IMPSA S.A. — Interim / Quarterly Report 2006

Jun 14, 2006

IMPSA INTERNATIONAL, INC.

Financial Statements

April 30, 2006 and April 30, 2005

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, 2006 and April 30, 2005 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

Joseph S. Scherle, CPA

Pittsburgh, Pennsylvania

May 11, 2006

IMPSA INTERNATIONAL, INC.

BALANCE SHEETS

APRIL 30, 2006 AND APRIL 30, 2005

Assets:

Notes 2006 2005

Current Assets:

Cash 1 $ 278,803 $ 54,346,502

Accounts and notes receivable – affiliated companies 1 and 3 1,770,833 10,426,856

Prepaid expenses 3,667 2,741

Total Current Assets 2,053,303 64,776,099

Non-Current Assets:

Deferred income tax benefit 6 444,000 436,000

Fixed assets 2 - -

Total Non-Current Assets 444,000 436,000

Total Assets $ 2,497,303 $ 65,212,099

LIABILITIES:

Current Liabilities:

Accounts payable $ 64,785 $ 42,452

Accounts payable – affiliated companies 890,603 63,216,262

Total Current Liabilities 955,388 63,258,714

Stockholder’s Equity (as per corresponding statement) 1,541,915 1,953,385

Total Liabilities and Equity $ 2,497,303 $ 65,212,099

See Accompanying Notes and Accountant’s Compilation Report.

IMPSA INTERNATIONAL, INC.

STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED APRIL 30, 2006 AND APRIL 30, 2005

Notes 2006 2005

Net sales of goods and services 1 and 3 $ 4,996 $ 25,972

Expenses:

Selling 1 and 5 26,241 25,057

Administrative 1 and 5 95,556 91,102

121,797 116,159

Subtotal – Loss (116,801 ) (90,187 )

Other income and expense 4 31,546 110,995

Income (Loss) Before Income Taxes (85,255 ) 20,808

Income taxes 1 and 6 - 8,000

Net Income (Loss) for the Three Month Period $ (85,255 ) $ 12,808

See Accompanying Notes and Accountant’s Compilation Report.

IMPSA INTERNATIONAL, INC.

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED APRIL 30, 2006 AND APRIL 30, 2005

OPERATING ACTIVITIES:

Net income (loss) for the three month period $ (85,255 ) $ 12,808

Add: Items not representing source or use of cash:

Deferred income taxes - 8,000

Sources:

Decrease in prepaid expenses 1,572 1,175

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

Uses:

Increase in accounts and notes receivable –affiliated companies (64,758 ) ( 1,601,007)

Decrease in accounts payable – affiliated companies (10,037,267 ) -

Decrease in accounts payable (50,228 ) (52,181)

Net Cash Provided (Used) by Operating Activities (10,235,936 ) 52,502,340

FINANCING ACTIVITIES:

Proceeds from borrowings 10,000,000 -

Net Cash Provided by Financing Activities 10,000,000 -

Net Increase (Decrease) in Cash $ (235,936) $ 52,502,340

Cash and Cash Equivalents – January 31 $ 514,739 $ 1,844,162

Net Change in Cash for the Three Month Period (235,936 ) 52,502,340

Cash and Cash Equivalents – April 30 $ 278,803 $ 54,346,502

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Noncash Transactions:

Payoff of note payable and related interest expense
by affiliated company $ 10,104,167 $ -

See Accompanying Notes and Accountant’s Compilation Report.

IMPSA INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2006 AND APRIL 30, 2005

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 6).

NOTE 2 — FIXED ASSETS:

A summary of fixed assets follows:

April 30,

2006 2005

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. In 2005 there were two notes receivable from two different affiliated companies totaling $8,946,211 which charged interest at 4% per annum and were satisfied in year ended January 31, 2006. Interest income on accounts and notes receivable from affiliated companies amounted to $25,728 for 2006 and $96,987 for 2005.

Commissions earned amounted to $4,996 and $25,972 for 2006 and 2005, respectively.

Note 4 — Note Payable:

On March 20, 2006 the Company obtained on behalf of their parent company a $10,000,000 loan from Forum Absolute Return Fund, LTD. This loan was guaranteed by the parent company and was repaid directly to the lender by the parent company on April 7, 2006 and included interest of $104,167.

Note 5 — 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 $9,259 for 2006 and $7,704 for 2005.

NOTE 6 — TAXES ON INCOME:

Taxes on income (credit) are as follows:

April 30,

2006 2005

DEFERRED:

Federal income tax $ - $ 6,000

State income tax - 2,000

Total $ - $ 8,000

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,

2006 2005

Non Current Deferred Tax Asset:

Net operating loss carryforwards $ 694,000 $ 525,000

Valuation allowance (250,000 ) (89,000 )

$ 444,000 $ 436,000

At April 30, 2005 the Company had net operating loss carryforwards totaling approximately $1,491,000 for federal income purposes which are available to offset future federal taxable income through 2026 and net operating loss carryforwards for state income tax purposes totaling approximately $2,835,000 which are available to offset future state taxable income through 2016. 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.

IMPSA INTERNATIONAL, INC

STATEMENTS OF STOCKHOLDER’S EQUITY

FOR THE Three Months ended aPRIL 30, 2006 AND aPRIL 30, 2005

2006 2005

Owner’s Contribution Reserves Unappropriated Total of Total of

*Subscribed Adjustment Capital Irrevocable Retained Stockholder’s Stockholder’s
Capital Note to Capital Surplus Contributions Total Statutory Others Total Earnings Equity Equity

Balance as of
January 31 $ 250 $ - $ 234,750 $ - $ 235,000 $ - $ - $ - $ 1,392,170 $ 1,627,170 $ 1,940,577

Net income (loss) for
the three month
period as per
statement of
income - - - - - - - - (85,255) (85,255 ) 12,808

Balance as
of April 30 $ 250 $ - $ 234,750 $ - $ 235,000 $ - $ - $ - $ 1,306,915 $ 1,541,915 $ 1,953,385

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

See Accompanying Notes and Accountant’s Compilation Report.