IMPSA S.A. — Interim / Quarterly Report 2007

Jun 13, 2007

IMPSA INTERNATIONAL, INC.

Financial Statements

April 30, 2007 and April 30, 2006

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, 2007 and April 30, 2006 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 23, 2007

IMPSA INTERNATIONAL, INC.

BALANCE SHEETS

APRIL 30, 2007 AND APRIL 30, 2006

Notes 2007 2006

Assets:

Current Assets:

Cash 1 $ 16,592,868 $ 278,803

Accounts receivable – affiliated companies 1 and 4 56,140,723 1,770,833

Prepaid expenses 3,590 3,667

Total Current Assets 72,737,181 2,053,303

Non-Current Assets:

Intellectual property 1 and 3 6,005,321 -

Deferred income tax benefit 1 and 7 397,000 444,000

Fixed assets 1, 2, and 5 45,627 -

Loan financing costs 1 and 5 1,078,563 -

Total Non-Current Assets 7,526,511 444,000

Total Assets $ 80,263,692 $ 2,497,303

LIABILITIES:

Current Liabilities:

Current portion of long-term debt 5 $ 26,006,381 $ -

Accounts payable 102,555 64,785

Accounts payable – affiliated companies 4 - 890,603

Accrued interest 423,000 -

Total Current Liabilities 26,531,936 955,388

Long-Term Debt 5 52,033,552 -

Total Liabilities 78,565,488 955,388

Stockholder’s equity (as per corresponding statement) 1,698,204 1,541,915

Total Liabilities and Stockholder’s Equity $ 80,263,692 $ 2,497,303

See Accompanying Notes and Accountant’s Compilation Report.

IMPSA INTERNATIONAL, INC.

STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED APRIL 30, 2007 AND APRIL 30, 2006

Notes 2007 2006

Income:

Net sales of goods and services 1 and 4 $ 54,548 $ 4,996

Consulting income 3 325,000 -

379,548 4,996

Expenses:

Selling 1 and 3 409,797 26,241

Administrative 6 107,257 95,556

517,054 121,797

Subtotal – Loss (137,506 ) (116,801 )

Other income (expense) – net 4 and 5 178,256 31,546

Income (Loss) Before Income Taxes 40,750 (85,255 )

Income taxes 1 and 7 16,000 -

Net Income (Loss) For the Year $ 24,750 $ (85,255 )

See Accompanying Notes and Accountant’s Compilation Report.

IMPSA INTERNATIONAL, INC.

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED APRIL, 30, 2007 AND APRIL 30, 2006

2007 2006

OPERATING ACTIVITIES:

Net income (loss) for the three month period $ 24,750 $ (85,255 )

Add: Items not representing source of cash:

Depreciation 1,780 -

Amortization of intellectual property 382,867 -

Amortization of loan fees 83,039 -

Deferred income taxes 16,000 -

Sources:

Decrease in prepaid expenses 1,539 1,572

Uses:

Increase in accounts receivable – affiliated companies (21,757,467 ) (64,758 )

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

Decrease in accounts payable (136,387 ) (50,228 )

Decrease in accrued interest (962,417 ) -

Net Cash Used by Operating Activities (22,346,296 ) (10,235,936 )

FINANCING ACTIVITIES:

Loan financing costs (361,750 ) -

Proceeds from borrowings 36,000,000 10,000,000

Payments on long-term debt (1,050,845 ) -

Net Cash Provided by Financing Activities 34,587,405 10,000,000

Net Increase (Decrease) in Cash $ 12,241,109 $ (235,936 )

Cash and Cash Equivalents – Beginning of Period 4,351,759 514,739

Net Increase (Decrease) in Cash for the Period 12,241,109 (235,936 )

Cash and Cash Equivalents – End of Period $ 16,592,868 $ 278,803

SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:

Interest paid $ 1,008 $ -

Noncash TRANSACTIONS:

Payment of debt by affiliated company $ 6,950,000 $ 10,104,167

Purchase of intellectual property thru reduction
of accounts receivable from affiliated companies $ 2,972,200 $ -

See Accompanying Notes and Accountant’s Compilation Report.

IMPSA International, Inc.

Notes to Financial Statements

APRIL 30, 2007 AND APRIL 30, 2006

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. Starting in fiscal year ending January 31, 2007 the Company began offering consulting services relating to the hydro electric power business on a worldwide basis.

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 from the parent company and affiliates.

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.

Intellectual Property – Intellectual property as described in Note 3 is being amortized over the period beginning January 1, 2007 and ending December 31, 2009. Amortization expense was $382,867 for 2007. There was no amortization expense for 2006.

Depreciation – Depreciation is computed under an accelerated method (MACRS) for both income tax and financial reporting purposes. Depreciation expense for 2007 was $1,780. There was no depreciation expense for 2006.

Loan Financing Costs – Loan financing costs of $1,237,621 are being amortized over the original life of the long-term debt described in Note 5. Amortization expense for 2007 was $83,039 and was charged back to IMPSA International, Inc.’s parent company. There was no amortization expense for 2006.

Income Taxes – Income tax expense 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 7).

NOTE 2 — FIXED ASSETS:

A summary of fixed assets follows:

April 30,

2007 2006

Automobiles $ 47,407 $ -

Office equipment 180,612 180,612

Furniture and fixtures 27,486 27,486

255,505 208,098

Less: Accumulated depreciation 209,878 208,098

Total Fixed Assets $ 45,627 $ -

note 3 — intellectual property:

The Company purchased intellectual property from its parent company consisting of know how and management expertise in the purchase and operation of a hydro electric power business. The Company plans to use this expertise by providing consulting services to a newly formed company doing business in the hydro electric power industry. The Company has paid to date $6,485,788 for the intellectual property and is amortizing this amount over its estimated useful life ending December 31, 2009.

NOTE 4 — RELATED PARTY TRANSACTIONS:

All advances, as well as accounts receivable, notes receivable and accounts payable from/to the parent company and affiliates, are made in U.S. dollars, and the exchange rate costs are accounted for by the parent company and/or affiliates.

Commissions earned amounted to $54,548 and $4,996 for 2007 and 2006, respectively.

Interest income on receivables from affiliated companies amounted to $28,809 for 2007 and $25,728 for 2006.

Interest expense and loan amortization fees charged back to the parent company was $1,741,872 for 2007. There were no interest and loan amortization fees charged back to the parent company for 2006.

Note 5 — Long-term Debt:

On October 19, 2006 the Company entered into a credit agreement with certain lenders to borrow $50,000,000 bearing interest at 10½% per annum and payable in 6 semi-annual installments of principal and interest. The outstanding balance on this credit agreement at April 30, 2007 was $42,000,000.

On January 31, 2007 the Company financed two automobiles thru Ford Credit. The notes bear interest at 12.8%, require 60 monthly payments of $926 beginning March 10, 2007, and are secured by the vehicles being purchased. The outstanding balance on these notes at April 30, 2007 was $39,933.

On March 16, 2007 the Company entered into a credit agreement with certain lenders to borrow $36,000,000 bearing interest at 8½% per annum and payable in nine quarterly installments of principle beginning March 16, 2008 with quarterly interest only payments prior to that date. The outstanding balance on this credit agreement at April 30, 2007 was $36,000,000.

The Company’s parent company has guaranteed all of the above loans. The parent company also is responsible for paying or reimbursing the Company for interest on the $50,000,000 and $36,000,000 loans.

Principal payments on long-term debt are due as follows:

April 30, Amount

2008 $ 26,006,381

2009 32,007,244

2010 20,008,226

2011 9,339

2012 8,743

78,039,933

Portion Due in One Year 26,006,381

Long-Term Portion $ 52,033,552

NOTE 6 — 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 expenses amounted to $6,979 for 2007 and $9,259 for 2006.

NOTE 7 — TAXES ON INCOME:

Taxes on income are as follows:

April 30,

2007 2006

Deferred:

Federal income tax $ 12,000 $ -

State income tax 4,000 -

Total $ 16,000 $ -

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

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

April 30,

2007 2006

Non Current Deferred Tax Asset:

Net operating loss carryforwards $ 611,000 $ 694,000

Valuation allowance 214,000 250,000

$ 397,000 $ 444,000

At April 30, 2007 the Company had net operating loss carryforwards totaling approximately $1,287,000 for federal income tax purposes and $2,630,000 for state income tax purposes which are available to offset future taxable income through 2027. 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, 2007 AND aPRIL 30, 2006

2007 2006

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 $ - $ - $ - $ 1,438,454 $ 1,673,454 $ 1,627,170

Net income (loss) for
the three month
period as per
statement of
income - - - - - - - - 24,750 24,750 (85,255 )

Balance as
of April 30 $ 250 $ - $ 234,750 $ - $ 235,000 $ - $ - $ - $ 1,463,204 $ 1,698,204 $ 1,541,915

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

See Accompanying Notes and Accountant’s Compilation Report.