  value for the license
and goodwill and determined  that  impairment in value had occurred,  related to
its 1998  acquisition  of CDP,  for the  remaining  unamortized  balance  of the
license and goodwill of $400,000 and $1,390,000 respectively.

RESERVE FOR LOAN AND INTEREST RECEIVABLE

As  discussed on page 11, the Company  incurred a charge of $517,616  related to
the reserve of the entire note and interest receivable due from Azurel Ltd.

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

                                       10
<PAGE>

operations,  supplemented by bank borrowings and long term equipment  financing.
The Company's cash decreased to $188,213 on December 29, 2000 from $1,992,265 on
December 31, 1999.

Cash  flow  used in  operating  activities  WAS  $1,319,489  for the year  ended
December  29,  2000 on a net  loss  of  $3,833,990.  The  increase  in  accounts
receivable is the result of tooling  invoiced in December and collectable in the
following  quarter.  The increase in  inventory  is the result of the  Company's
build up of government  components to a sufficient  level to properly respond to
government orders on a timely basis.  Cash used in investing  activities for the
year ended  December  29, 2000 was  $361,856,  which  consisted  of cash for the
purchase of tooling,  molds,  machinery  and  equipment  and a decrease in notes
receivable from related parties.

Net cash used in financing  activities  for the year ended December 29, 2000 WAS
$122,707. In June 2000, the Company issued 167,667 shares of its common stock at
$3.00 per share to  purchasers  who  qualify  as  "Accredited  Investors"  under
Regulation D promulgated under the Securities Act of 1933. Net proceeds from the
offering  after  the  underwriting  commissions  and  other  related  fees  were
$415,000. In July 2000 the Company issued an additional 167,667 shares, with net
proceeds of $435,000.  In July, September and October 2000 the Company issued an
aggregate  of  10,100  shares of  common  stock,  pursuant  to the  exercise  of
warrants, with net proceeds of $50,300.

Cash of $200,000 was provided  from  borrowings  from related  parties.  Cash of
$1,108,213 was used to make principal  payments on loans.  In December 2000, the
Company,  utilizing the proceeds from the Initial  Public  Offering,  repaid the
$917,000  balance on the revolving  line of credit with  European  American Bank
(EAB).

In April 2001, the Company closed on a revolving line of credit agreement with a
bank that  provides  for a maximum  borrowing  of up to  $1,500,000,  subject to
certain conditions, at an interest rate of prime plus 1.75%. The loan is secured
by substantially all the assets of the company and is unconditionally guaranteed
by three officers/shareholders, each limited to $250,000. The agreement provides
that, among the other requirements, the Company maintain a tangible net worth of
at least $1,750,000 from the date of the agreement to and including December 30,
2001 and $2,000,000 through April 2003, when the outstanding balance is due.

NOTE RECEIVABLE  RESERVE AND 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 December 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.

In June 2000, the Company renegotiated the loans it had made to Azurel Ltd. This
agreement  granted the Company a security interest in the inventory of Azurel as
collateral for the loan and accrued  interest.  In consideration of the security
agreement,  the Company granted an extension of maturity of the notes to January
31, 2001.

                                       11
<PAGE>

In February the borrower  declared  bankruptcy  under  Chapter 11 of the Federal
bankruptcy code. As of December 29, 2000 the Company has reserved for the entire
note and  interest  receivable  aggregating  $517,616.  AS of March 9,  2000 the
Company is  determining  its recourse with regards to the  collateral  under the
security interest agreement with the borrower.

CAUTIONARY FACTORS REGARDING FUTURE OPERATING RESULTS

The matters  discussed  in this form 10-KSB 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.

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







                                       12
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
ChinaB2Bsourcing.com, Inc.
Farmingdale, New York

We    have    audited    the    accompanying    consolidated    balance    sheet
ChinaB2Bsourcing.com, Inc., as of December 29, 2000 and the related consolidated
statements  of  operations,  stockholders'  equity  and cash flows for the years
ended  December 29, 2000 and December 31,  1999.  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 ChinaB2Bsourcing.com, Inc. as of December 29, 2000 and the
results  of its  operations  and its  cash  flows  for each of the  years  ended
December 29, 2000 and December 31, 1999 in conformity  with  generally  accepted
accounting principles.

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

New York, New York
March 15, 2001
(April 11, with respect to Note 22)









                                       F-1



<PAGE>

                   CHINAB2BSOURCING.COM, INC. AND SUBSIDIARIES
                  (FORMERLY INTERNATIONAL SMART SOURCING, INC.)

                           CONSOLIDATED BALANCE SHEET

                               DECEMBER 29, 2000


                                     ASSETS

CURRENT ASSETS:
     Cash                                                      $        188,213
     Accounts receivable - net of allowance for
        doubtful accounts of $15,000                                  1,328,203
     Notes receivable-related party                                      46,454
     Inventories                                                      1,358,974
     Prepaid expenses and other current assets                          290,079
                                                                 ---------------
        TOTAL CURRENT ASSETS                                          3,211,923

Property and Equipment - net                                            805,220

Note receivable-related party                                           163,802

Other assets                                                            287,180
                                                                 ---------------

                                                               $      4,468,125
                                                                 ===============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable and accrued expenses                     $      1,491,113
     Due to related party                                                61,752
     Deferred revenue                                                   107,943
     Current portion of long tem debt
       (including $95,827 to officer/shareholders)                      169,216
     Current portion of obligations under capital leases                 84,445
                                                                 ---------------

        TOTAL CURRENT LIABILITIES                                     1,914,469

     Long tem debt (including $161,817 to officer/shareholders)         412,471
     Obligations under capital leases                                    86,748
                                                                 ---------------


        TOTAL LIABILITIES                                             2,413,688
                                                                 ---------------


STOCKHOLDERS' EQUITY:
     Common Stock, $0.001 par value, 10,000,000 shares
        authorized, issued and outstanding 3,725,934                      3,726
     Additional paid-in capital                                       7,715,713
     Accumulated deficit                                             (5,665,002)
                                                                 ---------------

        TOTAL STOCKHOLDERS' EQUITY                                    2,054,437
                                                                 ---------------


                                                               $      4,468,125
                                                                 ===============



                See notes to consolidated financial statements.

                                      F-2
<PAGE>
                   CHINAB2BSOURCING.COM, INC. AND SUBSIDIARIES
                  (FORMERLY INTERNATIONAL SMART SOURCING, INC.)

                      CONSOLIDATED STATEMENTS OF OPERATIONS



                                                           Year Ended
                                                --------------------------------
                                                  December 29,      December 31,
                                                      2000              1999
                                                ---------------   --------------

NET SALES                                       $  8,101,634      $   4,919,095
COST OF GOODS SOLD                                 5,545,613          3,631,143
                                                ---------------   --------------
       GROSS PROFIT                                2,556,021          1,287,952
                                                ---------------   --------------

OPERATING EXPENSES
       Selling and shipping                        1,082,475          1,374,194
       General and administrative                  2,901,851          1,932,736
       Impairment charge - long lived assets       1,790,400                  -
       Reserve for loan and interest receivable      517,616                  -
                                                ---------------   --------------
          TOTAL OPERATING EXPENSES                 6,292,342          3,306,930
                                                ---------------   --------------
LOSS FROM OPERATIONS                              (3,736,321)        (2,018,978)

       Interest income                                96,178            180,793
       Interest expense                             (193,847)          (201,493)
                                                ---------------   --------------
NET LOSS BEFORE TAXES                             (3,833,990)        (2,039,678)

INCOME TAX BENEFIT                                         -             70,310
                                                ---------------   --------------
NET LOSS                                        $ (3,833,990)     $  (1,969,368)
                                                ===============   ==============
NET LOSS PER SHARE - BASIC AND DILUTED          $      (1.08)     $       (0.68)
                                                ===============   ==============
WEIGHTED AVERAGE COMMON SHARES                     3,545,000          2,913,000
                                                ===============   ==============





                 See notes to consolidated financial statements.

                                       F-3
<PAGE>
                   CHINAB2BSOURCING.COM, INC. AND SUBSIDIARIES
                  (FORMERLY INTERNATIONAL SMART SOURCING, INC.)

            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>




                                                        Common Stock            Additional      Retained
                                                 ----------------------------     Paid In       Earnings
                                                   Shares          Amount         Capital       (Deficit)         Total
                                                 ------------   -------------   ------------   ------------    ------------
<S>                                              <C>                 <C>        <C>         <C>             <C>

Balance December 27, 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

    Net Loss                                               -               -              -     (3,833,990)     (3,833,990)
    Issuance of stock from exercise of warrants       10,100              10         50,490              -          50,500
    Sale of stock - Private Placement                333,334             333        813,019              -         813,352
                                                 ------------   -------------   ------------   ------------    ------------
Balance December 29, 2000                          3,725,934      $    3,726    $ 7,715,713    $(5,665,002)   $  2,054,437
                                                 ============   =============   ============   ============    ============

</TABLE>
























                See notes to consolidated financial statements.

                                      F-4


<PAGE>

                   CHINAB2BSOURCING.COM, INC. AND SUBSIDIARIES
                  (FORMERLY INTERNATIONAL SMART SOURCING, INC.)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


                                                                                                For the Year Ended
                                                                                            -----------------------------
                                                                                            December 29,   December 31,
                                                                                               2000            1999
                                                                                            ------------   --------------
<S>                                                                                       <C>            <C>

Cash flows from operating activities:
     Net loss                                                                               $(3,833,990)   $  (1,969,368)
                                                                                            ------------   --------------
Adjustments to  reconcile  net loss to net cash (used in)  provided by operating
     activities:

        Depreciation                                                                            265,258          273,301
        Amortization                                                                            223,800          223,800
        Impairment charge - long lived assets                                                 1,790,400
        Reserve for loan and interest receivable                                                517,616                -
        Non-cash compensation related
           to issuance of  options                                                                    -           52,200
Changes in assets and liabilities:
     Increase in accounts receivable                                                           (749,880)         (66,801)
     Increase in inventories                                                                   (571,643)          (2,331)
     Increase in prepaid expenses and other current assets                                       (9,691)        (188,630)
     Decrease (Increase) in other assets                                                        184,625         (236,997)
     Increase (decrease) in accounts payable and accrued expenses                               694,321          (63,772)
     Increase in due to related party                                                            61,752                -
     Increase in deferred revenue                                                               107,943                -
                                                                                            ------------   --------------
           Total adjustments                                                                  2,514,501           (9,230)
                                                                                            ------------   --------------
Cash used in operating activities                                                            (1,319,489)      (1,978,598)
                                                                                            ------------   --------------

Cash flows from investing activities:

     Decrease in note receivable from related parties                                            42,894          381,911 *
     Expenditures for property and equipment                                                   (404,750)        (302,860)
     Loans to another company                                                                         -         (500,000)
                                                                                            ------------   --------------
Cash used in investing activities                                                              (361,856)        (420,949)
                                                                                            ------------   --------------
Cash flows from financing activities:
     Sale of common stock and exercise of warrants                                              863,852        5,244,004
     Capital lease repayments                                                                   (78,347)         (75,110)
     Proceeds from borrowings                                                                   200,000        1,536,520
     Principal payments and repayment of loans                                               (1,108,212)      (2,329,748)
                                                                                            ------------   --------------
Cash (used in) provided by financing activities                                                (122,707)       4,375,666
                                                                                            ------------   --------------
(Decrease) increase in cash                                                                  (1,804,052)       1,976,119

Cash - beginning of year                                                                      1,992,265           16,146
                                                                                            ------------   --------------
Cash - end of year                                                                          $   188,213    $   1,992,265
                                                                                            ============   ==============
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 options for services                                       $         -    $      52,200
                                                                                            ============   ==============
        Purchase of equipment through capital leases payable                                $   159,664    $      44,773
                                                                                            ============   ==============
        Conversion of accounts payable to note payable                                      $   150,000    $           -
                                                                                            ============   ==============
</TABLE>

   * -  reclassified to conform with current year presentation


                 See notes to consolidated financial statements.

                                      F-5
<PAGE>

                            CHINAB2BSOURCING.COM INC.
                  (Formerly INTERNATIONAL SMART SOURCING, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               YEARS ENDED DECEMBER 29, 2000 AND DECEMBER 31, 1999


1.       BUSINESS OF THE COMPANY

         ChinaB2Bsourcing.com,  Inc.  (formerly  International  Smart  Sourcing,
         Inc.)  ("ChinaB2B") 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").

         Under an agreement and plan of reorganization, dated December 24, 1998,
         ChinaB2B  issued  1,500,000  shares  of its stock for the stock 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.

         Under another agreement and plan of reorganization,  dated December 24,
         1998, ChinaB2B 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  ChinaB2B by
         one of the shareholders of EHC and one other shareholder.

         In connection with the acquisition of CDP,  ChinaB2B 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,  ChinaB2B  allocated  $500,000  to
         license cost and $1,738,000 to goodwill.

         On May 7, 1999 a newly  formed  company  called  International  Plastic
         Technologies,  Inc.,  ("IPT") a Delaware  corporation,  outsources  for
         their customers the  manufacturing of injection molded plastic products
         and the  manufacturing of injection molded plastic product  assemblies,
         in the Peoples  Republic of China,  for their  customers  in the United
         States.

         Hereinafter,  ChinaB2B,  EHC, CDP, and IPT 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



                                      F-6
<PAGE>

         an over-allotment as well as 187,500 redeemable warrants.  Net proceeds
         from 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.

         On June 15, 2000 International Smart Sourcing, Inc. changed its name to
         ChinaB2Bsourcing.com, Inc.


2.       SIGNIFICANT ACCOUNTING POLICIES

         (a      FISCAL YEAR  -  The  Company  operates on  a  "52-53     Week"
                  reporting  year ending 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
                  affect the  reported  amounts of assets  and  liabilities  and
                  disclosure of contingent assets and liabilities at the date of
                  the financial  statements and the reported  amounts of revenue
                  and expenses during the reporting period. Actual results could
                  differ from those estimates.

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

         (c)      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 principally 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 - 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 the deferred tax asset is also  recorded
                  when it is probable that some or all of the deferred tax asset
                  will not be realized.


                                      F-7
<PAGE>

         (h)     NET LOSS PER SHARE -  Net loss per share is  computed  based on
                 the weighted  average of  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.

         (j)    GOODWILL  -  THE    COMPANY   RECOGNIZED    GOODWILL   from  the
                acquisition  of  CDP,   which 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.

         (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
                based  compensation 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   consists  of cash and trade  receivables.  At
                 times, the cash in  any one bank account may exceed the Federal
                 Deposit  Insurance   Corporations  $100,000 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.

         (n)     NEW ACCOUNTING STANDARDS

                (i) Segment  Information - The Company has adopted SFAS No. 131,
                    Disclosures  about  Segments  of an  Enterprise  and Related
                    Information.   SFAS  No.  131   establishes   standards  for
                    reporting information regarding operating segments in annual
                    financial  statements and requires selected  information for
                    those segments to be presented in interim  financial reports
                    issued  to  stockholders.  SFAS  No.  131  also  establishes
                    standards  for  related   disclosures   about  products  and
                    services and geographic areas.

                    Operating  segments  are  identified  as  components  of  an
                    enterprise   about  which   separate,   discrete   financial
                    information   is  available  for  evaluation  by  the  chief
                    operating decision maker, or decision-making group,

                                      F-8
<PAGE>

                    in making  decisions  how to allocate  resources  and assess
                    performance.  The Company's chief decision maker, as defined
                    under SFAS No. 131, is the chief executive officer.

              (ii)  In June  1999,  the  Financial  Accounting  Standards  Board
                    (FASB) issued Statement of Financial Accounting Standard No.
                    137 ("SFAS No. 137"), "Accounting for Derivative Instruments
                    and Hedging  Activities - Deferral of the Effective  Date of
                    FASB  Statement No. 133".  SFAS No. 137 amends SFAS no. 133,
                    "Accounting   for   Derivative   Instruments   and   Hedging
                    Activities",  which was issued in June 1998. SFAS 137 defers
                    the  effective  date of SFAS  No.  133 to all  fiscal  years
                    beginning after June 15, 2000. Accordingly, the Company will
                    adopt the  provisions  of SFAS No. 133 for the  fiscal  year
                    2001,  which commences on December 30, 2000. The application
                    of the new  pronouncement  should not have a material impact
                    on the Company's financial statements.

             (iii)  In December 1999, the United States  Securities and Exchange
                    Commission  released Staff Accounting Bulletin No. 101 ("SAB
                    No. 101"),  "Revenue  Recognition in Financial  Statements".
                    (The  implementation  date  of  SAB  101,  was  subsequently
                    amended by SAB 101A and SAB 101B.) Under SAB 101  additional
                    guidance  on  revenue   recognition   criteria  and  related
                    disclosure requirements are required.  Implementation of SAB
                    No. 101 is required no later than the fourth fiscal  quarter
                    of fiscal years  beginning  after  December 15, 1999, but is
                    effective  retroactively  to the  beginning  of that  fiscal
                    period (per SAB 101B).  Company management has evaluated the
                    standard and the  reporting  implications  thereof,  and has
                    determined  that there will not be a  significant  impact on
                    the Company's operating results.


3.       CONCENTRATION OF MAJOR CUSTOMER

         During the year ended  December 29, 2000,  one customer  accounted  for
         approximately  27% of the Company's  sales. The customer also accounted
         for approximately 10% of the Company's outstanding accounts receivable.

4.       INVENTORIES

         Inventories consist of the following at December 29, 2000:

                 Raw Materials                             $   76,644
                 Work in Process                               54,008
                 Finished Goods                               833,608
                 Components                                   394,714
                                                       ----------------
                                                           $ 1,358,974
                                                       ================

                                      F-9
<PAGE>


5.       PROPERTY AND EQUIPMENT

          Property and  equipment are comprised of the following at December 29,
          2000:

                                                     Life
                                                --------------
              Machinery and Equipment             5-10 Years      $   3,368,480
              Tools, Dies and Molds               5-10 Years          1,782,199
              Leasehold Improvements                10 Years            250,300
              Office Furniture and Fixtures          5 Years            216,848
                                                                 ---------------
                                                                      5,617,826
                                                                      4,812,607
                                                                 ---------------
                                                                  $     805,220
                                                                 ===============

         At  December  29, 2000 the Company  had  $333,133 of its  property  and
         equipment under capital leases.

6.       INTANGIBLE ASSETS

         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.  For the year  ended  December  29,  2000 the  Company  owed
         $36,663 in royalty payments as per the agreement.

         During December 2000, the Company  evaluated its carrying value for the
         license,  and the goodwill  that resulted from the purchase of CDP. The
         Company  has  had to  date  only  minimal  sales  of its  compact  disc
         packaging product, nor can management reasonably estimate expected cash
         flows from future revenues to substantiate  such carrying value.  Based
         on these  circumstances  management  determined  that an  impairment in
         value had occurred for the remaining unamortized balance of license and
         goodwill of $400,000 and $1,390,000, receptively.


                                      F-10
<PAGE>

7.       OBLIGATIONS UNDER CAPITAL LEASES

         The Company  leases  certain  equipment  under  various  capital  lease
         arrangements expiring in December 2001 through November 2005. Following
         is a summary of future minimum payments under capital leases:

                    2001                                       $        111,772
                    2002                                                 59,281
                    2003                                                 23,201
                    2004                                                 20,023
                    2005                                                  8,704
                                                                   -------------
                                                                        222,981

                    Less: amounts representing interest                  51,788
                                                                   -------------
                                                               $        171,193
                                                                   =============

8.       LOANS PAYABLE

          Loans payable are comprised of the following at December 29, 2000:

         (a)   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...................................

                                                                      $ 174,043

         (b)   Various  loans  payable  to  officer/shareholders,   all  bearing
               interest  at 10%  per  annum,  payable  in  monthly  installments
               ranging from $2,125 to $4,840 including  interest.  The loans are
               due  in  dates   ranging   from   July  2001   through   February
               2004..................................................

                                                                     $  257,644

         (c)   In December 2000 the Company converted an outstanding  payable to
               an  outside   consultant   into  a  loan   payable  with  monthly
               installments of $4,840 of principal and interest at 10% per annum
               due January 2004.....................................

                                                                     $  150,000
                                                              ------------------
                                                                        581,687
                  Less: current portion                                 169,216
                                                              ------------------
                  Long-term portion                                  $  412,471
                                                              ==================

         Long term debt matures as follows:

                2001                  $            169,216
                2002                               114,737
                2003                               117,500
                2004                                73,695
                2005                                67,625
                Thereafter                          38,914
                                          -----------------
                                      $            581,687
                                          =================
                                      F-11

<PAGE>

         The  Company   estimates  that  the  fair  value  of  the  above  loans
         approximates their carrying value.

         In December  2000, the Company paid off its  outstanding  term loan and
         line of credit that it had entered into in December 1999.

9.       ISSUANCES OF STOCK

         a.       In June and July 2000 the Company sold an aggregate of 334,334
                  shares  of its  common  stock at $3.00  per  share  through  a
                  private  placement.  Net proceeds from the offering  after the
                  underwriting commissions and other related fees were $813,352.

         b.       In July and September  2000 the Company issued an aggregate of
                  10,500  shares of common  stock,  pursuant to the  exercise of
                  warrants at $5.00 per share, for net proceeds of $50,500.

10.      NOTE RECEIVABLE RESERVE

         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.  In June 2000 the Company  renegotiated  the loans,
         whereby a security  interest,  as  collateral  for the loan and accrued
         interest,   was  granted  on  the   inventory  of  the   borrower.   In
         consideration  for  the  security  agreement  the  Company  granted  an
         extension  of maturity of the notes to January  31,  2001.  In February
         2001, the borrower declared  bankruptcy under Chapter 11 of the Federal
         bankruptcy  code.  As of December 29, 2000 the Company has reserved for
         the  entire  note  receivable  and  interest   receivable   aggregating
         $517,616.  As of March 9, 2000 the Company is determining  its recourse
         with regards to the collateral  under the security  interest  agreement
         with the borrower.

11.      INCOME TAXES

         The benefit for income  taxes  consists of the  following  for the year
         ended December 31, 1999:

                               Federal                       $           55,310
                               State                                     15,000
                                                             -------------------
                                                             $           70,310
                                                             ===================


                                      F-12
<PAGE>


         The  benefit  for income  taxes  differs  from the amount  computed  by
         applying the statutory  federal  income tax rate to the loss before the
         benefit for income taxes as follows:

                                                         Year Ended
                                            -----------------  -----------------
                                            December 29, 2000  December 31, 1999
                                            -----------------  -----------------

         Income tax benefit  computed at
         the Federal statutory rate         $      1,304,000   $        693,000

         Deductions for which no benefit is
         recognized                               (1,304,000)          (638,000)

         State income tax benefit                          -             15,000
                                            -----------------  -----------------
                                            $              -   $         70,000
                                            =================  =================

         The Company has a net  operating  loss  carryforward  for tax  purposes
         totaling approximately $3,100,000 at December 29, 2000 expiring between
         the years 2010  through  2020.  The  resulting  tax  deferred  asset of
         approximately  $1,050,000 has been offset by a corresponding  valuation
         allowance.

12.      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 29,
         2000 and December 31, 1999, the Company did not make any  contributions
         to the plan.

13.      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 29, 2000 and December 31, 1999 there was no additional
         compensation earned.

14.  STOCK OPTION AND GRANT PLAN

         In March 1998, the Company adopted the Stock Option and Grant Plan (the
         "Plan") which as amended in June 2000  provides for an aggregate  grant
         of 800,000  options to purchase  shares of the Company's  common stock.
         Options may be granted to employees,  officers, directors,  consultants
         and independent contractors. Under the Plans, options may be issued for
         periods up to 10 years and become exercisable in varying  amounts based
         on a vesting schedule.  Generally,  options are granted at prices equal
         to market value on the date of the grant with lives of five years.


                                      F-13
<PAGE>

         For  disclosure  purposes  the fair value of each stock option grant 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 years ended December 29, 2000 and December
         31, 1999: (i) annual  dividends of $0.00,  (ii) expected  volatility of
         79% and 81% for the years  ended  December  29, 2000 and  December  31,
         1999,  respectively,  (iii)  risk-free  interest rate of 5.7%, and (iv)
         expected  option lives of three years for the years ended  December 29,
         2000 and  December 31,  1999.  The  weighted  average fair value of the
         stock  options  granted  for the  years  ended  December  29,  2000 and
         December 31, 1999 was $5.125 and $4.08, respectively.

         In  August  1999 the  Company  granted  143,000  stock  options  to key
         employees and members of the board of directors  for an exercise  price
         ranging  from $4.00 - $4.50 per share.  The options  vest on the second
         anniversary of the agreement and expire on the fifth anniversary of the
         agreement. In August 1999 the Company also granted 18,000 stock options
         to consultants and recorded a charge to operations of $52,200.

         In  April  2000  the  Company  granted  310,500  stock  options  to key
         employees  and a member of the board of directors at an exercise  price
         of $5.125 per share.  The 60,500  options for the employees vest on the
         second anniversary of the agreement and expire on the fifth anniversary
         of the  agreement.  The  remaining  250,000  options  were granted to a
         member of the board of directors,  vest at 20% per year,  over the five
         year life of the options.

         The following tables illustrates the Company's stock option and warrant
         issuances  and  balances  outstanding  at and  during  the years  ended
         December 29, 2000 and December 31, 1999. The Company  generally  issues
         warrants to purchase shares of common stock in connection with debt and
         equity financing and to non-employee consultants.
<TABLE>
<CAPTION>

                                                                 OPTIONS                          WARRANTS
                                                      ------------------------------    ------------------------------
                                                                         Weighted                          Weighted
                                                         Shares           Average          Shares           Average
                                                       Underlying        Exercise        Underlying        Exercise
                                                        Options            Price          Warrants           Price
                                                      -------------     ------------    -------------     ------------
<S>                                                      <C>       <C>                   <C>         <C>

         Outstanding at December 27, 1998                        -   $            -                -   $            -

                  Granted                                  161,000             4.08        1,437,500             5.00
                                                      -------------     ------------    -------------     ------------
         Outstanding at December 31, 1999                  161,000   $         4.08        1,437,500   $         5.00
                  Granted                                  310,500             5.13                -                -

                  Canceled                                 (4,000)             4.00                -                -

                  Exercised                                      -                -         (10,100)             5.00

                                                      -------------     ------------    -------------     ------------
         Outstanding at December 29, 2000                  467,500   $         4.77        1,427,400   $         5.00
                                                      =============     ============    =============     ============

</TABLE>



                                      F-14
<PAGE>




         The following is additional  information  with respect to the Company's
         options and warrants as of December 29, 2000:
<TABLE>
<CAPTION>


                                  OPTIONS OUSTANDING                                             OPTIONS
                                                                                               EXERCISABLE

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

                                                 Weighted
                                                 Average           Weighted
                                                 Remaining          Average                              Weighted
                                Number          Contractual         Exercise           Number             Average
          Exercise Price      Outstanding           Life             Price           Exercisable       Exercise Price
         ----------------    --------------    ---------------    -------------     --------------     ---------------
             $ 4.00                132,000       3.58 years          $ 4.00               -                 $ -
             $ 4.50                 25,000       3.58 years          $ 4.50               -                 $ -
             $ 5.13                310,500       4.29 years          $ 5.13               -                 $ -
         ----------------    --------------    ---------------    -------------     --------------     ---------------
                                   467,500       4.08 years          $ 4.77               -                 $ -
                             ==============    ===============    =============     ==============     ===============



                                  WARRANTS OUSTANDING                                           WARRANTS
                                                                                               EXERCISABLE

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

                                                  Weighted
                                                  Average           Weighted
                                                 Remaining          Average                               Weighted
                                Number          Contractual         Exercise           Number             Average
          Exercise Price      Outstanding           Life             Price           Exercisable       Exercise Price
         ----------------    --------------    ---------------    -------------     --------------     ---------------
             $ 5.00              1,427,400       3.29 years    $     $ 5.00           1,427,400            $ 5.00
                             ==============    ===============    =============     ==============     ===============
</TABLE>

         Had  compensation   cost  for  the  Company's  two  option  plans  been
         determined in accordance with SFAS 123, the Company's net loss and loss
         per share would have been increased to the pro forma amounts  indicated
         below:
<TABLE>
<CAPTION>

                                                                                            Year Ended
                                                                              ----------------------------------------
                                                                              December 29, 2000      December 31, 1999
                                                                              ------------------     -----------------
        <S>                                           <C>                <C>                    <C>

         Net loss:                                      As reported        $        (3,833,990)   $       (1,969,368)
                                                        Pro forma          $        (4,207,777)   $       (2,047,464)
         Net loss per share:
                    Basic and diluted                   As reported        $             (1.08)   $            (0.68)
                    Basic and diluted                   Pro forma          $             (1.19)   $            (0.70)

</TABLE>

15.      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.

16.      COLLECTIVE BARGAINING AGREEMENT

         The Company's factory employees and factory supervisors are represented
         by a collective  bargaining agreement between a local branch of a major
         national labor trade union and the Company.  Such agreement  expires in
         May 2001.


                                      F-15
<PAGE>

17.      RELATED PARTY TRANSACTIONS

         a.       Sales during the years ended December 29,2000 and December 31,
                  1999  included $809,000 and  $631,000, respectively to another
                  company owned by three  officer/stockholders  of the  Company.
                  Gross  Profit  on  such  sales  was approximately $235,000 and
                  $125,000 for  the  years  ended December 29, 2000 and December
                  31,  1999, respectively. Accounts receivable  from the related
                  company was $64,409 at December  29, 2000.  In September  1999
                  the Company  converted  outstanding  accounts   receivable  of
                  $253,150  into a  term  loan at 8%  per  annum,  with  monthly
                  payments of  $5,133  per  month  inclusive  of  principal  and
                  interest for 5 years starting  January 1, 2000. The balance of
                  the note receivable on December 29, 2000 is $210,256.

                  As of  December  29,  2000 the  Company  is  indebted  to this
                  related  company for  $61,752  for general and  administrative
                  goods and services provided to the Company.

         b.       The Company leases its premises from a company owned by two of
                  the officer/stockholders of the Company at an annual rental of
                  $153,444. Such lease expires in December 2005. The mortgage on
                  the premises in the amount of $484,398 at December 29, 2000 is
                  guaranteed by the Company.

         c.       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.

         d.       In March 1998,  the Company and an  affiliate  entered into an
                  engineering  consulting  and  services  agreement on a fee for
                  services  basis under which the Company will have the right to
                  manufacture certain of the affiliate's products.

18.      CONSULTING AGREEMENT

         In March 1998, the Company entered into a ten year consulting agreement
         in  connection  with  the  Company's  plans  to  develop  manufacturing
         resources in the People's Republic of China ("China").  The Consultant,
         who is board member of the  Company,  will be paid at an hourly rate as
         mutually  determined  and agreed upon by the Company and the Consultant
         from time to time and 1.5% of the net cost, as defined, of all Products
         manufactured  in China up to $5,000,000 per year and 1% of net costs in
         excess of $5,000,000.

                                      F-16
<PAGE>

19.      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.

20.      STOCKHOLDERS' AGREEMENTS

         In March 1998,  the Company  entered into an agreement with each of its
         three  officers/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.

21.      SEGMENT AND GEOGRAPHIC INFORMATION

          The Company views its  operations  as  principally  two segments,  the
          manufacturing and assembly of injection molded plastic  components and
          outsourcing  of  injection   molded   plastic   components  and  their
          assemblies.   The  segments  share  a  common   workforce  and  office
          headquarters, which preclude an allocation of all overhead components.
          Overhead  items that are  specifically  identifiable  to a  particular
          segment are applied to such segment. The Company's segment information
          for the years ended  December  29, 2000 and  December  31, 1999 are as
          follows:

<TABLE>
<CAPTION>
                                                     Manufacturing                        Corporate
                                                          and                                and
                                                       Assembly        Outsourcing          Other          Consolidated
                                                    ----------------   -------------------------------    ----------------
     <S>                                       <C>                <C>              <C>               <C>

       Year ended December 29, 2000
           Sales to unaffiliated customers       $        5,733,691 $     2,315,891  $         52,052  $        8,101,634
           Interest Income                                   16,676          18,702            60,800              96,178
           Interest Expense                                  68,888           3,112           121,847             193,847
           Depreciation and amortization                    213,768          10,463           264,827             489,058
           Segment assets                                 2,522,382       1,706,645           239,098           4,468,125
           Long lived asset expenditures                    172,241         108,154           284,019             564,414
           Segment income (loss)                            239,000       (735,862)       (3,337,128)         (3,833,990)




                                      F-17

<PAGE>


                                                     Manufacturing                        Corporate
                                                          and          Outsourcing           and           Consolidated
                                                       Assembly                             Other
      Year ended December 31, 1999
           Sales to unaffiliated customers       $        4,221,568 $       682,549  $         14,978  $        4,919,095
           Interest Income                                   75,453             -             105,340             180,793
           Interest Expense                                 184,090             122            17,281             201,493
           Depreciation and amortization                    265,166           8,135           223,800             497,101
           Segment assets                                 1,938,138       1,760,400         3,717,629           7,416,167
           Long lived asset expenditures                     94,594         253,039             -                 347,633
           Segment loss                                   (425,826)     (1,135,519)          (407,723)         (1,969,368)


</TABLE>

22.      SUBSEQUENT EVENT

         On April 11,  2001,  the Company  closed on a revolving  line of credit
         agreement with a bank which  provides for a maximum  borrowing of up to
         $1,500,000, subject to certain conditions, at an interest rate of prime
         plus 1.75%. The loan is secured by  substantially  all of the assets of
         the   Company   and   is    unconditionally    guaranteed    by   three
         officers/shareholders, each limited to $250,000. The agreement provides
         that, among the other requirements, the Company maintain a tangible net
         worth of at least  $1,750,000  from  the date of the  agreement  to and
         including December 30, 2001 and $2,000,000 through April 2003, when the
         outstanding balance is due.









                                      F-18

<PAGE>



ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE



Not Applicable

                                       13
<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

10.1      Amendment  Number  1  to  the  ChinaB2Bsourcing.com,   Inc.  (formerly
          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.) amending name of Plan
          and  increasing  the  number  of  option  shares  which  the  Plan  is
          authorized to grant from 300,000 shares to 800,000 shares.

                                       14
<PAGE>

10.2      Agreement by and between EHC and the U.S.  Government - Defense Supply
          Center Philadelphia Extending the term of  the  Contract from June 21,
          2000 to June 20, 2001.

(B) REPORTS ON FORM 8-K

None





















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<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.



                                                    CHINAB2BSOURCING.COM, INC.


April 11, 2001                                      /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                April 11, 2001
-------------------        and President, Director


/S/ DAVID KASSEL           Chairman of the Board                  April 11, 2001
----------------           of Directors

/S/ HARRY GOODMAN          Vice President   and Secretary,        April 11, 2001
-----------------          Director

/S/ STEVEN SGAMMATO        Chief Financial Officer                April 11, 2001
-------------------

/S/ BAO-WEN CHEN           Director                               April 11, 2001
----------------

/S/ CARL SELDIN KOERNER    Director                               April 11, 2001
-----------------------

/S/ MITCHELL SOLOMON       Director                               April 11, 2001
--------------------








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