IMPSA S.A. — Interim / Quarterly Report 2003

Dec 15, 2003

IMPSA INTERNATIONAL, INC.

Financial Statements

October 31, 2003 and October 31, 2002

To the Board of Directors

IMPSA International, Inc.

Pittsburgh, Pennsylvania

We have compiled the accompanying balance sheets of IMPSA International, Inc. as of October 31, 2003, and October 31, 2002, and the related statements of income, stockholder’s 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 10, 2003

• 1 -

IMPSA INTERNATIONAL, INC.

BALANCE SHEETS

OCTOBER 31, 2003 AND OCTOBER 31, 2002

ASSETS:

NOTES 2003 2002

Current Assets:

Cash 1 $ 204,514 $ 103,848

Trade receivables 1 and 3 1,774,492 4,244,688

Prepaid expenses 440 5,337

Total Current Assets 1,979,446 4,353,873

Non-Current Assets
Deferred income tax benefit 1 and 5 403,000 144,525

Fixed assets 1 and 2 - 946

Total Non-Current Assets 403,000 145,471

Total Assets $2,382,446 $ 4,499,344

LIABILITIES:

Current Liabilities:

Accounts payable $ 47,744 $ 819,060

Other liabilities 6 - 1,000,000

Total Current Liabilities 47,744 1,819,060

Stockholder’s Equity (as per corresponding statement) 2,334,702 2,680,284

Total Liabilities and Equity $ 2,382,446 $ 4,499,344

See Accompanying Notes and Accountant’s Compilation Report.

• 2 -

IMPSA INTERNATIONAL, INC.

STATEMENTS OF INCOME

FOR THE NINE MONTHS ENDED OCTOBER 31, 2003 AND OCTOBER 31, 2002

NOTES 2003 2002

Net sales of goods and services 1 and 3 $ 30,538 $303,857

Expenses:

Selling 1 and 4 125,773 124,485

Administrative 1 and 4 257,708 300,359

383,481 424,844

Subtotal – Loss (352,943) (120,987)

Other income and expense 29,195 52,181

Loss before income taxes (323,748) (68,806)

Income taxes (credit) 1 and 5 (130,000) (16,000)

Net Loss for the Nine Month Period $(193,748) $ (52,806)

See Accompanying Notes and Accountant's Compilation Report.

• 3 -

IMPSA INTERNATIONAL, INC.

STATEMENTS OF STOCKHOLDER’S EQUITY

FOR THE NINE MONTHS ENDED OCTOBER 31, 2003 AND OCTOBER 31, 2002

2003 2002

Owner’s Contribution Reserves Unappropriated Total of Total of

*Subscribed Adjustment Capital Irrevocable Retained Stockholder’s Stockholder’s

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

Balance as of January 31 $ 250 $ - $234,750 $ - $235,000 $ - $ - $ - $2,293,450 $2,528,450 $2,733,090

Net loss for the nine month

period as per statement of

income - - - - - - - - (193,748) (193,748) (52,806)

Balance as of October 31 $ 250 $ - $234,750 $ - $235,000 $ - $ - $ - $2,099,702 $2,334,702 $2,680,284

*Par Value $1 per share

Authorized 1000 shares

Issued 250 shares

See Accompanying Notes and Accountant’s Compilation Report.

• 4 -

IMPSA INTERNATIONAL, INC.

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2003 AND OCTOBER 31, 2002

2003 2002

OPERATING ACTIVITIES:

Net loss for the nine month period $ (193,748) $ (52,806)

Add: Items not representing source of cash:

Depreciation - 2,826

Deferred income taxes (130,000) (16,000)

Sources:

Decrease in trade receivables 614,392 -

Decrease in prepaid expenses 1,603 4,323

Decrease in refundable income taxes - 418,475

Increase in accounts payable - 6,528

Uses:

Increase in trade receivables - (521,080)

Decrease in accounts payable (363,617) -

Net Cash Used By Operating Activities (71,370) (157,734)

Net Decrease In Cash $ (71,370) $ (157,734)

Cash and Cash Equivalents - February 1 $ 275,884 $ 261,582

Net Decrease in Cash for the Period (71,370) (157,734)

Cash and Cash Equivalents - October 31 $ 204,514 $ 103,848

SUPPLEMENTAL DISCLOSURE OF CASH

FLOW INFORMATION:

Interest paid $ 945 $ 5,117

Income taxes paid (refunded) $ - $ (418,730)

NONCASH TRANSACTIONS:

Payment of arbitration award liability by an

affiliated company $2,846,789 $ -

See Accompanying Notes and Accountant's Compilation Report.

• 5 -

IMPSA INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

OCTOBER 31, 2003 AND OCTOBER 31, 2002

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

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 were being depreciated under IRC Section 179 for income tax purposes and MACRS for financial reporting purposes. There was no depreciation expense for 2003 because all the fixed assets were fully depreciated. Depreciation expense amounted to $2,826 for 2002.

Income Taxes - Income tax expense (credit) is based on reported income (loss) adjusted for differences of a permanent nature. Deferred income tax benefit relates to the temporary difference in the recognition of the Company’s net operating loss carryforward for financial and tax reporting purposes (See Note 5).

• 6 -

NOTE 2 - FIXED ASSETS:

A summary of fixed assets follows:

October 31,

2003 2002

Office equipment $180,612 $180,612

Furniture and fixtures 27,486 27,486

208,098 208,098

Less: Accumulated depreciation 208,098 207,152

Total Fixed Assets $ - $ 946

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 $30,538 and $303,857 for 2003 and 2002, respectively.

Trade receivables consist of accounts receivable from parent and affiliates:

NOTE 4 - 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 March 1, 2003 thru February 28, 2008 and is payable in 60 monthly payments of $2,034 with an escalation provision for real estate tax increases. The Company has the option to renew the lease for an additional 36 months upon its expiration. The lease can be terminated by the Company upon 180 days written notice.

Rent expense amounted to $30,276 for 2003 and $35,011 for 2002.

NOTE 5 - TAXES ON INCOME:

Taxes on income (credit) are as follows:

2003 2002

CURRENTLY PAYABLE (REFUNDABLE):

Federal income tax $ - $ -

State income tax -        -

• -

DEFERRED:

Federal income tax (99,000) (10,000)

State income tax (31,000) (6,000)

(130,000) (16,000)

Total $(130,000) $(16,000)

7 -

NOTE 5 - TAXES ON INCOME (CONTINUED):

The deferred income tax benefit results from the Company's available net operating loss carryforwards.

At October 31, 2003 the Company had federal and state net operating loss carryforwards of approximately $663,000 and $2,007,000, respectively, which will be available to reduce future taxable income. The federal and state net operating loss carryforwards expire in 2024 and 2014, respectively. Although realization is not assured, management believes it is more likely than not that the entire deferred income tax benefit relating to the net operating loss carryforwards will be realized. Accordingly, no valuation allowance is required.

NOTE 6 - ARBITRATION AWARD:

An arbitration claim was filed against the Company by a subcontractor under a subcontract agreement with the Company for the erection of three container cranes at two United States Naval facilities. In January 2002, the Company recorded a liability of $1,000,000 relating to this claim, which at that time was management’s best estimate of the possible loss relating to this claim. Any further expense relating to this claim excluding interest and legal fees would be charged to its parent Company. On February 13, 2003 all parties involved in this matter signed a final settlement which would pay the subcontractor $2,460,000 plus interest. On February 28, 2003 this claim was paid in the amount of $2,856,707 of which $1,699,477 was charged to its parent Company.

• 8 -