SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
International Smart Sourcing, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
________________________________________________________________________________
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
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[_] Fee paid previously with preliminary materials:
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was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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INTERNATIONAL SMART SOURCING, INC.
(FORMERLY CHINAB2BSOURCING.COM, INC.)
320 BROAD HOLLOW ROAD
FARMINGDALE, NEW YORK 11735
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 18, 2003
NOTICE IS HEREBY GIVEN that the 2003 Annual Meeting of Stockholders (the "Annual
Meeting") of International Smart Sourcing, Inc. (Formerly ChinaB2Bsourcing.com,
Inc.) (the "Company") will be held on June 18, 2003 at 9:00 a.m. New York time
at Koerner Silberberg & Weiner LLP 112 Madison Avenue, 3rd Floor, New York, New
York, for the following purposes:
1. To elect five directors of the Company to serve until the 2004 Annual
Meeting of Stockholders and until their respective successors are duly
elected and qualified.
2. To consider and act upon any other matters that may properly be brought
before the Annual Meeting and at any adjournments or postponements
thereof.
Any action may be taken on the foregoing matters at the Annual Meeting on the
date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned, or to which the Annual Meeting
may be postponed.
The Board of Directors has fixed the close of business on May 5, 2003 as the
record date for determining the stockholders entitled to notice of and to vote
at the Annual Meeting and at any adjournments or postponements thereof. Only
stockholders of record of the Common Stock at the close of business on that date
will be entitled to notice of and to vote at the Annual Meeting and at any
adjournments or postponements thereof.
You are requested to fill in and sign the enclosed form of proxy, which is being
solicited by the Board of Directors of the Company, and to mail it promptly in
the enclosed postage-prepaid envelope. Any proxy may be revoked by delivery of a
later dated proxy. Stockholders of record who attend the Annual Meeting may vote
in person, even if they have previously delivered a signed proxy.
By Order of the Board of Directors
Harry Goodman
Secretary
Farmingdale, New York
April 25, 2003
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE, AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID
ENVELOPE PROVIDED. IF YOU ARE A STOCKHOLDER OF RECORD AND YOU ATTEND THE ANNUAL
MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
INTERNATIONAL SMART SOURCING, INC.
(FORMERLY CHINAB2BSOURCING.COM, INC.)
320 BROAD HOLLOW ROAD
FARMINGDALE, NEW YORK 11735
PROXY STATEMENT
FOR 2003 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 18, 2003
April 25, 2002
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of International Smart Sourcing, Inc. (Formerly
ChinaB2Bsourcing.com, Inc.) (the "Company") for use at the 2003 Annual Meeting
of Stockholders of the Company to be held on June 18 , 2003, and at any
adjournments or postponements thereof (the "Annual Meeting"). At the Annual
Meeting, stockholders will be asked to vote upon the election of five directors
of the Company, and to act upon any other matters properly brought before them.
This Proxy Statement and the accompanying Notice of Annual Meeting and Proxy
Card are first being sent to stockholders on or about May 9, 2003. The Board of
Directors has fixed the close of business on May 5, 2003 as the record date for
the determination of stockholders entitled to notice of and to vote at the
Annual Meeting (the "Record Date"). Only stockholders of record of the Company's
common stock, par value $.001 per share (the "Common Stock"), at the close of
business on the Record Date will be entitled to notice of and to vote at the
Annual Meeting. Holders of Common Stock outstanding as of the close of business
on the Record Date will be entitled to one vote for each share held by them.
The presence, in person or by proxy, of holders of at least a majority of the
total number of shares of Common Stock outstanding and entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. Both abstentions and broker non-votes (as defined below) will be
counted as present in determining the presence of a quorum. A plurality of votes
cast shall be sufficient for the election of directors. Abstentions and broker
non-votes will be disregarded in determining the "votes cast" for purposes of
electing directors and will not affect the election of the candidates receiving
a plurality of votes. A "broker non-vote" is a proxy from a broker or other
nominee indicating that such person has not received instructions from the
beneficial owner or other person entitled to vote the shares which are the
subject of the proxy on a particular matter with respect to which the broker or
other nominee does not have discretionary voting power.
Stockholders of the Company are requested to complete, sign, date, and promptly
return the accompanying Proxy Card in the enclosed, postage-prepaid envelope.
Shares represented by a properly executed proxy received prior to the vote at
the Annual Meeting and not revoked will be voted at the Annual Meeting as
directed on the proxy. If a properly executed proxy is submitted and no
instructions are given, the proxy will be voted FOR the election of the nominees
for director of the Company named in this Proxy Statement. It is not anticipated
that any matters other than the election of directors will be presented at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the discretion of the proxy holders.
A stockholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Secretary of the Company at
the address of the Company set forth above; by filing a duly executed proxy
bearing a later date; or by appearing in person and voting by ballot at the
Annual Meeting. Any stockholder of record as of the Record Date attending the
Annual Meeting may vote in person whether or not such stockholder has previously
given a proxy, but the presence (without further action) of a stockholder at the
Annual Meeting will not constitute revocation of a previously given proxy.
2
The Company's 2002 Annual Report, including audited financial statements for the
fiscal year ended December 27, 2002 ("Fiscal 2002"), is being mailed to
stockholders concurrently with this Proxy Statement. The Annual Report, however,
is not part of the proxy solicitation materials.
PROPOSAL 1: ELECTION OF DIRECTORS
---------------------------------
The Board of Directors of the Company currently consists of five members. At the
Annual Meeting, five directors will be elected to serve until the 2004 Annual
Meeting of Stockholders and until their respective successors are duly elected
and qualified. The Board of Directors has nominated Andrew Franzone, David
Kassel, Harry Goodman, Carl Seldin Koerner and Mitchell Solomon (each a
"Nominee") to serve as directors. Each of the Nominees is currently serving as a
director of the Company. The Board of Directors anticipates that each of the
Nominees will serve, if elected, as a director. However, if any Nominee is
unable to accept election, the proxies will be voted for the election of such
other person or persons as the Board of Directors may recommend. The Board of
Directors will consider a Nominee for election to the Board of Directors
recommended by a stockholder of record if the stockholder submits the nomination
in compliance with the requirements of the Company's By-laws (the "By-laws").
See "Other Matters-Stockholder Proposals" for a summary of these requirements.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
INFORMATION REGARDING THE DIRECTORS/NOMINEES
The names, ages, and a description of the business experience, principal
occupation and past employment during the last five years of each of the
Nominees are set forth below.
Name Age Position
---- --- --------
David L. Kassel (2) 67 Chairman of the Board of Directors
and Chief Executive Officer
Andrew Franzone 65 President of EHC, Director
Harry Goodman 76 Vice President and Secretary, Director
Carl Seldin Koerner (1)(2) 53 Director
Mitchell Solomon (1)(2) 43 Director
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
David L. Kassel founded Electronic Hardware Corp., a wholly owned subsidiary of
the Company ("EHC") in 1970. Mr. Kassel has served as Chairman of EHC since 1975
and President of Compact Disc Packaging Corp., a wholly owned subsidiary of the
Company ("CDP") since 1995. In 2002, Mr. Kassel became the Chief Executive
Officer of the Company. From 1983 until 1995, he was Chairman of the Board of
Directors of American Safety Closure Corp., a company engaged in the
manufacturing of bottle caps. Mr. Kassel has been the Chairman and principal
stockholder of Allen Field Company, Inc. ("AFC") since 1984. Mr. Kassel has been
the Chairman of Memory Protection Devices, Inc., a company engaged in the
manufacturing of devices for the protection of computer memory, since 1987. Mr.
Kassel has been a partner in K&G Realty Associates, a privately held real estate
company, since 1978.
Andrew Franzone is currently President of EHC. Mr. Franzone also served as
President and Chief Executive Officer of the Company from 1987 through May 2001.
Mr. Franzone served as President of AFC from 1984 until 2001. Mr. Franzone
served as Chairman of the Board of Directors and President of Ackerman Bodnar
Corp., a manufacturer of interior aircraft lighting, from 1974 through 1983.
Harry Goodman served as Vice President of EHC since 1986. Mr. Goodman served as
President of EHC from 1976 to 1986 and began working as an officer of EHC in
1970. Mr. Goodman has been a partner at K&G Realty Associates since 1978. Mr.
Goodman has served as an officer of AFC since 1984. Mr. Goodman has served as an
officer of Memory Protection Devices, Inc. since 1987.
3
Carl Seldin Koerner joined the Company in 1998 as a director. Mr. Koerner has
been a practicing attorney since 1976 and is a managing partner in the law firm
of Koerner Silberberg & Weiner, LLP. Mr. Koerner established Koerner Silberberg
& Weiner, LLP, in 1986 and has served as counsel to the Company since 1976. Mr.
Koerner has served as a principal of Koerner Kronenfeld Partners, LLC, a
production company, since 1996 and has served on the board of directors of ASI
Solutions Incorporated (NASDAQ: ASIS), a human resources outsourcing firm from
1997 until 2001 when it merged with AON.
Mitchell Solomon joined the Company in 1998 as a director. Mr. Solomon has
served as President and director of Eby Electro Inc., a privately held
corporation, since 1993 and serves as President and director of Aspro Technology
Inc. and ECAM Technology Inc., both privately held corporations.
BOARD COMMITTEES
The Board of Directors of the Company has established a compensation committee
(the "Compensation Committee") and an audit committee (the "Audit Committee").
The Compensation Committee, which consists of David L. Kassel and two
non-employee directors, Carl Seldin Koerner and Mitchell Solomon, determines the
salaries and bonuses of the Company's executive officers. The Compensation
Committee also administers the Company's 1998 Stock Option and Grant Plan. Mr.
Koerner and Mr. Solomon also serve as members of the Audit Committee. The Audit
Committee recommends the appointment of auditors and oversees the accounting and
audit functions of the Company.
MEETINGS OF THE BOARD
During Fiscal 2002, the Board of Directors met 5 times. During Fiscal 2002, 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).
COMPENSATION OF DIRECTORS
Directors of the Company who are also employees receive no additional
compensation for their service as directors. Non employee Directors of the
Company receive a fee of $ 300 a month for serving on the Board of Directors and
reimbursement of reasonable expenses incurred in attending meetings.
4
INFORMATION REGARDING EXECUTIVE OFFICERS
The names, ages and positions of each of the executive officers of the Company,
as well as a description of their business experience and past employment, are
as set forth below:
Name Age Position
---- --- --------
David L. Kassel 67 Chairman of the Board of Directors and Chief
Executive Officer
David Hale 57 President and Chief Operating Officer
Andrew Franzone 65 President of EHC, Director
Harry Goodman 76 Vice President and Secretary, Director
Arthur Myers 49 Chief Financial Officer
For biographical information regarding Messrs. Franzone, Kassel, and Goodman,
see "Information Regarding the Directors/Nominees."
David Hale commenced his position as President and Chief Operating Officer in
April 2002. Mr. Hale commenced employment at the Company in October 1999 as
Director of Operations and became Chief Operating Officer in May 2001. Prior to
his employment at the Company, Hale was a two star major general in the United
States Army serving as the senior U.S. officer in NATO's Allied Land Forces,
Southeastern Europe command. Hale also served as deputy inspector general at the
Pentagon until his retirement in 1998. Hale was the recipient of a Purple Heart
and a Silver Star in Vietnam. Subsequent to his retirement, in 1999 General Hale
entered a plea of guilty to seven counts of "conduct unbecoming an officer and a
gentleman" and one count of making a false official statement for which he
received a reprimand and a $22,000 fine.
Arthur Myers commenced his position as Chief Financial Officer of the Company in
May 2001 and commenced employment at the Company in January 2001 as Vice
President of Finance. Prior to his employment at the Company, Myers served as
Vice President of Finance for Orion Telecommunications Corp from 1999 to 2001.
Myers also served as Vice President of Finance and Administration and Treasurer
for Quintel Communications, Inc. & Subsidiaries from 1997 to 1999 and served as
Comptroller for Sam Ash Music Corp. from 1995 to 1997.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors of the Company serves as the
representative of the Board for general oversight of the Company's financial
accounting and reporting process, system of internal control, audit process, and
process for monitoring compliance with laws and regulations and the Company's
Standards of Business Conduct. The Company's management has primary
responsibility for preparing the Company's financial statements. The Audit
Committee met a total of five times during the fiscal year ended December 27,
2002.
In this regard, the Audit Committee hereby reports as follows:
1. The Audit Committee has reviewed and discussed the audited
financial statements with the Company's management.
2. The Audit Committee has discussed with the independent accountants
the matters required to be discussed by SAS 61 (Codification of
Statements on Auditing Standard, AU 380).
3. The Audit Committee has received the written disclosures and the
letter from the independent accountants required by Independence
Standards Board Standard No. 1 (Independence Standards Board
Standards No. 1, Independence Discussions with Audit Committees)
and has discussed with the independent accountants the independent
accountants' independence.
4. Based on the review and discussion referred to in paragraphs (1)
through (3) above, the Audit Committee recommended to the Board of
Directors of the Company, and the Board has approved, that the
audited financial statements be included in the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 27, 2002,
for filing with the Securities and Exchange Commission.
5
Each of the members of the Audit Committee is independent as defined under the
listing standards of the National Association of Securities Dealers.
Audit Committee
CARL SELDIN KOERNER
MITCHELL SOLOMON
AUDIT FIRM FEE SUMMARY
During Fiscal 2002, the Company retained Grassi & Co., CPAs, P.C. (a successor
of Feldman Sherb & Co., P.C. through merger) to provide services in the
following categories and amounts:
AUDIT FEES
Grassi & Co., CPAs, P.C. billed the Company an aggregate of approximately
$68,000 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 fiscal year ended December 27, 2002.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company did not engage Grassi & Co., CPAs, P.C. for professional services
relating to financial information systems design and implementation for the
fiscal year ended December 27 2002.
ALL OTHER FEES
The Company did not engage Grassi & Co., CPAs, P.C. for professional services
related to tax compliance and consulting services for the fiscal year ended
December 27, 2002.
6
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 Fiscal 2002 (collectively, the "Named Executive
Officers"). No other officers received compensation in excess of $ 100,000 in
2002.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------- ----------
FISCAL SALARY BONUS NUMBER ALL OTHER
YEAR IN DOLLARS IN DOLLARS OF OPTIONS COMPENSATION
--------- ------------ ---------- ---------- ------------
David Kassel ....................... 2002 115,707 114,000 50,000
Chairman of the Board 2001 104,104 -- -- 7,800
and Chief Executive Officer 2000 50,322(1) -- -- 7,800
Andrew Franzone .................... 2002 138,834 114,000 16,800
President of EHC 2001 138,329 -- -- 7,800
2000 138,909 -- -- 7,800
Harry Goodman ...................... 2002 30,150 19,000 35,300
Executive Vice President 2001 104,776 -- -- 7,800
and Secretary 2000 50,190(1) -- -- 7,800
David Hale........................... 2002 88,074 -- 57,000 13,150
Chief Operating Officer
Arthur Myers ....................... 2002 122,630 57,000 8,500
Chief Financial Officer 2001 109,071 -- 2,500 --
(1) These Officers agreed to accept the amounts indicated as payment in
full for the fiscal year 2002 and agreed to waive any contrary provisions
in their respective employment agreements.
OPTION GRANTS. The following table sets forth the option grants made during
Fiscal 2002 to the Named Executive Officers.
OPTION GRANTS IN FISCAL 2002
INDIVIDUAL GRANTS
--------------------------------------------------------
NUMBER PERCENTAGE
OF OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED OR BASE PRICE
OPTIONS TO EMPLOYEES (DOLLARS DATE
GRANTED (1) IN FISCAL YEAR PER SHARE) EXPIRATION
----------- -------------- ------------ ----------
David Kassel .............. 114,000 22% 2.15 12/31/06
Andrew Franzone ........... 114,000 22% 2.15 12/31/06
Harry Goodman ............. 19,000 4% 2.15 12/31/06
Carl S. Koerner ........... 25,000 5% 2.15 12/31/06
Mitchell Solomon .......... 25,000 5% 2.15 12/31/06
Arthur Myers .............. 57,000 11% 2.15 12/31/06
David Hale ................ 57,000 11% 2.15 12/31/06
(1) These options are fully exercisable after two years from the date of the
grant.
7
YEAR-END OPTION HOLDINGS. The following table sets forth the value of options
held at the end of Fiscal 2002 by the Named Executive Officers. None of the
Named Executive Officers exercised any options during Fiscal 2002.
FISCAL 2002 YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END AT FISCAL YEAR-END
------------------------------ -------------------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (1)
------------------------------ -------------------------------
<c>
David Kassel ......... 0/ 114,000 $524,400
Andrew Franzone ...... 0/ 114,000 $524,000
Harry Goodman ........ 0/ 19,000 $138,000
Mitchell Solomon ..... 0/ 30,000 $0/ $138,000
Carl S. Koerner ...... 15,000/ 30,000 $69,000/ $138,000
Arthur Myers ......... 0/ 59,500 $0/ $273,700
David Hale ........... 0/ 62,000 $0/ $285,200
(1) Based on $4.60 per share, the price of the last reported trade of
the Common Stock on the Nasdaq Bulletin Board Market on December 27,
2002.
EMPLOYMENT AGREEMENTS
The Company entered into executive employment agreements as of March 15, 1998
with Andrew Franzone, David Kassel and Harry Goodman each an "Executive". The
term of each of the employment agreements ends March 2, 2008 (the "Term"). The
annual base salaries of Messrs. Franzone, Kassel and Goodman under their
employment agreements are $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 Executive is entitled to fringe benefits and an
annual bonus to be determined by the Compensation Committee of the Board of
Directors. Each Executive can be terminated for cause (as defined in the
employment agreements) with all future compensation ceasing. If the Executive
dies 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 Executive or the Executive's estate or
beneficiaries shall be entitled to full compensation for three years following
the date thereof. If the executive is terminated without cause, the executive
shall be entitled to full compensation for the remainder of the Term. If the
Executive resigns, his compensation ceases as of the date of his resignation.
During the period of employment and for two years thereafter the Executives are
prohibited from competing with the Company; provided, however, that the
Executives may provide services to other noncompeting business. 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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
INTEREST OF COUNSEL
Koerner Silberberg & Weiner, LLP has been general counsel to the Company since
1986. The Company believes that the fees paid to Koerner Silberberg & Weiner,
LLP are comparable to those fees that would have been paid to an unrelated third
party law firm.
8
LEASES
EHC leases its facility in Farmingdale, New York from K&G Realty Associates
("K&G"), a partnership owned by David L. Kassel and Harry Goodman, both officers
and directors of the Company. The lease agreement has been extended until
December 31, 2005. The annual rent is currently $186,615, with increases equal
to the greater of the increase in the Consumer Price Index or 5%. Pursuant to a
rider of the lease agreement dated as of March 1, 1998, EHC shall pay as an
additional rent, any and all real property taxes for the demised premises in
excess of $ 26,000 per annum. In 2002, the taxes were approximately $37,810. The
mortgage agreement between Long Island Commercial Bank and K&G dated November
28, 1995, is a 15 year self liquidating adjustable mortgage currently bearing
9.5 % interest in the original principal amount of $ 610,000, which as of
December 27, 2002 is approximately $442,042. The mortgage is guaranteed by EHC.
By agreement dated November 28, 1995, K&G has assigned all rents due from EHC to
the Long Island Commercial Bank. The Company believes that the terms and
consideration of this lease are no less favorable to the Company than a lease
from a third party.
OFFICER LOANS
Messrs. Kassel, Goodman and Franzone advanced or arranged for the advance of
funds to the Company for working capital. The loans advanced by Mr. Kassel are
represented by the following three notes (i) a demand negotiable promissory
note, dated May 31, 2000, from the Company, in favor of David Kassel for the
principal amount of $50,000, bearing interest at 10% per annum, (ii) a demand
negotiable promissory note dated August 17, 2000 from the Company, in favor of
David Kassel for the principal amount of $50,000, bearing interest at 10% per
annum and (iii) a demand negotiable promissory note dated August 26, 2002 from
the Company, in favor of David Kassel for the principal amount of $50,000,
bearing interest at 10% per annum.
The loans advanced by Mr. Goodman are represented by the following three notes
(i) a demand negotiable promissory note, dated May 31, 2000, from the Company,
in favor of Mr. Goodman for the principal amount of $50,000, bearing interest at
10% per annum, (ii) a demand negotiable promissory note dated August 10, 2000,
from the Company, in favor of Harry Goodman for the principal amount of $50,000,
bearing interest at 10% per annum and (iii) a demand negotiable promissory note,
dated July 2, 2002, from the Company, in favor of Mr. Goodman for the principal
amount of $50,000, bearing interest at 10% per annum.
The loan advanced by Mr. Franzone is represented by the following note (i) a
demand negotiable promissory note, dated July 2, 2002, from the Company, in
favor of Mr. Franzone for the principal of $50,000, bearing interest at 10% per
annum.
AFFILIATED TRANSACTIONS
EHC and AFC have entered into an engineering consulting and services agreement
on a fee for service basis. Under such agreement, (a) EHC will have the
exclusive right to manufacture or contract for the manufacturing of certain AFC
products on a time and materials basis and (b) EHC will not develop products in
the following lines other than for AFC: (i) point of sale display items; and
(ii) cabinet and furniture plastic hardware. The Company believes the terms and
consideration of this agreement are no less favorable to the Company than
agreements with similar unrelated third party companies. The President of AFC,
Andrew Franzone Jr., is the son of the President of EHC. AFC is owned by three
officer/stockholders of the Company.
The Company recorded sales during the years ended December 27, 2002 and December
28, 2001 of $292,000 and $682,000, respectively to AFC. Gross Profit on such
sales was approximately $79,500 and $257,000 for the years ended December 28,
2002 and December 29, 2001, respectively. Accounts receivable from AFC were
$26,344 at December 27, 2002. On or about September 1, 1999 the Company
converted the outstanding accounts receivable ($253,150) from AFC into a term
loan with payments of $5,132.97 per month including principal and interest for 5
years starting January 1, 2000. The balance of the note receivable on December
27, 2002 was $0.
9
SECURITY OWNERSHIP OF MANAGEMENT AND
------------------------------------
CERTAIN BENEFICIAL OWNERS
-------------------------
The following table sets forth as of December 27, 2002 (except as otherwise
indicated) 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 (10 persons). 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.
NUMBER OF SHARES PERCENTAGE
BENEFICIALLY OWNED OF COMMON STOCK
NAME OF BENEFICIAL OWNER (1) OWNED
- ---------------------------------------------- --------------------- ---------------------
David Kassel ............................... 840,000 22.3
Andrew Franzone ............................ 450,000 (1) 12.0
Harry Goodman .............................. 420,000 (1) 11.2
All directors and executives as a group .... 1,895,000 50.4
(1) Includes 100,000 shares owned by wife, of which beneficial
ownership is disclaimed.
OTHER MATTERS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 the copies of such reports provided to the Company and written
representations that no other reports were required during, or with respect to,
Fiscal 2002, all Section 16(a) filing requirements applicable to its executive
officers, directors and greater than 10% beneficial owners are in the process of
being satisfied.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Grassi & Co., P.C. served as the Company's independent
public accountants during Fiscal years 2001 and 2002. A representative of Grassi
& Co., P.C. is expected to be present at the Annual Meeting, will be given an
opportunity to make a statement if he desires and will be available to respond
to appropriate questions.
EXPENSES OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company. In an effort
to have as large a representation at the Annual Meeting as possible, special
solicitation of proxies may, in certain instances, be made personally or by
telephone, telegraph or mail by one or more employees of the Company. The
Company also may reimburse brokers, banks, nominees, and other fiduciaries for
postage and reasonable clerical expenses of forwarding the proxy materials to
their principals who are beneficial owners of Common Stock.
STOCKHOLDER PROPOSALS
Any stockholder proposals submitted pursuant to Exchange Act Rule 14a-8 and
intended to be presented at the Company's 2004 Annual Meeting of Stockholders
must be received by the Company at its principal executive office on or before
January 12, 2004 to be eligible for inclusion in the proxy statement and form of
proxy to be distributed by the Board of Directors in connection with such
meeting.
Any stockholder proposals (including recommendations of nominees for election to
the Board of Directors) intended to be presented at the Company's 2004 Annual
Meeting of Stockholders, other than a stockholder proposal submitted pursuant to
Exchange Act Rule 14a-8, must be received in writing at the principal executive
office of the Company no later than sixty (60) days prior to the date of such
meeting, nor prior to ninety (90) days prior to the date of such meeting,
together with all supporting documentation required by the By-laws; provided,
however, that in the event that less than seventy (70) days' notice or prior
public disclosure of the date of such meeting is given or made to stockholders,
stockholder proposals must be received, together with all required supporting
documentation, not later than the close of business on the tenth day following
the date on which such notice or public disclosure of the date of the annual
meeting is first made.
10
OTHER MATTERS
The Board of Directors does not know of any matters other than those described
in this Proxy Statement, which will be presented for action at the Annual
Meeting. If other matters are presented, proxies will be voted in accordance
with the best judgment of the proxy holders.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER
27, 2002 (INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO), WHICH WAS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 28, 2003, WILL BE PROVIDED
WITHOUT CHARGE TO ANY PERSON TO WHOM THIS PROXY STATEMENT IS MAILED UPON THE
WRITTEN REQUEST OF ANY SUCH PERSON TO DAVID HALE, PRESIDENT, INTERNATIONAL SMART
SOURCING, INC., 320 BROAD HOLLOW ROAD, FARMINGDALE, NEW YORK 11735.
INTERNATIONAL SMART SOURCING, INC.
320 BROAD HOLLOW ROAD
FARMINGDALE, NEW YORK 11735
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David Hale and Andrew Franzone, and each of
them, proxies with full power of substitution to vote for and on behalf of the
undersigned at the Annual Meeting of Stockholders of International Smart
Sourcing, Inc. (the "Company"), to be held at Koerner Silberberg & Weiner LLP,
112 Madison Avenue, 3rd Floor, New York, New York on June 18, 2003 at 9:00 a.m.,
New York time, and at any adjournments or postponements thereof, hereby granting
full power and authority to act on behalf of the undersigned at said meeting and
any adjournments or postponements thereof. The undersigned hereby revokes any
proxy previously given in connection with such meeting and acknowledge receipt
of the Notice of Annual Meeting of Stockholders and Proxy Statement and the 2002
Annual Report to Stockholders.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO INSTRUCTION IS INDICATED WITH RESPECT TO
THE PROPOSALS BELOW, THE UNDERSIGNED'S VOTES WILL BE CAST "FOR" EACH OF SUCH
MATTERS. THE UNDERSIGNED'S VOTES WILL BE CAST IN ACCORDANCE WITH THE PROXIES'
DISCRETION ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENTS OR POSTPONEMENTS THEREOF. PLEASE SIGN AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
1. Proposal to elect David Kassel, Andrew Franzone, Harry Goodman,
Mitchell Solomon and Carl Seldin Koerner as Directors of the Company,
each for a one year term to continue until the 2004 Annual Meeting of
Stockholders and until the successor of each is duly elected and
qualified.
[___] For All [___] Withheld from All
___________________________________________
[___] Withheld as to the Nominee Noted Above
2. To consider and act upon such other business as may properly come
before the meeting or any adjournments or postponements thereof.
Dated:______
Signature: __________________________
Name: __________________________
Signature (if held jointly): __________________________
Name (if held jointly): __________________________
NOTE: Please sign exactly as your name appears hereon. Joint owners should each
sign. When signing as an attorney, executor, administrator, trustee, or
guardian, please give full title of such.