IMPSA S.A. — Interim / Quarterly Report 2000

May 9, 2002

IMPSA INTERNATIONAL, INC.

AND SUBSIDIARIES

Consolidated Financial Statements

October 31, 2000 and October 31, 1999

To the Board of Directors

IMPSA International, Inc.

Pittsburgh, Pennsylvania

We have compiled the accompanying consolidated balance sheets of IMPSA International, Inc. and Subsidiaries as of October 31, 2000, and October 31, 1999, and the related consolidated statements of income, stockholders' equity and cash flows for the nine months then ended in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants.

A compilation is limited to presenting in the form of financial statements information that is the representation of management. We have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or any other form of assurance on them.

Certified Public Accountants

Pittsburgh, Pennsylvania

November 14, 2000

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IMPSA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

OCTOBER 31, 2000 AND OCTOBER 31, 1999

ASSETS:

NOTES 2000 1999

Current Assets:

Cash 1 $ 378,198 $ 7,266

Trade receivables 1 and 3 3,502,571 3,956,572

Prepaid expenses 119,260 11,730

Total Current Assets 4,000,029 3,975,568

Non-Current Assets:

Fixed assets 1 and 2 8,568 13,605

Total Non-Current

Assets 8,568 13,605

Total Assets $4,008,597 $3,989,173

LIABILITIES:

Current Liabilities:

Accounts payable $ 527,952 $ 567,369

Accrued taxes 1 and 6 - 25,096

Other liabilities 14,900 14,900

Total Current

Liabilities 542,852 607,365

Stockholders' Equity (as per

corresponding statement) 3,465,745 3,381,808

Total Liabilities

and Equity $4,008,597 $3,989,173

See Accompanying Notes and Accountant's Compilation Report.

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IMPSA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE NINE MONTHS ENDED OCTOBER 31, 2000 AND OCTOBER 31, 1999

NOTES 2000 1999

Net sales of goods

and services 1 and 3 $466,819 $1,026,974

Expenses:

Selling 1 and 5 288,624 327,684

Administrative 1 and 5 249,250 324,993

537,874 652,677

Subtotal – Profit (Loss) (71,055) 374,297

Other income and expense 4 214,785 160,363

Profit before income

taxes 143,730 534,660

Income taxes 1 and 6 47,000 213,000

Net Income for the Nine

Month Period $ 96,730 $ 321,660

See Accompanying Notes and Accountant's Compilation Report.

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IMPSA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE NINE MONTHS ENDED OCTOBER 31, 2000 AND OCTOBER 31, 1999

2000 1999

Owner's Contribution Reserves Unappropriated Total of Total of

* Subscribed Adjustment Capital Irrevocable Retained Stockholders' Stockholders'

Capital Notes 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

Return of capital

to Parent Company - - - - - - - - - - (1,300,000)

Net income for

the nine month

period as per

statement of income - - - - - - - - 96,730 96,730 321,660

Balance as of

October 31 $250 $ - $234,750 $ - $235,000 $ - $ - $ - $3,230,745 $3,465,745 $3,381,808

* Par Value $1 per share

Authorized 1000 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 NINE MONTHS ENDED OCTOBER 31, 2000 AND OCTOBER 31, 1999

2000 1999

OPERATING ACTIVITIES:

Net income for the nine month period $ 96,730 $ 321,660

Add: Items not representing source

of cash:

Depreciation 2,700 10,597

Sources:

Decrease in trade receivables 1,156,027 30,994

Uses:

Increase in prepaid expenses (28,123) (4,636)

Decrease in accounts payable (1,536,618) (765,179)

Decrease in accrued taxes       - (37,950)

Net Cash Used By Operating

Activities (309,284) (444,514)

INVESTING ACTIVITIES:

Sources:

Sale of fixed asset       -     6,000

Net Cash Provided By Investing

Activities       -     6,000

FINANCING ACTIVITIES:

Sources:

Proceeds from borrowings - 350,000

Use:

Principal payments made

on borrowings       -     (700,000)

Net Cash Used By Financing

Activities       -     (350,000)

Net Decrease In Cash $ (309,284) $(788,514)

Cash and Cash Equivalents -

February 1 $ 687,482 $ 795,780

Net Decrease in Cash for the

Period (309,284) (788,514)

Cash and Cash Equivalents -

October 31 $ 378,198 $ 7,266

See Accompanying Notes and Accountant's Compilation Report.

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IMPSA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE NINE MONTHS ENDED OCTOBER 31, 2000 AND OCTOBER 31, 1999

2000 1999

SUPPLEMENTAL DISCLOSURE OF CASH

FLOW INFORMATION

Interest paid $ 3,635 $ 21,329

Income taxes paid $81,900 $ 272,101

Noncash operating, investing

and finance activity:

Increase in receivables

with transfer of invest-

ments to parent $  -    $2,155,177

Reduction in receivables

with return of paid-in-

capital to parent $  -    $1,300,000

See Accompanying Notes and Accountant's Compilation Report.

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IMPSA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2000 AND OCTOBER 31, 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 exceeds federally insured limits. Receivables are due primarily from 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 - Depreciation is computed 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 $2,700 for 2000 and $10,597 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:

October 31,

2000 1999

Office equipment $180,612 $180,612

Furniture and fixtures 27,486 27,486

Automobiles 10,851 24,296

218,949 232,394

Less: Accumulated depreciation 210,381 218,789

Total Fixed Assets $ 8,568 $ 13,605

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 $466,819 and $1,026,974 for 2000 and 1999, respectively.

Trade receivables and advances at October 31, 2000, and 1999, are as follows:

October 31,

2000 1999

Accounts receivable from

parent and affiliates $1,302,571 $1,456,572

Note receivable from parent

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

$3,502,571 $3,956,572

NOTE 4 – LINE OF CREDIT:

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 the above line of credit and various purchase orders amounted to $3,635 and $21,329 for 2000 and 1999, respectively.

NOTE 5 - LEASE COMMITMENTS:

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, 2000 thru August 31, 2005. The first 24 monthly lease payments are $3,496 and the next 36 payments are $3,605. The new lease can be terminated by the Company upon 180 days written notice. The Company also leases an automobile providing for monthly payments of $372 thru July 20, 2001.

Rent expense amounted to $46,753 for 2000 and $32,943 for 1999.

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NOTE 6 - TAXES ON INCOME:

Taxes on income are as follows:

2000 1999

CURRENTLY PAYABLE:

Federal income tax $47,000 $172,000

State income tax    -    41,000

$47,000 $213,000

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