##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549-1004



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FORM 10-K



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(Mark One)

|x | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended June 30, 2006



| ̈ | Transition Report Pursuant to Section 13 or 15(D) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File Number: 0-23335



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MPW INDUSTRIAL SERVICES GROUP,
INC.

(Exact Name of Registrant as Specified in Its Charter)



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|OHIO                                                           |  | 31-1567260                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)
|                                                               | 
|9711 Lancaster Road, S.E., Hebron, Ohio                        |  | 43025                            
|(Address of principal executive offices)                       |  | (Zip Code)                       

Registrants telephone number, including area code: (740) 927-8790



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Securities Registered Pursuant to Section 12(b) of the Act:

Common
Stock, Without Par Value



Securities Registered Pursuant to
Section 12(g) of the Act:

None

(Title of Class)



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Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Section 405 of the Securities Exchange Act of
1934).    Yes ̈No   x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange
Act.    Yes ̈No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ̈

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes ̈No  x

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant (based on the closing sale price of such
stock as of the last business day of the Registrants most recently completed second fiscal quarter) was approximately $8,442,342.*

The number of shares of Common Stock outstanding on September 28, 2006, was 6,312.654 shares.

* Calculated by excluding all shares that may
be deemed to be beneficially owned by executive officers and directors of the registrant, without conceding that all such persons are affiliates of the registrant for purposes of the federal securities law.



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##### Table of Contents

|                   |  |                                                                                                              |  |   
|------------------ |  | ------------------------------------------------------------------------------------------------------------ |  | --
|PART I             |  |                                                                                                             
|                   |  |                                                                                                             
|Item 1.            |  | Business                                                                                                     |  | 3 
|Item 2.            |  | Properties                                                                                                   |  | 8 
|Item 3.            |  | Legal Proceedings                                                                                            |  | 8 
|Item 4.            |  | Submission of Matters to a Vote of Security Holders                                                          |  | 9 
|Supplemental Item. |  | Executive Officers of the Company                                                                            |  | 9 
|                   | 
|PART II            |  |                                                                                                             
|                   |  |                                                                                                             
|Item 5.            |  | Market for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities |  | 10
|Item 6.            |  | Selected Consolidated Financial Data                                                                         |  | 11
|Item 7.            |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 11
|Item 7a.           |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 19
|Item 8.            |  | Financial Statements and Supplementary Data                                                                  |  | 20
|Item 9.            |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |  | 44
|Item 9A.           |  | Controls and Procedures                                                                                      |  | 44
|Item 9B.           |  | Other Information                                                                                            |  | 44
|                   | 
|PART III           |  |                                                                                                             
|                   |  |                                                                                                             
|Item 10.           |  | Directors and Executive Officers                                                                             |  | 45
|Item 11.           |  | Executive Compensation                                                                                       |  | 46
|Item 12.           |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 50
|Item 13.           |  | Certain Relationships and Related Transactions                                                               |  | 50
|Item 14.           |  | Principal Accountant Fees and Services                                                                       |  | 51
|PART IV            |  |                                                                                                             
|                   |  |                                                                                                             
|Item 15.           |  | Exhibits and Financial Statement Schedules                                                                   |  | 52
|SIGNATURES         |  |                                                                                                              |  | 53
|EXHIBIT INDEX      |  |                                                                                                              |  | 54



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##### Table of Contents

PART I

All statements, other than statements of historical facts, included in this Form 10-K, including,
without limitation, statements made in Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations that address activities, events or developments that the Company expects, believes or anticipates
will or may occur in the future, including such matters as future capital expenditures, including the amount and nature thereof, potential acquisitions by the Company, trends affecting the Companys financial condition or results of operations,
and the Companys business and growth strategies are forward-looking statements. Such statements are subject to a number of risks and uncertainties, including risks and uncertainties identified in Item 1. Business-Investment
Considerations and other general economic and business conditions, the business opportunities (or lack thereof) that may be presented to and pursued by the Company, changes in laws or regulations affecting the Companys operations and
other factors, many of which are beyond the control of the Company. Also, there is always risk and uncertainty in pursuing and defending litigation and other disputes in the course of the Companys business. All of these risks and uncertainties
could cause actual results to differ materially from those assumed in the forward-looking statements. These forward-looking statements reflect managements analysis, judgment, belief or expectation only as of the date of this Form 10-K. The
Company undertakes no obligation to revise publicly these forward-looking statements to reflect events or circumstances that arise after the date hereof. In addition to the disclosure contained herein, readers should carefully review risks and
uncertainties contained in other documents the Company files or has filed from time to time with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, that are incorporated by reference herein or are
otherwise publicly available at the offices of the Securities and Exchange Commission or at its website (http://www.sec.gov).

Item 1.Business

Business

MPW Industrial Services Group, Inc. and its subsidiaries (the Company or MPW) is headquartered in Hebron, Ohio. Founded in 1972,
MPW is a leading provider of integrated, technically-based industrial cleaning and related facilities support services to a broad array of industries in North America. The Company operates under four separate segments that are integral to a wide
variety of manufacturing processes. These four segments are Industrial Cleaning, Facility Maintenance and Support Services, Industrial Container Cleaning and Industrial Process Water Purification.

Industrial Cleaning. The Company provides industrial cleaning of critical operating equipment for industrial customers primarily at their
facilities. The typical industries served by this segment include the automotive, utility, steel, pulp and paper, manufacturing and construction industries. The Company provides its industrial cleaning services on a daily recurring basis, a
project-by-project basis, as well as pursuant to longer-term arrangements. The Companys services principally include: dry vacuuming, wet vacuuming, industrial power washing, water blasting, ultra-high pressure water blasting and cryojetic
cleaning. These services have been provided for over 30 years. The Chemical Cleaning business unit of the Industrial Cleaning segment provides chemical cleaning services on heat exchange equipment on a project-by-project basis primarily for
customers in the utility, pulp and paper and manufacturing industries.

Facility Maintenance and Support Services. The Company
provides support to customers ongoing maintenance of their facilities as well as cleaning services that help customers to maximize the performance of their production processes through effective cleaning, leading to increased efficiency and
productivity in their facilities.

Industrial Container Cleaning. The Company believes that it is a leading container cleaner for
automotive paint manufacturers in North America. The automotive industry uses paint resin containers (totes) in the vehicle painting process. Totes are large portable stainless steel or aluminum containers that are filled with paint
resin and are refilled after cleaning services are provided. The Company also provides container cleaning services to a small number of other industrial customers. This segment uses patented cleaning systems to perform services from two primary
processing facilities located in Detroit, Michigan and Cleveland, Ohio.

Industrial Process Water Purification.The Company provides
pure feed water to customers primarily in the utility, manufacturing and automotive industries. The Company can also provide water purification equipment on an emergency response basis when customers existing water purification systems are
temporarily out of service or cannot meet the existing demand.



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Recent Developments

Privatization of Company. On April 5, 2006, the Company announced that a Special Committee of its Board of Directors had reached an agreement in principle with the Companys Chairman, Chief Executive
Officer and President, Monte R. Black, to acquire the outstanding public shares of MPW not controlled by Mr. Black or his immediate family (the Black Family) for $2.55 per share. The Black Family controlled approximately 59% of the
outstanding shares of MPW. On April 14, 2006, the Company entered into an Agreement and Plan of Merger between the Company and Noir Acquisition Corporation (Noir Acquisition), a newly created corporation controlled by
Mr. Black.

On September 14, 2006, the shareholders of MPW approved the Agreement and Plan of Merger between MPW and Noir
Acquisition. On September 26, 2006, the going private merger of Noir Acquisition with and into MPW was completed. Effective with the completion of the merger, the Black Family owns 100% of MPW. Holders of outstanding common shares
of MPW not controlled by the Black Family, and who have not perfected their appraisal rights under Ohio law, will receive in cash, without interest, $2.55 per share.

On September 26, 2006, The NASDAQ Stock Market filed a Form 25 with the Securities and Exchange Commission (the SEC) to delist the Companys Common Stock from the NASDAQ Global Market
(NASDAQ). On October 10, 2006 the Company filed a Form 15 with the SEC to terminate the registration of the Common Stock and to suspend its SEC reporting obligations.

In addition, on September 27, 2006, the Company entered into a credit agreement with LaSalle Bank NA and The Huntington National Bank to finance the
going private merger and refinance the Companys current credit agreement.

Sales and Marketing

The Companys marketing and sales efforts focus on increasing the volume of current services provided to existing customers, actively cross-marketing
additional services to the existing customer base and developing new customer relationships.

Increasing the Volume of Services
Provided. The Company has full-time account managers assigned to and stationed in customers facilities where the Company performs work on an on-going basis. The Company also has district managers that serve in a similar capacity in
geographic areas in which it serves several customers. In each case, these account and district managers are responsible for the maintenance of existing customer relationships and are in a position to actively identify new opportunities within these
facilities for additional business. Monte R. Black, the Companys Chairman, Chief Executive Officer and President, and each of the leaders of the Companys divisions are actively involved in supporting the efforts of these managers and
regularly attend meetings at customer facilities and visit work-sites within these facilities. Account, district and division managers are provided incentives, both short and long-term, to continue to grow their businesses and to seek
cross-marketing opportunities within the facilities they serve.

Cross-Marketing. Each of the Companys divisions has a strong
management team that is responsible for ensuring that customer relationships are built on a foundation of high-quality, responsive service. The Companys senior management team actively develops a thorough understanding of customers
outsourcing needs and makes every effort to present innovative solutions to meet these needs. Once a cross-marketing opportunity has been identified, the technical and sales leadership of the division being marketed takes the lead in supporting the
sales effort to the customer.

Developing New Customer Relationships. The Company attempts to visit and communicate with companies
that it does not actively serve on a recurring basis. The Company presently utilizes sales managers that have geographic responsibilities spanning several states to manage the majority of these efforts. Local sales representatives are also used in
conjunction with account, district and division managers to provide consistent Company representation on a local basis. The Company also direct markets its reputation and capabilities to plant management within these facilities and to the corporate
management of these companies. In many cases, either Monte R. Black or other members of the senior management team participate in these sales presentations.

Customers

During fiscal 2006, the Company had sales to approximately 930 customers with the ten largest customers
representing approximately 41% of revenues.



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A substantial portion of the business operations are performed within customers facilities
utilizing the Companys personnel and equipment to clean or maintain their critical operating equipment. From these customers, the Company typically receives most orders for services on a job-by-job basis. In some instances, the Company
maintains equipment at the locations of customers that have issued to the Company blanket purchase orders for the provision of services over an extended period. These blanket orders do not obligate the customer to purchase a specified dollar amount
of services. Blanket orders permit the Company to be contracted to perform services when needed. These blanket orders, in combination with the location of the Companys personnel and equipment, allow the Company to expedite responses to a
particular customers needs and may constitute a competitive advantage versus service providers without on-site equipment. The Company provides services primarily at prescribed rates or based upon competitive bidding and in some cases through
direct negotiation with the customer. In certain instances, the Company has developed an ongoing daily or weekly presence within customers facilities that results in a consistent level of service revenues. However, the Company generally does
not have any meaningful backlog of service orders and does not consider backlog to be an important indicator of future performance.

In
certain fixed-based facilities of the Company, industrial paint containers used by automotive paint manufacturers are cleaned. These customers typically execute long-term agreements or blanket orders that provide for consistent levels of business.
In these circumstances, the Company regularly communicates with such customers to identify and plan for expected turnaround times and delivery schedules.

Employees

As of June 30, 2006, the Company employed approximately 1,500 full-time employees. One of the Companys
subsidiaries based in Detroit, Michigan is unionized and employs approximately 90 of these employees. One customer location in Canada also has a union contract covering approximately 45 employees. The Companys other employees do not belong to
unions. The Company has only experienced one minor work stoppage and believes that relations with its employees are good.

Safety, Training and Quality
Assurance

Performance of many of the Companys services requires the use of equipment and exposure to conditions that can be
dangerous. Although the Company is committed to a policy of operating safely and prudently, it has been and is subject to claims by employees, customers and third parties for property damage and personal injuries resulting from the performance of
services. To minimize these risks, the Company has adopted broad training and educational programs and comprehensive safety policies and regulations. The Company requires that all operational personnel complete applicable safety courses mandated by
the Occupational Safety and Health Administration, Environmental Protection Agency, Department of Transportation and Mine Safety and Health Administration in areas including hazard communication, protective equipment, confined space entry, first
aid, decontamination procedures and emergency response. In addition to these mandated training courses, water blast, dry and wet vacuum and power wash operations personnel complete an MPW-designed hands-on skill training program prior to commencing
these activities. Management regularly monitors compliance with regulations set forth by the Occupational Safety and Health Administration and the other regulatory authorities and is responsible for directing the overall safety, training, quality
assurance and environmental compliance programs. In addition, most of the Companys service facilities have a designated safety/training manager who has responsibility for overseeing safety policies and procedures at the facility.

Competition

The Company believes that the
principal competitive factors are experience, capability, customer responsiveness and price competitiveness. The Company believes that its principal competitive advantages are technically-based services, ongoing customer relationships, customer
responsiveness and quality of operational personnel. The Company positions itself competitively as a value leader and not a price leader, though it remains necessary for the Company to price its services at levels where customers will achieve cost
savings versus performing the same services themselves.

The market for industrial services is highly fragmented. There are many
competitors in each of the Companys segments, but the Company does not believe that there is any competitor that offers the quality and range of services that the Company can offer. Each segment competes with a number of companies in
substantially all of the regions in which it operates.



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The Industrial Cleaning segment competes with large national or regional firms that are typically
divisions or subsidiaries of engineering, construction or other service firms and a large number of private firms with relatively few customer relationships. The Facility Maintenance and Support Services segment competes with several national firms
on larger accounts and several regional competitors on smaller accounts. The Industrial Water Process Purification segment competes with large national water purification firms in its midwestern market and also with smaller regional competitors. The
Company believes it is the leading provider of container cleaning services to the automotive paint manufacturers in North America, but competes with smaller private companies in this market.

Regulation

The Companys operations are subject
to numerous rules and regulations at the federal, state and local levels. All of the Companys operations are subject to regulations issued by the United States Department of Labor under the Occupational Safety and Health Act. These regulations
have strict requirements for protecting employees involved with any materials that are classified as hazardous.

As part of its industrial
cleaning services, the Company provides support to customers for the management of their hazardous materials and other contaminants generally in the form of assisting in the movement of these materials within customers facilities and,
occasionally, assisting customers in the logistics of transporting hazardous materials, including advising customers on the completion of waste manifests and providing customers with information regarding permitted disposal facilities. The Company
typically does not transport or dispose of these hazardous materials, and attempts to not take regulatory responsibility for hazardous materials. The Company attempts to avoid any regulatory responsibility by not taking title to any wastes as
defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Resource Conservation and Recovery Act of 1976 and the Superfund Amendments and Reauthorization Act.

As part of the Industrial Container Cleaning operations, the Company manages some solvents used in the cleaning process. Once they are used, these
solvents are sent by licensed transporters to licensed recycling facilities. The Company does not believe that its current activities are subject to the regulations pertaining to hazardous waste treatment, storage or disposal facilities or
transporters of these wastes.

The Companys employees typically work within the customers operating facilities. These work
environments generally do not expose the customers employees or the Companys employees to hazardous materials beyond levels allowed by applicable regulations. Occasionally, as part of the Companys support services, employees may,
at a customers request, move hazardous materials within the customers facility. In addition, some of the Companys more specialized cleaning procedures may require employees to work near hazardous materials. Before any of this type
of work is commenced, however, a complete survey of the material is performed and a health and safety plan with respect to the material is developed and implemented. Employees are required to perform this type of work only with the proper protective
equipment and training.

The Company maintains a full-time staff of safety specialists to ensure that personnel operate in safe conditions
and are properly protected against harmful exposure. The staff of specialists design training materials, develop safety and environmental policies and materials, conduct training classes for employees regarding compliance with governmental
regulations and the Companys procedures, conduct environmental and safety audits at work sites and monitor safety and environmental compliance at onsite customer locations.

The Company believes that it has obtained the permits and licenses required to perform business and believes that it is in compliance with all federal,
state and local laws and regulations governing the Companys business. To date, the Company has not been subject to any significant fines, penalties or other liabilities under these laws and regulations. However, no assurance can be given that
future changes in these laws and regulations, or interpretations thereof, will not have an adverse impact on the Companys operations.

Insurance

Much of the work the Company performs is pursuant to contracts that require the Company to indemnify the customer for injury or damage
occurring on the work site. The terms of these indemnity agreements vary, but generally they provide that the Company is required to indemnify the customer for losses resulting from or incurred in connection with the Companys actions while
providing services. Liability for these indemnification claims is covered primarily by the Companys insurance policies.



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The Company believes that it carries sufficient insurance coverage; however, an uninsured or partially
insured claim, if successful and of sufficient magnitude, could have a material adverse effect on the Company or its financial condition.

Segment
Financial Data

Financial information for the Companys segments is provided in Item 8.  Financial Statements and
Supplementary Data  Notes to Consolidated Financial Statements  Note 16  Segment Reporting.

Financial Information About
Geographic Areas

The Company has a small subsidiary based in Canada. The revenues of this subsidiary represented approximately 4%, 4%
and 2% of the Companys consolidated revenues for the years ended June 30, 2006, 2005 and 2004, respectively.

Risk Factors

MPW faces the competitive pressures of a highly fragmented industry. The industrial services industry is highly competitive and fragmented.
Companies compete on the basis of the quality of services provided, responsiveness to customers, ability to provide services, range of services offered and price. One or more of the larger national or regional industrial services companies, as well
as numerous local industrial services companies of varying sizes and resources, serve each of the geographic markets in which we compete or will likely compete. The larger industrial services companies may have significantly greater financial and
other resources than MPW. In addition, many smaller industrial services companies exist or are formed to serve only one or relatively few customers. From time to time, these or other competitors may reduce the price of their services in an effort to
expand market share or protect existing business. These practices may either require us to reduce the pricing of services or lose business. We expect that competition will remain high or increase in the future, and we cannot be certain that we will
continue to compete successfully.

Our business may be adversely affected if customers reduce their outsourcing or use preferred
vendors. Our business and growth strategies depend in large part on the continuation of our customers outsourcing industrial services. The decision to outsource depends upon customer perceptions that outsourcing may provide higher quality
services at a lower overall cost and permit customers to focus on core business activities. We cannot be certain that this trend will continue or not be reversed or that customers that have outsourced functions will not decide to perform these
functions themselves. In addition, labor unions representing employees of some of our current and prospective customers have generally opposed the outsourcing trend and sought to direct to union employees the performance of the types of services we
offer. In addition, management has identified a trend among some customers toward the retention of a limited number of preferred vendors to provide all or a large part of their required facility services. We cannot be certain that this trend will
continue or not be reversed or, if it does continue, that we will be selected and retained as a preferred vendor to provide these services. Adverse developments with respect to either of these trends would have a material adverse effect on the
business, results of operations and financial condition.

Our business would be adversely affected if key customers are lost. In
fiscal 2006, our ten largest customers represented approximately 41% of total revenues. Customers may terminate or modify substantially all arrangements to perform services for them at will and without penalty. The loss of, and failure to replace
the revenues from, one or more large customers or the loss of a significant number of customers could have a material adverse effect on our business, results of operations and financial condition.

The business cycles of our customers could adversely affect revenues. Many significant customers of MPW operate in industries, such as the
automotive, steel, manufacturing, pulp and paper and utility industries, which are subject to work stoppages and slowdowns and have historically shown sensitivity to recessions and other adverse conditions in the general economy. A general or
regional economic downturn, a work stoppage at one of our significant customers or a decline in the creditworthiness of one of our customers could have a material adverse effect on our business, results of operations and financial condition.

Our business may be adversely affected if it is unable to maintain an adequate workforce. Our business is labor intensive and could
be adversely affected if MPW fails to maintain an adequate workforce. A large majority of the workforce is comprised of hourly workers. MPW incurs substantial expenses for recruiting and training new personnel. We have historically experienced a
high level of turnover, and there can be no assurance that we will be able to successfully attract and retain employees. As a result of a shortage in the supply of hourly workers, we may not be able to maintain a labor force adequate to operate
efficiently, labor expenses may increase or we may have to curtail our growth strategy.



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We may not be able to successfully manage acquisitions. We cannot be sure that we can add new
businesses to our existing operations without substantial costs, delays or other operational or financial problems. Acquisitions involve a number of special risks that could materially and adversely affect the business, financial condition and
results of operations. For example, these risks include a failure to maintain customer relationships and the diversion of managements attention from operational matters. MPW also could be affected by the inability to retain key personnel of
the acquired businesses and risks associated with unanticipated events or liabilities. Customer dissatisfaction or performance problems at one of the acquired businesses could materially and adversely affect the reputation of the entire company.

A failure to retain senior management could have an adverse effect on our business. Our business is largely dependent upon the
efforts of the members of the senior management team, particularly Monte R. Black, Chairman of the Board, Chief Executive Officer and President. If this executive officer or other officers of MPW do not continue in their present positions, or if a
material number of other managers fail to continue with us, the business could be adversely affected.

Environmental risks could
adversely affect our business. Although we attempt not to take responsibility for, nor transport or dispose of, hazardous materials generated by customers in the normal course of business, MPW does provide support to customers for the management
of their hazardous materials. This support includes some on-site movement and packaging of customers hazardous materials and logistical support for customers transportation and disposal of hazardous materials. In addition, some of our
more specialized cleaning procedures may require employees to work near hazardous materials. In performing these services, we could potentially be liable to third parties or their employees for various claims for property damage or personal injury
stemming from a release of hazardous substances or otherwise. Personal injury claims could arise contemporaneously with performance of the work or long after completion of the project as a result of alleged exposure to toxic substances. A large
number of these claims or one or more claims that results in a significant liability to MPW could have a material adverse effect on our business, results of operations and financial condition.

MPW may be adversely affected if it expands international operations. MPW generates a small portion of revenues from services provided outside of
the United States. We may increase our presence outside of the United States. Conducting business outside of the United States is subject to various risks, including longer payment cycles, unexpected changes in regulatory requirements and tariffs,
difficulties in staffing and managing foreign operations and greater difficulty in accounts receivable collection.

Item 2.Properties

Facilities

The Company currently services customers through its Hebron, Ohio headquarters and approximately 35 branch locations in 14 states plus Canada. The Company
owns a 24,000 square foot building, which serves as its principal executive offices, an 11,000 square foot building, which serves as its main fabrication facility, an 8,250 square foot building, which serves as its paint and body facility, and an
11,000 square foot building, which serves as a hangar for aircraft leased by the Company, in Hebron, Ohio; a 64,000 square foot industrial container cleaning facility in Cleveland, Ohio; a 40,000 square foot industrial water facility in Sedalia,
Missouri; a 17,000 square foot industrial parts cleaning facility in Fairborn, Ohio; and an 8,000 square foot light industrial building in Hendersonville, Tennessee. Many of the Companys locations are leased facilities ranging from 3,000 to
71,000 square feet at which the Company houses equipment and maintains a small sales and administrative staff. Each industrial cleaning branch location is equipped to perform minor equipment maintenance. The Company leases land, office space and its
maintenance and training facility in Hebron, Ohio, consisting of approximately 48,000 square feet, its industrial cleaning facility in Rockport, Indiana, consisting of approximately 12,000 square feet, its industrial water facilities located in
Newark, Ohio, consisting of approximately 32,000 square feet and its industrial container cleaning facility located in Chesterfield, Michigan, consisting of approximately 71,000 square feet from related parties. See Item 13. Certain
Relationships and Related Transactions.

Item 3.Legal Proceedings

Various legal actions arising in the ordinary
course of business are pending against the Company. None of the litigation pending against the Company, individually or collectively, is expected to have a material adverse effect on the Company.



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Item 4.Submission of Matters to a Vote of Security Holders

None.

Supplemental Item.  Executive Officers of the Company

The Company furnishes the following information
concerning the executive officers of the Company. Executive officers are elected annually by, and serve at the pleasure of, the Board of Directors.

Monte R. Black (age 56). Mr. Black originally founded the Company in 1972 and has served as Chairman of the Board of Directors and Chief Executive Officer since that time. Mr. Black was appointed President in June 2001 and
has served in that capacity since that time. From June 2001 through June 2004, Mr. Black also served as Chief Operating Officer.

Robert Valentine (age 46). Mr. Valentine joined the Company in July 2003 as Vice President, Chief Financial Officer (CFO), Secretary and Treasurer. In July 2004, Mr. Valentine was also appointed to serve in the
capacity of Chief Operating Officer. Prior to joining the Company, Mr. Valentine served as CFO of Liqui-Box Corporation, a manufacturer and designer of liquid package systems, from 2001 through the acquisition of the company by DuPont Canada in
2002. He also served as Division Chief Executive Officer and CFO for WW Holdings Inc., an industrial products manufacturing company, from 1997 to 2001; International Group Controller (1995-1997) and Director of Internal Audit (1992-1994) for
Invacare Corporation, a durable medical products manufacturer; and was employed with Price Waterhouse, a public accounting firm, prior to joining Invacare Corporation.

James P. Mock(age 61). Mr. Mock joined the Company in October 1996 as Vice President and General Manager of the Northern Region, Industrial Cleaning. From July 1997 through June 2004, Mr. Mock served
as Vice President and General Manager of Industrial Cleaning and Facility Maintenance. In July 2004, Mr. Mock was appointed Vice President of Corporate Shared Services. From 1984 until joining the Company, Mr. Mock served in various
general management and executive positions for a leading environmental services company and its successors.



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PART II

Item 5.Market for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

The Companys Common Stock was traded on the NASDAQ Global Market (NASDAQ) under the symbol MPWG through September 26,
2006. The Companys Common Stock ceased trading on NASDAQ effective September 27, 2006 upon completion of the going-private merger. As of September 28, 2006, the Company had six shareholders of record. The following table sets forth,
for the periods indicated, the range of high and low closing prices for the Companys Common Stock as reported on NASDAQ during fiscal 2006 and 2005:



|               |  |             |      |     |   |     
|-------------- |  | ----------- | ---- | --- | - | ----
|               |  | Price Range
|Fiscal 2006    |  | High        |      | Low
|First Quarter  |  | $           | 2.87 |     | $ | 1.70
|Second Quarter |  |             | 2.22 |     |   | 1.72
|Third Quarter  |  |             | 2.23 |     |   | 1.85
|Fourth Quarter |  |             | 2.55 |     |   | 2.18
|               |  |            
|Fiscal 2005    |  | High        |      | Low
|First Quarter  |  | $           | 2.35 |     | $ | 2.08
|Second Quarter |  |             | 2.55 |     |   | 2.23
|Third Quarter  |  |             | 2.56 |     |   | 2.30
|Fourth Quarter |  |             | 2.54 |     |   | 1.77

The Company anticipates that all future earnings will be retained to finance operations and for
the growth and development of the business. Accordingly, the Company does not currently anticipate paying cash dividends on its Common Stock. The payment of any future dividends will be subject to the discretion of the Board of Directors and will
depend on the results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors that the Board of Directors deem relevant. The Companys current Credit Facility contains covenants
that limit the payment of cash dividends to an amount not to exceed the quarterly estimated income tax payments required to be made by each shareholder.

The following table sets forth information concerning the equity compensation plans of the Company as of June 30, 2006.



|                                                              |  |                                                                       |  |                                                        |      |                                                                                                                                            |        
|------------------------------------------------------------- |  | --------------------------------------------------------------------- |  | ------------------------------------------------------ | ---- | ------------------------------------------------------------------------------------------------------------------------------------------ | -------
|Plan Category                                                 |  | (A) Number ofSecurities to BeIssued UponExercise ofOutstandingOptions |  | (B)Weighted-AverageExercise Price ofOutstandingOptions |      | (C) Number of SecuritiesRemaining Available ForFuture Issuance Under EquityCompensation Plans(Excluding Securities Reflectedin
Column (A))
|Equity Compensation Plan Approved By Security Holders (1)     |  | 808,250                                                               |  | $                                                      | 4.49 |                                                                                                                                            | 363,900
|Equity Compensation Plan Not Approved by Security Holders (2) |  | 72,000                                                                |  | $                                                      | 3.23 |                                                                                                                                            |       

---

|(1) | Plan represents the 1997 Stock Option Plan.
|--- | -------------------------------------------

|(2) | Plan represents the 1994 Stock Option Plan which was adopted prior to the Companys initial public offering in fiscal 1998 (the Offering). Effective with the
Offering, no additional options may be granted under the 1994 Stock Option Plan, and the Companys repurchase obligation upon exercise of stock options was terminated.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

The following table provides information about purchases made by, or on behalf of, MPW Industrial
Services Group, Inc. or any affiliated purchaser (as defined in Rule 10b  18(a) (3) under the Securities Exchange Act of 1934) of common shares of MPW Industrial Services Group, Inc. during each month of the fiscal quarter
ended June 30, 2006:



|                 |  |                                       |  |                                     |  |                                                                                   |  |                                                                                                                    
|---------------- |  | ------------------------------------- |  | ----------------------------------- |  | --------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------
|Period           |  | Total Number ofCommon SharesPurchased |  | Average Price Paid per Common Share |  | Total Number ofCommon SharesPurchased aspart of PubliclyAnnouncedPlans orPrograms |  | Maximum Number (or Approximate Dollar Value)
of Common Shares that May Yet Be Purchased Under the Plans or Programs
|April 1-30, 2006 |  |                                      |  |                                    |  |                                                                                  |  |                                                                                                                   
|May 1-31, 2006   |  |                                      |  |                                    |  |                                                                                  |  |                                                                                                                   
|June 1-30, 2006  |  |                                      |  |                                    |  |                                                                                  |  |                                                                                                                   

Item 6.Selected Consolidated Financial Data

The following information should be read
in conjunction with the Consolidated Financial Statements and notes thereto and Managements Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Form 10-K.



|                                                                              |  |                                       |         |      |   |        |  |   |        |   |  |      |         |   |  |   |       
|----------------------------------------------------------------------------- |  | ------------------------------------- | ------- | ---- | - | ------ |  | - | ------ | - |  | ---- | ------- | - |  | - | ------
|                                                                              |  | Year Ended June 30,                  
|                                                                              |  | 2006                                  |         | 2005 |   | 2004   |  |   | 2003   |   |  | 2002
|                                                                              |  | (in thousands, except per share data)
|STATEMENT OF OPERATIONS DATA                                                  |  |                                       |         |      |   |        |  |   |        |   |  |      |         |   |  |   |       
|Revenues                                                                      |  | $                                     | 107,755 |      | $ | 93,298 |  | $ | 89,125 |   |  | $    | 102,821 |   |  | $ | 90,878
|Income (loss) from continuing operations (1)                                  |  |                                       | 3,938   |      |   | 467    |  |   | (663   | ) |  |      | (5,212  | ) |  |   | 1,550 
|Income (loss) from continuing operations per common share - assuming dilution |  |                                       | 0.16    |      |   | 0.04   |  |   | (0.06  | ) |  |      | (0.48   | ) |  |   | 0.14  
|BALANCE SHEET DATA                                                            |  |                                       |         |      |   |        |  |   |        |   |  |      |         |   |  |   |       
|Working capital                                                               |  | $                                     | 9,903   |      | $ | 9,616  |  | $ | 9,689  |   |  | $    | 6,829   |   |  | $ | 7,232 
|Net property and equipment                                                    |  |                                       | 27,651  |      |   | 28,192 |  |   | 30,198 |   |  |      | 35,120  |   |  |   | 37,476
|Investment in affiliate                                                       |  |                                       |        |      |   |       |  |   |       |   |  |      |        |   |  |   | 6,792 
|Net assets of discontinued operations                                         |  |                                       |        |      |   |       |  |   |       |   |  |      |        |   |  |   | 1,917 
|Total assets                                                                  |  |                                       | 63,371  |      |   | 62,239 |  |   | 64,691 |   |  |      | 73,070  |   |  |   | 85,815
|Total debt and capital leases, including current maturities                   |  |                                       | 14,419  |      |   | 17,644 |  |   | 18,892 |   |  |      | 20,214  |   |  |   | 27,354
|Total shareholders equity                                                    |  |                                       | 33,828  |      |   | 31,825 |  |   | 31,329 |   |  |      | 32,243  |   |  |   | 39,761



---

|(1) | The loss from continuing operations in fiscal 2003 includes the Companys equity in loss of affiliate of $7.2 million. The fiscal 2003 equity in loss of affiliate included the
Companys share ($2.8 million) of a $12.7 million goodwill impairment charge recorded by Pentagon under the provisions of Statement of Financial Accounting Standard (SFAS) No. 142 and a $3.8 million other than temporary
impairment charge to fully write-off the Companys remaining investment in Pentagon due to continued declines in operating results as well as the slowdown and uncertainty in the semi-conductor industry.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with Item 1. Business-Investment Considerations, the Consolidated Financial Statements and related notes included elsewhere in this Form 10-K.

Overview

MPW is a leading
provider of integrated, technically-based industrial cleaning and related facilities support services to a broad array of industries in North America on a daily recurring basis, a project-by-project basis, as well as pursuant to longer-term
arrangements. The Company has approximately 35 branch locations in 14 states and Canada and operates under four separate segments: Industrial Cleaning, Facility Maintenance and Support Services, Industrial Container Cleaning and Industrial Process
Water Purification.



11



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##### Table of Contents

The results of our operations are mainly driven by two factors, customer demand and pricing. Many of our
significant customers operate in industries, such as the automotive, steel, manufacturing, pulp and paper and utility industries, which are subject to work stoppages and slowdowns and have historically shown sensitivity to recessions and other
adverse conditions in the general economy. During fiscal 2006, we saw improvement in customer demand with higher volumes of both base and outage work from new and existing customers across all segments.

Our focus over the past year and going forward is to minimize the peaks and valleys associated with the variability in customer demand by increasing our
cross-marketing efforts to offer our diversified services to all existing and new customers, seeking additional long-term contractual arrangements and creating new service lines to complement our current offerings.

Results of Operations

The following table sets forth
revenue and income from operations by segment for continuing operations for the fiscal years ended June 30, 2006, 2005 and 2004. Expenses associated with the Companys corporate headquarters are fully allocated to the segments. Corporate
staff support services that are attributable to the operating segments are allocated based on each segments percentage of total revenues. General corporate expenses are allocated to each segment equally.



|                                                          |  |                |         |   |             |        |   |        |   |        |             |  |       |        |  |   |             |   |  |        |   
|--------------------------------------------------------- |  | -------------- | ------- | - | ----------- | ------ | - | ------ | - | ------ | ----------- |  | ----- | ------ |  | - | ----------- | - |  | ------ | --
|                                                          |  | 2006           |         |   | 2005        |        |   | 2004   |  
|                                                          |  | Actual         |         |   | % ofRevenue |        |   | Actual |   |        | % ofRevenue |  |       | Actual |  |   | % ofRevenue |  
|                                                          |  | (in thousands) |        
|Revenue                                                   |  |                |         |   |             |        |   |        |   |        |             |  |       |        |  |   |             |   |  |        |   
|Industrial Cleaning                                       |  | $              | 65,266  |   |             | 60.6   | % |        | $ | 56,296 |             |  | 60.3  | %      |  | $ | 54,224      |   |  | 60.8   | % 
|Facility Maintenance and Support Services                 |  |                | 20,119  |   |             | 18.7   |   |        |   | 17,814 |             |  | 19.1  |        |  |   | 15,997      |   |  | 17.9   |   
|Industrial Container Cleaning                             |  |                | 11,330  |   |             | 10.5   |   |        |   | 10,035 |             |  | 10.8  |        |  |   | 11,172      |   |  | 12.5   |   
|Industrial Water Process Purification                     |  |                | 10,146  |   |             | 9.4    |   |        |   | 7,834  |             |  | 8.4   |        |  |   | 7,395       |   |  | 8.3    |   
|Other                                                     |  |                | 894     |   |             | 0.8    |   |        |   | 1,319  |             |  | 1.4   |        |  |   | 337         |   |  | 0.4    |   
|                                                          |  |                |         |   |             |        |   |        |   |        |             |  |       |        |  |   |             |   |  |        |   
|Total revenue                                             |  |                | 107,755 |   |             | 100.0  |   |        |   | 93,298 |             |  | 100.0 |        |  |   | 89,125      |   |  | 100.0  |   
|Cost of services                                          |  |                | 85,245  |   |             | 79.1   |   |        |   | 75,068 |             |  | 80.5  |        |  |   | 71,772      |   |  | 80.5   |   
|                                                          |  |                |         |   |             |        |   |        |   |        |             |  |       |        |  |   |             |   |  |        |   
|Gross profit                                              |  |                | 22,510  |   |             | 20.9   |   |        |   | 18,230 |             |  | 19.5  |        |  |   | 17,353      |   |  | 19.5   |   
|Selling, general and administrative expenses              |  |                | 18,542  |   |             | 17.2   |   |        |   | 16,578 |             |  | 17.8  |        |  |   | 17,010      |   |  | 19.1   |   
|Other general expenses                                    |  |                | 30      |   |             |       |   |        |   | 157    |             |  | 0.1   |        |  |   | 109         |   |  | 0.1    |   
|                                                          |  |                |         |   |             |        |   |        |   |        |             |  |       |        |  |   |             |   |  |        |   
|Income (loss) from operations                             |  |                |         |   |             |        |   |        |   |        |             |  |       |        |  |   |             |   |  |        |   
|Industrial Cleaning                                       |  |                | 1,140   |   |             | 1.7    |   |        |   | (2,805 | )           |  | (5.0  | )      |  |   | (3,884      | ) |  | (7.2   | ) 
|Facility Maintenance and Support Services                 |  |                | 1,754   |   |             | 8.7    |   |        |   | 2,704  |             |  | 15.2  |        |  |   | 2,351       |   |  | 14.7   |   
|Industrial Container Cleaning                             |  |                | 1,683   |   |             | 14.9   |   |        |   | 1,697  |             |  | 16.9  |        |  |   | 2,171       |   |  | 19.4   |   
|Industrial Water Process Purification                     |  |                | 440     |   |             | 4.3    |   |        |   | 186    |             |  | 2.4   |        |  |   | 188         |   |  | 2.5    |   
|Other                                                     |  |                | (1,079  | ) |             | (120.7 | ) |        |   | (287   | )           |  | (21.8 | )      |  |   | (592        | ) |  | (175.7 | ) 
|                                                          |  |                |         |   |             |        |   |        |   |        |             |  |       |        |  |   |             |   |  |        |   
|Total income from operations                              |  |                | 3,938   |   |             | 3.7    |   |        |   | 1,495  |             |  | 1.6   |        |  |   | 234         |   |  | 0.3    |   
|Other income (expense):                                   |  |                |         |   |             |        |   |        |   |        |             |  |       |        |  |   |             |   |  |        |   
|Other income (expense)                                    |  |                | (186    | ) |             | (0.2   | ) |        |   | 186    |             |  | 0.2   |        |  |   |            |   |  |       |   
|Interest expense, net                                     |  |                | (994    | ) |             | (0.9   | ) |        |   | (1,076 | )           |  | (1.1  | )      |  |   | (1,129      | ) |  | (1.3   | ) 
|                                                          |  |                |         |   |             |        |   |        |   |        |             |  |       |        |  |   |             |   |  |        |   
|Income (loss) before provision (benefit) for income taxes |  |                | 2,758   |   |             | 2.6    |   |        |   | 605    |             |  | 0.7   |        |  |   | (895        | ) |  | (1.0   | ) 
|Provision (benefit) for income taxes                      |  |                | 1,028   |   |             | 1.0    |   |        |   | 138    |             |  | 0.1   |        |  |   | (232        | ) |  | (0.3   | ) 
|                                                          |  |                |         |   |             |        |   |        |   |        |             |  |       |        |  |   |             |   |  |        |   
|Net income (loss)                                         |  | $              | 1,730   |   |             | 1.6    | % |        | $ | 467    |             |  | 0.6   | %      |  | $ | (663        | ) |  | (0.7   | )%
|                                                          |  |                |         |   |             |        |   |        |   |        |             |  |       |        |  |   |             |   |  |        |   



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Fiscal 2006 Compared to Fiscal 2005

Revenues. Revenues increased to $107.8 million in fiscal 2006 from $93.3 million in fiscal 2005. The increase in the Industrial Cleaning segment was primarily the result of additional outage work for several
new and existing customers, combined with additional daily work for a customer that is currently experiencing a work stoppage. The increase in the Facility Maintenance and Support Services segment was primarily due to growth within existing
customers. The Industrial Container Cleaning segment experienced higher volumes from existing customers while also providing additional services under a new contract with a key customer. The Industrial Water Process Purification segment saw
increased volumes of industrial water purification trailers supplied to customers on an emergency basis as a result of warmer temperatures in the first quarter of fiscal 2006.

Cost of Services. Total cost of services increased to $85.2 million for fiscal 2006 compared to $75.1 million for fiscal 2005; however, cost of
services as a percentage of revenue decreased to 79.1% in fiscal 2006 from 80.5% in fiscal 2005. The decrease was primarily the result of lower depreciation, subcontract and temporary services, slightly offset by higher chemical and fuel costs.

Selling, General and Administrative Expenses.Selling, general and administrative expenses increased to $18.5 million, or 17.2% as
a percentage of revenue, in fiscal 2006 from $16.6 million, or 17.8% as a percentage of revenue, in fiscal 2005. The increase was primarily the result of increased selling expenses as a result of an increased focus on business development, combined
with increased incentive compensation and administrative costs.

Other General Expenses. Other general expense was $30 thousand in
fiscal 2006 compared to $0.2 million in fiscal 2005. The $30 thousand of other general expense in fiscal 2006 was primarily due to a $0.4 million impairment charge related to property and equipment of the Companys Recovery Technologies
reporting unit offset by a $0.4 million gain related primarily to the sale of equipment of the Industrial Cleaning segment. The $0.4 million impairment charge was as a result of Recovery Technologys continued operating and cash flow losses and
was based on a purchase offer and market appraisal. The fiscal 2005 other general expense represented the loss on disposal of assets.

Income from Operations. Income from operations was $3.9 million in fiscal 2006 compared to $1.5 million in fiscal 2005. As a percentage of revenue, income from operations increased to 3.7% in fiscal 2006 from 1.6% in the prior year
period primarily related to the factors discussed above.

Other Income (Expense). Other income (expense) was $(0.2) million in
fiscal 2006 compared to $0.2 million in fiscal 2005, which represented the recognition of the mark-to-market on interest rate swaps through earnings. The interest rate swaps expired in June 2006.

Provision (Benefit) for Income Taxes. The provision (benefit) for income taxes for fiscal 2006 and 2005 reflects an effective rate of 37.3% and
22.8%, respectively. On June 30, 2005, the State of Ohio enacted various changes to its tax laws. One change is the phase out of the Ohio franchise tax, which is generally based on federal taxable income. This phase out is scheduled to occur at
20% per year for 2006 through 2010. As a result of the various changes to Ohios tax laws, the Company reduced the rate at which it records its deferred taxes, resulting in a lower effective annual income tax rate in fiscal 2005.

Fiscal 2005 Compared to Fiscal 2004

Revenues. Revenues increased to $93.3 million in fiscal 2005 from $89.1 million in fiscal 2004. The increase in the Industrial Cleaning segment was primarily the result of new business from the Hubbells and Fairbanks
acquisition, increased revenues from new customers and increased project work for existing customers, slightly offset by decreased base load work from existing customers. The increase in the Facility Maintenance and Support Services segment was
primarily due to growth from both new and existing customers. The decrease in the Industrial Container Cleaning segment was primarily the result of lower volumes due to slower sales in the automotive industry.

Cost of Services. Total cost of services increased to $75.1 million for fiscal 2005 compared to $71.8 million for fiscal 2004; however, cost of
services as a percentage of revenue was flat at 80.5% in both fiscal 2005 and 2004. While cost of services was flat as a percentage of revenue, increased labor and fuel costs primarily in the Industrial Cleaning, Facility Maintenance and Support
Services and Industrial Water Process Purification segments were offset by lower depreciation, subcontract and temporary services.

Selling, General and Administrative Expenses.Selling, general and administrative expenses decreased to $16.6 million, or 17.8% as a percentage of revenue, in fiscal 2005 from $17.0 million, or 19.1% as a percentage of revenue, in
fiscal 2004. The decrease was primarily the result of decreased bad debt expense due to a $1.1 million charge in fiscal 2004 for a customer that filed bankruptcy, offset slightly by increased selling expenses as a result of an increased focus on
business development and increased administrative personnel costs.



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##### Table of Contents

Income from Operations. Income from operations was $1.5 million in fiscal 2005 compared to $0.2
million in fiscal 2004. As a percentage of revenue, income from operations increased to 1.6% in fiscal 2005 from 0.3% in the prior year period primarily related to the factors discussed above.

Other Income (Expense). Other income was $0.2 million in fiscal 2005, which represented the recognition of the mark-to-market on interest rate
swaps through earnings. A portion of the mark-to-market adjustment recognized in earnings relates to a prior period but was not deemed material to the prior periods presented.

Provision (Benefit) for Income Taxes. The provision (benefit) for income taxes for fiscal 2005 and 2004 reflects an effective rate of 22.8% and
26.0%, respectively. On June 30, 2005, the State of Ohio enacted various changes to its tax laws. One change is the phase out of the Ohio franchise tax, which is generally based on federal taxable income. This phase out is scheduled to occur at
20% per year for 2006 through 2010. As a result of the various changes to Ohios tax laws, the Company has reduced the rate at which it records its deferred taxes, resulting in a lower effective annual income tax rate in fiscal 2005. In
addition, the Company also recorded a $0.1 million charge for an adjustment to deferred income taxes. A portion of the adjustment to deferred income taxes relates to a prior period but was not deemed material to the current or prior periods
presented.

Critical Accounting Policies

Critical accounting policies are defined as those that are reflective of the Companys significant judgments and uncertainties that could potentially result in materially different results under different assumptions and conditions.
The following accounting policies are considered the most critical to the Company, in that they are the primary areas subject to the use of estimates, assumptions and judgments in the preparation of the consolidated financial statements of the
Company.

Revenue and Cost Recognition.The Company primarily derives its revenues from services under time and materials, fixed
price and unit price contracts. Revenues from these contracts are recorded based on performance and efforts expended. Revenues derived from non-contract activities are recorded as services are performed or goods are sold. Cost of services includes
all direct labor, material, travel, subcontract and other direct and indirect project costs related to contract performance. Cost of services also includes all costs associated with operating equipment, including depreciation.

Allowance for Doubtful Accounts.The Companys allowance for doubtful accounts is estimated to cover the risk of loss related to the
Companys accounts receivable. The allowance for doubtful accounts is maintained at a level that the Company considers appropriate based on historical experience and other factors that affect collectibility. The Company evaluates the
collectibility of accounts receivable based on a combination of factors. In circumstances where the Company is aware of a specific customers inability to meet its financial obligations, the Company records a specific reserve against amounts
due to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers, the Company records reserves for bad debts based on the age of the receivables and historical bad debt percentages.
While the Company believes its allowance for doubtful accounts is adequate, changes in major customers ability to meet financial obligations or higher than expected defaults could cause the Company to lower its estimates of recoverability by a
material amount.

Property and Equipment.Property and equipment is recorded at cost and includes expenditures that substantially
increase the useful lives of the asset. Maintenance and repairs that do not improve or extend the useful life of the respective assets are expensed as incurred. Depreciation is provided over the estimated useful lives of the respective assets using
the straight-line method.

Depreciation on the Companys property and equipment has been computed based on the following useful lives:



|                                            |  |        
|------------------------------------------- |  | -------
|                                            |  | Years  
|Buildings and improvements                  |  | 2 to 30
|Motor vehicles and transportation equipment |  | 1 to 10
|Machinery and equipment                     |  | 1 to 10
|Furniture, fixtures and computer equipment  |  | 2 to 7 

Goodwill. The Company has classified as goodwill the excess of the acquisition cost over
the fair values of the net assets of businesses acquired. In accordance with SFAS No. 142, goodwill and indefinite-lived intangible assets are tested for impairment upon adoption of the standard and annually thereafter or upon the occurrence of
certain triggering events as defined by SFAS No. 142. SFAS No. 142 requires a two-step process for impairment testing of goodwill. The first step



14



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##### Table of Contents

identifies indications of impairment, while the second step, if necessary, measures the amount of the impairment, if any.
The Company performs its annual impairment test during the fourth quarter of each year using the discounted cash flow methodology.

Impairment of Long-Lived Assets.The recoverability of long-lived assets, including intangible assets, is evaluated whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, and
if future undiscounted cash flows are believed insufficient to recover the remaining carrying value of the asset, the carrying value is written down to fair value in the period the impairment is identified.

Insurance Risk.The Company is self-insured for workers compensation, general and auto liability costs up to certain retention levels and
purchases private insurance for claims in excess of those retention levels. The Company records its self-insurance liability based on claims filed and an estimate of claims incurred but not yet reported. These liabilities are based on estimates and,
while management believes that the reserve is adequate, the ultimate liability may be in excess of or less than the amounts recorded.

Contractual
Obligations

As of June 30, 2006, the Company had the following contractual obligations (in thousands):



|                                   |  |                        |        |                 |   |           |  |           |        |                 |   |     |  |   |   
|---------------------------------- |  | ---------------------- | ------ | --------------- | - | --------- |  | --------- | ------ | --------------- | - | --- |  | - | --
|                                   |  | Payments Due by Period
|                                   |  | Total                  |        | Less than1 Year |   | 1-3 Years |  | 4-5 Years |        | MoreThan 5Years
|Notes payable to bank              |  | $                      | 14,400 |                 | $ | 299       |  | $         | 14,101 |                 | $ |    |  | $ |  
|Capital lease obligations          |  |                        | 9      |                 |   | 9         |  |           |       |                 |   |    |  |   |  
|Other notes payable                |  |                        | 10     |                 |   | 9         |  |           | 1      |                 |   |    |  |   |  
|Non-cancelable operating leases    |  |                        | 6,878  |                 |   | 2,486     |  |           | 3,544  |                 |   | 803 |  |   | 45
|                                   |  |                        |        |                 |   |           |  |           |        |                 |   |     |  |   |   
|Total contractual cash obligations |  | $                      | 21,297 |                 | $ | 2,803     |  | $         | 17,646 |                 | $ | 803 |  | $ | 45
|                                   |  |                        |        |                 |   |           |  |           |        |                 |   |     |  |   |   

The Company is a guarantor of a lease agreement related to a facility operated by its former
subsidiary, Pentagon. The lease, on which rent is approximately $30,000 per month, expires in October 2009. As of June 30, 2006, the Company believes its maximum potential liability is $1.2 million, payable only if Pentagon fails to comply with
the lease terms, and subject to many factors, including the landlords duty to mitigate, the validity of the guarantee and the like.

Related Party
Transactions

The Company rents certain land, property, buildings and an aircraft from entities controlled by its principal shareholder
and Chief Executive Officer (CEO) under long-term lease agreements. The Company also periodically uses a ranch, which is owned by an entity controlled by the CEO, for entertainment and overnight lodging of customers and other business
associates. Total expenses related to these leases and to the ranch were $2.0 million, $2.0 million and $2.1 million for fiscal 2006, 2005 and 2004, respectively.

The Company provides, from time to time, certain fabrication-type services to Pro-Kleen Industrial Services, Inc. (Pro-Kleen), a portable sanitation services company wholly-owned by the Companys
principal shareholder and CEO. The Company charges Pro-Kleen for the cost of services it renders plus a markup. The amount of such charges for fiscal years 2006, 2005 and 2004 were approximately $207,000, $298,000, and $212,000, respectively. These
charges are for the use of parts and supplies and the use of certain of the Companys employees on certain projects as requested by Pro-Kleen. These charges are generally treated as an offset to supplies, repairs and maintenance or labor
expense. Accounts receivable related to these transactions were $0.1 million and $0.2 million at June 30, 2006 and 2005, respectively. During fiscal 2004, the Company also sold existing equipment to Pro-Kleen for cash proceeds of $204,000. The
sale was reviewed and approved by the Companys Audit Committee.

These transactions are reviewed periodically by the Companys
Audit Committee. Based on such review, the Company believes that these transactions are on terms at least as favorable as those that could be obtained from an independent third party.



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##### Table of Contents

Liquidity and Capital Resources

In fiscal 2006, the Company generated $8.8 million in cash from operating activities, representing a $3.0 million increase from fiscal 2005. The increase was primarily the result of an increase in income from
operations.

Working capital of $9.9 million at June 30, 2006 increased $0.3 million from June 30, 2005. The increase was due to
a $2.5 million increase in accounts receivable and $0.9 million decrease in current maturities of long-term debt offset by a $1.5 million increase in accrued compensation and related taxes due to increased incentive compensation accruals combined
with a $1.2 million increase in other accrued liabilities primarily as a result of an increased income tax payable and customer rebate obligation.

The Companys primary investing and financing activities during fiscal 2006 included spending $6.7 million on capital projects and paying $3.2 million on long-term debt. These transactions were funded by the cash flows from the
Companys operations.

Capital spending during fiscal 2006 included the purchases of new vehicles and equipment and spending to
rebuild existing equipment in primarily the Industrial Cleaning and Industrial Water Process Purification segments, combined with the buyout of an aircraft lease. For the fiscal year ending June 30, 2007, we expect to spend approximately $5.5
million on capital projects.

The Companys short-term and long-term liquidity needs are primarily served by a credit agreement with
its principal banks (the Credit Facility). In June 2002, the Company entered into the Credit Facility with $35.0 million of revolving credit availability for a three-year period and a $6.0 million three-year term loan to be repaid in
quarterly installments of $0.3 million. Effective June 30, 2005, the Company amended its Credit Facility and reduced the revolving credit availability to $27.0 million, which was subject to further periodic reduction of $0.3 million per quarter
commencing on March 31, 2007. The amendment also extended the Credit Facilitys term loan expiration from April 1, 2006 to December 31, 2006 and the revolving credit facilitys expiration from April 1, 2006 to
January 1, 2008, at which time the principal balance outstanding, together with all accrued interest will become immediately due and payable. As of June 30, 2006, outstanding borrowings under the Credit Facility were $14.4 million.
Excluding outstanding borrowings and letters of credit, there was $8.0 million available under the Credit Facility at June 30, 2006.

On September 27, 2006, the Company entered into a credit agreement with LaSalle Bank NA and The Huntington National Bank (the New Credit Facility) to finance the going private merger and refinance the
Companys Credit Facility. The New Credit Facility consists of the following senior secured credit facilities:



| |  |  | Revolving Credit Facility. The New Credit Facility has $17.0 million of revolving credit availability with a subfacility of $5.0 million for letters of credit. Any
outstanding balance will be due and payable on September 30, 2011. As of September 27, 2006, outstanding borrowings under the New Credit Facility were $7.5 million.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Equipment Term Loan. The New Credit Facility has a $13.5 million five-year equipment term loan. The principal amount of the equipment term loan will amortize as follows:
equal quarterly payments totaling $2.0 million in year one; $2.2 million in year two; $2.4 million in year three; $2.6 million in year four and $2.1 million in year five, with the remaining balance due and payable on September 30, 2011.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Real Estate Term Loan. The New Credit Facility has a $6.0 million five-year real estate term loan commitment, which will be reduced by the collateral value of any real
property owned by the Company for which certain documents have not been delivered at the closing of the financing and reduced by the collateral value of any real property owned the Company as of the closing to the extent such real property is sold
or otherwise transferred. With a real estate term loan of $6.0 million, the outstanding balance on the loan will be amortized in equal quarterly payments of $100,000 each, with the remaining balance due and payable on September 30, 2011;
however, the required principal payments will be reduced if the real estate term loan commitment is reduced. As of the closing of the financing on September 27, 2006, the real estate term loan commitment and outstanding principal was $5.6
million.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The New Credit Facility is secured by substantially all of the Companys assets and is available for general
corporate purposes, including working capital, capital expenditures and acquisitions. Borrowings under the New Credit Facility



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##### Table of Contents

currently bear interest at the Eurodollar market rate or Prime rate plus the applicable margin rate of 2.75%. The Company
also pays a commitment fee of 0.50% for unused portions of the New Credit Facility. The interest rate is subject to change based on interest rate formulas tied to the ratio of consolidated funded debt to earnings before interest, taxes, depreciation
and amortization. Availability of borrowing is subject to the maintenance of a minimum level of earnings before interest, taxes, depreciation and amortization, certain levels of fixed charge coverage and maintenance of a specific ratio of funded
debt to earnings before interest, taxes, depreciation and amortization. The New Credit Facility also contains covenants that limit the payment of cash dividends to an amount not to exceed the quarterly estimated income tax payments required to be
made by each shareholder.

The Company had two pay-fixed interest rate swap agreements as a hedge against the interest rate risk associated
with borrowing at a variable rate, which matured in June 2006. The objective of the hedge was to eliminate the variability of cash flows related to interest rate payments on the Companys variable rate debt. Through their expiration on
June 15, 2006, the swap agreements had a notional amount of $8.0 million and $10.0 million and effectively locked in a portion of the Companys variable rate revolving credit liability at fixed rates of 2.61% and 2.80%, respectively, plus
the Companys applicable margin. These swap agreements were accounted for as cash flow hedges, as defined under SFAS No. 133, Accounting for Derivative and Hedging Activities. In fiscal 2004, the Company adjusted the pay-fixed
interest rate swaps to current market values through other comprehensive income (loss). In fiscal 2005, the Company determined that it failed to qualify for hedge accounting treatment at inception of the interest rate swaps and therefore recognized
the $0.2 million gain deferred in accumulated comprehensive income in earnings. The gain (loss) recognized in fiscal 2006 and 2005 was reported in other income (expense).

The Company expects to continue to assess acquisition opportunities as they arise. Additional financing may be required if the Company makes an acquisition. There can be no assurance, however, that any such
opportunities will arise, that any such acquisitions will be consummated, or that any needed additional financing will be available on satisfactory terms when required. Absent any other acquisitions, we anticipate that cash flows from operations and
unused borrowing capacity should be sufficient to fund expected normal operating costs, working capital, and capital expenditures for the Companys existing businesses.

Recently Adopted Accounting Standards

In November 2004, the Financial Accounting Standards
Board (FASB) issued SFAS No. 151, Inventory Costs. SFAS No. 151 amends the guidance in Accounting Research Bulletin No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of
idle facility expense, freight, handling cost and wasted material (spoilage). In addition, this Statement requires that allocation of fixed production overhead to the costs of conversion be based on the normal capacity of the production facilities.
The Company adopted this Statement on July 1, 2005. The adoption of this Statement had no impact on the Companys financial position or results of operations.

In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29. APB Opinion No. 29 is based on the principle that exchanges of
nonmonetary assets should be measured on the fair value of the assets exchanged. The guidance in that Opinion, however, included certain exceptions to that principle. This Statement amends APB Opinion No. 29 to eliminate the exception for
nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. The Company adopted this Statement on July 1, 2005. The adoption of this
Statement had no impact on the Companys financial position or results of operations.

In December 2004, the FASB issued SFAS
No. 123 (revised), Share-Based Payment. SFAS No. 123 (revised) is a revision of SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and its related implementation guidance. This Statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also
addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entitys equity instruments or that may be settled by the issuance of those equity instruments. This
Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. The Company adopted this Statement prospectively on July 1, 2005. The impact to the Company related to
the adoption of this Statement is quantified in the Stock Options section of Note 1 in the Companys Consolidated Financial Statements.



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##### Table of Contents

Effect of Recent Accounting Pronouncements

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Correctionsa replacement of APB Opinion No. 20 and FASB
Statement No. 3. This Statement replaces APB Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting for and
reporting of a change in accounting principle. This Statement applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not
include specific transition provisions. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal periods beginning after December 15, 2005. The Company does not expect the adoption of this Statement to
have a material impact on its financial position or results of operations.

In March 2006, the FASB issued SFAS No. 156,
Accounting for Servicing of Financial Assetsan amendment of FASB Statement No. 140. This Statement amends SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with
respect to the accounting for separately recognized servicing assets and servicing liabilities. SFAS No. 156 is effective at the beginning of the first fiscal year beginning after September 15, 2006. The Company does not expect the
adoption of this Statement to have a material impact on its financial position or results of operations.

In July 2006, the FASB issued
FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109(FIN 48), which clarifies the accounting for uncertainty in tax positions. This Interpretation
requires that the Company recognize in our financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are
effective for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The Company is currently evaluating the impact of adopting
FIN 48 on the Companys financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements.
This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP) and expands disclosures about fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements. Prior to this Statement, there were different definitions of fair value and limited guidance for applying those definitions in GAAP. In developing this Statement, the FASB considered the
need for increased consistency and comparability in fair value measurements and for expanded disclosures about fair value measurements. This Statement is effective for financial statements issued for fiscal years beginning after November 15,
2007 and interim periods within those fiscal years. The Company does not expect the adoption of this Statement to have a material impact on its financial position or results of operations.

In September 2006, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 108, which
expresses the SEC staffs views regarding the process of quantifying financial statement misstatements. The SEC staff is aware of diversity in practice. For example, certain registrants do not consider the effects of prior year errors on
current year financial statements, thereby allowing improper assets or liabilities to remain unadjusted. While these errors may not be material if considered only in relation to the balance sheet, correcting the errors could be material to the
current year income statement. The interpretations in SAB 108 are being issued to address diversity in practice in quantifying financial statement misstatements and the potential under current practice for the build up of improper amounts on the
balance sheet. Early application of the guidance in this FSP is encouraged in any report for an interim period of the first fiscal year ending after November 15, 2006. The Company does not expect the adoption of this SAB to have a material
impact on its financial position or results of operations.

In September 2006, the FASB issued FASB Staff Position (FSP) No.
AUG AIR-1, Accounting for Planned Major Maintenance Activities. This FSP amends certain provisions in the AICPA Industry Audit Guide, Audits of Airlines (Airline Guide), and APB Opinion No. 28, Interim Financial
Reporting. The Airline Guide is the principal source of guidance on the accounting for planned major maintenance activities and is widely used by other industries. The Airline Guide permits four alternative methods of accounting for planned
major maintenance activities: direct expense, built-in overhaul, deferral and accrual (accrue-in-advance). This FSP prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities in annual and interim
financial reporting periods. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2006. The Company does not expect the adoption of this FSP to have a material impact on its financial
position or results of operations.



18



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##### Table of Contents

Inflation

The effects of inflation on the Companys operations were not significant during the periods presented in the Consolidated Financial Statements.

Item 7a.Quantitative and Qualitative Disclosures About Market Risk

The Company is
exposed to certain market risks from transactions that are entered into during the normal course of business. The Company has not entered into derivative financial instruments for trading purposes. The Companys primary market risk exposure
relates to interest rate risk. At June 30, 2006, the balance on the Credit Facility was $14.4 million, which is subject to a variable rate of interest based on the Eurodollar rate. The Company had hedged its exposure to changes in interest
rates by fixing its rate of interest on $18.0 million of its variable rate credit facility through two interest rate swap agreements; however, the interest rate swaps expired June 15, 2006. Assuming borrowings at June 30, 2006, a one
hundred basis point change in interest rates would impact net interest expense by approximately $144,000 per year.



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##### Table of Contents

Item 8.Financial Statements and Supplementary Data

REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors

MPW Industrial Services Group, Inc.

We have audited the accompanying consolidated balance sheets of MPW Industrial Services
Group, Inc. and subsidiaries (the Company) as of June 30, 2006 and 2005, and the related consolidated statements of operations, changes in shareholders equity, and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of MPW Industrial Services Group, Inc. and subsidiaries as of June 30, 2006 and 2005, and the results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted
accounting principles.

As discussed in Note 1 to the consolidated financial statements, the Company adopted Statement of Financial
Accounting Standard No. 123(R), Share-Based Payments, effective July 1, 2005.

/s/ KPMG LLP

Columbus, Ohio

October 13, 2006



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors

MPW Industrial Services Group, Inc.

We have audited the accompanying consolidated statements of operations, changes in shareholders equity, and cash flows of MPW Industrial Services
Group, Inc. and subsidiaries (the Company) for the year ended June 30, 2004. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Companys internal control over
financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated results of
operations and cash flows of MPW Industrial Services Group, Inc. and subsidiaries for the year ended June 30, 2004, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Columbus,
Ohio

August 12, 2004, except for Note 16,

as to which
the date is September 30, 2005



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##### Table of Contents

MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in
thousands, except share data)



|                                                                                                                                           |  |          |        |   |      |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | -------- | ------ | - | ---- | - | ------ | -
|                                                                                                                                           |  | June 30, |       
|                                                                                                                                           |  | 2006     |        |   | 2005 |  
|ASSETS                                                                                                                                     |  |          |        |   |      |   |        |  
|Cash                                                                                                                                       |  | $        | 184    |   |      | $ | 744    |  
|Accounts receivable, net                                                                                                                   |  |          | 19,227 |   |      |   | 16,723 |  
|Inventories                                                                                                                                |  |          | 1,991  |   |      |   | 2,002  |  
|Deferred income taxes                                                                                                                      |  |          | 1,390  |   |      |   | 1,264  |  
|Prepaid expenses                                                                                                                           |  |          | 1,371  |   |      |   | 1,066  |  
|Other current assets                                                                                                                       |  |          |       |   |      |   | 15     |  
|                                                                                                                                           |  |          |        |   |      |   |        |  
|Total current assets                                                                                                                       |  |          | 24,163 |   |      |   | 21,814 |  
|                                                                                                                                           |  |          |        |   |      |   |        |  
|Property and equipment, net                                                                                                                |  |          | 27,651 |   |      |   | 28,192 |  
|Goodwill                                                                                                                                   |  |          | 5,487  |   |      |   | 5,487  |  
|Other intangibles, net                                                                                                                     |  |          | 5,759  |   |      |   | 6,503  |  
|Other assets                                                                                                                               |  |          | 311    |   |      |   | 243    |  
|                                                                                                                                           |  |          |        |   |      |   |        |  
|Total assets                                                                                                                               |  | $        | 63,371 |   |      | $ | 62,239 |  
|                                                                                                                                           |  |          |        |   |      |   |        |  
|LIABILITIES                                                                                                                                |  |          |        |   |      |   |        |  
|Accounts payable                                                                                                                           |  | $        | 3,780  |   |      | $ | 3,547  |  
|Accrued compensation and related taxes                                                                                                     |  |          | 3,398  |   |      |   | 1,899  |  
|Current maturities of long-term debt                                                                                                       |  |          | 317    |   |      |   | 1,234  |  
|Other accrued liabilities                                                                                                                  |  |          | 6,765  |   |      |   | 5,518  |  
|                                                                                                                                           |  |          |        |   |      |   |        |  
|Total current liabilities                                                                                                                  |  |          | 14,260 |   |      |   | 12,198 |  
|                                                                                                                                           |  |          |        |   |      |   |        |  
|Long-term debt                                                                                                                             |  |          | 14,102 |   |      |   | 16,410 |  
|Deferred income taxes                                                                                                                      |  |          | 948    |   |      |   | 1,806  |  
|Other liabilities                                                                                                                          |  |          | 233    |   |      |   |       |  
|                                                                                                                                           |  |          |        |   |      |   |        |  
|Total liabilities                                                                                                                          |  |          | 29,543 |   |      |   | 30,414 |  
|                                                                                                                                           |  |          |        |   |      |   |        |  
|SHAREHOLDERS EQUITY                                                                                                                       |  |          |        |   |      |   |        |  
|Preferred stock, $0.01 par value; 5,000,000 shares authorized; no shares issued and outstanding                                            |  |          |       |   |      |   |       |  
|Common stock, no par value; 30,000,000 shares authorized; 10,716,207 shares issued and outstanding at June 30, 2006 and 2005,
respectively |  |          | 107    |   |      |   | 107    |  
|Additional paid-in capital                                                                                                                 |  |          | 41,092 |   |      |   | 40,936 |  
|Accumulated deficit                                                                                                                        |  |          | (7,493 | ) |      |   | (9,223 | )
|Accumulated other comprehensive income                                                                                                     |  |          | 122    |   |      |   | 5      |  
|                                                                                                                                           |  |          |        |   |      |   |        |  
|Total shareholders equity                                                                                                                 |  |          | 33,828 |   |      |   | 31,825 |  
|                                                                                                                                           |  |          |        |   |      |   |        |  
|Total liabilities and shareholders equity                                                                                                 |  | $        | 63,371 |   |      | $ | 62,239 |  
|                                                                                                                                           |  |          |        |   |      |   |        |  

The accompanying notes are an integral part of these consolidated financial statements.



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MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share data)



|                                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|--------------------------------------------------------- |  | ------------------- | ------- | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                          |  | Year Ended June 30, |        
|                                                          |  | 2006                |         |   | 2005 |   |        | 2004 | 
|Revenues                                                  |  | $                   | 107,755 |   |      | $ | 93,298 |      |  | $ | 89,125 |  
|Cost of services                                          |  |                     | 85,245  |   |      |   | 75,068 |      |  |   | 71,772 |  
|                                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|Gross profit                                              |  |                     | 22,510  |   |      |   | 18,230 |      |  |   | 17,353 |  
|Selling, general and administrative expenses              |  |                     | 18,542  |   |      |   | 16,578 |      |  |   | 17,010 |  
|Other general expenses                                    |  |                     | 30      |   |      |   | 157    |      |  |   | 109    |  
|                                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|Income from operations                                    |  |                     | 3,938   |   |      |   | 1,495  |      |  |   | 234    |  
|Other income (expense):                                   |  |                     |         |   |      |   |        |      |  |   |        |  
|Other income (expense)                                    |  |                     | (186    | ) |      |   | 186    |      |  |   |       |  
|Interest expense, net                                     |  |                     | (994    | ) |      |   | (1,076 | )    |  |   | (1,129 | )
|                                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|Income (loss) before provision (benefit) for income taxes |  |                     | 2,758   |   |      |   | 605    |      |  |   | (895   | )
|Provision (benefit) for income taxes                      |  |                     | 1,028   |   |      |   | 138    |      |  |   | (232   | )
|                                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|Net income (loss)                                         |  | $                   | 1,730   |   |      | $ | 467    |      |  | $ | (663   | )
|                                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|Net income (loss) per share, basic and dilutive           |  | $                   | 0.16    |   |      | $ | 0.04   |      |  | $ | (0.06  | )
|                                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|Weighted average shares outstanding                       |  |                     | 10,716  |   |      |   | 10,711 |      |  |   | 10,838 |  
|Weighted average shares outstanding, assuming dilution    |  |                     | 10,761  |   |      |   | 10,786 |      |  |   | 10,838 |  

The accompanying notes are an integral part of these consolidated financial statements.



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##### Table of Contents

MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

(in thousands)



|                                                                                                   |  |              |   |  |                            |     |   |                     |   |        |                                              |  |   |                             |   |  |   |      |   |  |   |       |  
|-------------------------------------------------------------------------------------------------- |  | ------------ | - |  | -------------------------- | --- | - | ------------------- | - | ------ | -------------------------------------------- |  | - | --------------------------- | - |  | - | ---- | - |  | - | ----- | -
|                                                                                                   |  | Common Stock |   |  | Additional Paid-In Capital |     |   | Accumulated Deficit |   |        | AccumulatedOther Comprehensive Income
(Loss) |  |   | Comprehensive Income (Loss) |  
|                                                                                                   |  | Shares       |   |  | Amount                     |     |   |                     |   |       
|Balance at June 30, 2003                                                                           |  | 10,940       |   |  | $                          | 109 |   |                     | $ | 41,507 |                                              |  | $ | (9,027                      | ) |  | $ | (346 | ) |  |   |       |  
|Net loss                                                                                           |  |             |   |  |                            |    |   |                     |   |       |                                              |  |   | (663                        | ) |  |   |     |   |  | $ | (663  | )
|Mark-to-market on interest rate swaps (net of income taxes of $230)                                |  |             |   |  |                            |    |   |                     |   |       |                                              |  |   | .                          |   |  |   | 344  |   |  |   | 344   |  
|Foreign currency translation adjustment                                                            |  |             |   |  |                            |    |   |                     |   |       |                                              |  |   |                            |   |  |   | (7   | ) |  |   | (7    | )
|Exercise of stock options                                                                          |  | 19           |   |  |                            |    |   |                     |   | 37     |                                              |  |   |                            |   |  |   |     |   |  |   |      |  
|Repurchase of common stock                                                                         |  | (250         | ) |  |                            | (2  | ) |                     |   | (623   | )                                            |  |   |                            |   |  |   |     |   |  |   |      |  
|                                                                                                   |  |              |   |  |                            |     |   |                     |   |        |                                              |  |   |                             |   |  |   |      |   |  |   |       |  
|Balance at June 30, 2004                                                                           |  | 10,709       |   |  |                            | 107 |   |                     |   | 40,921 |                                              |  |   | (9,690                      | ) |  |   | (9   | ) |  | $ | (326  | )
|                                                                                                   |  |              |   |  |                            |     |   |                     |   |        |                                              |  |   |                             |   |  |   |      |   |  |   |       |  
|Net income                                                                                         |  |             |   |  |                            |    |   |                     |   |       |                                              |  |   | 467                         |   |  |   |     |   |  | $ | 467   |  
|Reclassification of mark-to-market on interest rate swaps to earnings (net of income taxes of $42) |  |             |   |  |                            |    |   |                     |   |       |                                              |  |   |                            |   |  |   | (63  | ) |  |   | (63   | )
|Foreign currency translation adjustment                                                            |  |             |   |  |                            |    |   |                     |   |       |                                              |  |   |                            |   |  |   | 77   |   |  |   | 77    |  
|Exercise of stock options                                                                          |  | 7            |   |  |                            |    |   |                     |   | 15     |                                              |  |   |                            |   |  |   |     |   |  |   |      |  
|                                                                                                   |  |              |   |  |                            |     |   |                     |   |        |                                              |  |   |                             |   |  |   |      |   |  |   |       |  
|Balance at June 30, 2005                                                                           |  | 10,716       |   |  | $                          | 107 |   |                     | $ | 40,936 |                                              |  | $ | (9,223                      | ) |  | $ | 5    |   |  | $ | 481   |  
|                                                                                                   |  |              |   |  |                            |     |   |                     |   |        |                                              |  |   |                             |   |  |   |      |   |  |   |       |  
|Net income                                                                                         |  |             |   |  |                            |    |   |                     |   |       |                                              |  |   | 1,730                       |   |  |   |     |   |  | $ | 1,730 |  
|Foreign currency translation adjustment                                                            |  |             |   |  |                            |    |   |                     |   |       |                                              |  |   |                            |   |  |   | 117  |   |  |   | 117   |  
|Employee stock option compensation                                                                 |  |             |   |  |                            |    |   |                     |   | 156    |                                              |  |   |                            |   |  |   |     |   |  |   |      |  
|                                                                                                   |  |              |   |  |                            |     |   |                     |   |        |                                              |  |   |                             |   |  |   |      |   |  |   |       |  
|Balance at June 30, 2006                                                                           |  | 10,716       |   |  | $                          | 107 |   |                     | $ | 41,092 |                                              |  | $ | (7,493                      | ) |  | $ | 122  |   |  | $ | 1,847 |  
|                                                                                                   |  |              |   |  |                            |     |   |                     |   |        |                                              |  |   |                             |   |  |   |      |   |  |   |       |  

The accompanying notes are an integral part of these consolidated financial statements.



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##### Table of Contents

MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



|                                                                                         |  |                     |        |   |      |   |        |      |  |   |         |  
|---------------------------------------------------------------------------------------- |  | ------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                                                                         |  | Year Ended June 30, |       
|                                                                                         |  | 2006                |        |   | 2005 |   |        | 2004 | 
|Cash flow from operating activities:                                                     |  |                     |        |   |      |   |        |      |  |   |         |  
|Net income (loss)                                                                        |  | $                   | 1,730  |   |      | $ | 467    |      |  | $ | (663    | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                     |        |   |      |   |        |      |  |   |         |  
|Depreciation                                                                             |  |                     | 6,667  |   |      |   | 7,193  |      |  |   | 8,175   |  
|Amortization                                                                             |  |                     | 744    |   |      |   | 660    |      |  |   | 605     |  
|Impairment charge                                                                        |  |                     | 417    |   |      |   | 26     |      |  |   |        |  
|(Earnings) loss from mark-to-market on interest rate swap                                |  |                     | 186    |   |      |   | (112   | )    |  |   |        |  
|(Gain) loss on disposals of assets                                                       |  |                     | (387   | ) |      |   | 157    |      |  |   | 100     |  
|Employee stock option compensation                                                       |  |                     | 156    |   |      |   |       |      |  |   |        |  
|Change in deferred income taxes                                                          |  |                     | (984   | ) |      |   | (998   | )    |  |   | (401    | )
|Changes in operating assets and liabilities:                                             |  |                     |        |   |      |   |        |      |  |   |         |  
|Accounts receivable                                                                      |  |                     | (2,511 | ) |      |   | (1,935 | )    |  |   | 2,335   |  
|Inventories                                                                              |  |                     | 11     |   |      |   | 192    |      |  |   | 175     |  
|Prepaid expenses and other assets                                                        |  |                     | (311   | ) |      |   | 21     |      |  |   | 176     |  
|Accounts payable                                                                         |  |                     | 350    |   |      |   | 111    |      |  |   | (4,712  | )
|Other accrued liabilities                                                                |  |                     | 2,746  |   |      |   | (293   | )    |  |   | (925    | )
|Other                                                                                    |  |                     |       |   |      |   | 297    |      |  |   |        |  
|                                                                                         |  |                     |        |   |      |   |        |      |  |   |         |  
|Net cash provided by operating activities                                                |  |                     | 8,814  |   |      |   | 5,786  |      |  |   | 4,865   |  
|                                                                                         |  |                     |       
|Cash flow from investing activities:                                                     |  |                     |        |   |      |   |        |      |  |   |         |  
|Purchases of property and equipment                                                      |  |                     | (6,740 | ) |      |   | (5,065 | )    |  |   | (3,679  | )
|Purchase of businesses                                                                   |  |                     |       |   |      |   | (990   | )    |  |   |        |  
|Proceeds from the disposal of property and equipment                                     |  |                     | 609    |   |      |   | 30     |      |  |   | 235     |  
|                                                                                         |  |                     |        |   |      |   |        |      |  |   |         |  
|Net cash used in investing activities                                                    |  |                     | (6,131 | ) |      |   | (6,025 | )    |  |   | (3,444  | )
|                                                                                         |  |                     |       
|Cash flow from financing activities:                                                     |  |                     |        |   |      |   |        |      |  |   |         |  
|Proceeds from issuance of common stock, net                                              |  |                     |       |   |      |   | 15     |      |  |   | 37      |  
|Repurchase of common stock                                                               |  |                     |       |   |      |   |       |      |  |   | (625    | )
|Proceeds from revolving credit facility                                                  |  |                     | 6,550  |   |      |   | 4,500  |      |  |   | 17,050  |  
|Payments on revolving credit facility                                                    |  |                     | (9,750 | ) |      |   | (5,700 | )    |  |   | (18,250 | )
|Payments on notes payable                                                                |  |                     | (22    | ) |      |   | (60    | )    |  |   | (122    | )
|Payments on capital lease obligations                                                    |  |                     | (21    | ) |      |   | (9     | )    |  |   |        |  
|                                                                                         |  |                     |        |   |      |   |        |      |  |   |         |  
|Net cash used in financing activities                                                    |  |                     | (3,243 | ) |      |   | (1,254 | )    |  |   | (1,910  | )
|                                                                                         |  |                     |        |   |      |   |        |      |  |   |         |  
|Decrease in cash                                                                         |  |                     | (560   | ) |      |   | (1,493 | )    |  |   | (489    | )
|Cash at beginning of year                                                                |  |                     | 744    |   |      |   | 2,237  |      |  |   | 2,726   |  
|                                                                                         |  |                     |        |   |      |   |        |      |  |   |         |  
|Cash at end of year                                                                      |  | $                   | 184    |   |      | $ | 744    |      |  | $ | 2,237   |  
|                                                                                         |  |                     |        |   |      |   |        |      |  |   |         |  
|Supplemental schedule of noncash investing and financing activities:                     |  |                     |        |   |      |   |        |      |  |   |         |  
|Capital lease of property and equipment                                                  |  | $                   | 18     |   |      | $ | 21     |      |  | $ |        |  
|                                                                                         |  |                     |        |   |      |   |        |      |  |   |         |  

The accompanying notes are an integral part of these consolidated financial statements



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##### Table of Contents

MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

Note 1. Summary of Significant Accounting Policies

Basis of Presentation and Description of Business MPW Industrial Services Group, Inc. and its subsidiaries (the Company) provide
technically-based services, including industrial and chemical cleaning, facility maintenance and support services, industrial container cleaning and industrial process water purification. Such services are primarily provided at customer facilities.
The Company serves customers in numerous industries including automotive, utility, manufacturing, pulp and paper, steel and chemical primarily throughout the United States and Canada.

The accompanying consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. All material
intercompany transactions and balances have been eliminated in consolidation.

Revenue and Cost RecognitionThe Company primarily
derives its revenues from services under time and materials, fixed price and unit price contracts. Revenues from these contracts are recorded based on performance and efforts expended. Contract costs include all direct labor, material, travel,
subcontract and other direct and indirect project costs related to contract performance. Cost of services also includes all costs associated with operating equipment, including depreciation. Revenues derived from non-contract activities are recorded
as services are performed or goods are sold.

Allowance for Doubtful AccountsThe Companys allowance for doubtful
accounts is estimated to cover the risk of loss related to the Companys accounts receivable. The allowance for doubtful accounts is maintained at a level that the Company considers appropriate based on historical experience and other factors
that affect collectibility. The Company evaluates the collectibility of accounts receivable based on a combination of factors. In circumstances where the Company is aware of a specific customers inability to meet its financial obligations, the
Company records a specific reserve against amounts due to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers, the Company records reserves for bad debts based on the age of
the receivables and historical bad debt percentages.

Inventories Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out (FIFO) method.

Property and Equipment Property and equipment is recorded at cost and
includes expenditures that substantially increase the useful lives of the asset. Maintenance and repairs that do not improve or extend the useful life of the respective assets are expensed as incurred. Depreciation is calculated using the
straight-line method over the estimated useful lives of the respective assets.

Depreciation on the Companys property and equipment
has been computed based on the following useful lives:



|                                            |  |        
|------------------------------------------- |  | -------
|                                            |  | Years  
|Buildings and improvements                  |  | 2 to 30
|Motor vehicles and transportation equipment |  | 1 to 10
|Machinery and equipment                     |  | 1 to 10
|Furniture, fixtures and computer equipment  |  | 2 to 7 

Goodwill and Other Intangibles, Net The Company has classified as goodwill the excess of
the acquisition cost over the fair values of the net assets of businesses acquired. In accordance with Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, goodwill and other
intangible assets deemed to have indefinite lives are no longer amortized. Other intangible assets with identifiable definite lives continue to be amortized over their useful lives. Other intangible assets include patents, covenants not-to-compete
and customer lists and are amortized on a straight-line basis over periods ranging from 3 to 20 years.



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##### Table of Contents

MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

In accordance with SFAS No. 142, goodwill and
indefinite-lived intangible assets are tested for impairment annually or upon the occurrence of certain triggering events as defined by SFAS No. 142. SFAS No. 142 requires a two-step process for impairment testing of goodwill. The first
step identifies indications of impairment, while the second step, if necessary, measures the amount of the impairment, if any. The Company performs its annual impairment test during the fourth quarter of each year using the discounted cash flow
methodology. See Note 6.

Impairment of Long-Lived AssetsThe recoverability of long-lived assets, including intangible assets, is
evaluated whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, and if future undiscounted cash flows are believed insufficient to recover the remaining carrying value of the asset, the
carrying value is written down to fair value in the period the impairment is identified.

Other Current LiabilitiesTotal
other current liabilities of $6.8 million as of June 30, 2006 includes $3.5 million related to workers compensation and $1.6 million of income taxes payable. Total other current liabilities of $5.5 million as of June 30, 2005
includes $3.4 million related to workers compensation and $1.0 million of income taxes payable.

Insurance RiskThe Company is
self-insured for workers compensation, general and auto liability costs up to certain retention levels and purchases private insurance for claims in excess of those retention levels. The Company records its self-insurance liability based on
claims filed and an estimate of claims incurred but not yet reported.

Legal Costs. Legal expenses expected to be incurred in
connection with a SFAS No. 5 loss contingency are recognized in the period in which they are incurred.

Financial Instruments
Financial instruments consist primarily of cash, accounts receivable, accounts payable and long-term debt. The carrying value of all financial instruments at June 30, 2006 and 2005 approximated their fair value.

Risks and Uncertainties As of June 30, 2006, the Company operated approximately 35 branch locations in 14 states and Canada. The
Companys largest markets are the utility, manufacturing, steel and automotive markets, which comprise approximately 80% of the Companys revenues. Foreign operations represent approximately 4% of the Companys consolidated revenues
and consolidated net assets. Approximately 9% of the Companys consolidated labor force is covered by current collective bargaining agreements, which expire in 2007 and 2009. Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist primarily of trade accounts receivable.

Income Taxes The Company follows SFAS
No. 109, Accounting for Income Taxes. This accounting standard requires that the liability method be used in accounting for income taxes. Under this accounting method, deferred tax assets and liabilities are determined based on the
differences between the financial reporting basis and the tax basis of assets and liabilities and are measured using the enacted tax rates and laws that apply in the periods in which the deferred tax asset or liability is expected to be realized or
settled.

Stock Options As of June 30, 2006, the Company has two stock-based compensation plans, which are described in detail
in Note 12. On July 1, 2005, the Company adopted SFAS No. 123 (revised 2004), Share-Based Payment (SFAS No. 123(R)), which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation, and
supersedes Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations.

Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to employees, including grants of employee
stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is not an alternative. The Company has elected to adopt SFAS No. 123(R) using the modified prospective method, in which compensation cost
is recognized beginning with the effective date based on (i) the requirements of SFAS No. 123(R) for all share-based payments granted after the effective date and (ii) based on the requirements of SFAS No. 123 for all awards
granted to employees prior to the effective date of SFAS No. 123(R) that remain unvested on the effective date.



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##### Table of Contents

MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

There were 12,000, 167,000 and 47,000 stock options granted during
the years ended June 30, 2006, 2005 and 2004, respectively. The following table shows the impact of adopting SFAS No. 123(R) for the year ended June 30, 2006 (in thousands, except per share data):



|                                                              |  |   |       |  
|------------------------------------------------------------- |  | - | ----- | -
|Income from operations:                                       |  |   |       |  
|Before stock-based compensation                               |  | $ | 4,094 |  
|Less: Stock-based compensation recorded under SFAS No. 123(R) |  |   | (156  | )
|                                                              |  |   |       |  
|As reported                                                   |  | $ | 3,938 |  
|                                                              |  |   |       |  
|Income before provision for income taxes:                     |  |   |       |  
|Before stock-based compensation                               |  | $ | 2,914 |  
|Less: Stock-based compensation recorded under SFAS No. 123(R) |  |   | (156  | )
|                                                              |  |   |       |  
|As reported                                                   |  | $ | 2,758 |  
|                                                              |  |   |       |  
|Net income:                                                   |  |   |       |  
|Before stock-based compensation                               |  | $ | 1,828 |  
|Less: Stock-based compensation recorded under SFAS No. 123(R) |  |   | (98   | )
|                                                              |  |   |       |  
|As reported                                                   |  | $ | 1,730 |  
|                                                              |  |   |       |  
|Net income per share, basic and diluted:                      |  |   |       |  
|Before stock-based compensation                               |  | $ | 0.17  |  
|Less: Stock-based compensation recorded under SFAS No. 123(R) |  |   | (0.01 | )
|                                                              |  |   |       |  
|As reported                                                   |  | $ | 0.16  |  
|                                                              |  |   |       |  

The following table illustrates the pro forma effect on the net income (loss) and net income
(loss) per share for the years ended June 30, 2005 and 2004, if the Company had applied the fair value recognition provisions of SFAS No. 123:



|                                                                                                                   |  |                                       |      |   |      |   |       |  
|------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------- | ---- | - | ---- | - | ----- | -
|                                                                                                                   |  | Year Ended June 30,                   |     
|                                                                                                                   |  | 2005                                  |      |   | 2004 |  
|                                                                                                                   |  | (in thousands, except per share data) |     
|Net income (loss):                                                                                                 |  |                                       |      |   |      |   |       |  
|As reported                                                                                                        |  | $                                     | 467  |   |      | $ | (663  | )
|Less: Stock-based compensation determined under fair value based method for all awards, net of related tax effects |  |                                       | (90  | ) |      |   | (71   | )
|                                                                                                                   |  |                                       |      |   |      |   |       |  
|Pro forma net income (loss)                                                                                        |  | $                                     | 377  |   |      | $ | (734  | )
|                                                                                                                   |  |                                       |      |   |      |   |       |  
|Net income (loss) per share, basic and diluted:                                                                    |  |                                       |      |   |      |   |       |  
|As reported                                                                                                        |  | $                                     | 0.04 |   |      | $ | (0.06 | )
|                                                                                                                   |  |                                       |      |   |      |   |       |  
|Pro forma                                                                                                          |  | $                                     | 0.03 |   |      | $ | (0.07 | )
|                                                                                                                   |  |                                       |      |   |      |   |       |  



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MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

For purposes of determining the stock-based compensation recorded
under SFAS No. 123(R) for the stock options granted in fiscal 2006 and the required pro forma information for fiscal 2005 and 2004, the following assumptions were used:



|                                                                                                              |  |                     |       |   |      |   |       |      |  |   |       |  
|------------------------------------------------------------------------------------------------------------- |  | ------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                                                                              |  | Year Ended June 30, |      
|                                                                                                              |  | 2006                |       |   | 2005 |   |       | 2004 | 
|Weighted-average fair value of options granted during the period using a Black-Scholes option valuation model |  | $                   | 1.24  |   |      | $ | 1.52  |      |  | $ | 1.06  |  
|                                                                                                              |  |                     |      
|Weighted-average assumptions used for grants:                                                                 |  |                     |       |   |      |   |       |      |  |   |       |  
|Risk-free interest rate                                                                                       |  |                     | 4.48  | % |      |   | 4.08  | %    |  |   | 3.80  | %
|Expected dividend yield                                                                                       |  |                     | 0.00  | % |      |   | 0.00  | %    |  |   | 0.00  | %
|Expected volatility                                                                                           |  |                     | 55.70 | % |      |   | 57.10 | %    |  |   | 44.00 | %
|Expected life of option (in years)                                                                            |  |                     | 7     |   |      |   | 7     |      |  |   | 7     |  

The risk-free rate is based on the United States Treasury yield curve at the time of the grant.
The expected dividend yield is zero as the Companys Credit Facility prohibits the payment of dividends. Expected volatilities are based on historical volatility since 2001 as the stock volatility prior to that time is not representative of the
volatility expected over the expected life of the options. The expected life of the options granted was represents an estimate of the length of time in years that the options granted are expected to be outstanding.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Companys employee stock options have characteristics significantly different
from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in managements opinion, the existing models do not necessarily provide a reliable single measure of the fair
value of its employee stock options.

Accumulated Other Comprehensive Income (Loss)SFAS No. 130, Reporting Comprehensive
Income, requires that an enterprise report the change in its equity during the period from non-owner sources as other comprehensive loss. In fiscal 2004, the Company adjusted the pay-fixed interest rate swaps to current market values through
other comprehensive income (loss). In fiscal 2005, the Company determined that it failed to qualify for hedge accounting treatment at inception of the interest rate swaps and therefore recognized the $0.2 million gain deferred in accumulated
comprehensive income in earnings. The gain (loss) recognized in fiscal 2006 and 2005 was reported in other income. Accumulated other comprehensive income at June 30, 2006 and 2005 was comprised of foreign currency translation adjustment.

Statement of Cash FlowsCash paid (refund received) for income taxes for fiscal 2006, 2005 and 2004 was $1.3 million, $1.0 million
and $0.7 million, respectively. Cash paid for interest was $1.0 million, $1.1 million and $1.1 million for fiscal 2006, 2005 and 2004, respectively.

Use of Estimates The preparation of the financial statements in conformity with U.S. Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the amounts
reported in the accompanying consolidated financial statements. Actual results could differ from those estimates.

ReclassificationsCertain amounts presented as of and for the years ended June 30, 2005 and 2004 have been reclassified to conform to the June 30, 2006 presentation.

Recently Adopted Accounting StandardsIn November 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 151, Inventory Costs. SFAS No. 151 amends the guidance
in Accounting Research Bulletin No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling cost and wasted material (spoilage). In addition, this Statement
requires that allocation of fixed production overhead to the costs of conversion be based on the normal capacity of the production facilities. The Company adopted this Statement on July 1, 2005. The adoption of this Statement had no impact on
the Companys financial position or results of operations.



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##### Table of Contents

MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

In December 2004, the FASB issued SFAS No. 153,
Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29. APB Opinion No. 29 is based on the principle that exchanges of nonmonetary assets should be measured on the fair value of the assets exchanged. The guidance in
that Opinion, however, included certain exceptions to that principle. This Statement amends APB Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for
exchanges of nonmonetary assets that do not have commercial substance. The Company adopted this Statement on July 1, 2005. The adoption of this Statement had no impact on the Companys financial position or results of operations.

Effect of Recent Accounting PronouncementsIn May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error
Correctionsa replacement of APB Opinion No. 20 and FASB Statement No. 3. This Statement replaces APB Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial
Statements, and changes the requirements for the accounting for and reporting of a change in accounting principle. This Statement applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting
pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal periods beginning after
December 15, 2005. The Company does not expect the adoption of this Statement to have a material impact on its financial position or results of operations.

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assetsan amendment of FASB Statement No. 140. This Statement amends SFAS No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the accounting for separately recognized servicing assets and servicing liabilities. SFAS No. 156 is effective at the beginning of the first
fiscal year beginning after September 15, 2006. The Company does not expect the adoption of this Statement to have a material impact on its financial position or results of operations.

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement
No. 109(FIN 48), which clarifies the accounting for uncertainty in tax positions. This Interpretation requires that the Company recognize in our financial statements, the impact of a tax position, if that position is more
likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting
principle recorded as an adjustment to opening retained earnings. The Company is currently evaluating the impact of adopting FIN 48 on the Companys financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This Statement defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles (GAAP) and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements.
Prior to this Statement, there were different definitions of fair value and limited guidance for applying those definitions in GAAP. In developing this Statement, the FASB considered the need for increased consistency and comparability in fair value
measurements and for expanded disclosures about fair value measurements. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The Company
does not expect the adoption of this Statement to have a material impact on its financial position or results of operations.

In September
2006, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 108, which expresses the SEC staffs views regarding the process of quantifying financial statement misstatements. The
SEC staff is aware of diversity in practice. For example, certain registrants do not consider the effects of prior year errors on current year financial statements, thereby allowing improper assets or liabilities to remain unadjusted. While these
errors may not be material if considered only in relation to the balance sheet, correcting the errors could be material to the current year income statement. The interpretations in SAB 108 are being issued to address diversity in practice in
quantifying financial statement misstatements and the potential under current practice for the build up of improper amounts on the balance sheet. Early application of the guidance in this FSP is encouraged in any report for an interim period of the
first fiscal year ending after November 15, 2006. The Company does not expect the adoption of this SAB to have a material impact on its financial position or results of operations.



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##### Table of Contents

MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

In September 2006, the FASB issued FASB Staff Position
(FSP) No. AUG AIR-1, Accounting for Planned Major Maintenance Activities. This FSP amends certain provisions in the AICPA Industry Audit Guide, Audits of Airlines (Airline Guide), and APB Opinion No. 28,
Interim Financial Reporting. The Airline Guide is the principal source of guidance on the accounting for planned major maintenance activities and is widely used by other industries. The Airline Guide permits four alternative methods of
accounting for planned major maintenance activities: direct expense, built-in overhaul, deferral and accrual (accrue-in-advance). This FSP prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities in
annual and interim financial reporting periods. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2006. The Company does not expect the adoption of this FSP to have a material impact on
its financial position or results of operations.

Note 2. Privatization of Company

On April 5, 2006, the Company announced that a Special Committee of its Board of Directors had reached an agreement in principle with the
Companys Chairman, Chief Executive Officer and President, Monte R. Black, to acquire the outstanding public shares of MPW not controlled by Mr. Black or his immediate family (the Black Family) for $2.55 per share. The Black
Family controlled approximately 59% of the outstanding shares of MPW. On April 14, 2006, the Company entered into an Agreement and Plan of Merger between the Company and Noir Acquisition Corporation (Noir Acquisition), a newly
created corporation controlled by Mr. Black.

On September 14, 2006, the shareholders of MPW approved the Agreement and Plan of
Merger between MPW and Noir Acquisition. On September 26, 2006, the going private merger of Noir Acquisition with and into MPW was completed. Effective with the completion of the merger, the Black Family owns 100% of MPW. Holders of
outstanding common shares of MPW not controlled by the Black Family, and who have not perfected their appraisal rights under Ohio law, will receive in cash, without interest, $2.55 per share.

On September 26, 2006, The NASDAQ Stock Market filed a Form 25 with the Securities and Exchange Commission (the SEC) to delist the
Companys Common Stock from the NASDAQ Global Market (NASDAQ). On October 10, 2006 the Company filed a Form 15 with the SEC to terminate the registration of the Common Stock and to suspend its SEC reporting obligations.

In addition, on September 27, 2006, the Company entered into a credit agreement with LaSalle Bank NA and The Huntington National Bank
to finance the going private merger and refinance the Companys current credit agreement. See Note 8  Long-Term Debt.

Note 3.
Investment in Affiliate

On July 18, 2000, the Company closed a transaction related to its then subsidiary, Pentagon Technologies
Group, Inc. (Pentagon), pursuant to a Recapitalization Agreement, dated as of April 25, 2000, by and among Pentagon, the Company, MPW Management Services Corp., Pentagon Merger Sub, Inc., Baird Capital Partners III Limited
Partnership, BCP III Special Affiliates Limited Partnership and BCP III Affiliates Fund Limited Partnership, as amended (the Recapitalization Agreement). Pursuant to the Recapitalization Agreement, Baird Capital Partners and certain of
its affiliates (BCP) invested in Pentagon, the Company sold a majority of its equity interest in Pentagon to BCP and Pentagons indebtedness to the Company was repaid. The Company retained an approximately 22% interest in the
capital stock of Pentagon.

As a result of the reduction in the Companys ownership of Pentagons capital stock, the Company
began accounting for its remaining investment in Pentagon under the equity method of accounting in fiscal 2001.



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MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

As a result of the full write-off of the Companys investment
in Pentagon at June 30, 2003 due to continued declines in operating results as well as the slowdown and uncertainty in the semi-conductor industry, the Company ceased recognizing its equity investment in the losses of Pentagon beginning in
fiscal 2004 as the Company had no further commitments to provide further financial support to Pentagon.

Note 4. Acquisitions

On November 22, 2004, the Company purchased substantially all of the net assets of Hubbells Cleaning Systems, Inc. and Fairbanks Mobile Wash,
Inc. (Hubbells and Fairbanks) for $860,000 in cash. Hubbells and Fairbanks specialize in environmental cleaning and facility management services, low-pressure hydroblasting and industrial wet and dry vacuum services. The
purchase price has been allocated to the acquired assets based on their estimated fair value at the date of the acquisition with $640,000 being recorded to other intangibles. The other intangibles include a non-compete agreement and non-contractual
customer relationship and are being amortized over five years. The Hubbells and Fairbanks results of operations are included in the Companys Industrial Cleaning segment from the acquisition date. Pro forma results, including the acquired
business since the beginning of the earliest period presented, would not be materially different than actual results.

On December 27,
2004, the Company purchased substantially all of the net assets of the jacket water cleaning business of Blasters, Inc. (Blasters) for $130,000 in cash, with a maximum of $200,000 of contingent consideration payable over a three-year
period, which is included in other accrued liabilities. Blasters provides jacket water cleaning services to gas transmission companies. The purchase price has been allocated to the acquired assets based on their estimated fair value at the date of
the acquisition with $265,000 being recorded to other intangibles. The other intangibles include a customer contract and non-contractual customer relationship and are being amortized over three to five years. The Blasters results of operations are
included in the Companys Industrial Cleaning segment from the acquisition date. Pro forma results, including the acquired business since the beginning of the earliest period presented, would not be materially different than actual results.

Note 5. Accounts Receivable

Accounts
receivable is summarized as follows:



|                                     |  |                |        |   |      |   |        |  
|------------------------------------ |  | -------------- | ------ | - | ---- | - | ------ | -
|                                     |  | June 30,       |       
|                                     |  | 2006           |        |   | 2005 |  
|                                     |  | (in thousands) |       
|Accounts receivable                  |  | $              | 19,635 |   |      | $ | 17,586 |  
|Less allowance for doubtful accounts |  |                | (408   | ) |      |   | (863   | )
|                                     |  |                |        |   |      |   |        |  
|                                     |  | $              | 19,227 |   |      | $ | 16,723 |  
|                                     |  |                |        |   |      |   |        |  

The following is a summary of activity in the allowance for doubtful accounts:



|                                  |  |                     |      |   |      |   |       |      |  |   |        |  
|--------------------------------- |  | ------------------- | ---- | - | ---- | - | ----- | ---- |  | - | ------ | -
|                                  |  | Year Ended June 30, |     
|                                  |  | 2006                |      |   | 2005 |   |       | 2004 | 
|                                  |  | (in thousands)      |     
|Beginning balance                 |  | $                   | 863  |   |      | $ | 1,297 |      |  | $ | 2,435  |  
|Provision (benefit) for bad debts |  |                     | (122 | ) |      |   | (105  | )    |  |   | 1,536  |  
|Account write-offs, net           |  |                     | (333 | ) |      |   | (329  | )    |  |   | (2,674 | )
|                                  |  |                     |      |   |      |   |       |      |  |   |        |  
|Ending balance                    |  | $                   | 408  |   |      | $ | 863   |      |  | $ | 1,297  |  
|                                  |  |                     |      |   |      |   |       |      |  |   |        |  



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MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

Note 6. Property and Equipment

Property and equipment is summarized as follows:



|                                            |  |                |         |   |      |   |         |  
|------------------------------------------- |  | -------------- | ------- | - | ---- | - | ------- | -
|                                            |  | June 30,       |        
|                                            |  | 2006           |         |   | 2005 |  
|                                            |  | (in thousands) |        
|Land and buildings                          |  | $              | 11,227  |   |      | $ | 10,719  |  
|Motor vehicles and transportation equipment |  |                | 47,722  |   |      |   | 47,918  |  
|Machinery and equipment                     |  |                | 29,447  |   |      |   | 28,118  |  
|Leasehold improvements                      |  |                | 5,266   |   |      |   | 5,195   |  
|Furniture, fixtures and computer equipment  |  |                | 3,445   |   |      |   | 2,989   |  
|Construction in progress                    |  |                | 1,381   |   |      |   | 1,918   |  
|                                            |  |                |         |   |      |   |         |  
|                                            |  |                | 98,488  |   |      |   | 96,857  |  
|Less accumulated depreciation               |  |                | (70,837 | ) |      |   | (68,665 | )
|                                            |  |                |         |   |      |   |         |  
|                                            |  | $              | 27,651  |   |      | $ | 28,192  |  
|                                            |  |                |         |   |      |   |         |  

During the fourth quarter of fiscal 2006, the Company recognized a $0.4 million impairment charge
related to property and equipment of its Recovery Technologies reporting unit as a result of continued operating and cash flow losses. The impairment charge was recorded in other general expenses and was based on a purchase offer and market
appraisal.

Note 7. Goodwill and Other Intangibles

The carrying amount of goodwill for the years ended June 30, 2006 and 2005 is $5.5 million and is related to the Industrial Cleaning segment.

Other intangibles are summarized as follows:



|                                 |  |                     |        |                         |               |        |                     |  |                         |        |  |   |        |  
|-------------------------------- |  | ------------------- | ------ | ----------------------- | ------------- | ------ | ------------------- |  | ----------------------- | ------ |  | - | ------ | -
|                                 |  | June 30, 2006       |        |                         | June 30, 2005 |       
|                                 |  | GrossCarryingAmount |        | AccumulatedAmortization |               |        | GrossCarryingAmount |  | AccumulatedAmortization |       
|                                 |  | (in thousands)      |       
|Amortized intangible assets:     |  |                     |        |                         |               |        |                     |  |                         |        |  |   |        |  
|Customer relationships and lists |  | $                   | 9,074  |                         | $             | (3,675 | )                   |  | $                       | 9,074  |  | $ | (3,090 | )
|Patents                          |  |                     | 1,393  |                         |               | (1,102 | )                   |  |                         | 1,393  |  |   | (963   | )
|Non-compete agreements           |  |                     | 510    |                         |               | (441   | )                   |  |                         | 510    |  |   | (421   | )
|                                 |  |                     |        |                         |               |        |                     |  |                         |        |  |   |        |  
|                                 |  | $                   | 10,977 |                         | $             | (5,218 | )                   |  | $                       | 10,977 |  | $ | (4,474 | )
|                                 |  |                     |        |                         |               |        |                     |  |                         |        |  |   |        |  

During the fourth quarter of fiscal 2005, the Company recognized a $26 thousand impairment charge
related to a customer list as a result of a decline in expected revenues. The impairment charge was reported in selling, general and administrative expenses and related to the Industrial Cleaning segment.



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MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

Amortization expense related to other intangibles was $0.7
million, $0.7 million and $0.6 million for the years ended June 30, 2006, 2005 and 2004, respectively. Estimated amortization expense for the next five fiscal years is as follows:



|                                 |  |                              |    
|-------------------------------- |  | ---------------------------- | ---
|                                 |  | EstimatedAmortizationExpense
|                                 |  | (in thousands)              
|For the year ended June 30, 2007 |  | $                            | 744
|For the year ended June 30, 2008 |  |                              | 710
|For the year ended June 30, 2009 |  |                              | 547
|For the year ended June 30, 2010 |  |                              | 458
|For the year ended June 30, 2011 |  |                              | 402

Note 8. Long-Term Debt

Long-term debt is summarized as follows:



|                          |  |                |        |      |   |       
|------------------------- |  | -------------- | ------ | ---- | - | ------
|                          |  | June 30,      
|                          |  | 2006           |        | 2005
|                          |  | (in thousands)
|Credit facility           |  | $              | 14,400 |      | $ | 17,600
|Capital lease obligations |  |                | 9      |      |   | 12    
|Other notes payable       |  |                | 10     |      |   | 32    
|                          |  |                |        |      |   |       
|                          |  |                | 14,419 |      |   | 17,644
|Less current maturities   |  |                | 317    |      |   | 1,234 
|                          |  |                |        |      |   |       
|                          |  | $              | 14,102 |      | $ | 16,410
|                          |  |                |        |      |   |       

In June 2002, the Company entered into a credit agreement with its principal banks (the
Credit Facility) with $35.0 million of revolving credit availability for a three-year period and a $6.0 million three-year term loan to be repaid in quarterly installments of $0.3 million. Effective June 30, 2005, the Company
amended its Credit Facility and reduced the revolving credit availability to $27.0 million, which is subject to further periodic reduction of $0.3 million per quarter commencing on March 31, 2007. The amendment also extended the Credit
Facilitys term loan expiration from April 1, 2006 to December 31, 2006 and the revolving credit facilitys expiration from April 1, 2006 to January 1, 2008, at which time the principal balance outstanding, together
with all accrued interest will become immediately due and payable. As of June 30, 2006, outstanding borrowings under the Credit Facility were $14.4 million.

As of June 30, 2006, excluding outstanding borrowings and letters of credit, there was $8.0 million available under the Credit Facility. There were $4.9 million and $5.4 million of unused letters of credit
outstanding under the Credit Facility at June 30, 2006 and 2005, respectively. The weighted average interest rate for the Credit Facility was 5.63% for the year ended June 30, 2006.



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MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

On September 27, 2006, the Company entered into a credit
agreement with LaSalle Bank NA and The Huntington National Bank (the New Credit Facility) to finance the going private merger and refinance the Companys Credit Facility. The New Credit Facility consists of the following
senior secured credit facilities:



| |  |  | Revolving Credit Facility. The New Credit Facility has $17.0 million of revolving credit availability with a subfacility of $5.0 million for letters of credit. Any
outstanding balance will be due and payable on September 30, 2011. As of September 27, 2006, outstanding borrowings under the revolving credit facility were $7.5 million.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Equipment Term Loan. The New Credit Facility has a $13.5 million five-year equipment term loan. The principal amount of the equipment term loan will amortize as follows:
equal quarterly payments totaling $2.0 million in year one; $2.2 million in year two; $2.4 million in year three; $2.6 million in year four and $2.1 million in year five, with the remaining balance due and payable on September 30, 2011.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Real Estate Term Loan. The New Credit Facility has a $6.0 million five-year real estate term loan commitment, which will be reduced by the collateral value of any real
property owned by the Company for which certain documents have not been delivered at the closing of the financing and reduced by the collateral value of any real property owned the Company as of the closing to the extent such real property is sold
or otherwise transferred. With a real estate term loan of $6.0 million, the outstanding balance on the loan will be amortized in equal quarterly payments of $100,000 each, with the remaining balance due and payable on September 30, 2011;
however, the required principal payments will be reduced if the real estate term loan commitment is reduced. As of the closing of the financing on September 27, 2006, the real estate term loan commitment and outstanding principal was $5.6
million.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The New Credit Facility is secured by substantially all of the Companys assets and is available for general
corporate purposes, including working capital, capital expenditures and acquisitions. Borrowings under the New Credit Facility currently bear interest at the Eurodollar market rate or Prime rate plus the applicable margin rate of 2.75%. The Company
also pays a commitment fee of 0.50% for unused portions of the New Credit Facility. The interest rate is subject to change based on interest rate formulas tied to the ratio of consolidated funded debt to earnings before interest, taxes, depreciation
and amortization. Availability of borrowing is subject to the maintenance of a minimum level of earnings before interest, taxes, depreciation and amortization, certain levels of fixed charge coverage and maintenance of a specific ratio of funded
debt to earnings before interest, taxes, depreciation and amortization. The New Credit Facility also contains covenants that limit the payment of cash dividends to an amount not to exceed the quarterly estimated income tax payments required to be
made by each shareholder.

The Company had two pay-fixed interest rate swap agreements as a hedge against the interest rate risk associated
with borrowing at a variable rate, which matured in June 2006. The objective of the hedge was to eliminate the variability of cash flows related to interest rate payments on the Companys variable rate debt. Through their expiration on
June 15, 2006, the swap agreements had a notional amount of $8.0 million and $10.0 million and effectively locked in a portion of the Companys variable rate revolving credit liability at fixed rates of 2.61% and 2.80%, respectively, plus
the Companys applicable margin. These swap agreements were accounted for as cash flow hedges, as defined under SFAS No. 133, Accounting for Derivative and Hedging Activities. In fiscal 2004, the Company adjusted the pay-fixed
interest rate swaps to current market values through other comprehensive income (loss). In fiscal 2005, the Company determined that it failed to qualify for hedge accounting treatment at inception of the interest rate swaps and therefore recognized
the $0.2 million gain deferred in accumulated comprehensive income in earnings. The gain (loss) recognized in fiscal 2006 and 2005 was reported in other income (expense).

An asset of $0.2 million was recognized in the consolidated financial statements at June 30, 2005 for the mark-to-market adjustment on the interest rate swap contracts.

The Company has one note payable with a total outstanding balance of $10 thousand at June 30, 2006. Payments on the note payable are made monthly
with a maturity date in fiscal 2008. The Company also has a capital lease obligation with a total outstanding balance of $9 thousand at June 30, 2006, which matures during fiscal 2007.



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MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

The aggregate maturities of long-term debt for the five years
ending June 30 are: 2007, $0.3 million; 2008, $14.1 million; and thereafter, $0.

Note 9. Lease Commitments

The Company leases certain land, buildings, equipment and aircraft under non-cancelable operating leases with third parties and with entities controlled
by its principal shareholder and Chief Executive Officer. See Note 14  Related Party Transactions.

The aggregate minimum rent
commitment under non-cancelable operating leases with lease terms in excess of one year are as follows:



|                                    |  |                 |       |               |   |  
|----------------------------------- |  | --------------- | ----- | ------------- | - | -
|                                    |  | OperatingLeases |       | CapitalLeases
|                                    |  | (in thousands) 
|2007                                |  | $               | 2,486 |               | $ | 9
|2008                                |  |                 | 1,903 |               |   | 
|2009                                |  |                 | 1,641 |               |   | 
|2010                                |  |                 | 725   |               |   | 
|2011                                |  |                 | 78    |               |   | 
|Later years                         |  |                 | 45    |               |   | 
|                                    |  |                 |       |               |   |  
|Minimum lease payments              |  | $               | 6,878 |               |   | 9
|                                    |  |                 |       |               |   |  
|Less: Amounts representing interest |  |                 |       |               |   | 
|                                    |  |                 |       |               |   |  
|Capital lease obligations           |  |                 |       |               | $ | 9
|                                    |  |                 |       |               |   |  

Rental expense related to all operating leases was approximately $3.0 million, $2.8 million and
$2.8 million for fiscal 2006, 2005 and 2004, respectively.

The Company is also a guarantor of a lease agreement related to a facility operated by its
former subsidiary, Pentagon. See Note 15  Commitments and Contingencies.

Note 10. Income Taxes

The components of the provision (benefit) for income taxes are as follows:



|                             |  |                     |       |   |      |   |       |      |  |   |      |  
|---------------------------- |  | ------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ---- | -
|                             |  | Year Ended June 30, |      
|                             |  | 2006                |       |   | 2005 |   |       | 2004 | 
|                             |  | (in thousands)      |      
|Current:                     |  |                     |       |   |      |   |       |      |  |   |      |  
|Federal                      |  | $                   | 2,085 |   |      | $ | 1,065 |      |  | $ | 69   |  
|International                |  |                     | (73   | ) |      |   | 4     |      |  |   | 24   |  
|State and local              |  |                     |      |   |      |   | 5     |      |  |   | 76   |  
|                             |  |                     |       |   |      |   |       |      |  |   |      |  
|                             |  |                     | 2,012 |   |      |   | 1,074 |      |  |   | 169  |  
|                             |  |                     |      
|Deferred                     |  |                     | (984  | ) |      |   | (671  | )    |  |   | (401 | )
|Change in Ohio state tax law |  |                     |      |   |      |   | (265  | )    |  |   |     |  
|                             |  |                     |       |   |      |   |       |      |  |   |      |  
|                             |  | $                   | 1,028 |   |      | $ | 138   |      |  | $ | (232 | )
|                             |  |                     |       |   |      |   |       |      |  |   |      |  



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MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

Differences arising between the provision (benefit) for income
taxes related to continuing operations and the amount computed by applying the statutory federal income tax rate to income (loss) from continuing operations before income taxes are as follows:



|                                                                |  |                     |   |  |       |   |  |      |  
|--------------------------------------------------------------- |  | ------------------- | - |  | ----- | - |  | ---- | -
|                                                                |  | Year Ended June 30, |  
|                                                                |  | 2006                |   |  | 2005  |   |  | 2004 |  
|Federal tax at statutory rate                                   |  | 34.0                | % |  | 34.0  | % |  | 34.0 | %
|State and local taxes (net of federal benefit)                  |  |                    |   |  | 0.5   |   |  | 2.4  |  
|Change in Ohio state tax law                                    |  |                    |   |  | (43.5 | ) |  |     |  
|Prior period adjustment to deferred income taxes                |  | (4.3                | ) |  | 15.1  |   |  |     |  
|Meals and entertainment                                         |  | 2.2                 |   |  | 10.2  |   |  | (8.3 | )
|Non-deductible aircraft expense                                 |  | 3.4                 |   |  |      |   |  |     |  
|Income tax reserve adjustment                                   |  | 3.3                 |   |  |      |   |  |     |  
|Other non-deductible expenses and foreign tax rate differential |  | (1.3                | ) |  | 6.5   |   |  | (2.1 | )
|                                                                |  |                     |   |  |       |   |  |      |  
|                                                                |  | 37.3                | % |  | 22.8  | % |  | 26.0 | %
|                                                                |  |                     |   |  |       |   |  |      |  

The significant components of the Companys deferred tax assets and liabilities are as
follows:



|                                                     |  |                |        |   |      |   |        |  
|---------------------------------------------------- |  | -------------- | ------ | - | ---- | - | ------ | -
|                                                     |  | June 30,       |       
|                                                     |  | 2006           |        |   | 2005 |  
|                                                     |  | (in thousands) |       
|Deferred tax assets:                                 |  |                |        |   |      |   |        |  
|Bad debt reserves                                    |  | $              | 137    |   |      | $ | 275    |  
|Allowance for revenue adjustments                    |  |                | 234    |   |      |   |       |  
|Workers compensation reserves                        |  |                | 1,173  |   |      |   | 1,159  |  
|Capital loss carryforward                            |  |                |       |   |      |   | 3,046  |  
|Net state operating loss carryforwards               |  |                | 1,327  |   |      |   | 954    |  
|Investment in affiliate                              |  |                | 1,894  |   |      |   | 1,894  |  
|Loss on sale of subsidiary and other liabilities     |  |                | 157    |   |      |   | 15     |  
|Intangible assets                                    |  |                | 338    |   |      |   | 684    |  
|Other                                                |  |                | 455    |   |      |   | 234    |  
|                                                     |  |                |        |   |      |   |        |  
|                                                     |  |                | 5,715  |   |      |   | 8,261  |  
|Deferred tax asset valuation allowance               |  |                | (3,186 | ) |      |   | (5,894 | )
|                                                     |  |                |        |   |      |   |        |  
|Total deferred tax assets net of valuation allowance |  | $              | 2,529  |   |      | $ | 2,367  |  
|                                                     |  |                |        |   |      |   |        |  
|Deferred tax liabilities:                            |  |                |        |   |      |   |        |  
|Property and equipment                               |  | $              | (1,629 | ) |      | $ | (2,490 | )
|Interest rate swap                                   |  |                |       |   |      |   | (63    | )
|Prepaid expenses                                     |  |                | (458   | ) |      |   | (356   | )
|                                                     |  |                |        |   |      |   |        |  
|Total deferred tax liabilities                       |  | $              | (2,087 | ) |      | $ | (2,909 | )
|                                                     |  |                |        |   |      |   |        |  
|Net deferred tax asset (liabilities)                 |  | $              | 442    |   |      | $ | (542   | )
|                                                     |  |                |        |   |      |   |        |  

On June 30, 2005, the State of Ohio enacted various changes to its tax laws. One change is
the phase out of the Ohio franchise tax, which is generally based on federal taxable income. This phase out is scheduled to occur at 20% per year for 2006 through 2010. The Companys accrual for income taxes for fiscal 2005 included 100%
of the expected Ohio franchise tax liability. In addition, as a result of the various changes to Ohios tax laws, the Company has reduced the rate at which it records its deferred taxes.



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MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

At June 30, 2006, the Company had tax benefits for state net
operating loss carryforwards of $24.2 million that expire from 2007 to 2026. At June 30, 2006, a valuation allowance of $1.3 million has been provided for substantially all of the state operating loss carryforwards. The Company has determined
that it is more likely than not that there will not be sufficient taxable income in future years to utilize all of the net operating loss carryforwards.

At June 30, 2006, the Company had a $1.9 million deferred tax asset related to its investment in its former subsidiary, Pentagon. At June 30, 2006, a full valuation allowance has been provided for the
deferred tax asset as the Company has determined that it is more likely than not that there will not be sufficient capital gains or dividend distributions in future years to realize the benefit of the deferred tax asset.

Deferred taxes are not provided on unremitted earnings of subsidiaries outside the United States because it is expected that the earnings will be
permanently reinvested. Such earnings may become taxable upon the sale or liquidation of these subsidiaries or upon remittance of dividends.

The Company establishes reserves when, despite its belief that its tax return positions are fully supportable, it believes that certain positions are likely to be challenged and may result in an unfavorable outcome. The Company adjusts
these reserves in light of changing facts and circumstances, such as the progress of a tax audit. A number of years may elapse before a particular tax matter, for which the company has established a reserve, is audited by the IRS or state agencies
and resolved. While it is often difficult to predict the final outcome or the timing of resolution, the Company believes that its reserves reflect the probable outcome of known tax contingences. An unfavorable settlement of any particular tax matter
would require the use of the Companys cash. A favorable settlement of any particular tax matter would be recognized as a reduction to the Companys effective tax rate in the year of resolution.

Note 11. Employee Benefits

The Company sponsors a
Savings Plan, which qualifies for tax-deferred contributions under Section 401(k) of the Internal Revenue Code (the 401(k) Plan), that covers substantially all employees of the Company who are over 21 years of age with at least
three months of continuous service. Contributions by eligible employees are matched at a rate of 50% of the first 6% of the employees contributed earnings. The Company may make additional discretionary contributions to the 401(k) Plan.
Matching contributions approximated $0.3 million for each of the fiscal years 2006, 2005 and 2004.

Note 12. Stock Option Plans

1994 Stock Option Plan The Companys 1994 Stock Option Plan (the 1994 Plan) provided for the granting of up to 1,000,000 stock
options to key management personnel. Effective with the Companys initial public offering in fiscal 1998, no additional options will be granted under the 1994 Plan and the Companys repurchase obligation upon exercise of stock options was
terminated. As of June 30, 2006, 72,000 options were outstanding at a weighted average exercise price of $3.23 per share.

1997
Stock Option PlanOn November 15, 1997, the Company adopted the 1997 Stock Option Plan (the 1997 Plan), which provides for the granting of up to 1,200,000 stock options to officers, key employees, consultants and directors of
the Company. Any options granted that lapse or are cancelled are available for re-grant under the terms of the 1997 Plan. Stock option grants may be in the form of incentive stock options, non-qualified options, or a combination thereof. The
exercise price of the stock options granted will be determined by the Compensation Committee of the Board of Directors of the Company which, in the case of incentive stock options, shall be equal to or greater than the market value per share on the
date of grant and, in the case of non-qualified options shall not be less than 85% of the market value per share at the date of grant. The stock options vest over a period of time determined by the Compensation Committee and expire after ten years
from the date of grant; however, the Compensation Committee may declare the options immediately exercisable in full upon any change in control of the Company. Non-employee directors shall be granted 2,000 non-qualified options at the first annual
shareholders meeting subsequent to the adoption of the 1997 Plan at which he or she is elected a director, and 1,000 options shall be granted at each subsequent annual shareholders meeting at which he or she is re-elected as a director. Additional
options may be granted to the non-employee directors at the discretion of the Compensation Committee. The non-employee



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##### Table of Contents

MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

director option grants vest after one full year from the date of grant and expire
ten years from the date of grant. Options covering 1,520,750 shares of common stock have been granted, of which 684,650 options have been forfeited. At June 30, 2006, there were 808,250 options outstanding at a weighted average exercise price
of $4.49 per share.

The following table summarizes stock option activity for the years ended June 30, 2006, 2005 and 2004:



|                             |  |                                      |   |  |                                           
|---------------------------- |  | ------------------------------------ | - |  | ------------------------------------------
|                             |  | Number ofOptions (#)                 |   |  | WeightedAverageExercise PricePer Share ($)
|                             |  | (in thousands, except pershare data)
|Outstanding at June 30, 2003 |  | 1,710                                |   |  | 4.74                                      
|Granted                      |  | 47                                   |   |  | 2.06                                      
|Exercised                    |  | (19                                  | ) |  | 1.85                                      
|Forfeited                    |  | (955                                 | ) |  | 4.46                                      
|                             |  |                                      |   |  |                                           
|Outstanding at June 30, 2004 |  | 783                                  |   |  | 5.00                                      
|Granted                      |  | 167                                  |   |  | 2.49                                      
|Exercised                    |  | (8                                   | ) |  | 1.85                                      
|Forfeited                    |  | (30                                  | ) |  | 6.57                                      
|                             |  |                                      |   |  |                                           
|Outstanding at June 30, 2005 |  | 912                                  |   |  | 4.50                                      
|Granted                      |  | 12                                   |   |  | 2.04                                      
|Forfeited                    |  | (44                                  | ) |  | 6.08                                      
|                             |  |                                      |   |  |                                           
|Outstanding at June 30, 2006 |  | 880                                  |   |  | 4.39                                      
|                             |  |                                      |   |  |                                           

The following table summarizes information about stock options outstanding at June 30, 2006:



|                            |  |                                                |  |                                                 |  |                                  |  |             |  |                                 
|--------------------------- |  | ---------------------------------------------- |  | ----------------------------------------------- |  | -------------------------------- |  | ----------- |  | --------------------------------
|                            |  |                                                |  | Options Outstanding                             |  | Options Exercisable             
|Range of Exercise Price ($) |  | Options (#)                                    |  | WeightedAverageRemainingContractualLife (years) |  | WeightedAverageExercisePrice ($) |  | Options (#) |  | WeightedAverageExercisePrice ($)
|                            |  | (in thousands, except per share and year data) |  |                                                 |  |                                 
|1.25-2.50                   |  | 554                                            |  | 6.6                                             |  | 2.05                             |  | 416         |  | 1.94                            
|2.51-3.23                   |  | 72                                             |  | 1.0                                             |  | 3.23                             |  | 72          |  | 3.23                            
|8.63-13.13                  |  | 254                                            |  | 1.8                                             |  | 9.81                             |  | 254         |  | 9.81                            
|                            |  |                                                |  |                                                 |  |                                  |  |             |  |                                 
|                            |  | 880                                            |  | 4.0                                             |  | 4.39                             |  | 742         |  | 4.76                            
|                            |  |                                                |  |                                                 |  |                                  |  |             |  |                                 

As of June 30, 2006, the total compensation cost related to nonvested stock options was $0.2
million, which was expected to be recognized over the weighted-average period of 2.3 years. However, as a result of the privatization of the Company as discussed in Note 2, all unvested stock options automatically vested and the Company will be
required to pay the difference between the offer price of $2.55 per share and the exercise price of the stock options. The impact will be a $0.3 million settlement payment. In addition the Company will recognize $0.1 million of compensation expense
upon the automatic vesting of the stock options.



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##### Table of Contents

MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

Note 13. Earnings (Loss) Per Share

The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except per share data):



|                                                                                                                  |  |                     |        |      |   |        |  |   |        |  
|----------------------------------------------------------------------------------------------------------------- |  | ------------------- | ------ | ---- | - | ------ |  | - | ------ | -
|                                                                                                                  |  | Year Ended June 30, |       
|                                                                                                                  |  | 2006                |        | 2005 |   | 2004   | 
|Numerator for basic and diluted earnings (loss) per share-Net income (loss)                                       |  | $                   | 1,730  |      | $ | 467    |  | $ | (663   | )
|                                                                                                                  |  |                     |        |      |   |        |  |   |        |  
|Denominator for basic earnings (loss) per share-weighted average common shares                                    |  |                     | 10,716 |      |   | 10,711 |  |   | 10,838 |  
|Effect of dilutive securities-Dilutive employee stock options                                                     |  |                     | 45     |      |   | 75     |  |   |       |  
|                                                                                                                  |  |                     |        |      |   |        |  |   |        |  
|Denominator for diluted earnings (loss) per share-adjusted weighted average common shares and assumed conversions |  |                     | 10,761 |      |   | 10,786 |  |   | 10,838 |  
|                                                                                                                  |  |                     |        |      |   |        |  |   |        |  
|Net income (loss) per share, basic and dilutive                                                                   |  | $                   | 0.16   |      | $ | 0.04   |  | $ | (0.06  | )
|                                                                                                                  |  |                     |        |      |   |        |  |   |        |  

Options to purchase 505,250 516,250, and 368,250 shares of common stock at a weighted average
price of $6.27, $6.52, and $8.52 per share, respectively, were outstanding during fiscal 2006, 2005 and 2004, respectively, but were not included in the computation of diluted earnings per share because the options exercise price was greater than
the average market price of the common shares and, therefore, the effect would be antidilutive. Options to purchase 415,000 shares of common stock at a weighted average price of $1.87 per share were outstanding during fiscal 2004, but were not
included in the computation of diluted earnings per share because the Company reported a net loss for the fiscal year ended June 30, 2004, therefore, the effect would be antidilutive.

Note 14. Related Party Transactions

The Company
rents certain land, property, buildings and an aircraft from entities controlled by its principal shareholder and Chief Executive Officer (CEO) under long-term lease agreements. The Company also periodically uses a ranch, which is owned
by an entity controlled by the CEO, for entertainment and overnight lodging of customers and other business associates. Total expenses related to these leases and to the ranch were $2.0 million, $2.0 million and $2.1 million for fiscal 2006, 2005
and 2004, respectively.

The Company provides, from time to time, certain fabrication-type services to Pro-Kleen Industrial Services, Inc.
(Pro-Kleen), a portable sanitation services company wholly-owned by the Companys principal shareholder and CEO. The Company charges Pro-Kleen for the cost of services it renders plus a markup. The amount of such charges for fiscal
years 2006, 2005 and 2004 were approximately $207,000, $298,000, and $212,000, respectively. These charges are for the use of parts and supplies and the use of certain of the Companys employees on certain projects as requested by Pro-Kleen.
These charges are generally treated as an offset to supplies, repairs and maintenance or labor expense. Accounts receivable related to these transactions were $0.1 million and $0.2 million at June 30, 2006 and 2005, respectively. During fiscal
2004, the Company also sold existing equipment to Pro-Kleen for cash proceeds of $204,000. The sale was reviewed and approved by the Companys Audit Committee.

These transactions are reviewed periodically by the Companys Audit Committee. Based on such review, the Company believes that these transactions are on terms at least as favorable as those that could be obtained
from an independent third party.



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##### Table of Contents

MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

Note 15. Commitments and Contingencies

The Company is a guarantor of a lease agreement related to a facility operated by its former subsidiary, Pentagon. The lease, on which rent is
approximately $30,000 per month, expires in October 2009. As of June 30, 2006, the Company believes its maximum potential liability is $1.2 million, payable only if Pentagon fails to comply with the lease terms, and subject to many factors,
including the landlords duty to mitigate, the validity of the guarantee and the like. The Company does not believe its liability under the guarantee meets the probability criteria under SFAS No. 5, Accounting for Contingencies.

The Company is subject to various claims and lawsuits in the ordinary course of its business. In the opinion of management, the outcome of
all claims and lawsuits, which is not clearly determinable at the present time, is either adequately covered by insurance, or will not, in the aggregate, have a material adverse effect upon the financial position or the results of future operations
of the Company.

Note 16. Segment Reporting

The Company operates under four separate segments that are integral to a wide variety of manufacturing processes. These four segments are Industrial Cleaning, Facility Maintenance and Support Services, Industrial Container Cleaning and
Industrial Process Water Purification and Chemical Cleaning. A discussion of each segment is set forth below.

Industrial Cleaning.
The Company provides industrial cleaning of critical operating equipment for industrial customers primarily at their facilities. The typical industries served by this segment include the automotive, utility, steel, pulp and paper, manufacturing and
construction industries. The Company provides its industrial cleaning services on a daily recurring basis, a project-by-project basis, as well as pursuant to longer-term arrangements. The Companys services principally include: dry vacuuming,
wet vacuuming, industrial power washing, water blasting, ultra-high pressure water blasting and cryojetic cleaning. These services have been provided for over 30 years. The Chemical Cleaning business unit of the Industrial Cleaning segment provides
chemical cleaning services on heat exchange equipment on a project-by-project basis primarily for customers in the utility, pulp and paper and manufacturing industries.

Facility Maintenance and Support Services. The Company provides support to customers ongoing maintenance of their facilities as well as cleaning services that help customers to maximize the performance of
their production processes through effective cleaning, leading to increased efficiency and productivity in their facilities.

Industrial
Container Cleaning. The Company believes that it is a leading container cleaner for automotive paint manufacturers in North America. The automotive industry uses paint resin containers (totes) in the vehicle painting process. Totes
are large portable stainless steel or aluminum containers that are filled with paint resin and are refilled after cleaning services are provided. The Company also provides container cleaning services to a small number of other industrial customers.
This segment uses patented cleaning systems to perform services from two primary processing facilities located in Detroit, Michigan and Cleveland, Ohio.

Industrial Process Water Purification. The Company provides pure feed water to customers primarily in the utility, manufacturing and automotive industries. The Company can also provide water purification
equipment on an emergency response basis when customers existing water purification systems are temporarily out of service or cannot meet the existing demand.

The performance of each segment is evaluated by key Company executives based primarily on the operating income of each segment. The accounting policies of the operating segments are the same as those outlined in Note
1 of the Consolidated Financial Statements. All material intercompany transactions and balances have been eliminated in consolidation. Expenses associated with the Companys corporate headquarters are fully allocated to the segments. Corporate
staff support services that are attributable to the operating segments are allocated based on each segments percentage of total revenues. General corporate expenses are allocated to each segment equally.



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MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)



|                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|----------------------------------------- |  | ------------------- | ------- | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                          |  | Year Ended June 30, |        
|                                          |  | 2006                |         |   | 2005 |   |        | 2004 | 
|                                          |  | (in thousands)      |        
|Revenue                                   |  |                     |         |   |      |   |        |      |  |   |        |  
|Industrial Cleaning                       |  | $                   | 65,266  |   |      | $ | 56,296 |      |  | $ | 54,224 |  
|Facility Maintenance and Support Services |  |                     | 20,119  |   |      |   | 17,814 |      |  |   | 15,997 |  
|Industrial Container Cleaning             |  |                     | 11,330  |   |      |   | 10,035 |      |  |   | 11,172 |  
|Industrial Water Process Purification     |  |                     | 10,146  |   |      |   | 7,834  |      |  |   | 7,395  |  
|Other                                     |  |                     | 894     |   |      |   | 1,319  |      |  |   | 337    |  
|                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|Total                                     |  | $                   | 107,755 |   |      | $ | 93,298 |      |  | $ | 89,125 |  
|                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|Depreciation and Amortization             |  |                     |         |   |      |   |        |      |  |   |        |  
|Industrial Cleaning                       |  | $                   | 4,048   |   |      | $ | 4,426  |      |  | $ | 5,062  |  
|Facility Maintenance and Support Services |  |                     | 252     |   |      |   | 242    |      |  |   | 265    |  
|Industrial Container Cleaning             |  |                     | 1,127   |   |      |   | 1,280  |      |  |   | 1,441  |  
|Industrial Water Process Purification     |  |                     | 1,786   |   |      |   | 1,711  |      |  |   | 1,882  |  
|Other (1)                                 |  |                     | 198     |   |      |   | 194    |      |  |   | 130    |  
|                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|Total                                     |  | $                   | 7,411   |   |      | $ | 7,853  |      |  | $ | 8,780  |  
|                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|Operating Income (Loss)                   |  |                     |         |   |      |   |        |      |  |   |        |  
|Industrial Cleaning                       |  | $                   | 1,140   |   |      | $ | (2,805 | )    |  | $ | (3,884 | )
|Facility Maintenance and Support Services |  |                     | 1,754   |   |      |   | 2,704  |      |  |   | 2,351  |  
|Industrial Container Cleaning             |  |                     | 1,683   |   |      |   | 1,697  |      |  |   | 2,171  |  
|Industrial Water Process Purification     |  |                     | 440     |   |      |   | 186    |      |  |   | 188    |  
|Other                                     |  |                     | (1,079  | ) |      |   | (287   | )    |  |   | (592   | )
|                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|Total                                     |  | $                   | 3,938   |   |      | $ | 1,495  |      |  | $ | 234    |  
|                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|Total Assets                              |  |                     |         |   |      |   |        |      |  |   |        |  
|Industrial Cleaning                       |  | $                   | 29,812  |   |      | $ | 29,724 |      |  | $ | 29,359 |  
|Facility Maintenance and Support Services |  |                     | 4,549   |   |      |   | 3,468  |      |  |   | 2,425  |  
|Industrial Container Cleaning             |  |                     | 10,394  |   |      |   | 11,138 |      |  |   | 12,329 |  
|Industrial Water Process Purification     |  |                     | 9,058   |   |      |   | 9,151  |      |  |   | 9,336  |  
|Other (2)                                 |  |                     | 9,901   |   |      |   | 8,758  |      |  |   | 11,242 |  
|                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|Total                                     |  | $                   | 63,714  |   |      | $ | 62,239 |      |  | $ | 64,691 |  
|                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|Capital Expenditures                      |  |                     |         |   |      |   |        |      |  |   |        |  
|Industrial Cleaning                       |  | $                   | 3,722   |   |      | $ | 3,460  |      |  | $ | 1,726  |  
|Facility Maintenance and Support Services |  |                     |        |   |      |   | 148    |      |  |   | 23     |  
|Industrial Container Cleaning             |  |                     | 60      |   |      |   | 116    |      |  |   | 106    |  
|Industrial Water Process Purification     |  |                     | 1,745   |   |      |   | 1,084  |      |  |   | 725    |  
|Other (2)                                 |  |                     | 1,231   |   |      |   | 278    |      |  |   | 1,099  |  
|                                          |  |                     |         |   |      |   |        |      |  |   |        |  
|Total                                     |  | $                   | 6,758   |   |      | $ | 5,086  |      |  | $ | 3,679  |  
|                                          |  |                     |         |   |      |   |        |      |  |   |        |  

---

|(1) | Other represents the depreciation and amortization related to operations not part of reportable segments.
|--- | ---------------------------------------------------------------------------------------------------------

|(2) | Other consists of assets and capital expenditures related to corporate and operations not part of a reportable segment.
|--- | -----------------------------------------------------------------------------------------------------------------------



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MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

Note 17. Selected Quarterly Financial Data (unaudited)



|                                                    |  |                                       |        |             |   |        |          |  |   |         |   |  |   |       
|--------------------------------------------------- |  | ------------------------------------- | ------ | ----------- | - | ------ | -------- |  | - | ------- | - |  | - | ------
|                                                    |  | Quarter Ended                        
|                                                    |  | September 30                          |        | December 31 |   |        | March 31 |  |   | June 30
|                                                    |  | (in thousands, except per share data)
|Fiscal 2006                                         |  |                                       |        |             |   |        |          |  |   |         |   |  |   |       
|Revenues                                            |  | $                                     | 25,286 |             | $ | 26,468 |          |  | $ | 26,091  |   |  | $ | 29,910
|Gross profit                                        |  |                                       | 5,295  |             |   | 5,411  |          |  |   | 4,761   |   |  |   | 7,043 
|Income (loss) from operations (1)                   |  |                                       | 1,079  |             |   | 884    |          |  |   | 288     |   |  |   | 1,687 
|Net income (loss) (1)                               |  |                                       | 537    |             |   | 330    |          |  |   | (49     | ) |  |   | 912   
|Net income (loss) per share, basic and dilutive (1) |  |                                       | 0.05   |             |   | 0.03   |          |  |   |        |   |  |   | 0.08  
|                                                    |  |                                       |        |            
|Fiscal 2005                                         |  |                                       |        |             |   |        |          |  |   |         |   |  |   |       
|Revenues                                            |  | $                                     | 22,825 |             | $ | 23,035 |          |  | $ | 22,732  |   |  | $ | 24,706
|Gross profit                                        |  |                                       | 4,787  |             |   | 4,669  |          |  |   | 3,685   |   |  |   | 5,089 
|Income (loss) from operations                       |  |                                       | 446    |             |   | 211    |          |  |   | (310    | ) |  |   | 1,148 
|Net income (loss) (2)                               |  |                                       | 97     |             |   | (23    | )        |  |   | (417    | ) |  |   | 810   
|Net income (loss) per share, basic and dilutive (2) |  |                                       | 0.01   |             |   |       |          |  |   | (0.04   | ) |  |   | 0.07  

---

|(1) | The quarter ended June 30, 2006 includes a $0.4 million impairment charge for Recovery Technologies machinery and equipment.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(2) | The quarter ended June 30, 2005 includes a $0.2 million adjustment to recognize the mark-to-market on interest rate swaps through earnings and a $0.1 million charge for an
adjustment to deferred income taxes. A portion of the mark-to-market adjustment and adjustment to deferred income taxes relate to a prior period but were not deemed material to the current or prior periods presented.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

MPW INDUSTRIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Years Ended June 30, 2006, 2005 and 2004)

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

On September 15, 2004, the Audit Committee of the Board of Directors of MPW Industrial Services Group, Inc. (the Company) dismissed its independent registered public accounting firm, Ernst & Young LLP, and
determined to appoint KPMG LLP as its new independent registered public accounting firm to audit the Companys consolidated financial statements for the years ending June 30, 2006 and 2005. The change was the result of a selection process
that considered quantitative and qualitative attributes of several accounting firms. Ernst & Young LLPs dismissal was effective on September 24, 2004.

The report of Ernst & Young LLP on the consolidated financial statements for the year ended June 30, 2004 did not contain any adverse opinion or disclaimer of opinion and was not qualified or modified as
to uncertainty, audit scope or accounting principles.

In connection with its audit for the year ended June 30, 2004 and through September 24,
2004, there were no disagreements between the Company and Ernst & Young on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure (as defined in Item 304(a)(1)(iv) of Regulation
S-K), and there were no reportable events (as defined by Item 304(a)(1)(v) of Regulation S-K).

Item 9A.Controls and Procedures



| | (a) | Evaluation of disclosure controls and procedures.
| | --- | -------------------------------------------------

The
Companys chief executive officer and chief financial officer, after evaluating the effectiveness of the Companys disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and
15d-15(e)) as of the end of the period covered by this Annual Report on Form 10-K, have concluded that as of that date, the Companys disclosure controls and procedures were effective and were designed to ensure that material information
relating to the Company and the Companys consolidated subsidiaries would be made known to them by others within those entities.

It
should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions, regardless how remote. In addition, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurances that the objectives of the control system are met. Therefore, the Company does
not expect these disclosure controls to prevent all error and fraud.



| | (b) | Changes in internal controls.
| | --- | -----------------------------

No change in the
Companys internal control over financial reporting occurred during the Companys last fiscal quarter that materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.

Item 9B.Other Information

None.



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##### Table of Contents

PART III

Item 10.Directors and Executive Officers

Directors

The following table sets forth information regarding each member of the Board of Directors. Certain biographical information, as of October 13, 2006,
concerning the age, principal occupation, other affiliations and business experience during the last five years for each of the persons nominated for election to the Board of Directors has been furnished to the Company by such nominee and is
described below the table.



|                 |  |     |  |                                      |  |                                                                          
|---------------- |  | --- |  | ------------------------------------ |  | -------------------------------------------------------------------------
|Name             |  | Age |  | Number of Yearsof Service asDirector |  | Position                                                                 
|Monte R. Black   |  | 56  |  | 34                                   |  | Chairman of the Board of Directors, Chief Executive Officer and President
|Pete A. Klisares |  | 70  |  | 8                                    |  | Director                                                                 
|Timothy A. Walsh |  | 45  |  | 12                                   |  | Director                                                                 

Monte R. Black originally founded the Company in 1972 and has served as Chief Executive
Officer and Chairman of the Board of Directors since that time. Mr. Black was appointed President in June 2001 and has served in that capacity since that time. From June 2001 through June 2004, Mr. Black also served as Chief Operating
Officer of the Company.

Pete A. Klisares has served as a Director of the Company since February 1998. Mr. Klisares is a
principal of MIGG Capital, an Ohio-based venture capital company. Mr. Klisares previously served as President, Chief Operating Officer and a director of Karrington Health, Inc., a provider of assisted living facilities, from August 1997 to June
1999. Mr. Klisares serves as a director of Vistacare, Inc., a hospice company.

Timothy A. Walsh has served as a Director of
the Company since September 1994. Mr. Walsh has served as President and Chief Executive Officer of Farm Family Holdings, Inc., a holding company that owns property and casualty insurance companies and a life insurance company, since February
2003 and Executive Vice President, Chief Financial Officer and Treasurer of Farm Family Holdings, Inc. since July 1999. Mr. Walsh also serves as a director of Farm Family Holdings, Inc. Prior to the going-private merger, Mr. Walsh served
as Chairman of the Audit Committee and qualified as an audit committee financial expert.

Each Director will hold office until
his successor is duly elected and qualified, or until his earlier death, resignation or removal from office.

Effective with the
going-private merger, the entire Board of Directors is acting as the Companys audit committee.

Executive Officers

For information regarding the executive officers of the Company required by Item 401 of Regulation S-K, see Supplemental Item.Executive
Officers of the Company in Part I of this Form 10-K.

Section 16(a) Beneficial Ownership Reporting Compliance

Ownership of and transactions in the Companys Common Stock by executive officers, directors and persons who beneficially own more than 10% of the
Common Stock are required to be reported to the SEC pursuant to Section 16(a) of the Securities Exchange Act of 1934. Based solely on a review of copies of the reports furnished to the Company and written representations that no other reports
were required, the Company believes that all filing requirements were complied with during fiscal 2006.



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##### Table of Contents

Code of Business Conduct and Ethics

The Board of Directors has adopted a Code of Business Conduct and Ethics that sets forth standards regarding honest and ethical conduct, full and timely disclosure and compliance with law. The Code of Business Conduct
and Ethics applies to all employees, officers and directors of the Company, including the Companys principal executive officer, principal financial officer and principal accounting officer or controller. A copy of the Code of Business Conduct
and Ethics is available on the Companys website at www.mpwservices.com under Investor RelationsCorporate Governance.

Item 11.Executive Compensation

Summary of Cash and Certain Other Compensation

The compensation discussion that follows has been prepared based on the actual plan and non-plan compensation awarded to, earned by or
paid to the Companys named executive officers during the periods presented. The Companys compensation arrangements with its directors and certain arrangements with its named executive officers are described below.

Summary of Cash and Other Compensation

The following
table sets forth the compensation paid or payable by the Company during the fiscal years ended June 30, 2006, 2005 and 2004, to those individuals serving as the registrants chief executive officer at any time during fiscal 2006 and the
other executive officers of the Company.

Summary Compensation Table



|                                      |  |      |  |                     |  |          |                             |  |                             |     |  |                                 |  |                            |    
|------------------------------------- |  | ---- |  | ------------------- |  | -------- | --------------------------- |  | --------------------------- | --- |  | ------------------------------- |  | -------------------------- | ---
|                                      |  |      |  | Annual Compensation |  |          | Long-TermCompensationAwards |  |                             |    
|Name and Principal Position           |  | Year |  | Salary ($)          |  | Bonus($) |                             |  | Other AnnualCompensation($) |     |  | SecuritiesUnderlyingOptions (#) |  | All Other Compensation ($) |    
|Monte R. Black                        |  |      |  |                     |  |          |                             |  |                             |     |  |                                 |  |                            |    
|Chairman of the Board of Directors,   |  | 2006 |  | 475,000             |  | 512,505  |                             |  |                            |     |  |                                |  | 912                        | (1)
|Chief Executive Officer and President |  | 2005 |  | 475,000             |  |         |                             |  | 60,880                      | (2) |  |                                |  | 969                        | (1)
|                                      |  | 2004 |  | 475,000             |  |         |                             |  | 50,258                      | (2) |  |                                |  | 925                        | (1)
|Robert Valentine                      |  |      |  |                     |  |          |                             |  |                             |     |  |                                 |  |                            |    
|Vice President, Chief Operating       |  | 2006 |  | 200,000             |  | 120,843  |                             |  |                            |     |  |                                |  | 6,384                      | (1)
|Officer, Chief Financial Officer,     |  | 2005 |  | 195,833             |  |         |                             |  |                            |     |  | 80,000                          |  | 6,283                      | (1)
|Secretary and Treasurer               |  | 2004 |  | 150,000             |  | 25,000   | (3)                         |  |                            |     |  | 20,000                          |  | 4,824                      | (1)
|James P. Mock                         |  |      |  |                     |  |          |                             |  |                             |     |  |                                 |  |                            |    
|Vice President and General Manager,   |  | 2006 |  | 150,000             |  | 64,738   |                             |  |                            |     |  |                                |  | 5,165                      | (1)
|Corporate Shared Services             |  | 2005 |  | 159,895             |  | 6,065    |                             |  |                            |     |  |                                |  | 5,343                      | (1)
|                                      |  | 2004 |  | 175,000             |  | 8,000    |                             |  |                            |     |  |                                |  | 6,339                      | (1)

---

|(1) | Represents the Companys match of contributions to the Companys Savings Plan or Deferred Compensation Plan and the premiums paid by the Company on life insurance policies
with the executives named as beneficiary.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Other Annual Compensation for Mr. Black included $35,795 and $33,627 of personal benefit from use of a plane leased by the Company from Mr. Black in fiscal 2005 and 2004,
respectively.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The bonus received by Mr. Valentine was paid pursuant to an agreement at the time of hire.
|--- | ------------------------------------------------------------------------------------------



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##### Table of Contents

Fiscal 2006 Aggregated Option Exercises and Fiscal Year-End Option Values

The following table sets forth information concerning the exercise of stock options by each of the Companys named executive officers during fiscal
2006 and fiscal year end value of unexercised options.



|                 |  |                               |  |                  |  |                                                                          |  |                                                                      |  |             |  |              
|---------------- |  | ----------------------------- |  | ---------------- |  | ------------------------------------------------------------------------ |  | -------------------------------------------------------------------- |  | ----------- |  | -------------
|                 |  |                               |  |                  |  | Number of SecuritiesUnderlying
UnexercisedOptions At Fiscal Year-End (#) |  | Value of Unexercised In-The-Money Options At Fiscal Year-End ($) (1)
|Name             |  | SharesAcquired OnExercise (#) |  | ValueRealized($) |  | Exercisable                                                              |  | Unexercisable                                                        |  | Exercisable |  | Unexercsiable
|Monte R. Black   |  |                              |  |                 |  | 135,000                                                                  |  |                                                                     |  | 63,000      |  |             
|                 |  |                               |  |                  |  |                                                                         
|Robert Valentine |  |                              |  |                 |  | 30,000                                                                   |  | 70,000                                                               |  | 5,800       |  | 5,800        
|                 |  |                               |  |                  |  |                                                                         
|James P. Mock    |  |                              |  |                 |  | 206,000                                                                  |  |                                                                     |  | 63,000      |  |             

---

|(1) | Value is based on the June 30, 2006 closing price of $2.48 per share of the Companys common stock on the NASDAQ National Market.
|--- | ---------------------------------------------------------------------------------------------------------------------------------

Compensation of Directors

Directors who are
employees of the Company do not receive compensation for serving as Directors. Non-employee Directors are paid a quarterly fee of $2,500 ($4,000 for the Audit Committee chair), plus $1,500 for each Board of Directors meeting attended in person,
$1,000 for attendance at each committee meeting ($1,500 for the Audit Committee chair) and 50% of the regular fee for participation in each Board or committee meeting via teleconference. In addition, the Lead Director shall receive additional
compensation of $10,000 per quarter.

Under the Companys 1997 Stock Option Plan, each non-employee Director of the Company shall be
granted 2,000 non-qualified options at the first annual shareholders meeting at which he or she is elected a director and 3,000 options shall be granted at each subsequent annual shareholders meeting at which he or she is re-elected as a director.
Additional options may be granted to the non-employee Directors at the discretion of the Compensation Committee. During fiscal 2006, each non-employee Director was granted options to purchase 3,000 shares of Common Stock.

All Directors of the Company also are reimbursed for reasonable travel expenses to and from meetings of the Board of Directors and committees.

Employment Contracts, Termination of Employment and Change-in-Control Arrangements

The Company entered into a severance agreement with Mr. Black (the Severance Agreement), which is designed to ensure the continuity of
management in the event of a change in control. The Severance Agreement provides that following a change in control Mr. Black will be entitled to severance compensation upon termination of employment during the period commencing with the
occurrence of the change in control and continuing until the earliest of (i) the third anniversary of the occurrence of the change in control, (ii) death or (iii) attainment of age 65 and the occurrence of one or more certain
additional events.

Under the Severance Agreement, severance compensation will be a lump sum payment in an amount equal to three times the
sum of (i) base pay at the highest rate in effect for the three calendar years immediately preceding the year in which the change in control occurs, plus (ii) incentive pay in an amount equal to not less than the highest aggregate annual
bonus, incentive or other payments of cash compensation made or to be made in regard to services rendered in any fiscal year during the three fiscal years immediately preceding the year in which the change in control occurs, less the sum of
(iii) any and all payments received from the Company, a successor or their affiliates following a change in control, plus (iv) any future payments to be made in accordance with any employment agreements or other contracts between the
Company and such other entities. For three years following termination, the Company will arrange to provide Mr. Black with welfare benefits substantially similar to those he was receiving or was entitled to receive immediately prior to the
termination date, with such three-year period qualifying as service with the Company for the purpose of determining service credits and benefits under the Companys various retirement benefit plans.

The Company has agreed to pay any and all legal fees incurred by Mr. Black in connection with the interpretation, enforcement or defense of his
rights under the Severance Agreement. The Severance Agreement automatically renews for successive one-year terms unless the Company or Mr. Black gives notice of intent to terminate before such renewal. The Severance Agreement was renewed for
fiscal 2006 and has also been renewed for fiscal 2007.



47



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##### Table of Contents

Effective February 15, 2005, the Company entered into employment agreements with Mr. Valentine
and Mr. Mock. Each agreement has a three-year term that is automatically extended for an additional one-year period unless the agreement is otherwise terminated. Following is a summary of the terms and conditions of each agreement:



| |  |  | If the executives employment is terminated by his death, the executives beneficiary shall be entitled to (i) any base salary that is accrued but unpaid, any
vacation that is accrued but unused and any unreimbursed business expenses; (ii) a pro rata award under the bonus program which is applicable to the executive at the time of his death; and (iii) any benefit following termination of
employment which may be provided under the Companys fringe benefit plans, policies and programs.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If the executive officer becomes disabled (as defined in the agreement), the executive shall continue to receive his base salary at the rate then in effect for such period until his
employment is terminated due to his disability; provided, however, that payments of base salary shall be reduced by the value of any income under any disability benefit plan or plans of the Company. The Company may terminate the executives
employment in the event of his disability, provided the executive does not return to work full-time within 30 days after he receives notice of termination of employment from the Company. Upon termination of employment, the executive will be entitled
to the same benefits and payments described above.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company may terminate the executive without cause effective as of a date specified by the Company or the executive may terminate his or her employment for good
reason effective as of a date specified by the executive. Upon termination without cause or for good reason, the executive will be entitled to the same benefits and payments described above. In addition, the Company
must pay the executive an amount referred to as a bridge separation allowance, which is equal to twelve and nine months of base salary to Mr. Valentine and Mr. Mock, respectively, payable on regular payroll dates, or until the
executive accepts a comparable position with another company.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If there is a change-in-control, the executive shall become fully vested in all employee benefit programs, including without limitation, all stock options in which he was a
participant at the time of the change-in-control.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If any portion of the payments and benefits provided for in an agreement would be considered excess parachute payments under section 280G(b) of the Internal Revenue Code
of 1986, as amended (the Code) and subject to excise tax, the Company will reduce the executives payments to an amount which is $1 less than the amount that would be an excess parachute payment.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Compensation Committee Interlocks and Insider Participation

The Compensation Committee of the Board of Directors is comprised of two outside directors, Messrs. Klisares and Walsh, neither of whom is or was formerly
an officer of the Company, although Mr. Walsh served as Vice President, Finance, Chief Financial Officer and Secretary of MPW Industrial Services, Inc., a subsidiary of the Company from April 1994 until August 1995. During fiscal 2006, none of
the Companys executive officers served on the board of any entity of which a Compensation Committee member was an executive officer or on the compensation committee of any entity of which any Director of the Company was an executive officer.

Board Compensation Committee Report on Executive Compensation*

Role of Compensation Committee

In general, the Companys compensation program for executive
officers consists of three primary elements: a base salary, a discretionary bonus and periodic grants of stock options. The Compensation Committee believes that it is important to pay competitive salaries but also to make a high proportion of the
executive officers total compensation at risk in order to cause the executive officers to focus on both the short-term and the long-term interests of the Companys shareholders. Therefore, the bonus (which permits individual performance
to be recognized on an annual basis, and which is based, in part, on an evaluation of the contribution made by the executive officer to the Companys performance and other individual and organizational goals) and stock option grants (which
directly tie the executive officers long-term remuneration to stock price appreciation realized by the Companys shareholders) are important components of the overall compensation package.



48



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##### Table of Contents

Base Salary

Base salary is reviewed annually. In evaluating the base salary component of compensation for the Companys executive officers, the Compensation Committee considers individual performance and industry analysis
and comparisons. For fiscal 2006, the base salary of Mr. Black remained unchanged. Mr. Valentines salary was increased in fiscal 2005 upon his appointment to serve in the capacity of Chief Operating Officer in July 2004.
Mr. Mocks salary was reduced in fiscal 2005 upon the change in his position to an administrative role from Vice President and General Manager of Industrial Cleaning and Facility Maintenance. Fiscal 2006 was the first full year impacted by
Mr. Valentines salary increase and Mr. Mocks salary reduction.

Bonus Plan

Bonuses are awarded at the discretion of the Compensation Committee and are targeted at a percentage of the annual base salary of each executive officer.
The targeted bonus is the bonus the Company expects to award, based on the Companys and individuals achievement of certain performance objectives. The granted bonus may be more or less than the targeted percentage, based on the
subjective determination by the Compensation Committee of the executives performance and the Companys performance in relation to the stated goals. For fiscal 2006, Mr. Black, Mr. Valentine and Mr. Mock received an annual
bonus, which was slightly less than their individual targeted bonuses.

Stock Options

The purpose of the Companys 1997 Stock Option Plan is to attract and retain key personnel and directors of the Company and to enhance their interest
in the Companys continued success. The maximum number of the Companys Common Shares with respect to which awards may be granted under the 1997 Stock Option Plan is 1,200,000. During fiscal 2006, no stock options were granted to executive
officers.

Chief Executive Officer Compensation

Mr. Black, the Companys Chief Executive Officer, was paid an annual salary of $475,000 and bonus of $512,000 for the fiscal year ended June 30, 2006. No stock options were granted to Mr. Black
during fiscal 2006. The Compensation Committee believes that tying the remuneration of Mr. Black to the achievement of certain Company performance goals and to the performance of the Common Stock will enhance the long-term performance and
stability of the Company.

Section 162(m) Compliance

Section 162(m) of the Code places certain restrictions on the amount of compensation in excess of $1,000,000, which may be deducted for each
executive officer. The Company intends to satisfy the requirements of Section 162(m) should the need arise.



Submitted by the CompensationCommittee of the CompanyPETE A. KLISARES, ChairmanTIMOTHY A. WALSH


---

*Notwithstanding anything to the
contrary set forth in the Companys previous filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that might incorporate future filings, including this proxy statement, in whole or in part, the information set for
under Board Compensation Committee Report on Executive Compensation shall not be incorporated by reference into any such filings.



49



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##### Table of Contents

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The Companys Common Stock is the only outstanding class of voting securities. The following table sets forth information regarding the beneficial
ownership of the Companys Common Stock as of September 28, 2006 by (a) each person who owns beneficially more than 5% of the Common Stock of the Company to the extent known to management, (b) each director and named executive
officer of the Company, and (c) all directors and executive officers of the Company, as a group. Unless otherwise indicated, the named persons exercise sole voting and investment power over the shares that are shown as beneficially owned by
them.



|                                                                |  |                                        |  |                     |  
|--------------------------------------------------------------- |  | -------------------------------------- |  | ------------------- | -
|Beneficial Owner                                                |  | Amount andNature ofBeneficialOwnership |  | Percent ofClass (1) |  
|Monte R. Black (2)                                              |  | 6,312.654                              |  | 100.00              | %
|Susan K. Black                                                  |  | 620.000                                |  | 9.82                | %
|The Monte R. and Susan K. Black 1994 Irrevocable Trust          |  | 547.840                                |  | 8.68                | %
|James P. Mock                                                   |  |                                       |  | *                   |  
|Robert Valentine                                                |  |                                       |  | *                   |  
|Pete A. Klisares                                                |  |                                       |  | *                   |  
|Timothy A. Walsh                                                |  |                                       |  | *                   |  
|All directors and executive officers as a group (5 persons) (2) |  | 6,312.654                              |  | 100.00              | %

* less than 1%

---

| | (1) | The Percent of Class is based on the 6,312.654 common shares outstanding on September 28, 2006.
| | --- | -------------------------------------------------------------------------------------------------

| | (2) | Includes (i) 620.000 shares of Common Stock held by Mr. Blacks wife, Susan K. Black, (ii) 39.954 shares of Common Stock held by Mr. Blacks children
and (iii) an aggregate of 547.840 shares of Common Stock held in trust for Mr. Blacks children. Mr. Black disclaims beneficial ownership of the foregoing shares. Mr. And Mrs. Blacks address is c/o MPW Industrial
Services Group, Inc., 9711 Lancaster Rd S.E., Hebron, Ohio 43025.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 13.Certain Relationships and Related Transactions

Prior to the
going private merger, the Audit Committee of the Board of Directors was responsible for approving and reviews quarterly any transactions between the Company and Monte R. Black or other affiliates.

In 1996, the Company entered into a long-term lease arrangement for certain real estate and a commercial building located in Chesterfield, Michigan,
which currently serves as one of the Companys industrial container cleaning facilities, with the Black Family Limited Partnership, an Ohio limited partnership in which Monte R. Black serves as the sole general partner. The lease was for a term
of ten years at an annual payment amount of approximately $421,000, payable monthly. In 1997, the Company entered into an amended lease agreement through November 30, 2004, which provided for an annual rental of $288,000, payable monthly. In
connection with an expansion at the Chesterfield facility, the Company entered into an additional ten-year lease agreement in October of 2001, which provided for an annual rental of approximately $254,400, payable monthly. Effective December 1,
2004, the Company entered into a new five-year lease agreement for the entire Chesterfield facility, which provides for an annual rental of $508,800, which the Company believes is no less favorable than it would obtain in a third party
arms-length transaction.

As part of an industrial revenue bond financing in 1986, Monte R. and Susan K. Black constructed an
approximately 67,000 square foot building in Hebron, Ohio, which the Company leased for a ten-year term. Annual rent payments on the building and equipment during this ten-year term were $726,000, payable monthly. In 1997, the Company entered into
an amended lease agreement through December 31, 2004, which provided for an annual rental of $600,000, payable monthly. Effective January 1, 2005, the Company entered into a new five-year lease agreement, which provides for an annual
rental of $644,100, which the Company believes is no less favorable than it would obtain in a third party arms-length transaction.



50



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##### Table of Contents

In 1989, the Company entered into a five-year agreement to rent certain real estate and a commercial
building located in Newark, Ohio from Monte R. and Susan K. Black as the principal offices of the Companys industrial water subsidiary. In 1993, the Company extended the lease for an additional five-year term with annual lease payments of
$46,920, payable monthly. Effective December 1, 1997, the Company entered into a lease agreement through December 31, 2004, which provided for an annual rental of $66,000, payable monthly. In 1999, the Company entered into an additional
lease agreement through December 31, 2004 to rent certain real estate and a commercial building located in Newark, Ohio from Miramonte Property Management, LLC, a limited liability company controlled by Monte R. Black, as additional
operating space for the Companys industrial water subsidiary. Effective January 1, 2005, the Company entered into a new five-year lease agreement with Monte R. and Susan K Black and Miramonte Property Management, LLC for the entire Newark
facility, which provides for an annual rental of $144,000, which the Company believes is no less favorable than it would obtain in a third party arms-length transaction.

In May 2003, the Company entered into a one-year agreement to rent an aircraft from Miramonte Aviation, LLC, a limited liability company controlled by
Monte R. Black. The lease provides for an annual lease payment of $420,000, payable monthly, plus applicable state and local taxes and includes four one-year options to renew at the lessors option upon 30 days written notice. The lease also
provides for payment of $300 per aircraft hour, payable monthly, for the cost of engine hot section inspections. The Company believes the lease terms are no less favorable than it would obtain in a third party arms-length transaction. The
second one-year renewal option terminated on May 12, 2006 and the lease was renewed for another one-year term.

In September 2001, the
Company entered into a ten-year agreement to rent certain real estate and a commercial building located in Rockport, Indiana, from Miramonte Property Management, LLC as additional operating space for the Companys Industrial Cleaning and
Facility Maintenance business. The lease provides for annual rental of $72,000, payable monthly, which the Company believes is no less favorable than it would obtain in a third party arms-length transaction.

During fiscal 2006, the Company paid $110,000 to Miramonte Ranch, LLC, a limited liability company controlled by Monte R. Black, for use of a ranch for
business meetings, entertainment and overnight lodging of customers and other business associates. The Company believes the amounts charged by Miramonte Ranch, LLC are no less favorable than it would obtain in a third party arms-length
transaction.

The Company provides from time to time certain fabrication-type services to Pro-Kleen Industrial Services, Inc (Pro-Kleen), a
portable sanitation services company wholly owned by Monte R. Black. During fiscal 2006, such services totaled $207,000. The largest amount outstanding from Pro-Kleen at any time during fiscal 2006 was $275,000. As of September 28, 2006, there
is approximately $46,000 outstanding from Pro-Kleen.

Item 14.Principal Accountant Fees and Services

Fees related to
services performed by KPMG LLP in fiscal 2006 and 2005 were as follows:



|                                             |  |            |         |     |            |   |         |    
|-------------------------------------------- |  | ---------- | ------- | --- | ---------- | - | ------- | ---
|                                             |  | Fiscal2006 |         |     | Fiscal2005 |  
|Audit Fees (including quarterly review fees) |  | $          | 263,300 |     |            | $ | 244,700 |    
|Audit-Related Fees                           |  |            |        |     |            |   | 15,000  | (1)
|Tax Fees                                     |  |            | 28,500  |     |            |   |        |    
|All Other Fees                               |  |            | 3,900   | (2) |            |   |        |    
|                                             |  |            |         |     |            |   |         |    
|Total                                        |  | $          | 295,700 |     |            | $ | 259,700 |    
|                                             |  |            |         |     |            |   |         |    

---

| | (1) | Audit-Related Fees include the fees associated with the audit of the Companys Savings Plan.
| | --- | --------------------------------------------------------------------------------------------

| | (2) | All Other Fees include the fees associated with KPMG LLPs review of the Companys preliminary and definitive proxy statements associated with the going-private merger.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Consistent with applicable SEC Rules and prior to the going-private merger, the charter of the Audit Committee required that
the Audit Committee review and pre-approve all audit services and permitted non-audit services provided by the independent registered public accounting firm to the Company or any of its subsidiaries. The Audit Committee could delegate pre-approval
authority to one or more members of the Audit Committee, and, if it did, the decision of that member or members was required to be presented to the full Audit Committee at its next regularly scheduled meeting.

All of the services rendered by KPMG LLP to the Company during fiscal 2006 and 2005, respectively, were pre-approved by the Audit Committee.



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##### Table of Contents

PART IV

Item 15.Exhibits and Financial Statement Schedules



|    |  |    |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  |   
|(a) |  | 1. |  | The following consolidated financial statements of the Company and its subsidiaries are included in Item 8:                                                                                                                                                                                                                                                                                           
|    |  |   
|    |  |    |  | Reports of Independent Registered Public Accounting Firm                                                                                                                                                                                                                                                                                                                                              
|    |  |   
|    |  |    |  | Consolidated Balance Sheets as of June 30, 2006 and 2005                                                                                                                                                                                                                                                                                                                                              
|    |  |   
|    |  |    |  | Consolidated Statements of Operations for the Years Ended June 30, 2006, 2005 and 2004                                                                                                                                                                                                                                                                                                                
|    |  |   
|    |  |    |  | Consolidated Statements of Changes in Shareholders Equity for the Years Ended June 30, 2006, 2005 and 2004                                                                                                                                                                                                                                                                                           
|    |  |   
|    |  |    |  | Consolidated Statements of Cash Flows for the Years Ended June 30, 2006, 2005 and 2004                                                                                                                                                                                                                                                                                                                
|    |  |   
|    |  |    |  | Notes to Consolidated Financial Statements                                                                                                                                                                                                                                                                                                                                                            
|    |  |   
|    |  | 2. |  | All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are either not required under the related instructions, are
inapplicable and therefore have been omitted, or the required information is provided in the Consolidated Financial Statements of the Company and its subsidiaries or Notes thereto.                         
|    |  |   
|    |  | 3. |  | Exhibits                                                                                                                                                                                                                                                                                                                                                                                              
|    |  |   
|    |  |    |  | The exhibits listed on the Exhibit Index beginning on page 54 of this Annual Report on Form 10-K are filed with this Annual Report on Form 10-K or incorporated herein by reference as
noted in the Exhibit Index. The Exhibit Index specifically identifies each management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K.
|    |  |   
|(b) |  |    |  | The exhibits listed on the Exhibit Index beginning on page 54 of this Annual Report on Form 10-K are filed with this Annual Report on Form 10-K or incorporated herein by reference as
noted in the Exhibit Index.                                                                                                                                                                                
|    |  |   
|(c) |  |    |  | Additional Financial Statement Schedules                                                                                                                                                                                                                                                                                                                                                              
|    |  |   
|    |  |    |  | None.                                                                                                                                                                                                                                                                                                                                                                                                 



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 4thday of October, 2005.



MPW INDUSTRIAL SERVICES GROUP, INC.By:

/s/ Robert ValentineRobert ValentineVice President, Chief Operating Officer, Chief Financial Officer, Secretary and Treasurer


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report
has been signed below by the following persons on behalf of the Company and in the capacities and on the date indicated.



|                                      |  |                  |                                                               |                                               
|------------------------------------- |  | ---------------- | ------------------------------------------------------------- | ----------------------------------------------
|Signature                             |  | Date             |                                                               | Title                                         
|/s/ Monte R. Black Monte R. Black     |  | October 13, 2006 |                                                               | Chairman of the Board of Directors, Chief     
|                                      |  |                  | Executive Officer and President (Principal Executive Officer)
|                                      |  |                 
|/s/ Robert Valentine Robert Valentine |  | October 13, 2006 |                                                               | Vice President, Chief Operating Officer, Chief
|                                      |  |                  | Financial Officer, Secretary and Treasurer                   
|                                      |  |                  |                                                               | (Principal Financial and Accounting Officer)  
|                                      |  |                 
|* Pete A. Klisares                    |  | *                |                                                               | Director                                      
|                                      |  |                  |                                                              
|                                      |  |                 
|* Timothy A. Walsh                    |  | *                |                                                               | Director                                      
|                                      |  |                  |                                                              

*The undersigned, by signing his name hereto, does hereby sign this report on behalf of each of the
above-identified directors of the Registrant pursuant to powers of attorney executed by such directors and filed with this report.



|     |  |                                                                                           |  |  |  |                       
|---- |  | ----------------------------------------------------------------------------------------- |  |  |  | ----------------------
|*By: |  | /s/ Robert Valentine                                                                      |  |  |  | Date: October 13, 2006
|     |  | Robert Valentine                                                                          |  |  |  |                       
|     |  | Vice President, Chief Operating Officer, Chief Financial Officer, Secretary and Treasurer |  |  |  |                       



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EXHIBIT INDEX



|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3(a)  |  | Amended and Restated Articles of Incorporation of the Company effective November 4, 1999 (filed as Exhibit 3(a) to the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999, and incorporated herein by reference)                                                                                                                                                                                                                                                                                                                                 
|      | 
|3(b)  |  | Amended and Restated Code of Regulations of the Company effective November 4, 1999 (filed as Exhibit 3(b) to the Companys Quarterly Report on Form 10-Q for the quarter ended September
30, 1999, and incorporated herein by reference)                                                                                                                                                                                                                                                                                                                                       
|      | 
|10(a) |  | Amended and Restated 1997 Stock Option Plan (filed as exhibit 10 to the Companys Quarterly Report on Form 10-Q for the quarter ended December 31, 1998, and incorporated herein by
reference)*                                                                                                                                                                                                                                                                                                                                                                                
|      | 
|10(b) |  | Lease for Hebron, Ohio facility (filed as exhibit 10(b) to the Companys Quarterly Report on Form 10-Q for the quarter ended December 31, 1997, and incorporated herein by
reference)                                                                                                                                                                                                                                                                                                                                                                                          
|      | 
|10(c) |  | Lease for Newark, Ohio facility (filed as exhibit 10(c) to the Companys Quarterly Report on Form 10-Q for the quarter ended December 31, 1997, and incorporated herein by reference)10(d)
First Lease Amendment for Chesterfield, Michigan facility (filed as exhibit 10(d) to the Companys Quarterly Report on Form 10-Q for the quarter ended December 31, 1997, and incorporated herein by reference)                                                                                                                                                                     
|      | 
|10(d) |  | Aircraft Lease (filed as exhibit 10(f) to the Companys Quarterly Report on Form 10-Q for the quarter ended December 31, 1997, and incorporated herein by reference)                                                                                                                                                                                                                                                                                                                                                                                                           
|      | 
|10(e) |  | Form of Severance Agreement by and between MPW Industrial Services Group, Inc. and Executive Officers (filed as Exhibit 10(e) to the Companys Registration Statement on form S-1
(Registration No. 333-36887) originally filed with the Securities and Exchange Commission on October 1, 1997 (the Registration Statement) and incorporated herein by reference)*                                                                                                                                                                                                           
|      | 
|10(f) |  | Form of Indemnification Agreement by and between MPW Industrial Services Group, Inc. and Directors (filed as Exhibit 10(f) to the Companys Registration Statement and incorporated herein
by reference)*                                                                                                                                                                                                                                                                                                                                                                      
|      | 
|10(g) |  | Form of Indemnification Agreement by and between MPW Industrial Services Group, Inc. and persons who are a Director and an Officer (filed as Exhibit 10(g) to the Companys Registration
Statement and incorporated herein by reference)*                                                                                                                                                                                                                                                                                                                                      
|      | 
|10(h) |  | Form of Indemnification Agreement by and between MPW Industrial Services Group, Inc. and Executive Officers (filed as Exhibit 10(h) to the Companys Registration Statement and
incorporated herein by reference)*                                                                                                                                                                                                                                                                                                                                                             
|      | 
|10(i) |  | Lease for Newark, Ohio additional facility (filed as Exhibit 10(k) to the Companys Annual Report on Form 10-K for the year ended June 30, 1999, and incorporated herein by
reference)                                                                                                                                                                                                                                                                                                                                                                                         
|      | 
|10(j) |  | Lease for Hebron, Ohio land (filed as Exhibit 10(l) to the Companys Annual Report on Form 10-K for the year ended June 30, 2002 and incorporated herein by reference)                                                                                                                                                                                                                                                                                                                                                                                                         
|      | 
|10(k) |  | Recapitalization Agreement, dated April 25, 2000, by and among the Company, Pentagon Technologies Group, Inc., MPW Management Services Corp., Pentagon Merger Sub, Inc., Baird Capital Partners
III Limited Partnership, BCP III Special Affiliates Limited Partnerships and BCP III Affiliates Fund Limited Partnership (filed as Exhibit 2.1 to the Companys Current Report on Form 8-K filed on August 3, 2000, and incorporated herein by
reference)                                                                                                                      
|      | 
|10(l) |  | Amendment No. 1 to Recapitalization Agreement, dated as of July 17, 2000, by and among the Company, Pentagon Technologies Group, Inc., MPW Management Services Corp., Pentagon Merger Sub,
Inc., Baird Capital Partners III Limited Partnership, BCP III Special Affiliates Limited Partnerships, BCP III Affiliates Fund Limited Partnership, PPM America Private Equity Fund, L.P., Old Hickory Fund I, LLC, and Antares Capital Corporation
(filed as Exhibit 2.2 to the Companys Current Report on Form 8-K filed on August 3, 2000, and incorporated herein by reference)
|      | 
|10(m) |  | Lease for Rockport, Indiana facility (filed as Exhibit 10(u) to the Companys Annual Report on Form 10-K for the year ended June 30, 2002 and incorporated herein by
reference)                                                                                                                                                                                                                                                                                                                                                                                                
|      | 
|10(n) |  | Lease for Chesterfield, Michigan additional facility (filed as Exhibit 10(v) to the Companys Annual Report on Form 10-K for the year ended June 30, 2002 and incorporated herein by
reference)                                                                                                                                                                                                                                                                                                                                                                                
|      | 
|10(o) |  | Credit Agreement, dated June 18, 2002, among the Company and its subsidiaries, Bank One, NA and National City Bank (filed as Exhibit 10(w) to the Companys Annual Report on Form 10-K for
the year ended June 30, 2002 and incorporated herein by reference)                                                                                                                                                                                                                                                                                                                  



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##### Table of Contents

|       |  |                                                                                                                                                                                                                                                                                                 
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | 
|10(p)  |  | Aircraft Lease (filed as Exhibit 10(a) to the Companys Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference)                                                                                                                                
|       | 
|10(q)  |  | First Amendment of Credit Agreement, dated April 27, 2004, among the Company and its subsidiaries, Bank One, NA and National City Bank (filed as Exhibit 10(t) to the Companys Annual
Report on Form 10-K for the year ended June 30, 2004 and incorporated herein by reference)               
|       | 
|10(r)  |  | Second Amendment of Credit Agreement, dated August 6, 2004, among the Company and its subsidiaries, Bank One, NA and National City Bank (filed as Exhibit 10(u) to the Companys Annual
Report on Form 10-K for the year ended June 30, 2004 and incorporated herein by reference)              
|       | 
|10(s)  |  | Third Amendment of Credit Agreement, dated November 12, 2004, among the Company and its subsidiaries, Bank One, NA and National City Bank (filed as exhibit 10(a) to the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, and incorporated herein by reference)
|       | 
|10(t)  |  | Fourth Amendment of Credit Agreement, dated February 11 2005, among the Company and its subsidiaries, Bank One, NA and National City Bank (filed as exhibit 10(a) to the Companys
Quarterly Report on Form 10-Q for the quarter ended December 31, 2004, and incorporated herein by reference) 
|       | 
|10(u)  |  | Fifth Amendment of Credit Agreement, dated March 31, 2005, among the Company and its subsidiaries, Bank One, NA and National City Bank (filed as exhibit 10(a) to the Companys Quarterly
Report on Form 10-Q for the quarter ended March 31, 2005, and incorporated herein by reference)       
|       | 
|10(v)  |  | Sixth Amendment of Credit Agreement, dated May 12, 2005, among the Company and its subsidiaries, Bank One, NA and National City Bank (filed as exhibit 10(b) to the Companys Quarterly
Report on Form 10-Q for the quarter ended March 31, 2005, and incorporated herein by reference)         
|       | 
|10(w)  |  | Lease for Hebron, Ohio facility (filed as exhibit 10(y) to the Companys Annual Report on Form 10-K for the year ended June 30, 2005, and incorporated herein by
reference)                                                                                                                     
|       | 
|10(x)  |  | Lease for Newark, Ohio facility (filed as exhibit 10(z) to the Companys Annual Report on Form 10-K for the year ended June 30, 2005, and incorporated herein by
reference)                                                                                                                     
|       | 
|10(y)  |  | Lease for Chesterfield, Michigan facility (filed as exhibit 10(aa) to the Companys Annual Report on Form 10-K for the year ended June 30, 2005, and incorporated herein by
reference)                                                                                                          
|       | 
|10(z)  |  | Seventh Amendment of Credit Agreement, dated June 30, 2005, among the Company and its subsidiaries, Bank One, NA and National City Bank (filed as exhibit 10(ab) to the Companys Annual
Report on Form 10-K for the year ended June 30, 2005, and incorporated herein by reference)            
|       | 
|10(aa) |  | Agreement and Plan of Merger between Noir Acquisition Corporation and MPW Industrial Services Group, Inc., dated April 14, 2006 (filed as exhibit 99.1 to the Companys Form 8-K dated
April 20, 2006, and incorporated herein by reference)                                                    
|       | 
|10(ab) |  | Credit Agreement, dated September 27, 2006, among the Company and its subsidiaries, LaSalle Bank, NA and The Huntington National Bank                                                                                                                                                           
|       | 
|21     |  | Subsidiaries of the Company                                                                                                                                                                                                                                                                     
|       | 
|23.1   |  | Consent of KPMG LLP                                                                                                                                                                                                                                                                             
|       | 
|23.2   |  | Consent of Ernst & Young LLP                                                                                                                                                                                                                                                                    
|       | 
|24     |  | Powers of Attorney                                                                                                                                                                                                                                                                              
|       | 
|31.1   |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                         
|       | 
|31.2   |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                         
|       | 
|32.1   |  | Certification of Principal Executive Officer, Monte R. Black, Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                          
|       | 
|32.2   |  | Certification of Principal Financial Officer, Robert Valentine, Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                        

---

|* | Indicates a management contract or compensatory plan or arrangement required to be filed pursuant to Item 15(b) of Form 10-K.
|- | -----------------------------------------------------------------------------------------------------------------------------



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