IMPSA S.A. — Interim / Quarterly Report 2000

May 8, 2002

IMPSA INTERNATIONAL, INC.

AND SUBSIDIARIES

Consolidated Financial Statements

July 31, 2000 and July 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 July 31, 2000, and July 31, 1999, and the related consolidated statements of income, stockholders' equity and cash flows for the six 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

August 10, 2000

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IMPSA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JULY 31, 2000 AND JULY 31, 1999

ASSETS:

NOTES 2000 1999

Current Assets:

Cash 1 $ 198,791 $1,822,975

Trade receivables 1 and 3 3,843,653 4,484,079

Prepaid expenses 40,019 3,518

Total Current Assets 4,082,463 6,310,572

Non-Current Assets:

Fixed assets 1 and 2 9,468 23,385

Total Non-Current Assets 9,468 23,385

Total Assets $4,091,931 $6,333,957

LIABILITIES:

Current Liabilities:

Accounts payable $ 592,812 $1,543,913

Accrued taxes 1 and 6 - 87,496

Other liabilities 14,900 14,900

Total Current Liabilities 607,712 1,646,309

Stockholders' Equity (as per

corresponding statement) 3,484,219 4,687,648

Total Liabilities and Equity $4,091,931 $6,333,957

See Accompanying Notes and Accountant's Compilation Report.

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IMPSA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE SIX MONTHS ENDED JULY 31, 2000 AND JULY 31, 1999

NOTES 2000 1999

Net sales of goods and services 1 and 3 $414,812 $881,147

Expenses:

Selling 1 and 5 204,800 232,767

Administrative 1 and 5 176,008 240,211

380,808 472,978

Subtotal - Profit 34,004 408,169

Other income and expense 4 155,200 135,331

Profit before income taxes 189,204 543,500

Income taxes 1 and 6 74,000 216,000

Net Income for the

Six Month Period $115,204 $327,500

See Accompanying Notes and Accountant's Compilation Report.

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IMPSA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE SIX MONTHS ENDED JULY 31, 2000 AND JULY 31, 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 six month

period as per

statement of

income  -      -      -       -      -       -    -    -  115,204 115,204 327,500

Balance as of

July 31 $250 $ - $234,750 $ - $235,000 $ - $ - $ - $3,249,219 $3,484,219 $4,687,648

* Par Value $l 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 SIX MONTHS ENDED JULY 31, 2000 AND JULY 31, 1999

2000 1999

OPERATING ACTIVITIES:

Net income for the six month period $ 115,204 $ 327,500

Add: Items not representing

source or use of cash:

Depreciation 1,800 6,817

Source:

Decrease in trade receivables 814,945 803,487

Decrease in prepaid expenses 51,118 3,576

Increase in accounts payable - 211,365

Increase in accrued taxes - 24,450

Use:

Decrease in accounts payable (1,471,758)      -

Net Cash Provided (Used) By

Operating Activities (488,691) 1,377,195

FINANCING ACTIVITIES:

Source:

Proceeds from borrowings - 350,000

Use:

Principal payments made on

borrowings       -     (700,000)

Net Cash Used By

Financing Activities       -     (350,000)

Net Increase (Decrease) In Cash $ (488,691) $1,027,195

Cash and Cash Equivalents -

January 31 $ 687,482 $ 795,780

Net change in Cash

for the Six Month Period (488,691) 1,027,195

Cash and Cash Equivalents - July 31 $ 198,791 $1,822,975

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Interest paid $ 3,635 $ 21,196

Income taxes paid $27,400 $ 177,418

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

JULY 31, 2000 AND JULY 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 $1,800 for 2000 and $6,817 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:

July 31,

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 209,481 215,009

Total Fixed Assets $ 9,468 $ 23,385

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 $414,812 and $881,147 for 2000 and 1999, respectively.

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

July 31,

2000 1999

Accounts receivable from

parent and affiliates $1,643,653 $1,484,079

Notes receivable from parent

and affiliates 2,200,000 3,000,000

$3,843,653 $4,484,079

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 note and various purchase orders amounted to $3,635 for 2000 and $21,196 for 1999.

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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, 1995, to August 31, 2000, at an average monthly base rate of $4,827. On June 1, 2000 a new 60 month lease covering office space was entered into with HFT Holding commencing September 1, 2000 and ending 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 to July 20, 2001.

Rent expense amounted to $32,943 for 2000 and $39,176 for 1999.

NOTE 6 - TAXES ON INCOME:

Taxes on income are as follows:

July 31,

2000 1999

CURRENTLY PAYABLE:

Federal income tax $66,000 $174,000

State income tax 8,000 42,000

$74,000 $216,000

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