IMPSA S.A. — Interim / Quarterly Report 2005

Dec 12, 2005

IMPSA INTERNATIONAL, INC.

Financial Statements

October 31, 2005 and October 31, 2004

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, 2005, and October 31, 2004, 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

Carl. R. Bauer, CPA

Pittsburgh, Pennsylvania

November 15, 2005

IMPSA INTERNATIONAL, INC.

BALANCE SHEETS

OCTOBER 31, 2005 AND OCTOBER 31, 2004

NOTES 2005 2004

ASSETS:

Current Assets:

Cash 1 $ 314,640 $ 47,176

Accounts receivables – affiliated companies 1 and 3 1,577,922 1,593,741

Prepaid expenses - 390

Total Current Assets 1,892,562 1,641,307

Non-Current Assets:

Deferred income tax benefit 1 and 5 533,000 399,000

Fixed Assets 1 and 2 - -

Total Non-Current Assets 533,000 399,000

Total Assets $ 2,425,562 $ 2,040,307

Liabilities:

Current Liabilities:

Accounts payable $ 17,983 $ 57,988

Accounts payable – affiliated companies 3 597,682 -

Total Current Liabilities 615,665 57,988

Stockholder’s Equity (as per corresponding statement) 1,809,897 1,982,319

Total Liabilities and Stockholder’s Equity $ 2,425,562 $ 2,040,307

See Accompanying Notes and Accountant’s Compilation Report.

IMPSA International, Inc.

StatementS of income

For the nine months ended october 31, 2005 and October 31, 2004

NOTES 2005 2004

Net sales of goods and services 1 and 3 $ 58,096 $ 14,613

Expenses:

Selling 1 and 4 73,894 30,012

Administrative 1 and 4 257,738 325,440

331,632 355,452

Subtotal – Loss (273,536 ) (340,839 )

Other income and expense 3 53,856 29,132

Loss before income taxes (219,680 ) (311,707 )

Income taxes (credit) 1 and 5 (89,000 ) (126,000 )

Net Loss for the Nine Month Period $ (130,680 ) $ (185,707 )

See Accompanying Notes and Accountant’s Compilation Report.

IMPSA International, INc.

Statements of Cash Flows

For the Nine Months Ended October 31, 2005 and October 31, 2004

2005 2004

Operating Activities:

Net loss for the nine month period $ (130,680 ) $ (185,707 )

Add: Items not representing source of cash:

Deferred income taxes (89,000 ) (126,000 )

Sources:

Decrease in accounts and notes receivable – affiliated companies 7,247,927 197,430

Decrease in prepaid expenses 3,916 3,733

Increase in accounts payable - 20,196

Uses:

Decrease in accounts payable (76,650 ) -

Decrease in accounts payable – affiliated companies (8,485,035 ) -

Net Cash Used By Operating Activities (1,529,522 ) (90,348 )

Net Decrease in Cash $ (1,529,522 ) $ (90,348 )

Cash and Cash Equivalents – February 1 $ 1,844,162 $ 137,524

Net Decrease in Cash for the Period (1,529,522 ) (90,348 )

Cash and Cash Equivalents – October 31 $ 314,640 $ 47,176

Supplemental Disclosure of Cash
flow information:

Interest paid $ - $ 3

See Accompanying Notes and Accountant’s Compilation Report.

IMPSA International, Inc.

notes to financial statements

october 31, 2005 and october 31, 2004

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

IMPSA International, Inc. is a wholly – owned subsidiary of Industrias 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.

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).

Note 2 — Fixed Assets:

A summary of fixed assets follows:

October 31,

2005 2004

Office equipment $ 180,612 $ 180,612

Furniture and fixtures 27,486 27,486

208,098 208,098

Less: Accumulated depreciation 208,098 208,098

Total Fixed Assets $ - $ -

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 $58,096 and $14,613 for 2005 and 2004, respectively.

Interest income on accounts receivable from affiliated companies amounted to $21,445 for 2005 and $27,666 for 2004.

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 lease can be terminated by the Company upon 180 days written notice.

Rent expense amounted to $23,316 for 2005 and $22,851 for 2004.

Note 5 — taxes on Income:

Taxes on income (credit) are as follows:

October 31,

2005 2004

DEFERRED:

Federal income tax $ (67,000 ) $ (95,000 )

State income tax (22,000 ) (31,000 )

Total $ (89,000 ) $ (126,000 )

NOTE 5 — TAXES ON INCOME (CONTINUED):

Deferred income taxes result from the tax benefit of the company’s current net operating loss adjusted for any changes in the valuation allowance.

The income tax effects of temporary differences that gave rise to the net deferred tax asset were as follows:

October 31,

2005 2004

Non Current Deferred Tax Asset:

Net operating loss carryforwards $ 622,000 $ 544,000

Valuation allowance (89,000 ) (145,000 )

$ 533,000 $ 399,000

At October 31, 2005 the Company had net operating loss carryforwards totaling approximately $1,313,000 for federal income purposes which are available to offset future federal taxable income through 2025 and net operating loss carryforwards for state income tax purposes totaling approximately $2,656,000 which are available to offset future state taxable income though 2015. The Company has recorded a valuation allowance to reflect the amount of deferred tax asset which may not be realized due to the expiration of the previously described net operating loss carryforwards for state income tax purposes.

IMPSA INTERNATIONAL, INC.

STATEMENTs OF STOCKHOLDER’S EQUITY

FOR THE NINE MONTHS ENDED OCTOBER 31, 2005 AND OCTOBER 31, 2004

2005 2004

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 $ - $ - $ - $ 1,705,577 $ 1,940,577 $ 2,168,026

Net loss for the nine
month period as per
statement income - - - - - - - - (130,680 ) (130,680 ) (185,707 )

Balance as of October 31 $ 250 $ - $ 234,750 $ - $ 235,000 $ - $ - $ - $ 1,574,897 $ 1,809,897 $ 1,982,319

*Par Value $1 per share
Authorized 1,000 shares
Issued 250 shares

See Accompanying Notes and Accountant’s Compilation Report.