UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C.
20549

FORM 10-KSB

|(Mark One)                                
|------------------------------------------
|                                          
|þ                                         
|                                          
|For the
      Year Ended December 31, 2007
|                                          
|OR                                        
|                                          
|o                                         

For the transition period from _______
to _______

Commission file number: 001-14753

INTERNATIONALSMARTSOURCING,INC.(Exact Name of Small Business Issuer as specified in its charter)

|Delaware                                                            |  | 11-3423157                               
|------------------------------------------------------------------- |  | -----------------------------------------
|(State or other jurisdiction
      ofincorporation or organization) |  | (I.R.S. EmployerIdentification
      No.)

320 Broad Hollow RoadFarmingdale, 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 $.001Common Stock Purchase Warrants

Check whether the issuer is not
required to file reports pursuant to section 13 or 15(d) of the Exchange Act
YES o NO þ

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.YESþNOo

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.YESþNOo

Indicate by check mark whether the
Registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act)
YESþNO o

The issuers net sales for the most
recent fiscal year were $0.

The aggregate market value of the
voting stock held by non-affiliates based upon the last sale price on March 3,
2008 was approximately $3,841,052. As of March 3, 2008, the Registrant had
18,899,435 shares of its Common Stock, $0.001 par value, issued and 10,974,435
outstanding.

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TABLE OF CONTENTS

|           |                                                                                                                             | Page
|---------- | --------------------------------------------------------------------------------------------------------------------------- | ----
|PART I     |                                                                                                                             |     
|Item 1.    | Description of
      Business                                                                                               | 1   
|Item 2.    | Description of Property                                                                                                     | 3   
|Item 3.    | Legal
      Proceedings                                                                                                     | 3   
|Item 4.    | Submission of Matters to a Vote of Security Holders                                                                         | 3   
|          
|PART II    |                                                                                                                             |     
|Item 5.    | Market for
      Common Equity and Related Shareholder Matters                                                              | 4   
|Item 6.    | Managements Discussion and Analysis or Plan of Operation                                                                   | 6   
|Item 7.    | Financial
      Statements                                                                                                  | 10  
|Item 8.    | Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosure                                  | 10  
|Item 8A.   | Controls and
      Procedures                                                                                               | 10  
|Item 8B.   | Other Information                                                                                                           | 12  
|          
|PART III   |                                                                                                                             |     
|Item 9.    | Directors,
      Executive Officers, Promoters and Control Persons; Compliance with section
      16(a) of the Exchange Act | 13  
|Item 10.   | Executive Compensation                                                                                                      | 15  
|Item 11.   | Security
      Ownership of Certain Beneficial Owners and Management and Related
      Shareholder Matters                  | 17  
|Item 12.   | Certain Relationships and Related Transactions                                                                              | 17  
|Item 13.   | Exhibits                                                                                                                    | 18  
|Item 14.   | Principal Accountant Fees and Services                                                                                      | 19  
|          
|SIGNATURES | 21                                                                                                                         

|**Exhibit****23.1** | **INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
      CONSENT**                                                                  |     
|------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | ----
|****                | ****                                                                                                                               | ****
|Exhibit 31.1        | SECTION 302 CERTIFICATION                                                                                                          |     
|****                | ****                                                                                                                               | ****
|Exhibit 31.2        | SECTION 302 CERTIFICATION                                                                                                          |     
|****                | ****                                                                                                                               | ****
|Exhibit 32.1        | **CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
      PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF
    2002** |     
|****                | ****                                                                                                                               | ****
|Exhibit 32.2        | **CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
      PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF
    2002** |     

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PART I

Item 1. Description of Business

The Company

Prior to the sale of the subsidiaries
of International Smart Sourcing, Inc. on September 28, 2006, as described below,
the Company was organized as a holding company for its three wholly owned
subsidiaries (together with International Smart Sourcing, Inc. referred to
herein as ISS or the Company):

- Electronic Hardware Corp. (EHC)
- Smart Sourcing, Inc. (formerly,
  International Plastic Technologies Inc.) (SSI), and
- Compact Disc Packaging Corp. (CDP and together with EHC and SSI, the
  Subsidiaries).

The Company was originally established
in 1970 as EHC, a New York corporation. The Company was reorganized in 1998 as a
Delaware holding company for its two wholly owned Subsidiaries, EHC and CDP. As
part of the reorganization, the shareholders 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, SSI, a Delaware Corporation, was formed.

The Company maintains its principal
executive offices at 320 Broad Hollow Road, Farmingdale, New York 11735. The
Companys telephone number is (631) 293-4650.

Sale of the
Subsidiaries

On September 28, 2006, at the Annual
Meeting of shareholders of the Company, the stockholders of the Company voted in
favor of a proposal to sell the capital shares of the Subsidiaries to ISSI
Holdings LLC (the Transaction) and approved and adopted the Stock Purchase
Agreement by and between the Company and ISSI Holdings LLC, dated May 8, 2006,
as amended (the Stock Purchase Agreement). The consent of the majority of the
stockholders of the Company as well as the consent of the majority of the
shareholders not affiliated with ISSI Holdings LLC was a requirement of the
Stock Purchase Agreement and was obtained at the annual meeting of shareholders.

The closing of the Transaction occurred
immediately upon the conclusion of the annual meeting of shareholders. Pursuant
to the Stock Purchase Agreement, the Company sold to ISSI Holdings LLC all of
the shares of the common stock of the Subsidiaries in exchange for: (i) the
total sum of $1,500,000, (ii) 7,925,000 shares of common stock of the Company
owned by certain members and/or managers of ISSI Holdings LLC who were also
officers and/or directors of the Company immediately prior to the closing of the
Transaction and their spouses, and (iii) the assumption by ISSI Holdings LLC of
certain other outstanding obligations of the Company.

1

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Plan of Operations

Until the sale of the Subsidiaries on
September 28, 2006, the Company was a holding company and the shares of the
Subsidiaries held by the Company constituted substantially all of the Companys
assets. Accordingly, since the sale of the Subsidiaries, the Company has existed
as a shell company with no subsidiaries and no business operations. The
Companys plan of operation is to seek a target company with which to merge or
to complete a business combination. In any transaction, management anticipates
that the Company would be the surviving legal entity and the shareholders of the
Company would retain a percentage ownership interest in the post-transaction
company. The amount of the retained equity ownership by the shareholders will be
negotiated by management and the target company.

The Company does not plan to restrict
its search to any specific business, industry or geographic location, and it may
participate in a business venture of virtually any kind or nature.

On July 10, 2007, the Company entered
into a nonbinding letter of intent for the acquisition of real Property
Technologies, LLC (RPT). RPT is a New York-based limited liability company
consisting of several companies in the real estate information business. RPT has
over 30 years of experience servicing customers in the Title Insurance Industry.

The letter of intent stated that the
Company agreed to purchase 100% of the capital stock of RPT for the issuance of
40,000,000 shares of common stock of the Company and 80 shares of Series C
Preferred Stock of the Company. The acquisition was to be subject to the
completion of a due diligence review and execution of definitive agreements. On
January 25, 2008, the Company and RPT mutually agreed to terminate this letter
of intent.

The Company may seek a business
opportunity with entities which have recently commenced operations, or that
desire to utilize the public marketplace in order to raise additional capital in
order to expand into new products or markets, to develop a new product or
service, or for other corporate purposes. The Company may acquire assets and
establish wholly owned subsidiaries in various businesses or acquire existing
businesses as subsidiaries.

The Company can give no assurance that
any such a transaction will occur, or that if such a transaction were to occur,
it would enhance the Companys future operations or financial results, or
specifically that the Company would become and remain profitable as a result of
such transaction.

The Subsidiaries Prior to
September 28, 2006

Prior to the sale of the Subsidiaries
on September 28, 2006, the following existed as Subsidiaries of the Company:

EHC was a subsidiary that had over 35
years of experience in the design, marketing and manufacture of injection molded
plastic components used in industrial, consumer, and military products. It also
offered secondary operations on molded products. Services such as hand painting,
pad printing, hot stamping and engraving were provided at a customers request.
EHC represented the Companys manufacturing and distribution segment.

SSI specialized in assisting companies
in reducing their cost of manufacturing by outsourcing to China. Through offices
in the United States and China, SSI put in place the system necessary to
simplify the transition of moving work to China. SSIs product specialization
included tooling, injection molding and secondary operations, castings,
mechanical assemblies, electronic manufacturing services and metal stampings.
SSI represented the Companys outsourcing segment.

2

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CDP had been an inactive subsidiary
since 2001. Its business was the manufacturing, marketing and sale of a compact
disc packaging system.

Segment Information

Segment information is set forth in
Note 12 to the Consolidated Financial Statements referred to in the Financial
Statements section hereof and incorporated herein by reference.

Item 2. Description of Property

Prior to the Transaction, the Company
leased its premises in Farmingdale, New York from K&G Realty, which is owned
by David Kassel, a former CEO and shareholder of the Company prior to the sale
of the Subsidiaries, and Harry Goodman, an officer and shareholder of the
Company, prior to the sale of the Subsidiaries.

The Company currently maintains offices
at 320 Broadhollow Road, Farmingdale, New York 11735 but has not entered into a
lease agreement with K&G Realty for such premises. Currently, the Company
does not pay rent for the premises it occupies.

Item 3. Legal Proceedings

None

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

No matters were submitted to a vote of
security holders during the fiscal year ended December 31, 2007.

3

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PART II

Item 5. Market for Common Equity and
Related Shareholder Matters

The Company completed its initial
public offering pursuant to a Registration Statement on Form SB-2 (Registration
No. 333-48701), which was declared effective by the SEC on April 23, 1999. As of
February 28, 2008, the Company had issued 18,899,435 shares of common stock,
$.001 par value, of which 10,974,435 are outstanding. The Companys common stock
is traded on the NASDAQ Over the Counter Bulletin Board under the symbol ISSG.

The following table sets forth the high
and low bid prices for the common stock as reported on the NASDAQ Over the
Counter Bulletin Board. The high and low bid prices reflect inter-dealer prices,
without mark-up, markdown or commission, and may not represent actual
transactions.

|                     |  | Common Stock Sale Prices
|-------------------- |  | ------------------------
|Fiscal 2007          |  | High                    
|First Quarter        |  | 0.18                    
|Second
      Quarter |  | 0.34                    
|Third Quarter        |  | 0.37                    
|Fourth Quarter       |  | 0.45                    
|                     |  | Common Stock Sale Prices
|Fiscal 2006          |  | High                    
|First Quarter        |  | 0.35                    
|Second
      Quarter |  | 0.34                    
|Third Quarter        |  | 0.21                    
|Fourth Quarter       |  | 0.18                    

On March 3, 2008, based on the records
of Continental Stock Transfer and Trust Company, there were approximately 111
holders of record but 207 beneficial holders of the Companys 10,974,435
outstanding shares of common stock.

On March 3, 2008, the last sale price
of the Common Stock as reported on the NASDAQ Bulletin Board was $ 0.35 per
share.

Common Stock

On December 8, 2004, the Company filed
a Certificate of Amendment to its Certificate of Incorporation increasing the
total number of authorized shares to 101,000,000, consisting of 100,000,000
shares of common stock and 1,000,000 shares of preferred stock.

On September 28, 2006, as a result of
the sale of the Subsidiaries, 7,925,000 shares of the Companys common stock
were received by the Company from certain stockholders/directors and returned to
the Companys treasury.

4

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Warrants

The Company currently has 1,727,400
common stock purchase warrants outstanding, exercisable for a total of 7,657,733
shares of common stock, which were issued by the Company as follows:

1,427,400 warrants remain of the
1,437,500 warrants issued in the initial public offering of the Company in April
1999 (IPO Warrants), as described below. In 2001, 10,100 IPO Warrants were
exercised.

On March 28, 2007, the Board of
Directors of the Company approved the grant of 300,000 warrants (the Warrants)
to the Companys three executive officers, Messrs David Hale, President and
Chairman of the Companys Board of Directors; Richard A. Peters, Secretary; and
Michael S. Rakusin, Chief Financial Officer (collectively referred to herein as
the Executive Officers), who are currently serving the Company without
receiving compensation for their services as officers. The Executive Officers
also serve as the Companys Directors.

The Warrants were granted to compensate
the Executive Officers for their services provided to the Company subsequent to
the sale of the Subsidiaries and to induce them to continue serving as officers.
Currently the Executive Officers also receive compensation, in the amount of
$500 per month, for serving as the Companys Directors.

The Warrants issued to each of the
Executive Officers entitles each Executive Officer to purchase 100,000 shares of
common stock of ISSI at an exercise price of $0.20 per share. The market price
on February 29, 2008 was $0.35 per share. The exercise price and the number of
shares which may be purchased upon exercise of a Warrant are subject to
adjustment in certain circumstances. The Warrants were fully vested and
exercisable on the date of grant and expire five years from such date. Neither
the Warrants nor the shares of common stock issuable upon the exercise of the
Warrants hereof have been registered under the Securities Act of 1933, as
amended, and have been issued in reliance upon an exemption from the
registration requirements of that Act.

The fair value of each stock warrant
grant is estimated based upon the grant date fair value using the Black-Scholes
option-pricing model with the following weighted average assumptions used for
stock warrants granted during the year ended December 31, 2007: (i) annual
dividends of $0.00, (ii) expected volatility of 37.96%, (iii) risk-free interest
rate of 4.50%, and (iv) expected warrant lives of five years for the year ended
December 31, 2007. The weighted average fair value of the stock warrants granted
for the year ended December 31, 2007 was $0.05. There were 300,000 warrants
granted during the year ended December 31, 2007.

Accordingly, the Company has valued the
warrants at their fair value and has recorded a charge to operations in the
amount of $15,000 which is included in general and administrative expenses in
the accompanying consolidated financial statements.

IPO Warrants

On December 4, 2006, the Company
reduced the total exercise price of each IPO Warrant from $4.85 to $1.03092756
(i.e. $0.20 per share of common stock). As a result, each IPO Warrant now
entitles the holder of the IPO Warrant to purchase 5.1546378 shares of the
Companys common stock at a total price of $1.03092756. The Company has extended
the expiration date of the Warrants by three years, from April 23, 2007 until
April 23, 2010. The other terms of the IPO Warrants have not been changed.
Accordingly, all of the IPO Warrants collectively, may be exercised for a total
of 7,357,733 shares of common stock at a collective price of $1,471,546.

5

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Registration of Shares Underlying
the IPO Warrants

The registration for the shares of
common stock issuable upon exercise of the IPO Warrants and the underwriter
warrants expired in April 2001. On September 27, 2004, the Securities and
Exchange Commission (the SEC) declared effective the registration statement
for the common stock issuable upon the exercise of the IPO Warrants.

Subsequently, the Company has complied
with the blue sky registration requirements or appropriate exemptions in New
York, New Jersey, Connecticut and Texas. Accordingly, at the present time, the
IPO Warrants may be exercised in New York, New Jersey, Connecticut and
Texas.

Options

On August 28, 2006, the Company sent a
Notice of Termination of Stock Options to all option holders announcing the
proposed sale of the Subsidiaries. Effective September 28, 2006, upon the sale
of the Subsidiaries, all unexercised options were effectively terminated.

Dividend Policy

The Company intends to retain future
earnings for use in its business for the foreseeable future. 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, capital requirements,
financial condition and other relevant factors.

Item 6. Managements Discussion and
Analysis or Plan of Operation

The information set forth in
Managements Discussion and Analysis of financial condition and results of
operations (the MD&A) contains certain Forward-Looking Statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, Section
21E of the Securities Exchange Act of 1934, as amended, and the Private
Securities Litigation Reform Act of 1995, including among others (a) expected
changes in the Companys revenues and profitability, (b) prospective business
opportunities, and (c) the Companys strategy for financing its business.
Forward-Looking statements are statements other than historical information or
statements of current condition. Some Forward-Looking statements may be
identified by the use of terms such as believes, anticipates, intends, or
expects. These Forward-Looking statements relate to plans, objectives and
expectations of the Company for future operations.

Although the Company believes that its
expectations with respect to the Forward-Looking statements are based upon
reasonable assumptions within the bounds of its knowledge of its business and
operations, in light of the risks and uncertainties inherent in all future
projections, the inclusion of Forward-Looking Statements in this report should
not be regarded as a representation by the Company or any other person that the
objectives or plans of the Company will be achieved.

This discussion and analysis should be
read in conjunction with the Companys financial statements and accompanying
notes included elsewhere in this Annual Report on Form 10-KSB. The following
financial information for the years ended December 31, 2007 and 2006 should be
considered with the knowledge that due to the sale of the Subsidiaries on
September 28, 2006, the Company had no sales and significantly reduced expenses
during the year ended December 31, 2007 and during the fourth quarter of 2006.
The Company operated as a shell company with only administrative expenses from
September 29, 2006 through December 31, 2007.

6

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Plan of Operations

The Company presently anticipates that
cash requirements during the next twelve months will be used to maintain the
corporate entity, comply with the periodic reporting requirements of the SEC,
evaluate and review possible business ventures and acquisition opportunities and
potentially negotiate and consummate any such transactions. The Company believes
that it has sufficient cash on hand to meet these cash requirements for the next
twelve months.

Results of Operations

For the year ended December 31, 2006,
amounts presented are for operations prior to the sale of the Subsidiaries on
September 28, 2006, except were indicated. As a result of the sale of the
Subsidiaries, the Company had no operations during the fiscal year ended
December 31, 2007.

Net Sales and Gross Profit

There were no sales for the year ended
December 31, 2007 compared to net sales of $10,698,277 for the year ended
December 31, 2006 from which the Company realized a gross profit of 38.5%. Net
sales for EHC for the year ended December 31, 2006 were $4,682,171 which
realized a gross profit of 54.0%. Net sales for SSI for the year ended December
31, 2006 were $6,016,106 which realized a gross profit of 26.4%. The decline in
net sales and gross profit was a result of the sale of the
Subsidiaries.

Selling
Expenses

Selling expenses for the year ended
December 31, 2007 were $0 as compared to $1,425,838 for the year ended December
31, 2006. EHCs selling expenses for the year ended December 31, 2006 were
$800,825. SSIs selling expenses for the year ended December 31, 2006 were
$595,145. ISSIs selling expenses were $29,868 for the year ended December 31,
2006. The decline in selling expenses for the year ended December 31, 2007 was
the result of the sale of the Subsidiaries.

General and Administrative
Expenses

General and administrative expenses for
the year ended December 31, 2007 were $225,875 as compared to $2,751,064 for the
year ended December 31, 2006. As a result of the sale of the Subsidiaries, the
Company is currently in the development stage and exists as a shell company with
only minimal general and administrative expenses. During the year ended December
31, 2007, the Company had accounting fees of $100,175 and legal fees of
approximately $60,000 in connection with its annual and quarterly SEC filings.
In addition, there was a non-cash charge of $15,000 related to the issuance of
common stock purchase warrants to the three officers/directors of the Company as
compensation for their services, $18,000 in directors fees, $17,000 in office
expenses and $9,200 for insurance. EHCs general and administrative expenses for
the year ended December 31, 2006 were $816,774. SSIs general and administrative
expenses for the year ended December 31, 2006 were $827,361. ISSIs general and
administrative expenses for the year ended December 31, 2006 were $1,106,792.
For the foreseeable future, general and administrative expenses should remain
relatively constant unless the Company makes an acquisition in which case legal
and accounting expenses may significantly increase.

7

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Income Tax

The sale of the Subsidiaries resulted
in a minimal tax liability. Also as a result of the sale, the primary deferred
tax asset and the net operating loss (NOL) cease to exist and the entire
valuation allowance has been eliminated as of December 31, 2006. The Company has
a NOL for tax purposes of approximately $169,000 at December 31, 2007.

Liquidity and Capital Resources

The Companys total assets as of
December 31, 2007 were $1,274,849, which is comprised primarily of $689,637
cash, a $529,088 certificate of deposit with a maturity of six months and a
$50,000 note receivable. On February 15, 2008, the Company received payment of $53,233 from Charter Fabric for the
principal and accrued interest on the note receivable. The Company has approximately $5,000 in current
liabilities which consist mainly of legal bills and office expenses. The Company presently
anticipates that cash requirements during the next twelve months will relate to
maintaining the corporate entity, complying with the periodic reporting
requirements of the U.S. Securities and Exchange Commission, evaluating and
reviewing possible business ventures and acquisition opportunities and
potentially negotiating and consummating any such transactions. The Company
believes that it has sufficient cash on hand to meet these cash requirements
over a period of twelve months.

Prior to September 28, 2006, the
Companys liquidity needs arose from working capital requirements, capital
expenditures, and principal and interest payments. Historically, the Companys
primary source of liquidity was cash flow generated internally from operations
and from borrowings and sales of securities. The Companys cash decreased to
$689,637 at December 31, 2007 from $828,847 at December 31, 2006.

Cash flow used in operating activities
was $239,210 for the year ended December 31, 2007 which included a net loss of
$168,615.

Cash provided by investing activities
for the year ended December 31, 2007 was $100,000, which consisted of the
redemption of certificate of deposit.

There were no financing activities for
the year ended December 31, 2007.

On September 28, 2006, in connection
with the sale of the Subsidiaries the line of credit with Citibank was
terminated and all outstanding amounts were repaid.

Cautionary Factors Regarding
Future Operating Results

The matters discussed in this Annual
Report on 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 delays in completing a business combination or merger.
The Company assumes no obligation to update any forward-looking statements as a
result of new information or future events or developments.

8

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Critical Accounting Policies or
Estimate

The Companys financial statements are
prepared in accordance with generally accepted accounting principles in the
United States of America (GAAP). Preparation of the financial statements in
accordance with GAAP requires that the Company make estimates, using available
data and its judgment for such things as valuing assets, accruing liabilities,
and estimating expenses. The following is a list of what the Company believes
are the most critical estimations that it makes when preparing the financial
statements.

Estimates

The preparation of financial statements
and related disclosures in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Estimates and assumptions are reviewed periodically and the effects of revisions
are reflected in the financial statements in the period they are determined to
be necessary.

Accounts Receivable  Allowance
for Doubtful Accounts

Prior to the sale of the Subsidiaries
on September 28, 2006, the Company routinely reviewed its accounts receivable by
customer account aging to determine the collectibility of the accounts based on
information it receive from the customer, past history, and economic conditions.
In doing so, the Company adjusted its allowance accordingly to reflect the
cumulative amount that it felt was uncollectible. After September 28, 2006, the
Company has existed as a shell company and has no accounts receivable.

Inventories  Slow Moving and
Obsolescence

Prior to the sale of the Subsidiaries
on September 28, 2006, the Company estimated and reserved amounts related to
slow moving and obsolete inventories that result from changing market
conditions. It developed its estimates based on the quantity and quality of
individual classes of inventory compared to historical and projected sales
trends. Inventory, prior to the sale of the subsidiaries on September 28, 2006,
had been reduced by a reserve of $276,025, based on the Companys assessment of
probable exposure related to excess and obsolete inventories. Major
uncertainties in the Companys estimation process included future industry and
economic trends, future needs of its customers, its ability to retain or replace
its customer base, and other competitive changes in the market place. After
September 28, 2006, the Company has existed as a shell company and has no
inventory.

9

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Item 7. Financial Statements

Index to Consolidated Financial
Statements

|                                                           |             | Page
|---------------------------------------------------------- | ----------- | ----
|Report of Independent Registered Public Accounting Firm    | F1        
|                                                           |            
|Balance Sheet                                              | F2        
|                                                           |            
|Consolidated Statements of Operations                      | F3        
|                                                           |            
|Consolidated Statements of Changes in Shareholders Equity | F4        
|                                                           |            
|Consolidated Statements of Cash Flows                      | F5        
|                                                           |            
|Notes to Consolidated Financial Statements                 | F6 to F17

10

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REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
of International Smart Sourcing, Inc.Farmingdale, New York

We have audited the accompanying
balance sheet of International Smart Sourcing, Inc. (a development stage
company) (the Company), as of December 31, 2007 and the related consolidated
statements of operations, changes in shareholders equity and cash flows for the
years ended December 31, 2007 and 2006 and for the period from September 29,
2006 (inception of development stage) to December 31, 2007. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Companys internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the financial
statements referred to above present fairly, in all material respects, the
financial position of International Smart Sourcing, Inc. as of December 31,
2007, and the consolidated results of its operations and its cash flows for the
years ended December 31, 2007 and 2006 and for the period from September 29,
2006 (inception of development stage) to December 31, 2007, in conformity with
United States generally accepted accounting principles.

/s/Marcum & Kliegman
LLPMarcum & Kliegman LLP

New York, New York March 12, 2008

F1

---

INTERNATIONAL SMART SOURCING, INC.
(A Development Stage Company) BALANCE SHEET

DECEMBER 31, 2007

|ASSETS                                                              
|--------------------------------------------------------------------
|CURRENT ASSETS:                                                     
|Cash and cash equivalents                                           
|Certificate of deposit                                              
|Prepaid expenses                                                    
|Note Receivable                                                     
|                                                                    
|TOTAL ASSETS                                                        
|                                                                    
|LIABILITIES AND
      SHAREHOLDERS' EQUITY                          
|                                                                    
|CURRENT LIABILITIES:                                                
|Accounts payable and accrued expenses                               
|                                                                    
|TOTAL LIABILITIES                                                   
|                                                                    
|SHAREHOLDERS' EQUITY:                                               
|Preferred Stock, $.001 par value, 1,000,000 shares
      authorized,
|no shares issued or outstanding                                     
|Common Stock, $.001 par value, 100,000,000
      shares authorized, 
|18,899,435 issued and 10,974,435 outstanding                        
|Additional paid-in capital                                          
|Accumulated deficit                                                 
|Deficit accumulated during the development stage                    
|                                                                    
|Less: Treasury Stock, at cost, 7,925,000 shares                     
|                                                                    
|TOTAL SHAREHOLDERS' EQUITY                                          
|                                                                    
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                          

The accompanying notes are an integral
part of these financial statements.

The Accompanying Notes Are an
Integral Part of these Financial Statements

F2

---

INTERNATIONAL SMART SOURCING, INC. AND
SUBSIDIARIES (A Development Stage Company) CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                      |  |   |               |   |  |                    |            |   |                      |   | Cumulative
      from
|----------------------------------------------------- |  | - | ------------- | - |  | ------------------ | ---------- | - | -------------------- | - | ---------------------
|                                                      |  |   | For
      the |   |  | September 29, 2006
|                                                      |  |   | Years Ended   |   |  | (Inception of     
|                                                      |  |   | December 31,  |   |  | December 31,       |            |   | development stage)  
|                                                      |  |   | 2007          |   |  | 2006               |            |   | to December 31, 2007
|NET SALES                                             |  | $ | -             |   |  | $                  | 10,698,277 |   |                      | $ | -                    
|COST OF GOODS
      SOLD                              |  |   | -             |   |  |                    | 6,581,639  |   |                      |   | -                    
|GROSS PROFIT                                          |  |   | -             |   |  |                    | 4,116,638  |   |                      |   | -                    
|OPERATING
      EXPENSES                              |  |   |               |   |  |                    |            |   |                      |   |                      
|Selling                                               |  |   | -             |   |  |                    | 1,425,838  |   |                      |   | -                    
|General and administrative                            |  |   | 225,875       |   |  |                    | 2,751,064  |   |                      |   | 292,734              
|TOTAL OPERATING EXPENSES                              |  |   | 225,875       |   |  |                    | 4,176,902  |   |                      |   | 292,734              
|(LOSS) FROM
      OPERATIONS                          |  |   | (225,875      | ) |  |                    | (60,264    | ) |                      |   | (292,734             
|OTHER INCOME (EXPENSE)                                |  |   |               |   |  |                    |            |   |                      |   |                      
|Interest income                                       |  |   | 57,260        |   |  |                    | 10,307     |   |                      |   | 57,795               
|Other income                                          |  |   | -             |   |  |                    | 11,093     |   |                      |   | -                    
|Interest expense                                      |  |   | -             |   |  |                    | (100,399   | ) |                      |   | -                    
|Other expenses                                        |  |   | -             |   |  |                    | (39,358    | ) |                      |   | -                    
|Gain on sale of Subsidiaries                          |  |   | -             |   |  |                    | 1,047,920  |   |                      |   | -                    
|TOTAL OTHER INCOME                                    |  |   | 57,260        |   |  |                    | 929,563    |   |                      |   | 57,795               
|(LOSS) INCOME
      BEFORE PROVISION FOR INCOME TAX   |  |   | (168,615      | ) |  |                    | 869,299    |   |                      |   | (234,939             
|Income tax                                            |  |   | -             |   |  |                    | (10,227    | ) |                      |   | (10,227              
|NET (LOSS)
      INCOME                               |  | $ | (168,615      | ) |  | $                  | 859,072    |   |                      | $ | (245,166             
|                                                     
|Earnings per share of common stock:                   |  |   |               |   |  |                    |            |   |                      |   |                      
|Net (loss) income per share - Basic and
      diluted |  | $ | (0.02         | ) |  | $                  | 0.05       |   |                      |   |                      
|Weighted average number of shares of common stock     |  |   |               |   |  |                    |            |   |                      |   |                      
|outstanding - Basic and diluted                       |  |   | 10,974,435    |   |  |                    | 16,896,413 |   |                      |   |                      

The Accompanying Notes Are an
Integral Part of these Financial Statements

F3

---

INTERNATIONAL SMART SOURCING, INC. AND
SUBSIDIARIES (A Development Stage Company)CONSOLIDATED STATEMENT OF
CHANGES IN SHAREHOLDERS' EQUITY

|                                |  |              |  |                |        |  |            |   |  |             |            |   |             |   |            |         |   |            |       |  |   | Deficit      |   |  |   |           
|------------------------------- |  | ------------ |  | -------------- | ------ |  | ---------- | - |  | ----------- | ---------- | - | ----------- | - | ---------- | ------- | - | ---------- | ----- |  | - | ------------ | - |  | - | ----------
|                                |  |              |  |                |        |  |            |   |  |             |            |   |             |   |            |         |   |            |       |  |   | Accumuluated |   |  |   |           
|                                |  |              |  |                |        |  |            |   |  |             |            |   |             |   | Additional |         |   |            |       |  |   | During       |   |  |   |           
|                                |  | Common Stock |  | Treasury Stock |        |  | Paid In    |   |  | Accumulated |            |   | Development |   |            |         |  
|                                |  | Shares       |  |                | Amount |  | Shares     |   |  | Amount      |            |   | Capital     |   |            | Deficit |   |            | Stage |  |   | Total       
|Balance January 1, 2006         |  | 18,899,435   |  | $              | 18,899 |  | -          |   |  | $           | -          |   |             | $ | 8,239,495  |         | $ | (6,029,767 | )     |  |   | -            |   |  | $ | 2,228,627 
|                               
|Shares reaquired pursuant to    |  |              |  |                |        |  |            |   |  |             |            |   |             |   |            |         |   |            |       |  |   |              |   |  |   |           
|stock purchase agreement        |  | -            |  |                | -      |  | (7,925,000 | ) |  |             | (1,664,250 | ) |             |   | -          |         |   | -          |       |  |   | -            |   |  |   | (1,664,250
|Net Income                      |  | -            |  |                | -      |  | -          |   |  |             | -          |   |             |   | -          |         |   | 935,623    |       |  |   | (76,551      | ) |  |   | 859,072   
|                               
|Balance December 31, 2006       |  | 18,899,435   |  | $              | 18,899 |  | (7,925,000 | ) |  | $           | (1,664,250 | ) |             | $ | 8,239,495  |         | $ | (5,094,144 | )     |  |   | (76,551      | ) |  | $ | 1,423,449 
|                               
|Non-cash compensation expense   |  |              |  |                |        |  |            |   |  |             |            |   |             |   |            |         |   |            |       |  |   |              |   |  |   |           
|related to issuance of warrants |  | -            |  |                | -      |  | -          |   |  |             | -          |   |             |   | 15,000     |         |   | -          |       |  |   | -            |   |  |   | 15,000    
|Net loss                        |  | -            |  |                | -      |  | -          |   |  |             | -          |   |             |   | -          |         |   | -          |       |  |   | (168,615     | ) |  |   | (168,615  
|                               
|Balance December 31, 2007       |  | 18,899,435   |  | $              | 18,899 |  | (7,925,000 | ) |  | $           | (1,664,250 | ) |             | $ | 8,254,495  |         | $ | (5,094,144 | )     |  | $ | (245,166     | ) |  | $ | 1,269,834 

The Accompanying Notes Are an
Integral Part of these Financial Statements

F4

---

INTERNATIONAL SMART SOURCING, INC. AND
SUBSIDIARIES (A Development Stage Company)CONSOLIDATED STATEMENTS OF
CASH FLOWS

|                                                             |  |   |                      |   |  |                    |            |                    |                       |   | Cumulative from
|------------------------------------------------------------ |  | - | -------------------- | - |  | ------------------ | ---------- | ------------------ | --------------------- | - | ---------------
|                                                             |  |   |                      |   |  |                    |            | September 29, 2006
|                                                             |  |   | For
      the Fiscal |   |  | (Inception of     
|                                                             |  |   | Years Ended          |   |  | development stage)
|                                                             |  |   | December 31,         |   |  | December 31,       |            |                    | to
      December 31,
|                                                             |  |   | 2007                 |   |  | 2006               |            |                    | 2007                 
|Cash flows from operating activities:                        |  |   |                      |   |  |                    |            |                    |                       |   |                
|Net (loss) income                                            |  | $ | (168,615             | ) |  | $                  | 859,072    |                    |                       | $ | (245,166       
|Adjustments to reconcile net income to net                   |  |   |                      |   |  |                    |            |                    |                       |   |                
|cash
      (used in) provided by operating activities:       |  |   |                      |   |  |                    |            |                    |                       |   |                
|Non-cash expenses related to issuance of warrants            |  |   | 15,000               |   |  |                    | -          |                    |                       |   | 15,000         
|Interest earned on certificate of deposit                    |  |   | (29,088              | ) |  |                    | -          |                    |                       |   | (29,088        
|Depreciation and amortization                                |  |   | -                    |   |  |                    | 62,584     |                    |                       |   | -              
|Bad debt expense                                             |  |   | -                    |   |  |                    | 7,755      |                    |                       |   | -              
|Gain on sales of subsidiaries                                |  |   | -                    |   |  |                    | (1,047,920 | )                  |                       |   | -              
|Inventory reserve                                            |  |   | -                    |   |  |                    | 276,025    |                    |                       |   | -              
|Changes in
      operating assets and liabilities:           |  |   |                      |   |  |                    |            |                    |                       |   |                
|Accounts receivable                                          |  |   | -                    |   |  |                    | 117,961    |                    |                       |   | -              
|Inventories                                                  |  |   | -                    |   |  |                    | (135,776   | )                  |                       |   | -              
|Prepaid expenses and other current assets                    |  |   | (6,124               | ) |  |                    | (253,827   | )                  |                       |   | (6,124         
|Accounts payable and accrued expenses                        |  |   | (40,156              | ) |  |                    | 49,664     |                    |                       |   | 5,015          
|Accrued severance                                            |  |   | 0                    |   |  |                    | 199,500    |                    |                       |   | -              
|Deferred revenue                                             |  |   | 0                    |   |  |                    | (738       | )                  |                       |   | -              
|Income taxes payable                                         |  |   | (10,227              | ) |  |                    | 10,227     |                    |                       |   | -              
|Total
      adjustments                                      |  |   | (70,595              | ) |  |                    | (714,545   | )                  |                       |   | (15,197        
|Net cash (used in) provided by operating activities          |  |   | (239,210             | ) |  |                    | 144,527    |                    |                       |   | (260,363       
|Cash flows
      provided by (used in) investing activities: |  |   |                      |   |  |                    |            |                    |                       |   |                
|Proceeds from sale of subsidiaries                           |  |   | -                    |   |  |                    | 1,450,000  |                    |                       |   | -              
|Cash
      sold in sale of subsidiaries                      |  |   | -                    |   |  |                    | (669,934   | )                  |                       |   | -              
|Purchase of certificate of deposit                           |  |   | -                    |   |  |                    | (600,000   | )                  |                       |   | (600,000       
|Expenditures for property and equipment                      |  |   | -                    |   |  |                    | (55,490    | )                  |                       |   | -              
|Proceeds from maturity of certificate of deposit             |  |   | 100,000              |   |  |                    | -          |                    |                       |   | 100,000        
|Net cash
      provided by (used in) investing activities    |  |   | 100,000              |   |  |                    | 124,576    |                    |                       |   | (500,000       
|Cash flows from financing activities:                        |  |   |                      |   |  |                    |            |                    |                       |   |                
|Capital lease payments                                       |  |   | -                    |   |  |                    | (5,650     | )                  |                       |   | -              
|Proceeds of line of credit - net                             |  |   | -                    |   |  |                    | 185,024    |                    |                       |   | -              
|Principal payments of long-term debt                         |  |   | -                    |   |  |                    | (159,436   | )                  |                       |   | -              
|Change in restricted cash                                    |  |   | -                    |   |  |                    | 257,294    |                    |                       |   | -              
|Net cash
      provided by financing activities              |  |   | -                    |   |  |                    | 277,232    |                    |                       |   | -              
|Net (decrease) increase in cash and cash equivalents         |  |   | (139,210             | ) |  |                    | 546,335    |                    |                       |   | (760,363       
|Cash and cash
      equivalents - beginning of year          |  |   | 828,847              |   |  |                    | 282,512    |                    |                       |   | 1,450,000      
|Cash and cash equivalents - end of year                      |  | $ | 689,637              |   |  | $                  | 828,847    |                    |                       | $ | 689,637        
|Cash paid during
      the year for taxes                    |  | $ | 15,904               |   |  | $                  | -          |                    |                       | $ | 15,904         

| | Noncash investing
      information:
| | ------------------------------------
| |                                     
| |                                     

The Accompanying Notes Are an
Integral Part of these Financial Statements

F5

---

INTERNATIONAL SMART SOURCING, INC.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFor the Years Ended December 31, 2007
and December 31, 2006

1. BASIS OF PRESENTATION

International Smart Sourcing, Inc.
(ISS or the Company) 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), an inactive
corporation, in connection with an initial public offering of ISSs stock (the
Offering), which was successfully completed in April of 1999. On May 7, 1999
ISS formed a company called Smart Sourcing Inc. (SSI), a Delaware corporation.
EHC manufactured, distributed and warehoused knobs, dials and pointers. SSI
specialized in assisting companies in reducing their cost of manufacturing by
outsourcing manufacturing in China.

The Company specialized in the
out-sourcing of manufacturing and the manufacturing of injection molded plastic
components, products and assemblies. The Company performed the manufacturing and
outsourcing functions for its customers, through its United States facilities
and through its outsourcing contacts and offices in the Peoples Republic of
China.

As discussed further in Note 2, on
September 28, 2006, the Company sold the operating subsidiaries, EHC and SSI, as
well as CDP (collectively, the Subsidiaries). Accordingly, the accompanying
financial statements reflect the consolidated results of operations with such
Subsidiaries through the date of sale. The Company is currently a shell company
with no active operations.

2. SALE OF SUBSIDIARIES AND PLAN OF
OPERATIONS

Sale of the
Subsidiaries

On September 28, 2006, at the Annual
Meeting of Shareholders of the Company, the shareholders of the Company voted in
favor of a proposal to sell the capital shares of the Subsidiaries, to ISSI
Holdings LLC (the Transaction) and approved and adopted the stock purchase
agreement by and between the Company and ISSI Holdings LLC, dated May 8, 2006,
as amended (the Stock Purchase Agreement). The consent of the majority of the
shareholders of the Company as well as the consent of the majority of the
shareholders not affiliated with ISSI Holdings LLC was a requirement of the
Stock Purchase Agreement and was obtained at the annual meeting of shareholders.

The closing of the Transaction occurred
immediately upon the conclusion of the annual meeting of shareholders. Pursuant
to the Stock Purchase Agreement, the Company sold to ISSI Holdings LLC all of
the shares of the common stock of the Subsidiaries in exchange for: (i) the
total sum of $1,500,000, (ii) 7,925,000 shares of common stock of the Company
owned by certain members and/or managers of ISSI Holdings LLC who were also
officers and/or directors of the Company immediately prior to the closing of the
Transaction and their spouses and (iii) the assumption by ISSI Holdings LLC of
certain other outstanding obligations of the Company. At the closing of the Transaction, ISSI Holdings LLC reduced the total cash delivered to the Company by $50,000. The reduction of cash paid at the
closing was to offset an increase in the outstanding balance of the line of credit assumed by ISSI Holdings LLC as a result of a certain liability of the Company.

The nature and amount of consideration
received by the Company was negotiated by an independent committee of the Board
of Directors (the Board) which consisted of Richard Peters and Michael
Rakusin, the independent directors of the Board at that time. Additionally,
Montauk Consulting, Inc. rendered an opinion on the Transaction and deemed the
Transaction was fair to the noninterested shareholders.

F6

---

INTERNATIONAL SMART SOURCING, INC.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the
Years Ended December 31, 2007 and December 31, 2006 (contd)

The Company realized a gain of
$1,047,920 on the sale of the Subsidiaries. The Company received $1,450,000 in
cash which was net of the $50,000 reduction, as described above. The Company sold assets totaling
$5,334,509 and liabilities of $3,218,179. As noted above, the Company also
received from certain shareholders/directors of the Company, who are also
affiliates of ISSI Holdings LLC, 7,925,000 shares of stock, valued at $1,664,250
and are classified as treasury shares in the accompanying financial statements.
The shares were valued at $.21 per share, which represented the weighted average
market value of the common stock for the three days before and after the
Transaction was agreed to and announced. A summary of the assets and liabilities
sold as part of the transaction are as follows:

Cash
    $
    669,934Accounts
      receivable, net
    
    1,793,358Inventories, net
    
    1,959,019Prepaid
      expenses
    
    431,148Other assets
    
    481,050Total
      Assets
    $
    5,334,509Accounts payable and accrued expenses
    $
    1,712,683Line of
      credit
    
    1,374,374Other liabilities
    
    131,122Total
      liabilities
    $
    3,218,179


Plan of Operations

Until the sale of the Subsidiaries on
September 28, 2006, the Company was a holding company and the shares of the
Subsidiaries held by the Company constituted substantially all of the Companys
assets. Accordingly, since the sale of the Subsidiaries, the Company has existed
as a shell company with no subsidiaries and no business operations. The plan of
operation of the Company is to seek a target company with which to merge or to
complete a business combination. In any transaction, management anticipates that
the Company would be the surviving legal entity and the shareholders of the
Company would retain a percentage ownership interest in the post-transaction
company. The amount of the retained equity ownership by the shareholders will be
negotiated by management and the target company.

The Company does not plan to restrict
its search to any specific business, industry or geographic location, and it may
participate in a business venture of virtually any kind or nature.

On July 10, 2007, the Company entered
into a nonbinding letter of intent for the acquisition of Real Property
Technologies, LLC (RPT). RPT is a New York-based limited liability company
consisting of several companies in the real estate information business. RPT has
over 30 years of experience servicing customers in the Title Insurance Industry.

The letter of intent stated that the
Company agreed to purchase 100% of the capital stock of RPT for the issuance of
40,000,000 shares of common stock of the Company and 80 shares of Series C
Preferred Stock of the Company. The acquisition was to be subject to the
completion of a due diligence review and execution of definitive agreements. On
January 25, 2008, the Company and RPT mutually agreed to terminate this letter
of intent.

F7

---

INTERNATIONAL SMART SOURCING, INC.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the
Years Ended December 31, 2007 and December 31, 2006 (contd)

The Company may seek a business
opportunity with entities which have recently commenced operations, or that
desire to utilize the public marketplace in order to raise additional capital in
order to expand into new products or markets, to develop a new product or
service, or for other corporate purposes. The Company may acquire assets and
establish wholly owned subsidiaries in various businesses or acquire existing
businesses as subsidiaries.

The Company can give no assurance that
any such a transaction will occur, or that if such a transaction were to occur,
it would enhance the Companys future operations or financial results, or
specifically that the Company would become and remain profitable as a result of
such transaction.

The Subsidiaries Prior to
September 28, 2006

Prior to the sale of the Subsidiaries
on September 28, 2006, the Subsidiaries were engaged in the following
businesses:

EHC was a subsidiary that had over 35
years of experience in the design, marketing and manufacture of injection molded
plastic components used in industrial, consumer, and military products. It also
offered secondary operations on molded products. Services such as hand painting,
pad printing, hot stamping and engraving were provided at a customers request.
EHC represented the Companys manufacturing and distribution segment.

SSI specialized in assisting companies
in reducing their cost of manufacturing by outsourcing to China. SSI has offices
in the United States and China. SSIs product specialization included tooling,
injection molding and secondary operations, castings, mechanical assemblies,
electronic manufacturing services and metal stampings. SSI represented the
Companys outsourcing segment.

CDP had been an inactive subsidiary
since 2001. It was in the business of manufacturing, marketing and sale of a
compact disc packaging system.

3. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

|(a) |  | Use of Estimates  The
      preparation of financial statements in conformity with GAAP 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Recognition of Revenue  Income
      from sales of goods was recognized when the orders were completed and
      shipped or possession of goods was taken by the customer provided that
      collection of the resulting receivable was reasonably assured. EHC goods
      were shipped both free on board (F.O.B.) shipping point and F.O.B.
      destination. SSI goods were shipped F.O.B. China and F.O.B. Farmingdale,
      as well as cost, insurance and freight (C.I.F.), origin/destination and
      delivered duty unpaid destination. In some cases, possession of goods was
      taken by the customer at the manufacturing facility in China. The
      Companys return policy on defective parts was: custom parts may only be
      exchanged for replacement parts within 30 days of the invoice; catalogue
      parts, which can be resold, may be exchanged for replacement parts or for
      a refund.

F8

---

INTERNATIONAL SMART SOURCING, INC.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the
Years Ended December 31, 2007 and December 31, 2006 (contd)

|(c) |  | Principles of Consolidation  The
      consolidated financial statements included the accounts of the Company and
      its wholly owned Subsidiaries through September 28, 2006. On September 28,
      2006, the Subsidiaries of the Company were sold. All significant
      intercompany transactions and balances have been eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(d) |  | Cash and Cash Equivalents For
      purposes of the statement of cash flows, the Company considers all highly
      liquid debt instruments with original maturities of three months or less
      when purchased to be cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(e) |  | Inventories  Prior to the sale
      of the Subsidiaries, inventories were stated at the lower of cost or
      market. Cost was determined principally by the use of the first-in,
      first-out method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(f) |  | Depreciation and Amortization 
      Fixed assets were depreciated on a straight-line basis over the estimated
      useful lives of the related assets. Leasehold improvements were amortized
      on a straight-line basis over the shorter of the estimated useful lives of
      the improvements, which was 10 years, or the life of the
  lease.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(g) |  | Income Taxes  The Company
      accounts for income taxes in accordance with Financial Accounting
      Standards Board (FASB) Statement of Financial Accounting Standards
      (SFAS) No. 109, Accounting for Income Taxes. The Company recognizes
      deferred tax assets and liabilities based on the differences between the
      book bases and the tax bases of the assets and liabilities, using the
      effective tax rates in the years in which the differences are expected to
      reverse. A valuation allowance is recorded when it is probable that some
      or all of a deferred tax asset will not be realized. Income tax expense
      consists of the tax payable for the period and the change during the
      period in deferred tax assets and liabilities.                                                                                                                                                                                                                                                                                                                                                          
|   
|(h) |  | Earnings per Share  Basic
      earnings per share (EPS) is determined by dividing net (loss) income for
      the period by the weighted average number of common shares outstanding
      during the same period. Diluted EPS reflects the potential dilution that
      could occur if securities or other contracts to issue common stock were
      exercised or converted into common stock or resulted in the issuance of
      common stock, which would then share in the earnings of the Company. For
      the year ended December 31, 2006, the Company had warrants to purchase
      7,357,733 shares that were not included in the dilutive earnings per share
      calculation because the exercise price of these items was greater than the
      average market price of the common stock for the period. For the year
      ended December 31, 2007, the Company had 7,657,733 warrants that were not
      included in the dilutive loss per share calculation since the effect would
      be antidilutive. As a result of the sale of the Subsidiaries on September
      28, 2006, all unexercised stock options were terminated.
|   
|(i) |  | Impairment of 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. The recoverability of assets
      held and used in operations is measured by a comparison of the carrying
      amount of the assets to the future net cash flows expected to be generated
      by the assets. If such assets are considered to be impaired, the
      impairment to be recognized is measured by the amount by which the
      carrying amount of the assets exceeds the fair value of the
    assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

F9

---

INTERNATIONAL SMART SOURCING, INC.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the
Years Ended December 31, 2007 and December 31, 2006 (contd)

|(j) |  | Stock Based Compensation  The
      Company accounts for stock based compensation using the fair value
      recognition provisions of SFAS No. 123R (revised 2004), Share Based
      Payment (SFAS 123R).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | On August 28, 2006, the Company
      sent a Notice of Termination of Stock Options to all option holders
      announcing the proposed sale of the Company. Effective September 28, 2006,
      upon the sale of the Subsidiaries, all unexercised options were
      effectively terminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | The Company did not record any
      compensation expense for the year ended December 31, 2006 since all
      options were fully vested prior to the adoption of SFAS 123R.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(k) |  | Accounts Receivable  Allowance
      for Doubtful Accounts  Prior to the sale of the Subsidiaries, the Company
      routinely reviewed its accounts receivable by customer account aging to
      determine the collectibility of the amounts due based on information
      received from the customer, past history and economic conditions. In doing
      so, the Company adjusted the allowance accordingly to reflect the net
      realizable value of an account receivable. Accounts receivable are written
      off at the time they are deemed to be uncollectible.                                                                                                                                                                                                                                                                          
|   
|(l) |  | Fair Value of Financial
      Instruments  The Companys financial instruments consist of cash, cash
      equivalents, certificate of deposits, notes receivable, accounts payable
      and accrued expenses. The carrying amounts of these financial instruments
      in the balance sheet approximate fair value due to their short-term
      nature.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(m) |  | Advertising Expense  Advertising
      costs were expensed when incurred. Advertising expense were $0 and
      $147,610 for the years ended December 31, 2007 and December 31, 2006,
      respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(n) |  | Shipping and Handling Costs  The
      Company classified EHCs shipping and handling cost as a component of
      selling expenses. The costs were for shipping the product to the customer.
      EHCs shipping and handling cost for the year ended December 31, 2006 was
      $169,911. EHC billed its customers directly for shipping and handing costs
      except for sales to the Defense Supply Center Philadelphia. SSIs shipping
      and handling policy was customer driven. The customer had the choice of
      including the shipping and handling costs into the piece price of the
      product, being billed separately for such costs, which are included in
      sales, or to pay the carrier directly. All of SSIs shipping and handling
      costs were expensed as incurred and were included in cost of goods
      sold.
|   
|(o) |  | Foreign Currency Translation 
      The Company accounted for foreign currency transactions under SFAS No. 52
      Foreign Currency Translation. The functional currency for the Companys
      foreign operations was the US dollar. Revenue and expenses were translated
      at the actual exchange rate when the transaction was completed. Gains and
      losses for foreign transactions were immaterial and were included in the
      Companys consolidated statements of operations during the year ended
      December 31, 2006. The Company did not have any foreign currency
      transactions during the year ended December 31,
2007.                                                                                                                                                                                               

F10

---

INTERNATIONAL SMART SOURCING, INC.
AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFor the Years
Ended December 31, 2007 and December 31, 2006 (contd)

|(p) |  | Recent
      Accounting Pronouncements
|--- |  | --------------------------------------
|   
|    |  | (i)                                   
|   
|    |  | (ii)                                  
|   
|    |  | (iii)                                 
|   
|    |  | (iv)                                  

F11

---

INTERNATIONAL SMART SOURCING, INC.
AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFor the Years
Ended December 31, 2007 and December 31, 2006 (contd)

4. CONCENTRATION OF CREDIT RISK AND
MAJOR CUSTOMERS

Financial instruments that potentially
subject the Company to significant concentrations of credit risk consist of
cash. At times, the cash in any one bank account may exceed the Federal Deposit
Insurance Corporations $100,000 limit. At December 31, 2007, the Company was
over the insured limit. The Company places its cash with high credit quality
financial institutions.

During the year ended December 31,
2006, the Company had one customer that accounted for approximately 11% of the
Companys net sales.

Prior to the sale of the Subsidiaries,
the Company relied on vendors from China for a significant amount of its
manufacturing and outsourcing capabilities. One vendor accounted for more than
10% of purchases for the year ended December 31, 2006. Purchases from this
supplier for the year ended December 31, 2006 approximated $4,720,000 (92%) of
total purchases.

5. INCOME TAXES

The Company utilized its net operating
loss (NOL) to eliminate all of its regular income tax in fiscal 2006; the NOL
had previously been fully reserved. The Companys income tax provision in fiscal
2006 relates to the Federal Alternative Minimum Tax as well as minimum state
taxes. Due to the sale of the Subsidiaries, the remaining NOL, in the amount of
$1,800,000, was deemed transferred in the Transaction. Also as a result of the
Transaction, the primary deferred tax asset and the NOL, ceased to exist and the
entire valuation allowance has been eliminated. Since the sale of its
Subsidiaries, the Company has a NOL of approximately $169,000. The deferred tax
asset related to such NOL has been fully reserved for.

The Company has adopted the provisions
of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes  an
interpretation of FASB Statement No. 109 (FIN 48), on January 1, 2007. FIN 48
clarifies the accounting for uncertainty in income taxes recognized in an
enterprises financial statements in accordance with SFAS No. 109, Accounting
for Income Taxes, and prescribes a recognition threshold and measurement
process for financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
period, disclosure and transition. There were no unrecognized tax benefits as of
January 1, 2007.

The Company has identified its federal
tax return and its state tax return in New York State as major tax
jurisdictions, as defined. Based on the Companys evaluation, it has been
concluded that there are no significant uncertain tax positions requiring
recognition in the Companys financial statements. The Companys evaluation was
performed for the tax years ended 2003 through 2006, the only periods subject to
examination. The Company believes that its income tax positions and deductions
would be sustained on audit and does not anticipate any adjustments that would
result in a material change to its financial position. Consequently, the Company
did not record a cumulative effect adjustment related to the adoption of FIN 48.

F12

---

INTERNATIONAL SMART SOURCING, INC.
AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFor the Years
Ended December 31, 2007 and December 31, 2006 (contd)

The Company classifies interest and
penalties related to unrecognized tax benefits in other expenses. The Company
did not incur interest or penalties during the year ended December 31, 2007.

The differences between the statutory
federal rate and the effective rate for the years ended December 31, 2007 and
December 31, 2006 is indicated below:

December 31,
    
    December 31,2007
    
    2006Income tax provision at 34%
    
    (34
    %)
    
    (34
    %)State and local
      income taxes net of federalbenefit
    
    (7
    %)
    
    (7
    %)Effect of permanent differences
    
    (6
    %)
    
    (6
    %)Alternative
      Minimum Tax
    
    
    
    
    1
    %Change in utilization of NOL
    
    
    
    
    47
    %Change in
      deferred tax asset valuationallowance
    
    47
    %
    
    Total
    
    0
    %
    
    1
    %


6. LINE OF CREDIT

On April 25, 2006, the Company entered
into an agreement with Citibank N.A. to provide the Company with a line of
credit of up to $1,700,000 until June 30, 2006. On May 18, 2006, the Company
closed the deal with Citibank N.A. effectively terminating the agreement with
Peoples Bank. The Company paid off the remaining balance of $596,374 to
Peoples Bank. On June 28, 2006, the Company signed an extension of the line
until June 30, 2007.

On September 28, 2006, the Companys
obligations under the line of credit with Citibank N.A. were terminated in
connection with the sale of the Subsidiaries.

7. RETIREMENT PLAN

Prior to September 28, 2006, the
Subsidiaries of the Company sponsored 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 were entitled to contribute up to 15% of their annual
compensation, subject to certain limitations. In addition, the Company was able
to make contributions to the plan at its discretion. During the years ended
December 31, 2007 and 2006, the Company made contributions of $0 and $15,000,
respectively, to the plan. As a result of the Transaction as of September 28,
2006, the Company has no further obligations or liabilities with respect to the
401(k) plan.

8. STOCK OPTION AND GRANT PLAN AND
WARRANTS

In March 1998, the Company adopted the
Stock Option and Grant Plan (the Plan) which was amended in June 2000 and
provides for an aggregate grant of options to purchase 5,000,000 shares of the
Companys common stock. Options may be granted to employees, officers,
directors, consultants and independent contractors. Under the Plan, 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. The Company
vested all unvested employee options as of December 31, 2004.

F13

---

INTERNATIONAL SMART SOURCING, INC.
AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFor the Years
Ended December 31, 2007 and December 31, 2006 (contd)

There were no stock options issued
during the years ended December 31, 2007 and 2006.

The following tables illustrate the
Companys stock option and warrant issuances and balances outstanding as of, and
during the years ended December 31, 2007 and 2006, restated for the
anti-dilution provisions related to the Companys common stock warrants.

OPTIONS
    
    WARRANTSWeighted
    
    
    
    
    WeightedShares
    
    Average
    
    Shares
    
    AverageUnderlying
    
    Exercise
    
    Underlying
    
    ExerciseOptions
    
    Price
    
    Warrants
    
    PriceOutstanding at December 31, 2005
    3,950,000
    
    $
    0.52
    
    
    7,482,733
    
    $
    0.97Expired
    
    
    
    
    
    
    (125,000
    )
    
    (0.97
    )Cancelled
    (3,950,000
    )
    
    (0.52
    )
    
    (7,357,733
    )
    
    (0.97
    )Granted
    
    
    
    
    
    
    7,357,733
    
    
    0.20Outstanding at December 31, 2006
    
    
    $
    
    
    
    7,357,733
    
    $
    0.20Expired
    
    
    
    
    
    
    
    
    
    Cancelled
    
    
    
    
    
    
    
    
    
    Granted
    
    
    
    
    
    
    300,000
    
    
    0.20Outstanding at December 31, 2007
    
    
    $
    
    
    
    7,657,733
    
    $
    0.20


As a result of the sale of the
Subsidiaries on September 28, 2006, all unexercised stock options and the
Companys Stock Option Plan were terminated.

On March 28, 2007, the Board of
Directors approved a grant of warrants to the Companys three executive
officers, David Hale, President and Chairman of the Companys Board of
Directors; Richard A. Peters, Secretary; and Michael S. Rakusin, Chief Financial
Officer (collectively referred to herein as the Executive Officers), who are
currently serving the Company without receiving cash compensation for their
services as officers. The Executive Officers also comprise all of the directors
of the Company.

The warrants were granted to compensate
the Executive Officers for their services provided to the Company subsequent to
the sale of the Subsidiaries and to induce them to continue serving as officers.
Currently each of the directors of the Company also receives compensation of
$500 per month for their services as directors.

The warrants issued to each of the
Executive Officers entitles each Executive Officer to purchase 100,000 shares of
the Companys common stock at an exercise price of $0.20 per share. The market
price on March 28, 2007 was $0.16 per share. The exercise price and the number
of shares which may be purchased upon exercise of a warrant are subject to
adjustment in certain circumstances. The warrants were fully vested and
exercisable on the date of grant and expire five years from such date. Neither
the warrants nor the shares of common stock issuable upon the exercise of the
warrants hereof have been registered under the Securities Act of 1933, as
amended, and have been issued in reliance upon an exemption from the
registration requirements of that act.

F14

---

INTERNATIONAL SMART SOURCING, INC.
AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFor the Years
Ended December 31, 2007 and December 31, 2006 (contd)

The fair value of each stock warrant
grant is estimated based upon grant date fair value using the Black-Scholes
option-pricing model with the following weighted average assumptions used for
stock warrants granted during the year ended December 31, 2007: (i) annual
dividends of $0.00, (ii) expected volatility of 37.96%, (iii) risk-free interest
rate of 4.50%, and (iv) expected warrant lives of five years for the year ended
December 31, 2007. The weighted average fair value of the stock warrants granted
for the year ended December 31, 2007 was $0.05. There were 300,000 warrants
granted during the year ended December 31, 2007.

Accordingly, the Company has valued the
warrants at their fair value and has recorded a charge to operations in the
amount of $15,000 which is included in general and administrative expenses in
the accompanying consolidated financial statements.

The following is additional information
with respect to the Companys warrants as of December 31, 2007:

WARRANTS OUTSTANDING AND EXERCISABLENumber
      of
    
    WeightedOutstanding
    
    Average
    
    WeightedShares
    
    Remaining
    
    AverageExercise
    
    Underlying
    
    Contractual
    
    ExercisePrice
    
    Warrants
    
    Life
    
    Price$0.20
    
    7,657,733
    
    2.42 years
    
    $ 0.207,657,733
    
    2.42 years
    
    $ 0.20


9. RELATED PARTY TRANSACTIONS

The Company leased its premises in
Farmingdale, N.Y. from K&G Realty, K&G Realty is owned by David Kassel,
the former CEO and a shareholder of the Company prior to the sale of the
Subsidiaries and Harry Goodman, an officer and shareholder of the Company, prior
to the sale of the Subsidiaries. Rent expense for the years December 31, 2007
and 2006 was $0 and $161,460, respectively. Total rent expense for the years
ended December 31, 2007 and December 31, 2006 was approximately $0 and $214,000,
respectively.

Sales during the year ended December
31, 2006 included approximately $530,000 to another company owned by two former
officers/shareholders and the former CEO of the Company. For the year ended
December 31, 2006, gross profit on such sales was $67,000.

Ray Engineering Company Limited
(Rencol), located in Bristol, United Kingdom is a knob, handle and hand wheel
manufacturer. Rencol is owned by Rencol Acquisitions LLC which is owned by Mr.
David Hale, Chairman and President of the Company, Mr. David Kassel, former
Director and CEO of the Company, Mr. Andrew Franzone, former Director and
President of EHC and Mark Mandel, an accounting consultant to the Company.
Rencol agreed to become a customer of SSI for its manufactured products sourced
in China on the same terms and conditions as other customers of the Company for
a period of at least two years. During the year ended December 31, 2006, the
Company charged Rencol a service fee of $67,500, which is included in
consolidated net sales in the accompanying consolidated statements of
operations. EHC is the exclusive distributor of Rencol products in North America
and Rencol is a distributor of EHC products for a two-year period. During the
year ended December 31, 2006, the Company paid Rencol $112,500, which is
included in cost of goods sold in the accompanying statements of
operations.

F15

---

INTERNATIONAL SMART SOURCING, INC.
AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFor the Years
Ended December 31, 2007 and December 31, 2006 (contd)

On February 23, 2006, the Board of
Directors terminated David Kassel as the Chief Executive Officer and an employee
of the Company, effective immediately. Pursuant to that certain employment
agreement by and between David Kassel and the Company dated March 15, 1998, Mr.
Kassel was to receive salary and benefits until February 28, 2008. The Company
recorded severance expense of $335,366 during the year ended December 31, 2007.
As of December 31, 2007, the Company had paid $135,866 of the total to be paid.
The Company was paying at an accelerated rate above the contractual rate
provided for in the Employment Agreement. As a result of the sale of the
Subsidiaries, the Company is no longer liable for the remaining unpaid balance
owed Mr. Kassel pursuant to the Employment Agreement between Mr. Kassel and the
Company.

The Company had unsubordinated loans
from two officer/shareholders and one director/shareholder of the Company
totaling $120,522. These loans were previously subordinated under the agreement
with Peoples Bank, discussed in Note 6, and required the banks approval to
make any payments. As a result, the principal and interest payments were past
due. In August 2006, the Company repaid the remaining principal and interest
owed under these loans totaling approximately $146,000.

10. 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 was a board member of the Company at the time, was 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 of all products
manufactured in China up to $5,000,000 per year and 1% of net costs in excess of
$5,000,000. On December 3, 2003, the consulting agreement was terminated.
However, the Company was obligated to pay the commission of 1.5% or 1%, of the
net cost, through December 2007. As a result of the sale of the Subsidiaries on
September 28, 2006, the Company is no longer responsible for the payment of such
commissions. During the year ended December 31, 2007, the Company paid
approximately $35,000 in commissions earned during 2006.

11. PREFERRED STOCK

The Board of Directors of the Company
is authorized, without further action of the shareholders 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. As of December 31, 2007, there were no
shares of preferred stock issued and outstanding.

F16

---

INTERNATIONAL SMART SOURCING, INC.
AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFor the Years
Ended December 31, 2007 and December 31, 2006 (contd)

12. SEGMENT AND GEOGRAPHIC
INFORMATION

The Company is currently a shell
company with no operations. Prior to the sale of the Subsidiaries on September
28, 2006, the Company viewed 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 shared a common workforce and office headquarters, which included an
allocation of all overhead components. Overhead items that were specifically
identifiable to a particular segment were applied to such segment. Information
with respect to foreign operations of the Company prior to September 28, 2006 is
not material. The Companys segment information for the year ended December 31,
2006 was as follows:

Distributionand
    
    
    
    
    CorporateManufacturing
    
    Outsourcing
    
    and Other
    
    ConsolidatedYear ended December 31, 2006Sales
    $
    4,682,171
    
    $
    6,016,106
    
    $
    
    
    $
    10,698,277Interest and other income
    
    17,479
    
    
    3,386
    
    
    
    
    
    20,865Interest and
      other expenses
    
    35,789
    
    
    6,000
    
    
    97,968
    
    
    139,757Depreciation and amortization
    
    42,174
    
    
    14,591
    
    
    5,819
    
    
    62,584Segment
      assets
    
    
    
    
    
    
    
    1,478,847
    
    
    1,478,847Long-lived asset expenditures
    
    49,664
    
    
    5,826
    
    
    
    
    
    55,490Segment net
      income
    $
    652,325
    
    $
    161,560
    
    $
    45,187
    
    $
    859,072


F17

---

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

There were no changes in accounting
principles or disagreements with the auditors regarding applications of any
accounting principles as of December 31, 2007.

Item 8A. Controls and Procedures

Evaluation and Disclosure
Controls and Procedures

The financial statements have been
audited by an independent registered accounting firm in accordance with the
standards of the Public Company Accounting Oversight Board. Their report
expresses the independent accountants judgment as to the fairness of
managements reported operating results, cash flows and financial position. This
judgment is based on the procedures described in the second paragraph of the
independent accountants report. See the Report of the Independent Registered
Accounting Firm on page F-1.

Management is responsible for the
preparation of the Companys consolidated financial statements and related
information.

Management uses its best judgment to
ensure that the consolidated financial statements present fairly, in all
material aspects, the Company consolidated financial position and results of
operations in conformity with generally accepted accounting principles.

The term disclosure controls and
procedures (as defined in Exchange Act Rule 13a-15(e)) refers to the controls
and other procedures of a company that are designed to ensure that information
required to be disclosed by a company in the reports that it files under the
Securities Exchange Act of 1934, as amended (the Exchange Act) is recorded,
processed, summarized and reported within time periods specified in SEC rules
and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by an issuer in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the issuers management,
including its principal executive and principal financial officers, or persons
performing similar functions, as appropriate to allow timely decisions regarding
required disclosures.

The Company has designed its disclosure
controls and procedures to ensure that information required to be disclosed by
the Company in the reports that it files under the Exchange Act is recorded,
processed, summarized and reported within time periods specified in SEC rules
and forms. The Company has also designed its disclosure controls and procedures
to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is accumulated and
communicated to the Companys management to allow timely decisions regarding
required disclosures.

This Annual Report does not include an
attestation report of the Companys registered public accounting firm regarding
internal controls over financial reporting. Managements report was not subject
to attestation by the Companys registered public accounting firm pursuant to
temporary rules of the SEC that permit the Company to provide only Managements
Report in this Annual Report.

10

---

Material Weaknesses in Internal
Control over Financial Reporting

Management is responsible for the
preparation of the Companys consolidated financial statements and related
information.

Management uses its best judgment to
ensure that the consolidated financial statements present fairly, in all
material aspects, the Companys consolidated financial position and results in
conformity with GAAP.

Under the supervision of management,
the Company conducted an evaluation of the effectiveness of its internal control
over financial reporting based on the framework in Internal Control  Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission published in 1992 and subsequent guidance prepared specifically for
smaller public companies.

As a result of its evaluation, the
Company concluded that its internal control over financial reporting was
ineffective as of December 31, 2007 due to the identification of a material
weakness. A material weakness is a control deficiency or combination of control
deficiencies such that there is a reasonable possibility that a material
misstatement of the registrants annual or interim financial statements will not
be prevented or detected on a timely basis.

To address the weakness described
below, the Company performed additional analysis and performed other procedures
to ensure the consolidated financial statements were prepared in accordance with
generally accepted accounting principles in the United States (GAAP).
Accordingly, management believes that the consolidated financial statements
included in this Annual Report on Form 10-KSB, fairly present, in all material
aspects, the Companys financial condition, results of operations and cash flows
for the periods presented in accordance with GAAP.

The weakness, identified by management,
related to the lack of necessary accounting resources to ensure consistently
complete and accurate reporting of financial reporting. The Company does not
employ a full time in-house controller or chief financial officer nor does the
Company employ any in-house accounting personnel to do routine record keeping.
Consequently, the Companys financial reporting function is limited. Commencing
on September 28, 2006, David Hale ceased to be acting Chief Financial Officer
and the Company appointed Michael Rakusin as the Chief Financial Officer, on a
part time basis. In order to further correct this deficiency upon the conclusion
of an acquisition, management plans to seek additional qualified in house
accounting personnel to ensure that management will have adequate resources in
order to attain complete reporting of financial information disclosures in a
timely manner. The Company is not presently conducting operations and does not
anticipate conducting operations prior to an acquisition.

The Company believes that for the
reasons described above, after the conclusion of an acquisition, it will be able
to improve its disclosure controls and procedures and remedy the material
weaknesses identified above. Because of inherent limitations in all the
Companys control systems, no evaluation can provide absolute assurance that all
control issues and instances of fraud, if any, will be or have been detected.
The Company believes that these new management plans related to controls and
procedures will provide reasonable assurance that assets are safeguard from loss
or unauthorized use, that transactions are recorded in accordance with GAAP
under managements directions, and that financial records are reliable to
prepare financial statements.

Changes in Internal Controls over
Financial Reporting

Subsequent to the sale of its
Subsidiaries on September 28, 2006, the Company is a shell company with three
officers/directors who are responsible for its financial reporting.

11

---

Other than the identification of the
material weakness in internal controls over financial reporting, there have not
been any other changes in the Companys internal control over financial
reporting that occurred during the year ended December 31, 2007 that have
materially affected or are reasonably likely to affect the Companys internal
control over financial reporting.

Item 8B. Other Information

Not applicable.

12

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PART III

|Item 9. |  | Directors, Executive Officers, Promoters and Control Persons;
      Compliance with Section 16(a) of the Exchange
Act
|------- |  | ---------------------------------------------------------------------------------------------------------------------

Information Regarding the
Directors

|Name                              | Age | Position                                                                                  
|--------------------------------- | --- | ------------------------------------------------------------------------------------------
|David Hale                        | 62  | Chairman, President and Former Chief Executive Officer (principal
      executive officer)
|Richard A.
      Peters(1)(2)(3)  | 70  | Director,
      Secretary                                                                 
|Michael S.
      Rakusin(1)(2)(3) | 52  | Director, Chief Financial
      Officer                                                   

|(1) |  | Member of the Audit
      Committee.       
|--- |  | -------------------------------------------
|(2) |  | Member of the
      Compensation Committee.
|(3) |  | Member of the
      Nominating Committee.  

David Halehas served as the President and Chief Operating Officer of
the Company since April 2002. In 2005, Mr. Hale became the chairman of the
Company, and in 2006, he became the Chief Executive Officer. Mr. Hale commenced
employment at the Company in October 1999 as Director of Operations and became
Chief Operating Officer in May 2001. Mr. Hale is a manager and shareholder of
Rencol Acquisitions LLC, a holding company which owns a knobs, handles and
wheels manufacturer located in the United Kingdom.

Richard A.
Petershas served as the Secretary of the
Company since September 28, 2006. Mr. Peters has over forty years experience in
business, development, marketing and management consulting. His product areas of
expertise include data storage, telecommunications, computer graphics and
software. Mr. Peters was the Vice President of World Wide Channel Marketing at
Quantum Corporation in Milpitas, California from April 1998 until his retirement
in February 2001. Mr. Peters lived and worked in Asia, Europe and South America
for twelve years. He led acquisition teams, strategic partnerships and product
introductions.

Michael S.
Rakusinhas served as Chief Financial
Officer of the Company since September 28, 2006. Since 2001, Mr. Rakusin has
served as the Managing Director of 54 Pearl Street Associates, a restaurant
management holding company. Mr. Rakusin is also a certified public accountant
and currently maintains an active accounting and tax practice. He also has
extensive experience as a builder of single-family homes. Mr. Rakusin previously
served as Chief Executive Officer of Echo Springs Water Co., Inc., a distributor
of bottled water. Michael Rakusin has been designated as the Audit Committee
Financial Expert by the Company.

CORPORATE GOVERNANCE

Meetings of the Board

During 2007, the Board of Directors of
the Company met three (3) times in person or via conference call. During 2007
each director attended at least 75% of the aggregate of (i) the total number of
meetings of the Board of Directors (held during the period for which such
director served on the Board of Directors) and (ii) the total number of meetings
of all committees of the Board of Directors on which such director served
(during the periods for which such director served on such committee or
committees).

13

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Board Committees

The Board of Directors of the Company
has established a compensation committee (the Compensation Committee), an
audit committee (the Audit Committee), and a nominating and corporate
governance committee (the Nominating and Corporate Governance Committee).

The Compensation Committee.The Compensation Committee consists of
Richard Peters and Michael Rakusin. The Compensation Committee determines the
salaries and bonuses of the Companys executive officers.

The Audit
Committee.Mr. Peters and Mr. Rakusin
serve as members of the Audit Committee. The Company has determined that Mr.
Rakusin qualifies as an audit committee financial expert under applicable SEC
regulations. The Audit Committee has the responsibilities set forth in the Audit
Committee Charter, which was revised and adopted by the Companys Board of
Directors on March 4, 2004 including appointing auditors, pre-approving all
auditing services, reviewing the audited financial statements and other
financial disclosures, and overseeing the accounting and audit functions of the
Company. The Audit Committee reports its findings to the Board of Directors. At
the present time, no members of the audit committee are independent. The Charter
of the Audit Committee is attached as Appendix D of the Companys definitive
proxy statement filed with the SEC on August 28, 2006.

Nominating and Corporate
Governance Committee.The members of the
Nominating Committee are Richard Peters and Michael Rakusin. The Nominating
Committee has the responsibilities set forth in the Nominating and Corporate
Governance Committee charter, which was adopted by the Companys Board of
Directors on March 4, 2004, including making recommendations to the Board of
Directors of persons to serve as directors of the Company and as chairman and
members of committees of the Board of Directors. The Nominating Committee is
also responsible for certain corporate governance practices, including the
development of ethical conduct standards for the Companys Directors, officers
and employees and an annual evaluation to determine whether the Board of
Directors and its committees are functioning effectively.

The Nominating Committee expects to
identify nominees to serve as directors of the Company primarily by accepting
and considering the suggestions and nominee recommendations made by directors,
management and stockholders. The Nominating Committee has not established
specific minimum qualifications for recommended nominees. However, as a matter
of practice, the Nominating Committee does evaluate recommended nominees for
directors based on their integrity, judgment, independence, financial and
business acumen, relevant experience, and their ability to represent and act on
behalf of all stockholders, as well as the needs of the Board of Directors. In
general, the Nominating Committee would expect to re-nominate incumbent
directors who express an interest in continuing to serve on the Board.

The Charter of the Nominating and
Corporate Governance Committee can be found as Appendix E of the definitive
proxy statement dated August 28, 2006.

Director Independence

The Companys determination of
independence of directors is made by using the definition of independent
director contained under Rule 4200(a)(15) of the Rules of the Financial
Industry Regulatory Authority. The Chairman of the Board of Directors, Mr. Hale
is the Companys President and principal executive officer and therefore is not
independent under this rule. Further, the Companys other two directors, Mr.
Peters and Mr. Rakusin, serve as the Companys Secretary and Chief Financial
Officer, respectively, and as a result also do not satisfy the standard under
Rule 4200(a)(15) of independent judgment.

14

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Code of Business Conduct and
Ethics

The Board of Directors has also adopted
a Code of Business Conduct and Ethics, which can be found in Appendix F of the
Definitive Proxy Statement filed by the Company with the SEC on August 28, 2006.
The Code of Business Conduct and Ethics will be provided without charge, upon
written request to the Company at the following address: International Smart
Sourcing, Inc., 320 Broad Hollow Road, Farmingdale, New York 11735, Attention:
David Hale.

Section 16(a) Reporting

Section 16(a) of the Exchange Act
requires the Companys executive officers and directors, and persons who own
more than 10% of a registered class of the Companys equity securities, to file
reports of ownership and changes in ownership with the SEC and NASDAQ. Officers,
directors and greater than 10% stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. To the
Companys knowledge, based solely on a review of such reports provided to the
Company and written representations that no other reports were required during,
or with respect to, the year ended December 31, 2006 (Fiscal 2005), all
Section 16(a) filing requirements applicable to the Companys executive
officers, directors and greater than 10% beneficial owners have been
satisfied.

Item 10. Executive Compensation.

Executive Compensation

Summary Compensation Table. The
following table sets forth cash compensation paid or accrued during the
indicated periods to the Companys Chief Executive Officer and the Companys
other Executive Officers whose total salary and bonus exceeded $100,000 during
the year ended December 31, 2006 (collectively, the Named Executive Officers).
No other Executive Officers received compensation in excess of $100,000 during
2006. No Executive Officers received compensation in excess of $100,000 during
the year ended December 31, 2007.

|                                           |      |  |                |  |                      |   |                  | **Nonqualified** |                  |        |           |  |         | 
|------------------------------------------ | ---- |  | -------------- |  | -------------------- | - | ---------------- | ---------------- | ---------------- | ------ | --------- |  | ------- | 
|                                           |      |  |                |  |                      |   |                  | **Deferred**     |                  |        |           |  |        
|                                           |      |  | **Salary**     |  | **Bonus**            |   | **Compensation** |                  | **All Other**    |        |           | 
|                                           |      |  | **in Dollars** |  | **in
      Dollars** |   | **Earnings**     |                  | **Compensation** |        | **Total**
|David Kassel                               | 2007 |  |               |  |                      |  |                  |                 |                  |       |           |  |        | 
|Former Chief Executive Officer             | 2006 |  | 159,900        |  |                      |  |                  |                 |                  | 5,805  |           |  | 165,705 | 
|Andrew Franzone                            | 2007 |  |               |  |                      |  |                  |                 |                  |       |           |  |        | 
|Former President of EHC                    | 2006 |  | 138,645        |  |                      |  |                  |                 |                  | 21,114 |           |  | 159,759 | 
|David Hale                                 | 2007 |  |               |  |                      |  |                  |                 |                  | 5,000  |           |  | 5,000   | 
|Chairman, President and former             | 2006 |  | 120,500        |  |                      |  |                  |                 |                  | 15,706 |           |  | 136,206 | 
|Chief Operating Officer                    |      |  |                |  |                      |   |                  |                  |                  |        |           |  |         | 
|Steven Sgammato                            | 2007 |  |               |  |                      |  |                  |                 |                  |       |           |  |        | 
|Former General Manager of EHC              | 2006 |  | 97,617         |  |                      |  |                  |                 |                  | 13,581 |           |  | 111,198 | 
|Michael Rakusin                            | 2007 |  |               |  |                      |  |                  |                 |                  | 5,000  |           |  | 5,000   | 
|Director and Chief
      Financial Officer | 2006 |  |               |  |                      |  |                  |                 |                  |       |           |  |        | 

15

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Year-End Option
Holdings.On August 28, 2006, the Company
sent a Notice of Termination of Stock Options to all option holders announcing
the proposed sale of the Subsidiaries. Effective September 28, 2006, upon the
sale of the Subsidiaries, all unexercised options were effectively terminated.

Employment Agreements

The Company entered into executive
employment agreements as of March 15, 1998 with Andrew Franzone, David Kassel
and Harry Goodman each a Former Executive. The terms of each of the employment
agreements would have ended on March 2, 2008 (the Term). The annual base
salaries of Messrs. Franzone, Kassel and Goodman under their employment
agreements were $125,000, $100,000 and $100,000, respectively, with annual
salary adjustments equal to the greater of 5% or the increase in the Consumer
Price Index.

Each Former Executive was entitled to
fringe benefits and an annual bonus to be determined by the Compensation
Committee of the Board of Directors. Each Former Executive could have been
terminated for cause (as defined in the employment agreements) with all future
compensation ceasing. If the Former Executive died during the Term or is unable
to competently and continuously perform the duties assigned to him because of
ill health or other disability (as defined in the employment agreements), the
Former Executive or the Former Executives estate or beneficiaries would have
been entitled to full compensation for three years following the date thereof.
If the Former Executive was terminated without cause, the Former Executive would
have been entitled to full compensation for the remainder of the Term. If the
Former Executive resigned, his compensation ceased as of the date of his
resignation. During the period of employment and for two years thereafter the
Former Executives are prohibited from competing with the Company; provided,
however, that the Former Executives may provide services to other noncompeting
businesses. In order for a restrictive covenant to be enforceable under
applicable state law, the covenant must be limited in terms of scope and
duration. While the Company believes that the covenants in the employment
contracts are enforceable, there can be no assurance that a court will declare
them enforceable under particular circumstances.

Mr. Kassels employment was terminated
without cause on February 24, 2006. As a result, he was entitled to full
compensation for the remainder of the Term. On September 28, 2006, as a result
of the sale of the Subsidiaries, the Company was no longer responsible for
payment of the remaining unpaid balance owed Mr. Kassel pursuant to the
employment agreement between Mr. Kassel and the Company.

In connection with the Transaction on
September 28, 2006, Mr. Goodman and Mr. Franzone resigned as officers of the
Company. The Company has no severance payment obligations with respect to the
resignations of Messrs. Goodman or Franzone.

Compensation of Directors

Prior to September 28, 2006, Directors
of the Company who were also employees received no additional compensation for
their service as directors and non employee Directors of the Company received a
fee of $500 a month for serving on the Board of Directors and reimbursement of
reasonable expenses incurred in attending meetings. At the present time, all
directors of the Company receive $500 a month for serving on the Board of
Directors as well as reimbursement of reasonable expenses incurred in attending
meetings.

16

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|                     |  |                 |  |                  |  |            |  |                  |  | **Changes in**    |  |                  |  |          
|-------------------- |  | --------------- |  | ---------------- |  | ---------- |  | ---------------- |  | ----------------- |  | ---------------- |  | ---------
|                     |  |                 |  |                  |  |            |  |                  |  | **Pension Value** |  |                  |  |          
|                     |  | **Fees Earned** |  |                  |  |            |  | **Non-equity**   |  | **and**           |  |                  |  |          
|                     |  | **or Paid in**  |  |                  |  | **Option** |  | **Incentive**    |  | **Nonqualified**  |  | **All**          |  |          
|                     |  | **Cash**        |  | **Stock Awards** |  | **Awards** |  | **Plan**         |  | **Compensation**  |  | **Other**        |  | **Total**
|                     |  | **($)**         |  | **($)**          |  | **($)**    |  | **Compensation** |  | **Earnings**      |  | **Compensation** |  | **($)**  
|David Hale           |  | 6,000           |  |                 |  |           |  |                 |  |                  |  | 5,000            |  | 11,000   
|Richard
      Peters |  | 6,000           |  |                 |  |           |  |                 |  |                  |  | 5,000            |  | 11,000   
|Michael Rakusin      |  | 6,000           |  |                 |  |           |  |                 |  |                  |  | 5,000            |  | 11,000   

|Item
      11. | Security
      Ownership of Certain Beneficial Owners and Management and
      Related
|-------------- | --------------------------------------------------------------------------------------
|               | Shareholder
      Matters                                                             

The following table sets forth as of
February 29, 2008 certain information regarding the beneficial ownership of
Common Stock by (i) each person or group (as that term is defined in Section
13(d)(3) of the Exchange Act) known by the Company to be the beneficial owner of
more than 5% of the Common Stock, (ii) each executive officer of the Company,
(iii) each director and Nominee and (iv) all directors and executive officers as
a group. Except as otherwise indicated, the Company believes, based on
information furnished by such persons, that each person listed below has sole
voting and investment power over the shares of common stock shown as
beneficially owned, subject to community property laws, where applicable.
Beneficial ownership is determined under the rules of the SEC and includes any
shares which the person has the right to acquire within 60 days after February
29, 2008 through the exercise of any stock option or other right.

|             |  |                                                       |  |                        |        |                     | **Percentage**
|------------ |  | ----------------------------------------------------- |  | ---------------------- | ------ | ------------------- | --------------
|**Title of** |  |                                                       |  | **Number of Shares**   |        | **of Common Stock**
|**Class**    |  | **Name
      of Beneficial Owner**                    |  | **Beneficially Owned** |        | **Owned**(1)       
|Common       |  | H.T. Ardinger, Jr.                                    |  | 10,643,145             | (1)(2) |                     | 66.73         
|Common       |  | Donald E.
      Adams                                 |  | 1,063,500              | (3)    |                     | 9.69          
|Common       |  | David Hale                                            |  | 100,500                |        |                     |               
|Common       |  | All directors and executive officers
      as a group |  | 300,500                |        |                     |               

|(*) |  | Represents less than
  1%.                                                                                                                   
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|    |  |                                                                                                                                              
|(1) |  | Based on 10,974,435 outstanding shares of
      common stock.                                                                                
|(2) |  | Number of shares as set forth on the
      Schedule-13G, as filed with the SEC on February 14, 2007.                                         
|(3) |  | Includes 965,000 warrants to purchase a
      total of 4,974,225 shares of common stock exercisable within 60 days of
      February 1, 2008.
|(4) |  | Number of Shares as set forth on the Form SC
      13G filed on March 13, 2006.                                                              
|(5) |  | Includes 100,000 warrants to purchase a
      total of 100,000 shares of common stock exercisable within 60 days of
      February 28, 2008. 
|(6) |  | Includes 300,000 warrants to purchase a
      total of 300,000 shares of common stock exercisable within 60 days of
      February 28, 2008. 

Item 12. Certain Relationships and
Related Transactions

The Company did not have any related
party transactions for the fiscal year ended December 31, 2007.

17

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Item 13. Exhibits

(A) Exhibits

|**ExhibitNo.** |  | **Description of
      Exhibit**                                                                                                                                                                                                                                                                                                                                     
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|**3.1**        |  | Certificate of Incorporation of
      International Plastic Technologies Inc. and Amendment to the Certificate
      of Incorporation dated December 7, 1998 (Incorporated by reference to
      Exhibit 3.1 to the Companys Registration Statement on Form SB-2
      (Registration Statement No. 333-48701 declared effective by the SEC on
      April 23, 1999.)
|               |  |                                                                                                                                                                                                                                                                                                                                                                      
|**3.2**        |  | Amendment to the Certificate of
      Incorporation of International Smart Sourcing dated June 19, 2000
      (Incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form
      10-QSB filed with the SEC on August 15, 2000.)                                                                                                                         
|               |  |                                                                                                                                                                                                                                                                                                                                                                      
|**3.3**        |  | Amendment to the Certificate of
      Incorporation of International Smart Sourcing dated December 8, 2004
      (Incorporated by reference to Exhibit A to the Definitive Information
      Statement on Schedule 14C filed with the SEC on November 15,
      2004.)                                                                                               
|               |  |                                                                                                                                                                                                                                                                                                                                                                      
|**3.4**        |  | By-Laws of International Plastic
      Technologies, Inc. (Incorporated by reference to Exhibit 3.2 to the
      Companys Registration Statement on Form SB-2 (Registration Statement
      333-48701 declared effective by the SEC on April 23,
  1999.)                                                                                                           
|               |  |                                                                                                                                                                                                                                                                                                                                                                      
|**3.5**        |  | Amendment of the By-Laws of
      International Smart Sourcing, Inc. dated as of October 14, 2004
      (Incorporated by reference to Exhibit B to the Definitive Information
      Statement on Schedule 14C filed with the SEC on November 15,
      2004.)                                                                                                        
|               |  |                                                                                                                                                                                                                                                                                                                                                                      
|**4.1**        |  | Form of Common Stock Certificate
      (Incorporated by reference to Exhibit 4.1 to the Companys Registration
      Statement on Form SB-2 (Registration Statement No. 333-48701 declared
      effective with the SEC on April 23, 1999.)                                                                                                                          
|               |  |                                                                                                                                                                                                                                                                                                                                                                      
|**4.2**        |  | Form of Warrant Certificate
      (Incorporated by reference to Exhibit 4.2 to the Companys Registration
      Statement on Form SB-2 (Registration Statement No. 333-48701, declared
      effective by the SEC on April 23, 1999.)                                                                                                                                
|               |  |                                                                                                                                                                                                                                                                                                                                                                      
|**4.3**        |  | Form of Warrant Agreement between
      the Company and Continental Stock Transfer and Trust Company (Incorporated
      by reference to Exhibit 4.3 to the Companys Registration Statement on
      Form SB-2 (Registration Statement No. 333-48701 declared effective by the
      SEC on April 23, 1999.)                                                        
|               |  |                                                                                                                                                                                                                                                                                                                                                                      
|**4.4**        |  | Amendment 1 to the Warrant
      Agreement between the Company and Continental Stock and Trust Company
      dated as of April 20, 2005 (Incorporated by reference to Exhibit 4.1 to
      the Current Report on Form 8-K filed with the SEC on April 20,
      1005.)                                                                                               
|               |  |                                                                                                                                                                                                                                                                                                                                                                      
|**4.5**        |  | Amendment 2 to the Warrant
      Agreement between the Company and Continental Stock and Trust Company
      dated December 4, 2006 (Incorporated by reference to Exhibit 4.1 to the
      Current Report on Form 8-K filed with the SEC on December 5,
      2006.)                                                                                                 
|               |  |                                                                                                                                                                                                                                                                                                                                                                      
|**23.1**       |  | Independent Registered Public
      Accounting Firms Consent                                                                                                                                                                                                                                                                                                        

18

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|**ExhibitNo.** |  | **Description of
      Exhibit**                                                                                                                         
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|**31.1**       |  | Rule 13a  14(a)/15d  14(a)
      certification, as adopted pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002                             
|               |  |                                                                                                                                                          
|**31.2**       |  | Rule 13a  14(a)/15d  14(a)
      certification, as adopted pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002                             
|               |  |                                                                                                                                                          
|**32.1**       |  | Certification of Chairman
      pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002               
|               |  |                                                                                                                                                          
|**32.2**       |  | Certification of Chief Financial
      Officer pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906
      of the Sarbanes-Oxley Act of 2002







**Fiscal
      Fees**Fee
    Category
    
    **2007**
    
    **2006**Audit Fees
    
    $45,000
    
    $120,000Audit Related
      Fees
    
    
    
    12,700Tax Fees
    
    
    
    5,200All Other
      Fees
    
    
    
    Total Fees
    
    $45,000
    
    $137,900


Audit Fees

Marcum Kliegman LLP billed the Company
an aggregate of approximately $45,000 in fees for professional services rendered
in connection with the audit of the Companys financial statements for the most
recent fiscal year and financial statements included in each of the Companys
quarterly reports on Form 10-QSB during the year ended December 31, 2007. Marcum
Kliegman LLP billed the Company an aggregate of approximately $120,000 in fees
for professional services rendered in connection with the audit of the Companys
financial statements for year ended December 31, 2006 and financial statements
included in each of the Companys quarterly reports on Form 10-QSB during the
year ended December 31, 2007.

Audit Related Fees

The Company did not engage Marcum &
Kliegman LLP for audit related services for the year ended December 31, 2007.
The Company engaged Marcum & Kliegman LLP for audit related services for the
year ended December 31, 2006 pertaining to the filing of the Companys Proxy
Statement. Marcum & Kliegman billed the Company an aggregate amount of
$12,700 for work related to the filing of the Proxy for the year ended December
31, 2006.

Tax Fees

The Company did not engage Marcum &
Kliegman for tax services during the year ended December 31, 2007. The Company
engaged Marcum & Kliegman LLP for professional services relating to tax
compliance, tax advice and tax planning for the year ended December 31, 2006.
Marcum & Kliegman LLP billed the Company an aggregate amount of $5,200 in
fees for professional services relating to the potential tax consequences of the
sale of the Subsidiaries for the year ended December 31, 2006.

19

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SIGNATURES

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

|                           | INTERNATIONAL
      SMART SOURCING, INC.               
|-------------------------- | -------------------------------------------------------
|                          
|                          
|Date: March 12,
      2008 | /s/ David Hale                                         
|                           | David
      Hale                                       
|                           | Chairman,
      President (principal executive officer)

In accordance with the Securities
Exchange Act of 1934, as amended, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

|Signature           |  | **Title**                                                                         |  | **Date**            
|------------------- |  | --------------------------------------------------------------------------------- |  | --------------------
|                    |  |                                                                                   |  |                     
|/s/ David Hale      |  | Chairman of the Board of
      Directors, President (principal executive officer) |  | March 12, 2008      
|                    |  |                                                                                   |  |                     
|/s/ Richard Peters  |  | Secretary,
      Director                                                         |  | March 12,
      2008
|                    |  |                                                                                   |  |                     
|/s/ Michael Rakusin |  | Chief Financial
      Officer, Director                                           |  | March 12,
      2008

21

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