ISSG.....check out the related party interactions (as listed in the last 10Q):
7. RELATED PARTY TRANSACTIONS
The Company leases its premises in Farmingdale, N.Y. from K&G Realty, a company owned by David Kassel and Harry Goodman who are two of the officers/shareholders of the Company. Rent expense for the three quarters ended September 30, 2005 and September 24, 2004 was $154,773 and $145,764, respectively. Rent expense for the quarters ended September 30, 2005 and September 24, 2004 was $51,591 and $48,588, respectively.
Sales to another company owned by Mr. Kassel, Mr. Goodman and Mr. Franzone who are three officer/shareholders of the Company during the three quarters ended September 30, 2005 and September 24, 2004 included $573,504 and $407,470, respectively. Gross profit on such sales was $55,577 and $46,421 respectively. Sales during the quarters ended September 30, 2005 and September 24, 2004 included $221,971 and $192,823, respectively. Gross profit on such sales was $23,968 and $15,223 for the quarters ended September 30, 2005 and September 24, 2004, respectively. Accounts receivable from the related company were $197,009 at September 30, 2005.
In 2004, the Company commenced the due diligence process in connection with preliminary discussions to acquire a knob, handle and hand wheel manufacturer, Ray Engineering Company Limited (“Rencol”), located in Bristol, United Kingdom. In January 2005, the Company concluded that it was not able to acquire Rencol due to limitations imposed by agreements with lenders, and lack of other adequate resources to complete the transaction. Upon the decision of the Company to terminate discussions to acquire Rencol, a group of investors expressed an interest in acquiring Rencol. These investors included, among others, Mr. Hale, Chairman, Acting Chief Financial Officer, and President of the Company, Mr. Kassel, Director and Chief Executive Officer, Mr. Franzone, Director and President of EHC and Mark Mandel, an accounting consultant to the Company. The investors formed a company for the purposes of the transaction named Rencol Acquistions, LLC.
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Firing Kassel must have been a huge step for the board to have taken, given how much he has been involved in other ventures and investments with current board members. Unwinding these relationships will be difficult and probably messy.
The timing of this action is also interesting, with a 10K report due to be filed that has been fully audited. Speculation would be that something may have come to light during the audit.
Kassel owns 4.3MM shares as of his last Form 4 filing.
