IMPSA S.A. — Audit Report / Information 2000

May 6, 2002

IMPSA INTERNATIONAL, INC.

AND SUBSIDIARIES

Consolidated Financial Statements

April 30, 2000 and April 30, 1999

LS&B

LOVE, SCHERLE & BAUER, P.C.

CERTIFIED PUBLIC ACCOUNTANTS

A PROFESSIONAL CORPORATION

310 Grant Street . Suite 1020 . The Grant Building . Pittsburgh, Pennsylvania 15219-2295

(412) 281-8270 – FAX (412) 281-7791

To the Board of Directors

IMPSA International, Inc.

Pittsburgh, Pennsylvania

We have audited the accompanying consolidated balance sheets of IMPSA International, Inc. and Subsidiaries as of April 30, 2000, and April 30, 1999, and the related consolidated statements of income, stockholders' equity and cash flows for the years then ended. Our responsibility is to express an opinion on these statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, tha financial position of IMPSA International, Inc. and Subsidiaries at April 30, 2000, and April 30, 1999, and the results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles.

Certified Public Accountants

Pittsburgh, Pennsylvania

May 10, 2000

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IMPSA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

APRIL 30, 2000 AND APRIL 30, 1999

ASSETS:

NOTES 2000 1999

Current Assets:

Cash 1 $ 788,989 $ 203,663

Trade receivables 1 and 3 3,356,616 8,883,302

Prepaid expenses 35,578 9,706

Total Current Assets 4,181,183 9,096,671

Non-Current Assets:

Fixed assets 1 and 2 10,368 26,794

Total Non-Current Assets 10,368 26,794

Total Assets $4,191,551 $9,123,465

LIABILITIES:

Current Liabilities:

Note payable 4 $ - $ 550,000

Accounts payable 775,899 3,749,309

Accrued taxes 1 and 6 - 210,313

Other liabilities 14,900 14,900

Total Current Liabilities 790,799 4,524,522

Stockholders' Equity (as per

corresponding statement) 3,400,752 4,598,943

Total Liabilities and Equity $4,191,551 $9,123,465

See accompanying notes and accountant's compilation report.

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IMPSA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED APRIL 30, 2000 AND APRIL 30, 1999

NOTES 2000 1999

Net sales of goods and services 1 and 3 $184,330 $506,653

Expenses:

Selling 1 and 5 109,397 109,136

Administrative 1 and 5 103,548 93,502

212,945 202,638

Subtotal – Profit (Loss) (28,615) 304,015

Other income and expense 4 74,352 91,780

Profit before income taxes 45,737 395,795

Income taxes 1 and 6 14,000 157,000

Net Income For The Three

Month Period $ 31,737 $238,795

See accompanying notes and accountant's compilation report.

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IMPSA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED APRIL 30, 2000 AND APRIL 30, 1999

2000 1999

Owner's Contribution Reserves Unappropriated Total of Total of

*Subscribed Adjustment Capital Irrevocable Retained Stockholders' Stockholders'

Capital Note to Capital Surplus Contributions Total Statutory Others Total Earnings Equity Equity

Balance as of

January 31 $250 $ - $234,750 $ - $235,000 $ - $ - $ - $3,134,015 $3,369,015 $4,360,148

Net income for

the three month

period as per

statement of

income   -    -      -     -      -      -    -    -  31,737 31,737 238,795

Balance as of

April 30 $250 $ - $234,750 $ - $235,000 $ - $ - $ - $3,165,752 $3,400,752 $4,598,943

* Par Value $1 per share

Authorized 1,000 shares

Issued 250 shares

See accompanying notes and accountant's compilation report.

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IMPSA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED APRIL 30, 2000 AND APRIL 30, 1999

2000 1999

OPERATING ACTIVITIES:

Net income for the three month period $ 31,737 $ 238,795

Add: Items not representing source

or use of cash:

Depreciation 900 3,408

Sources:

Decrease in trade receivables 1,301,982 -

Decrease in prepaid expenses 55,559 -

Increase in accounts payable - 2,416,761

Increase in accrued taxes - 147,267

Use:

Increase in trade receivables - (3,595,736)

Increase in prepaid expenses - (2,612)

Decrease in accounts payable (1,288,671) -

Net Cash Provided (Used) by

Operating Activities 101,507 (792,117)

FINANCING ACTIVITIES:

Source:

Proceeds from borrowings - 350,000

Use:

Principal payments made on

borrowings      -     150,000

Net Cash Provided by

Financing Activities      -     200,000

Net Increase (Decrease)

in Cash $ 101,507 $ (592,117)

Cash and Cash Equivalents -

January 31 $ 687,482 $ 795,780

Net Change in Cash for the

Three Month Period 101,507 (592,117)

Cash and Cash Equivalents -

April 30 $ 788,989 $ 203,663

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Interest paid$ 3,614$ 9,133

Income taxes paid (refunded) $ (39,300) $ 24,500

Noncash operating, and investing

activity:

Increase in receivables with

transfer of investments to

parent $    -     $ 2,155,177

See accompanying notes and accountant's compilation report.

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IMPSA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2000 AND APRIL 30, 1999

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, IMPSA International of Delaware, Inc. and Henry LaGarde, Inc. All intercompany accounts and transactions have been eliminated in consolidation.

IMPSA International, Inc. is a wholly-owned subsidiary of Industries Metalurgicas Pescarmona S.A.I.C.F., an Argentine based company. IMPSA International, Inc. acquires material requisitioned by the parent and affiliated companies on a commission basis. The Company also receives a commission from the parent company for sales of equipment manufactured in Argentina.

Use of Estimates in the Preparation of Financial Statements - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Concentrations of Credit Risk - Financial instruments potentially subject to concentrations of credit risk consist of cash in excess of federally insured limits and receivables. The Company maintains part of its cash in money market savings accounts and checking accounts which at times exceed federally insured limits. Receivables are due primarily from the parent and affiliates.

Cash Flows - The Company considers all temporary investments with a maturity of six months or less to be cash equivalents.

Commission income is recognized at the time that a purchase order is placed for the parent company or affiliates or at the time cash is received for a sale when the Company successfully bids on a project for the parent company or affiliates.

Depreciation is computed based under an accelerated method (MACRS) for both income tax and financial reporting purposes, except for certain fixed assets which are being depreciated under IRC Section 179 for income tax purposes and MACRS for financial reporting purposes. Depreciation expense amounted to $900 for 2000 and $3,408 for 1999.

Income Taxes - Income tax expense is based on reported income adjusted for differences of a permanent nature.

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NOTE 2 - FIXED ASSETS:

A summary of fixed assets follows:

2000 1999

Office equipment $180,612 $180,612

Furniture and fixtures 27,486 27,486

Automobiles 10,851 30,296

218,949 238,394

Less: Accumulated depreciation 208,581 211,600

Total Fixed Assets $ 10,368 $ 26,794

NOTE 3 - RELATED PARTY TRANSACTIONS:

All advances, as well as accounts receivable and notes receivable from the parent and affiliates, are made in U.S. dollars, and the exchange rate costs are accounted for by the parent and/or affiliates.

Commissions earned amounted to $184,330 and $506,653 for 2000 and 1999, respectively.

Trade receivables are as follows:

2000 1999

Accounts receivable from

parent and affiliates $1,156,616 $1,383,302

Note receivable from parent

and affiliates 2,200,000 7,500,000

$3,356,616 $8,883,302

NOTE 4 - NOTE PAYABLE:

The Company had a revolving line of credit agreement with National City Bank of Pennsylvania, which provided for an overall borrowing limit not to exceed $750,000. This revolving line of credit agreement expired June 30, 1999 and was not renewed.

Interest expense on line of credit borrowings and various purchase orders amounted to $3,614 and $9,133 for 2000 and 1999, respectively.

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NOTE 5 - LEASE COMMITMENT:

The Company has a long-term lease with HFT Holdings covering its present office space in Scott Township, Pennsylvania. The lease extends from September 1, 1995, to August 31, 2000, at an average monthly base rent of $4,827. The lease can be terminated by the Company upon 180 days written notice at a cost of $9,655 plus unamortized construction costs and commissions amounting to $24,357. The Company also leases an automobile providing for monthly payments of $372 to July 20, 2001.

Rent expense amounted to $16,472 for 2000 and $20,876 for 1999.

NOTE 6 - TAXES ON INCOME:

Taxes on income are as follows:

2000 1999

Currently Payable:

Federal income tax $14,000 $126,000

State income tax    -    31,000

$14,000 $157,000

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