IMPSA S.A. — Interim / Quarterly Report 2005

Jun 13, 2005

IMPSA INTERNATIONAL, INC.

Financial Statements

April 30, 2005 and April 30, 2004

To the Board of Directors

IMPSA International, Inc.

Pittsburgh, Pennsylvania

We have compiled the accompanying balance sheets of IMPSA International, Inc. as of April 30, 2005 and April 30, 2004 and the related statements of income, stockholder’s equity and cash flows for the three 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

May 3, 2005

IMPSA INTERNATIONAL, INC.

BALANCE SHEETS

APRIL 30, 2005 AND APRIL 30, 2004

Assets:

Notes 2005 2004

Current Assets:

Cash 1 $ 54,346,502 $ 361,290

Accounts and notes receivable – affiliated companies 1 and 3 10,426,856 1,590,203

Prepaid expenses 2,741 2,864

Total Current Assets 64,776,099 1,954,357

Non-Current Assets:

Deferred income tax benefit 5 436,000 319,000

Fixed assets 2 - -

Total Non-Current Assets 436,000 319,000

Total Assets $ 65,212,099 $ 2,273,357

LIABILITIES:

Current Liabilities:

Accounts payable $ 42,452 $ 172,962

Accounts payable – affiliated companies 63,216,262 -

Total Current Liabilities 63,258,714 172,962

Stockholder’s Equity (as per corresponding statement) 1,953,385 2,100,395

Total Liabilities and Equity $ 65,212,099 $ 2,273,357

See Accompanying Notes and Accountant’s Compilation Report.

IMPSA INTERNATIONAL, INC.

STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED APRIL 30, 2005 AND APRIL 30, 2004

Notes 2005 2004

Net sales of goods and services 1 and 3 $ 25,972 $ 2,815

Expenses:

Selling 1 and 4 25,057 10,710

Administrative 1 and 4 91,102 113,615

116,159 124,325

Subtotal – Loss (90,187) (121,510)

Other income and expense 110,995 7,879

Income (Loss) Before Income Taxes 20,808 (113,631)

Income taxes (credit) 1 and 5 8,000 (46,000)

Net Income (Loss) for the Three Month Period $ 12,808 $ (67,631)

See Accompanying Notes and Accountant’s Compilation Report.

IMPSA INTERNATIONAL, INC.

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED APRIL 30, 2005 AND APRIL 30, 2004

OPERATING ACTIVITIES:

Net income (loss) for the three month period $ 12,808 $ (67,631)

Add: Items not representing source or use of cash:

Deferred income taxes 8,000 (46,000)

Sources:

Decrease in accounts and notes receivable –affiliated companies - 200,968

Decrease in prepaid expenses 1,175 1,259

Increase in accounts payable - 135,170

Increase in accounts payable – affiliated companies 54,133,545 -

Uses:

Increase in accounts and notes receivable –affiliated companies ( 1,601,007) -

Decrease in accounts payable (52,181) -

Net Cash Provided by Operating Activities 52,502,340 223,766

Net Increase in Cash $ 52,502,340 $ 223,766

Cash and Cash Equivalents – January 31 $ 1,844,162 $ 137,524

Net Change in Cash for the Three Month Period 52,502,340 223,766

Cash and Cash Equivalents – April 30 $ 54,346,502 $ 361,290

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Interest paid $ - $ 2

See Accompanying Notes and Accountant’s Compilation Report.

IMPSA INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2005 AND APRIL 30, 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 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.

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:

April 30,

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.

Accounts and notes receivable from affiliated companies consist of both accounts and notes receivable. There are two notes receivable from two different affiliated companies totaling $8,946,211 which bear interest at 4% per annum and are due on June 15, 2005. Interest income on accounts and notes receivable from affiliated companies amounted to $96,987 for 2005 and $7,841 for 2004.

Commissions earned amounted to $25,972 and $2,815 for 2005 and 2004, respectively.

Note 4 — 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 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 $7,704 for 2005 and $7,463 for 2004.

NOTE 5 — TAXES ON INCOME:

Taxes on income (credit) are as follows:

April 30,

2005 2004

DEFERRED:

Federal income tax $ 6,000 $ (35,000)

State income tax 2,000 (11,000)

Total $ 8,000 $ (46,000)

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:

April 30,

2005 2004

Non Current Deferred Tax Asset:

Net operating loss carryforwards $ 525,000 $ 464,000

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

$ 436,000 $ 319,000

At April 30, 2005 the Company had net operating loss carryforwards totaling approximately $1,073,000 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 $2,417,000 which are available to offset future state taxable income through 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 Three Months ended aPRIL 30, 2005 AND aPRIL 30, 2004

2005 2004

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

Net income (loss) for
the three month
period as per
statement of
income - - - - - - - - 12,808 12,808 (67,631)

Balance as
of April 30 $ 250 $ - $ 234,750 $ - $ 235,000 $ - $ - $ - $ 1,718,385 $ 1,953,385 $ 2,100,395

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

See Accompanying Notes and Accountant’s Compilation Report.