UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

[x]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 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 No. 333-27665

                         CONTINENTAL GLOBAL GROUP, INC.
             (Exact Name of Registrant as Specified in its Charter)

             Delaware                                          31-1506889
             --------                                          ----------
 (State or other Jurisdiction of                           (I.R.S. Employer
  Incorporation or Organization)                           Identification No.)

                    CO-REGISTRANTS AND SUBSIDIARY GUARANTORS

    Continental Conveyor & Equipment Company        Delaware        34-1603197
    Goodman Conveyor Company                        Delaware        34-1603196

<TABLE>
<S>                                <C>                           <C>
                                    Continental Conveyor &
 Continental Global Group, Inc.        Equipment Company              Goodman Conveyor Company
      438 Industrial Drive           438 Industrial Drive                 Route 178 South
    Winfield, Alabama 35594         Winfield, Alabama 35594        Belton, South Carolina 29627
         (205) 487-6492                 (205) 487-6492                      (864) 338-7793
</TABLE>

   (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:   None
Securities registered pursuant to Section 12(g) of the Act:   None

Indicate by check mark if the  registrant is a well-known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act. Yes [ ] No [x]

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

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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. [x]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Act.
Large accelerated filer [ ]   Accelerated filer [ ]   Non-accelerated filer [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 stock held by non-affiliates of the
registrant as of June 30, 2006 was $-0-.

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
As of March 15, 2007, there were 100 shares of the registrant's common stock
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:  None

<PAGE>


                         CONTINENTAL GLOBAL GROUP, INC.

                          2006 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
 Item                                                                                                       Page
 Number                                                                                                    Number
 ------                                                                                                    ------
<S>           <C>                                                                                         <C>

               Cautionary Statement for Safe Harbor Purposes                                                    1
                                     PART I
      1        Business                                                                                         2
     1A        Risk Factors                                                                                     5
     1B        Unresolved Staff Comments                                                                        8
      2        Properties                                                                                       9
      3        Legal Proceedings                                                                               10
      4        Submission of Matters to a Vote of Security Holders                                             10
                                     PART II
      5        Market for Registrant's Common Stock and Related Stockholder Matters                            10
      6        Selected Financial Data                                                                         11
      7        Management's Discussion and Analysis of Financial Condition and Results of Operations
                                                                                                               12
     7A        Quantitative and Qualitative Disclosures about Market Risk                                      22
      8        Financial Statements and Supplementary Data                                                     23
      9        Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
                                                                                                               58
     9A        Controls and Procedures                                                                         58
                                    PART III
     10        Directors and Executive Officers of the Registrant                                              58
     11        Executive Compensation                                                                          61
     12        Security Ownership of Certain Beneficial Owners and Management                                  63
     13        Certain Relationships and Related Transactions                                                  63
     14        Principal Accountant Fees and Services                                                          64
                                     PART IV
     15        Exhibits, Financial Statement Schedules, and Reports on Form 8-K                                65
               Signatures                                                                                      66
               Index of Exhibits
</TABLE>




<PAGE>

CAUTIONARY STATEMENT FOR SAFE HARBOR PURPOSES

THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
FEDERAL SECURITIES LAWS. AS A GENERAL MATTER, FORWARD-LOOKING STATEMENTS ARE
THOSE FOCUSED UPON FUTURE PLANS, OBJECTIVES OR PERFORMANCE AS OPPOSED TO
HISTORICAL ITEMS AND INCLUDE STATEMENTS OF ANTICIPATED EVENTS OR TRENDS AND
EXPECTATIONS AND BELIEFS RELATING TO MATTERS THAT ARE NOT HISTORICAL IN NATURE.
SUCH FORWARD LOOKING STATEMENTS ARE SUBJECT TO UNCERTAINTIES AND FACTORS
RELATING TO THE COMPANY'S OPERATIONS AND BUSINESS ENVIRONMENT, ALL OF WHICH ARE
DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY,
THAT COULD CAUSE ACTUAL RESULTS OF THE COMPANY TO DIFFER MATERIALLY FROM THOSE
MATTERS EXPRESSED IN OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.

THE COMPANY BELIEVES ITS PRIMARY RISK RACTORS INCLUDE, BUT ARE NOT LIMITED TO,
THOSE IDENTIFIED IN "RISK FACTORS" AT PART I, ITEM 1A. PLEASE READ THESE
DISCLOSURES CAREFULLY.

IN ADDITION, THE COMPANY'S FUTURE RESULTS OF OPERATIONS, FINANCIAL CONDITION,
LIQUIDITY AND CAPITAL RESOURCES COULD BE MATERIALLY ADVERSELY AFFECTED BY, AMONG
OTHER THINGS, ECONOMIC AND POLITICAL UNCERTAINTIES OR PROLONGED ECONOMIC
RECESSION.


                                       1

<PAGE>


                                     PART I

Item 1.  Business

General

Continental Global Group, Inc. (hereinafter referred to as the "Company"),
through its subsidiaries, is a leading designer and manufacturer of conveyor
systems and components for mining applications, primarily in the coal industry.
The Company is a holding company organized under the Delaware General
Corporation Law and conducts all of its business through its direct and indirect
operating subsidiaries. The Company's direct operating subsidiaries are
Continental Conveyor and Equipment Company ("Continental") and Goodman Conveyor
Company ("Goodman"). The Company also owns indirectly all of the capital stock
of Continental Conveyor & Equipment Pty. Ltd. ("CCE Pty. Ltd."), an Australian
holding company that owns all of the capital stock of four Australian operating
companies and Continental Conveyor (Beijing) Trading Company Limited, a Chinese
trading company. The Company also owns indirectly all of the capital stock of
Continental Conveyor Ltd., a U.K. operating company; and Continental MECO (Pty.)
Ltd., a South African operating company.

While the Company primarily manages its operations on a geographical basis, the
Company operates in two principal business segments: conveyor equipment and
manufactured housing products. The conveyor equipment business, which comprised
approximately 92%, 89%, and 89% of net sales for 2006, 2005, and 2004,
respectively, markets its products in four main business areas. The mining
equipment business area includes the design, manufacture and testing of complete
belt conveyor systems and components for mining application primarily in the
coal industry. The conveyor components business area manufactures and sells
components for conveyor systems primarily for resale through distributor
networks. The engineered systems business area uses specialized project
management and engineering skills to combine mining equipment products,
purchased equipment, steel fabrication and other outside services for sale as
complete conveyor equipment systems that meet specific customer requirements.
The bulk conveyor equipment business area designs and manufactures a complete
range of conveyor equipment sold to transport bulk materials, such as cement,
lime, food products and industrial waste.

The Company's manufactured housing products business, which comprised
approximately 8%, 11%, and 11% of net sales for 2006, 2005, and 2004,
respectively, manufactures and/or refurbishes axle components sold directly to
the manufactured housing industry. As part of this segment, the Company also
sells mounted tire and rim assemblies to the manufactured housing industry.
Included in the other category is primarily the manufacture and sale of air
filtration equipment for use in enclosed environments, principally in the
textile industry.

Approximately 71% or $250.2 million of the Company's 2006 net sales were
generated in the United States, 16% or $57.2 million in Australia, 11% or $40.4
million in the United Kingdom, and 2% or $7.4 million in other countries.


                                       2

<PAGE>


Customers

The Company's conveyor equipment business segment markets its products worldwide
through a variety of marketing channels with different customer focuses. The
Company sells its mining equipment and bulk conveyor equipment products and
services primarily to mining companies and other end users, original equipment
manufacturers and engineering contractors. The Company sells its conveyor
components products to original equipment manufacturers, engineering contractors
and replacement part distributors, primarily in the following industries:
aggregates, such as rock, gravel, glass and cement materials; coal processing
and mining; pulp, paper and forest products; above ground hard rock and mineral
mining; food and grains; and environmental, sewage and waste water treatment.
The Company sells its engineered systems products and services primarily to
contractors and end users for applications in coal processing and mining, pulp
and paper, composting systems, grain handling, cement products, open-pit mining
and tunneling. The Company markets its manufactured housing products business
segment directly to the manufactured housing industry in the United States.

For the years ended December 31, 2006, 2005 and 2004, the Company did not have
sales to any single customer which exceeded 10% of the Company's total net
sales. Net sales to the Company's top five conveyor equipment customers
represented approximately 27%, 25%, and 23% of the Company's total net sales for
2006, 2005 and 2004, respectively. Although the Company has preferred supplier
arrangements with a number of its major customers pursuant to which the Company
and such customers effectively operate on a long-term basis, such arrangements
generally are not governed by long-term contracts and may be terminated by
either party at any time. A substantial portion of the Company's sales is on a
project by project basis.

Competition

The Company faces strong competition throughout the world in all of its product
lines. The various markets in which the Company competes are fragmented into a
large number of competitors, many of which are smaller businesses that operate
in relatively specialized or niche areas. In addition, a number of the Company's
competitors have financial and other resources greater than those of the
Company. Competitive considerations vary for each business area, but generally
include quality, price, reliability, availability and service.

Suppliers

The primary raw materials used by the Company to produce its products are steel
and miscellaneous purchased parts such as bearings, electric motors and gear
reducers. During 2005, due to the increase in production, the Company
experienced some delays in the delivery of these materials and components which
created some difficulties in meeting production and delivery obligations. The
Company has addressed these issues and believes that it has adequate sources of
supply for its raw materials and components. The Company is not dependent upon
any single supplier for any materials essential to its business or that are not
otherwise commercially available.


                                       3

<PAGE>


Backlog

Backlog at December 31, 2006 was $103.1 million, a decrease of $34.0 million, or
25%, from $137.1 million at December 31, 2005 and a decrease of $15.4 million,
or 13%, from $118.5 million at September 30, 2006. At December 31, 2006, backlog
in the domestic operations of the Company's conveyor equipment segment was $62.7
million, a decrease of $16.1 million from September 30, 2006, and backlog in the
foreign operations of the Company's conveyor equipment segment was $40.4
million, an increase of $0.7 million from September 30, 2006. Management
believes that approximately 95% of the backlog at December 31, 2006 will be
shipped in 2007.

Employees

As of December 31, 2006, the Company had approximately 1,430 employees,
approximately 950 of whom were located in the United States. Approximately 290
of the employees at the Company's Winfield, Alabama facility are represented by
The United Steelworkers of America Union and are covered by a three year
collective bargaining agreement that expires in May 2007. Approximately 90
production employees at the Company's Australian subsidiary are covered by
collective bargaining agreements that expire in 2009. Approximately 140 of the
production employees at the Company's United Kingdom subsidiary are covered by
an annual collective bargaining agreement that expires in December 2007.
Approximately 80 of the production employees at the Company's South African
subsidiary are covered by an annual collective bargaining agreement that expires
in June 2007. The Company has not experienced any work stoppages since 1971 and
believes its relations with its employees are good.

Environmental and Health and Safety Matters

The Company is subject to a variety of environmental standards imposed by
federal, state, local and foreign environmental laws and regulations. The
Company is also subject to the federal Occupational Health and Safety Act and
similar foreign and state laws. The Company periodically reviews its procedures
and policies for compliance with environmental and health and safety laws and
regulations and believes that it is in substantial compliance with all such
material laws and regulations applicable to its operations. Historically the
costs of compliance with environmental, health and safety requirements have not
been material to the Company.


                                       4

<PAGE>


Item 1A.  Risk Factors

The Company's business can be affected by a number of factors, including but not
limited to those set forth below and elsewhere in this Report on Form 10-K. If
any of the following risks actually occur, the Company's business, financial
condition, results of operations and cash flows could be materially adversely
affected.

Adverse developments in the coal mining industry could have a material adverse
impact on our business and results of operations.

Approximately 58% of our net sales in 2006 related to the manufacture and sale
of conveyor systems and components to companies engaged principally in
underground and surface mining of coal in the United States, Australia, South
Africa, China and various other locations worldwide. Accordingly, our results of
operations and financial condition may be materially affected by adverse
regional or worldwide developments in the coal mining industry, including the
risks and hazards inherent to the coal mining industry. Such factors include:

o        the price of coal;
o        mechanical equipment performance;
o        ease or difficulty of mining reserves;
o        labor grievances, strikes and other labor disputes;
o        severe weather;
o        effects of compliance with environmental, occupational safety and other
         applicable regulations; and o operational and geological factors
         related to available mine reserves.

Labor stoppages, in particular, can have a particularly significant and
broad-based effect upon the coal industry.

In addition, a significant portion of worldwide coal production is utilized by
electric utilities, and the demand for coal is highly dependent upon the demand
for electricity, which in turn depends to a large extent upon the level of
economic activity. The demand by electric utilities for coal also is related to
the availability and cost in any given location of alternative sources of
energy, such as natural gas, oil or nuclear power. Adverse developments relating
to the demand by electric utilities or the coal mining industry generally could
have an adverse impact on our business and results of operations.


Our business experiences substantial fluctuations between periods and such
fluctuations may adversely affect our business and results of operations in
particular periods.

Our net sales and operating results often fluctuate significantly from period to
period. Because we generally recognize net sales upon shipment of product, the
timing of a small number of contracts in any particular quarter or year may
adversely affect operating results. In addition, net sales and gross profit may
fluctuate due to the size of the contracts and the requirements of each
contract. As a result of these and other factors, we could experience
significant fluctuations in net sales and operating results in future periods,
which could adversely impact business.


                                       5

<PAGE>


A significant reduction in the price of coal could adversely affect our
customers' willingness to consummate capital expenditures and purchase our
products, which would adversely affect results of operations.

Recently, coal prices have decreased and we are unable to predict price levels
of coal in 2007. To the extent that coal prices are increasing, our customers
generally are more likely to consummate capital expenditures, expand their
operations and/or purchase our products or services. Should coal prices continue
to decrease or change suddenly, our customers may cancel their outstanding
orders or delay capital expenditures or other purchases, which would adversely
affect results of operations.


The loss of business of any of our top five customers could have an adverse
impact on our business.

In 2006, net sales to our top five customers represented approximately 27% of
total net sales for the year. The loss of business from any of these customers,
or a significant decrease or interruption in the business from such customers,
could have a material adverse impact on our business.


Our level of international operations subjects us to a number of risks,
including foreign currency fluctuations, political and economic instability and
regulatory and trade restrictions, which could have an adverse impact upon our
results of operations.

During 2006, $105.0 million, or 30%, of our net sales and $5.5 million, or 13%,
of our operating income were generated outside of the United States. We conduct
our international businesses in local currencies and other regional currencies,
so foreign sales and earnings vary with currency exchange fluctuations. In
addition, international manufacturing and sales are subject to other risks
including:

o        political and economic instability in a particular country or region;

o        labor unrest;

o        restrictions on transfer of funds; regulation, import and export duties
         and quotas;

o        domestic and foreign customs and tariffs;

o        difficulty in obtaining distribution and support;

o        difficulty in staffing and managing widespread operations;

o        restrictions on our ability to own or operate subsidiaries, make
         investments or acquire new businesses in these jurisdictions;

o        requirements relating to payments by subsidiaries; and

o        adverse tax consequences.

Significant changes in currency exchange rates or these other factors could have
an adverse impact upon our results of operations.


                                       6

<PAGE>


The loss of management personnel or management services could have an adverse
impact upon our business.

Our success depends in large part upon our management personnel and that of our
operating subsidiaries. The loss of services of some of these employees could
have a material adverse effect upon us or a particular operating subsidiary. In
addition, we have entered into a management agreement with Nesco, Inc., an
affiliate of N.E.S. Investment Co., to perform various management oversight
services. The loss of such support also could have a material adverse effect on
our ability to operate our business.


As a controlled company, we are subject to the oversight of our sole shareholder
and the board members that the shareholder appoints, and the interests of the
sole shareholder may differ from the interests of bondholders.

We are a wholly-owned subsidiary of N.E.S. Investment Co. and N.E.S. Investment
Co. controls the election of our directors. Through its interest in the company,
N.E.S. Investment Co. has the right to approve many of our significant company
actions, such as entering into material affiliate contracts or agreements,
acquiring assets outside the ordinary course of business, merging or
consolidating with another person, selling any material assets other than
inventory sold in the ordinary course of business, making certain advances or
loans, making any material capital expenditures, or effecting a liquidation or
dissolution.


Our backlog may not be necessarily indicative of the level of our future
revenues.

In this Report on Form 10-K, we have described our backlog and management's
expectations regarding the fulfillment of that backlog. Although we believe
backlog is an indicator of future revenues, the reported backlog may not be
converted into sales in any particular period and actual sales from such
contracts may not equal backlog estimates. Therefore, our backlog may not be
necessarily indicative of the level of our future revenues.


Some of our employees belong to labor unions, and strikes or work stoppages
could adversely affect our results of operations.

Disputes under our existing collective bargaining agreements or the inability to
negotiate favorable extensions to such agreements could result in strikes, work
stoppages or other slowdowns. Although our relations with our employees have
generally been good, we cannot assure that our relations with employees will
remain positive or that union organizers will not be successful in future
attempts to organize the workforce at other facilities. Any adverse events could
cause a significant disruption in our business operations and higher labor
costs, either of which could adversely affect our results of operations.


We compete in a highly competitive and concentrated industry, and this
competition or industry consolidation may adversely impact our financial
results.

We face aggressive competition by a concentrated group of competitors in all
geographic markets and each industry sector in which we operate. Some of these
companies have greater resources than we have. In addition, at times,
Continental Conveyor and Goodman, which have separate management and operate
independently, compete with each other. The effect of this competition could
reduce our revenues and margins, limit our ability to grow, increase pricing
pressure on products and otherwise affect financial results. In addition,
because of the concentrated nature of competitors and customers, we face a
heightened risk that further consolidation in the industry among or between
competitors and customers could adversely impact our financial results.


                                       7

<PAGE>


Raw materials used to produce our products are subject to price fluctuations
that could increase costs of production and adversely affect profitability.

Raw materials used to produce our products are subject to price fluctuations
that could increase costs of production and adversely affect profitability. The
most significant material used to produce our products, steel, is sourced on a
global or regional basis and the prices of that material are susceptible to
price fluctuations due to supply and demand trends, transportation costs,
government regulations and tariffs, changes in currency exchange rates, price
controls, the economic climate, alternative products and other unforeseen
circumstances. If we are unable to pass on material price increases to our
customers, future profitability may be materially adversely affected.


Because a substantial portion of our sales are on a purchase order basis, or
based on arrangements that can be canceled at any time, and because we rely on
estimated forecasts of customers' needs, inaccurate forecasts could adversely
affect our business.

A substantial portion of our sales are on a purchase order basis rather than
long-term purchase commitments. Therefore, we rely on estimated demand
forecasts, based upon input from customers, to determine how much material to
purchase and product to manufacture. Because sales are generally based on
purchase orders, customers may cancel, delay or otherwise modify their purchase
commitments with little or no consequence to them and with little or no notice
to us. In addition, although we have preferred supplier arrangements with
several of the world's largest coal and mineral mining companies, these
arrangements are not governed by long-term contracts and may be terminated at
any time by either party. For these reasons, we cannot provide assurance as to
the quantities or timing required by our customers for our products. Whether in
response to changes affecting the industry or a customer's specific business
pressures, any cancellation, delay or other modification in customers' orders
could significantly reduce revenue, cause operating results to fluctuate from
period to period and make it more difficult to predict revenue. In the event of
a cancellation or reduction of an order, we may not have enough time to reduce
operating expenses to minimize the effect of the lost revenue on business and
may purchase too much inventory and spend more capital than expected.


We may be liable for product liability claims that exceed our insurance
coverage.

The nature of our business subjects us to product liability claims in the event
that the use of our products is alleged to have resulted in injury or other
adverse effects. We maintain reserves and liability insurance coverage, but we
cannot assure that we will be able to obtain such insurance on acceptable terms
in the future, if at all, or that any such insurance will provide adequate
coverage against potential claims. Product liability claims can be expensive to
defend and can divert the attention of management and other personnel for long
periods of time, regardless of the outcome. An unsuccessful product liability
defense could have a material adverse effect on our business, financial
condition, results of operations and reputation.

Item 1B.  Unresolved Staff Comments

The Company has received no written comments regarding its periodic or current
reports from the staff of the Securities and Exchange Commission that were
issued 180 days or more preceding the end of its 2006 fiscal year and that
remain unresolved.


                                       8

<PAGE>


Item 2.  Properties

The Company conducts its operations through the following primary facilities:

<TABLE>
<CAPTION>
                                           Approximate                                         Owned/
Location                                  Square Footage           Principal Function          Leased

<S>                                      <C>                <C>                               <C>
United States:
   Winfield, Alabama                             220,000     Headquarters, manufacturing        Owned
   Canonsburg, Pennsylvania                        2,993     Administration                     Leased(1)
   Belton, South Carolina                        191,000     Administration, manufacturing      Owned
   Salyersville, Kentucky                        111,000     Manufacturing                      Owned
   Pueblo, Colorado                               75,600     Manufacturing, warehouse           Owned
   Eatonton, Georgia                              22,000     Manufacturing, warehouse           Owned
   Phil Campbell, Alabama                         47,000     Administration, manufacturing      Owned

Australia:
   Somersby, New South Wales                      49,655     Administration, engineering,       Owned
                                                               sales, and manufacturing
                                                   6,975     Engineering                        Leased(2)
   Mackay, Queensland                             21,086     Manufacturing, and installation    Leased(3)
                                                               support
                                                  31,151     Manufacturing, and installation    Leased(4)
                                                               support
   Minto,  New South Wales                        23,024     Manufacturing                      Owned

England:
   Sunderland, Tyne & Wear                       100,000     Administration, engineering,       Leased(5)
                                                               sales, and manufacturing

South Africa:
   Alrode, South Africa                           55,854     Administration, engineering,       Leased(6)
                                                               sales, and manufacturing

China:
   Beijing, China                                  2,033     Administration and sales           Leased(7)

-----------------------------
</TABLE>

(1)  Lease expires in October 2007 with option to renew the lease for an
     additional two years at the expiration of the current lease period.
(2)  Lease expires in January 2008.
(3)  Lease expires in December 2013.
(4)  Leased on a month to month lease.
(5)  Lease expires in November 2021 with options to end the lease in 2011 and
     2016.
(6)  Lease expires in May 2007. The Company has an option to renew the lease for
     an additional two years at the expiration of the current lease period.
(7)  Lease expires in September 2008.

In addition to the foregoing facilities, the Company has a number of leased
warehouses and field sales offices in various locations throughout the United
States, Australia, and Russia. The Company believes that substantially all of
its property and equipment is in a condition appropriate for its operations and
that it has sufficient capacity to meet its current operational needs. Each of
the Company-owned United States facilities is subject to a mortgage securing
payment of indebtedness under the Company's Revolving Credit Facility. In
addition, the Company's owned facilities in Australia are subject to mortgage
securing payment of indebtedness under the Australian Revolving Credit Facility.
See Note E, "Financing Arrangements," to the Consolidated Financial Statements.


                                       9

<PAGE>


Item 3.  Legal Proceedings

There are pending or threatened against the Company or its subsidiaries various
claims and lawsuits, all arising from the ordinary course of business with
respect to commercial and products liability matters, which seek remedies or
damages. The Company believes that any liability that may finally be determined
with respect to commercial and product liability claims should not have a
material adverse effect on its financial condition. Legal costs are generally
expensed when incurred.

At December 31, 2006 and 2005, the Company's Consolidated Balance Sheet includes
an accrued liability for any pending or threatened claim with respect to any
commercial and products liability matter of $0.3 million, and was included in
current liabilities as Other Accrued Liabilities.

In August and September 2003, Continental Conveyor & Equipment Company was
served as one of fifty-eight known and unknown defendants in nineteen separate
actions pending in various state courts in the State of Alabama alleging various
contract, tort and warranty claims. All claims in such actions arose out of
alleged injuries and deaths occurring at the Jim Walters Resources No. 5 Mine
which occurred on September 23, 2001. A settlement of these actions has been
agreed to by the parties involved, pending approval by the courts. The proposed
settlement does not materially impact the Company's financial condition.

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

No matters were submitted to a vote of the Company's security holders during the
fourth quarter of the fiscal year ended December 31, 2006.


                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

The Company is a direct wholly-owned subsidiary of N.E.S. Investment Co. There
is no established public trading market for the Company's common stock. As of
March 15, 2006, the Company had one stockholder. The Company paid no dividends
in 2006 or 2005. See Note E, "Financing Arrangements", to the Consolidated
Financial Statements, Part II, Item 8, for limitations on dividends.


                                       10

<PAGE>


Item 6.  Selected Financial Data

The following table presents selected financial and operating data of the
Company for each of the five years in the period ended December 31, 2006. The
data should be read in conjunction with the Consolidated Financial Statements
and related Notes included in this report on Form 10-K.

<TABLE>
<CAPTION>
                                               2006        2005        2004         2003        2002
                                           --------------------------------------------------------------
                                                          (Data in 000's, except ratios)
<S>                                         <C>         <C>         <C>          <C>         <C>
Income Statement Data:
Net sales                                    $ 355,245   $ 302,246   $ 235,719    $ 194,341   $ 184,976
Gross profit                                    75,539      66,372      39,949       26,676      29,774
Operating income                                42,156      36,115      13,104        3,475       6,645
Interest expense, net                            4,820       4,809       6,909       15,265      15,220
Income (loss) before cumulative effect of
   change in accounting principle               27,727      22,891       3,860      (12,633)     (8,692)
Net income (loss) (1)                           27,727      22,891       3,860      (12,633)    (12,542)

Other Data:
Depreciation and amortization                    2,136       2,042       2,297        2,221       2,283
Cash flows from operating activities            18,890      13,756       1,876       (5,394)     (1,560)
Cash flows from investing activities            (3,699)     (3,547)       (687)        (688)     (1,227)
Cash flows from financing activities           (11,545)    (10,547)     (1,159)       1,249      (6,283)
Ratio of earnings to fixed charges (2)            7.20        6.18        1.91            -           -

Balance Sheet Data:
Cash and cash equivalents                        4,372         543         887          851       5,635
Total assets                                   142,920     124,206     100,227       87,763      89,667
Senior Notes in default                              -           -           -      120,000           -
Long-term debt, including current portion      112,555     117,015     122,057        2,916     122,887
Stockholder's equity (deficit)                 (39,132)    (68,246)    (90,186)     (94,275)    (82,721)
</TABLE>

(1)   In 2002, the Company adopted Statement of Financial Accounting Standards
      (SFAS) No. 142, "Goodwill and Other Intangible Assets," and as a result no
      longer amortizes goodwill. Net loss in 2002 includes a non-cash goodwill
      impairment write-down recorded as a cumulative effect of change in
      accounting principle of $3,850.

(2)   Earnings consist of income before income taxes and accounting change plus
      fixed charges. Fixed charges consist of interest expense, amortization of
      deferred financing costs and one-third of rent expense from operating
      leases, which management believes is a reasonable approximation of an
      interest factor. Earnings were inadequate to cover fixed charges in the
      years ended December 31, 2003 and 2002 by $12,629 and $8,689,
      respectively.


                                       11

<PAGE>


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

Results of Operations

The following table sets forth, on a comparative basis, certain income statement
data as a percentage of net sales for the fiscal years ended December 31, 2006,
2005, and 2005.

                                           Year ended December 31
                           ---------------------------------------------------
                                   2006             2005              2004

Net sales                         100.0%           100.0%            100.0%
Cost of products sold              78.7             78.0              83.1
Gross profit                       21.3             22.0              16.9
SG&A expenses                       8.7              9.3              10.9
Management fee                      0.7              0.7               0.3
Restructuring charges               -                0.1               0.1
Operating income                   11.9             11.9               5.6

Year Ended December 31, 2006 Compared to Year Ended December 31, 2005

Net Sales
Net sales increased $53.0 million, or 18%, from $302.2 million in 2005 to $355.2
million in 2006. Net sales in the Company's conveyor equipment segment have been
favorably impacted as a result of the strong demand for coal. Net sales in the
domestic operations of the conveyor equipment segment increased $39.0 million
primarily due to increased sales volumes. The increased sales volumes resulted
from improved market conditions in the coal industry which resulted in increased
capital spending by the Company's major customers in this industry. The capital
investment needs of these customers could change in the future. The Company's
domestic subsidiaries began the year with a backlog of $92.4 million compared to
$21.5 million on January 1, 2005. Domestic backlog at December 31, 2006 was
$62.7 million. Net sales in the foreign operations of the Company's conveyor
equipment segment increased $19.6 million, net of a $0.8 million decrease due to
changes in foreign currency translation rates. When adjusted for foreign
currency fluctuations, net sales in the Company's Australian and United Kingdom
subsidiaries increased $12.3 million and $9.9 million, respectively, while net
sales in the Company's South African subsidiary decreased $1.8 million. The
increases in Australia and the United Kingdom resulted from increased shipments
due to improved market conditions. Australia began the period with a backlog of
$34.7 million compared to $14.0 million at the beginning of 2005. The increase
in the United Kingdom was due to increased sales of both engineered systems
projects and component sales to the OEM (original equipment manufacturer)
industry. The decrease in South Africa was the result of decreased sales volumes
and reduced selling prices due to increased competition in the South African
market. Net sales in the Company's manufactured housing segment decreased $5.6
million or 17%. Based on the Manufactured Housing Institute's economic report
for December 2006, shipments of manufactured homes for the twelve months ended
December 31, 2006 decreased 20% from the same period in 2005. Net sales in the
Company's other segment were unchanged.

Gross Profit
Gross profit increased $9.2 million, or 14%, from $66.3 million in 2005 to $75.5
million in 2006. Gross profit in the domestic operations of the Company's
conveyor equipment segment increased $7.6 million primarily due to increased
sales volume. Gross profit in the foreign operations of the Company's conveyor
equipment segment increased $2.3 million in Australia and $1.8 million in the
United Kingdom due to increased sales volume, offset by a $1.4 million decrease
in South Africa as a result of reduced volume and lower selling prices. Gross
profit in the Company's manufactured housing segment decreased $1.1 million due
to lower sales volume.


                                       12

<PAGE>


Gross profit as a percentage of net sales decreased from 22.0% in 2005 to 21.3%
in 2006. This decrease primarily resulted from reduced profit margins in the
South African subsidiary and in the manufactured housing segment. The reduction
in South Africa was due to reduced sales volumes and lower selling prices. The
decrease in the manufactured housing segment resulted from lower sales volume.

SG&A Expenses
SG&A expenses increased $2.9 million or 10%, from $28.1 million in 2005 to $31.0
million in 2006. As a percentage of net sales, SG&A expenses decreased from 9.3%
in 2005 to 8.7% in 2006. SG&A expenses in the domestic operations the Company's
conveyor equipment segment increased $1.0 million due to increased commission
expense, personnel costs and insurance expense as result of higher net sales.
SG&A expenses in the foreign operations of the Company conveyor equipment
segment increased due to increases of $0.1 million, $0.4 million and $ 0.1
million at the Company's Australian, United Kingdom and South African
subsidiaries, respectively. These increases were due to higher personnel and
marketing costs associated with the increase in net sales. SG&A expenses at the
Company's manufactured housing segment increased $0.3 million primarily due to
increased bad debt expense. Corporate SG&A expenses increased $1.0 million due
to the increase in personnel expenses associated with the appointment of a new
CEO in February 2006, replacing the interim CEO who had served for the previous
ten months.

Operating Income
Operating income increased $6.1 million, or 17%, from $36.1 million in 2005 to
$42.2 million in 2006. The increase resulted from the $9.2 million increase in
gross profit, partially offset by the $2.9 million increase in SG&A expenses and
a $0.2 million increase in other operating expenses, primarily accrued
management fee expenses.

Income Tax Expense
Income tax expense increased $1.4 million, from $7.2 million in 2005 to $8.6
million in 2006. The increase resulted from the Company's increased profits.

The Company's effective income tax rate of 24% is less than the statutory rate
primarily due to a favorable income tax benefit for interest payments on the New
Series A and Series B Notes due 2008 which are recorded as a reduction of the
outstanding indebtedness for financial reporting purposes. In addition, the
Company has not recognized income tax expense in certain of its foreign
subsidiaries due to the reversal of an income tax valuation allowance.

Net Income
Net income increased $4.8 million, or 21%, from $22.9 million in 2005 to $27.7
million in 2006. This increase resulted from the $6.1 million increase in
operating income combined with a $0.1 million decrease in miscellaneous expense
(income) and partially offset by the $1.4 million increase in income tax
expense.

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

Net Sales
Net sales increased $66.5 million, or 28%, from $235.7 million in 2004 to $302.2
million in 2005. Net sales in the domestic operations of the Company's conveyor
equipment segment increased $68.2 million due to increased sales volumes and
increased sales prices in all business areas of the conveyor equipment segment.
The increase in sales volume was due primarily to improved market conditions in
the coal industry, which created higher demand for coal and resulted in
increased capital spending by the Company's major customers in the coal
industry. The increase in sales prices in 2005 resulted from significant steel
price increases from the Company's vendors which began in March 2004 and
continued through the end of 2004. Net sales in the foreign operations of the
Company's conveyor equipment segment decreased $9.1 million, net of a $1.4
million increase due to changes in foreign currency translation rates. When
adjusted for variations in foreign exchange rates, net sales in the foreign


                                       13

<PAGE>

operations decreased $10.5 million due to decreases in the Company's Australian
and United Kingdom subsidiaries of $6.1 million each, offset by an increase in
the Company's South African subsidiary of $1.7 million. The decrease in
Australia resulted from significant shipments on a major contract in the second
quarter of 2004 which did not reoccur in 2005. The decrease in the United
Kingdom resulted from decreased sales of engineered systems contracts, primarily
to the tunneling industry. The increase in South Africa was due to improved
market conditions in the coal industry in South Africa. Net sales in the
Company's manufactured housing segment increased $7.4 million, or 28%, primarily
due to a change in the product mix with more sales of new manufactured products
which have a higher selling price than refurbished products. Based on the
Manufactured Housing Institute's economic report for December, 2005, production
of manufactured homes for the twelve months ended December 31, 2005 increased
12.3% from the same period in 2004. In the Gulf region, which is the Company's
primary market area, production of manufactured homes in 2005 increased
approximately 19% over 2004 due to FEMA and other hurricane related demand.

Gross Profit
Gross profit increased $26.4 million, or 66%, from $39.9 million in 2004 to
$66.3 million in 2005. This increase in gross profit resulted from a $14.2
million increase due to increased sales volume combined with a $12.2 million
increase due to improved margins. Gross profit in the domestic operations of the
Company's conveyor equipment segment increased $23.5 million. This increase was
primarily due to increased sales volume which contributed to a more efficient
utilization of overhead expense and improved gross profit margins. Gross profit
in the foreign operations of the conveyor equipment segment increased $1.7
million. Changes in foreign currency translation rates caused $0.2 million of
this increase. Adjusted for variations in foreign exchange rates, gross profit
in the Australian, United Kingdom and South African subsidiaries increased $0.2
million, $0.8 million and $0.5 million, respectively. The increase in Australia
resulted from improved product mix with a larger percentage of sales of
manufactured products which have a higher gross margin and a lower percentage of
sales of purchased and resale items. The increase in the United Kingdom resulted
from higher margins due to improved production methods and lower materials
costs. In addition, there was also a change in the product mixture in the United
Kingdom with decreased engineered systems sales in the tunneling industry (which
have lower margins than sales of standard manufactured products) and increased
sales to the mining industry which include higher sales volumes of the more
profitable standard conveyor components. The increase in South Africa resulted
from the increase in sales. Gross profit in the manufactured housing segment
increased $1.2 million due to increased sales volume and increased selling
prices.

Gross profit as a percentage of net sales increased from 16.9% in 2004 to 22.0%
in 2005. This increase primarily resulted from the increased sales volume and
improved utilization in the domestic conveyor equipment operations and the
improved margins in the foreign operations of the Company's conveyor equipment
segment.

SG&A Expenses
SG&A expenses increased $2.3 million, or 9%, from $25.8 million in 2004 to $28.1
million in 2005. As a percentage of net sales, SG&A expenses decreased from
10.9% in 2004 to 9.3% in 2005. SG&A expenses in the domestic operations of the
Company's conveyor equipment segment increased $1.5 million due to increased
personnel costs and insurance expense. SG&A expenses in the foreign operations
of the Company's conveyor equipment segment increased $1.4 million, of which
$0.2 million can be attributed to changes in foreign currency translation rates.
The remaining $1.2 million increase resulted from increases of $0.7 million,
$0.2 million, and $0.3 million at the Company's Australian, United Kingdom and
South African subsidiaries, respectively. The increase in Australia was
primarily due to higher engineering costs and increased insurance and
professional expenses. The increase in the United Kingdom resulted from
increased advertising and trade show expenses. The increase in South Africa was
caused by increased selling expenses as a result of higher net sales. SG&A
expenses at the Company's manufactured housing segment increased $0.1 million.
Corporate SG&A expenses decreased $0.7 million primarily due to lower personnel
expenses.


                                       14

<PAGE>

Operating Income
Operating income increased $23.0 million, or over 100%, from $13.1 million in
2004 to $36.1 million in 2005. This increased resulted from the $26.4 million
increase in gross profit, partially offset by the $2.3 million increase in SG&A
expenses and a $1.1 million increase in management fees. Management fees are
based on the Company's Adjusted EBITDA and this increase is a direct result of
the Company's increased profits.

Interest Expense, Net
Interest expense decreased $2.1 million, or 30%, from $6.9 million in 2004 to
$4.8 million in 2005. This decrease primarily resulted from the reduction of
interest on the Company's Senior Notes. Interest expense related to the 11%
Senior Notes due 2007 decreased $3.0 million from $4.2 million in 2004 to $1.2
million in 2005. On October 4, 2004, the Company completed a restructuring of
its 11% Senior Notes due 2007 which was accounted for according to Statement of
Financial Accounting Standards ("SFAS") No. 15, "Accounting by Debtors and
Creditors for Troubled Debt Restructurings". According to the provisions of SFAS
No. 15, all interest payments on the Company's newly issued Series A and Series
B Notes due 2008 are recorded as a reduction of outstanding indebtedness rather
than interest expense. During 2005 and 2004, the Company paid interest of $3.4
million and $3.2 million, respectively. Interest paid in 2005 and 2004 does not
include payments of $6.1 million and $3.1 million, respectively, related to the
Company's New Series A and Series B Notes, which were recorded as a reduction in
the balance of outstanding indebtedness. The decrease in interest expense on the
Senior Notes was partially offset by a $0.8 million increase in interest expense
on the Company's note payable to N.E.S. Investment Co. Refer to the Liquidity
and Capital Resources section for further discussion of future interest
payments.

Miscellaneous Expense (Income)
Miscellaneous expenses (income) increased $2.1 million, from income of $0.9
million in 2004 to expense of $1.2 million in 2005. The increase was primarily
due to the fact that in 2004 the Company recorded a gain on debt restructuring,
partially offset by significant debt restructuring expenses and these items did
not recur in 2005.

Income Tax Expense
Income tax expense increased $3.9 million, from $3.3 million in 2004 to $7.2
million in 2005. The increase resulted from the increase in pre-tax income of
the Company's domestic subsidiaries and the loss of all domestic tax attributes
in the fourth quarter of 2004 due to the recognition of cancellation of
indebtedness income which resulted from the restructuring of the Company's
Senior Notes. The Company's effective income tax rate is less than the statutory
rate in 2005 primarily due to a favorable income tax benefit for interest
payments on the New Series A and Series B Notes due 2008 which are recorded as a
reduction of the outstanding indebtedness for financial reporting purposes. In
addition, the Company has not recognized income tax expense in certain of its
foreign subsidiaries due to the reversal of an income tax valuation allowance.

Net Income
Net income increased $19.1 million, from $3.8 million in 2004 to $22.9 million
in 2005. This increase resulted from the $23.0 million increase in operating
income, combined with the $2.1 million decrease in interest expense, and
partially offset by the $2.1 million increase in miscellaneous expense (income)
and the $3.9 million increase in income tax expense.

Restructuring Charges
The Company incurred restructuring charges of approximately $0.1 million and
$0.2 million in 2005 and 2004, respectively, related to changes in staffing and
production requirements in its domestic operations. These charges consist
primarily of severance costs associated with a reduction in personnel which
occurred in 2002 and 2003. As part of this restructuring, in 2002 the Company
developed a plan to discontinue the manufacturing operations in certain of its


                                       15

<PAGE>

domestic facilities and merge these operations with other existing facilities.
The process of merging the domestic operations began in 2003 and continued
throughout 2004. Since 2002, the Company has incurred approximately $1.0 million
in restructuring charges. As of December 31, 2006, the Company has paid
approximately $0.9 million of the charges incurred to date, with the majority of
the remainder expected to be paid by 2008. Due to increases in the Company's
domestic backlog, the Company does not expect any further consolidation at this
time.

Liquidity and Capital Resources

Net cash provided by operating activities was $18.9 million, $13.8 million, and
$1.9 million for the years ended December 31, 2006, 2005, and 2004,
respectively. The increase in operating cash flows from 2004 to 2006 is
primarily the result of the increase in the Company's net income. Net cash
provided by operations in 2006 resulted from current year net income of $27.7
million, combined with non-cash expenses of $1.4 million, and partially offset
by a net increase in operating assets of $10.2 million. The net increase in
operating assets resulted primarily from an increase in accounts receivable and
inventory and a decrease in accounts payable and other liabilities. The increase
in accounts receivable resulted from the increase in net sales. The increase in
inventory primarily occurred in the Company's Australian subsidiary due to
significant projects in process at the end of 2006 that will be completed and
shipped in 2007. The decrease in accounts payable and other liabilities was
primarily due to a decrease in accounts payable and income taxes payable at the
Company's domestic subsidiaries. Net cash provided by operations in 2005
resulted from net income of $22.9 million combined with non-cash expenses of
$3.9 million and offset by a net increase in operating assets of $13.0 million.
The net increase in operating assets was primarily attributable to increases in
accounts receivable, inventories, and accounts payable. The increase in accounts
receivable resulted from higher net sales. The increase in inventories was due
to higher production levels to support the Company's increased backlog. The
increase in accounts payable occurred due to higher purchases related to the
increased inventories. Net cash provided by operating activities in 2004
resulted from net income of $3.9 million combined with non-cash expenses of $6.6
million and offset by a net increase in operating assets of $8.6 million. The
net increase in operating assets in 2004 was primarily caused by an increase in
accounts receivable due to increased net sales.

Net cash used in investing activities was $3.7 million, $3.5 million, and $0.7
million for the years ended December 31, 2006, 2005 and 2004, respectively. Net
cash used in investing activities represents net purchases of property, plant,
and equipment for all years.

Net cash used in financing activities was $11.5 million, $10.5 million, and $1.2
million for the years ended December 31, 2006, 2005, and 2004, respectively. Net
cash used in financing activities in 2006 resulted from a $5.5 million decrease
in borrowings on notes payable, payments on Senior Notes of $6.1 million, and
principal payments on long-term obligations of $1.1 million, partially offset by
proceeds from long-term obligations of $1.2 million. The decrease in borrowings
on notes payable resulted from a $1.8 million decrease in the domestic
subsidiaries combined with a $3.7 million decrease in the foreign subsidiaries.
Interest payments on the New Series A and Series B Notes of $6.1 million were
recorded as a reduction in the outstanding debt balance. The proceeds from
long-term obligations primarily resulted from an increase the Australian
subsidiary's term loan and equipment loans.

Net cash used in financing activities in 2005 resulted from a net decrease in
borrowings on notes payable of $4.2 million, payments on Senior Notes of $6.1
million, principal payments on long-term obligations of $0.9 million, and
payments of additional consideration to bondholders of $1.8 million, partially
offset by proceeds from long-term obligations of $2.5 million. The net decrease
in borrowings on notes payable resulted from a decrease in borrowings in the
domestic subsidiaries of $6.1 million, partially offset by an increase in
borrowings in the foreign subsidiaries of $1.9 million. Interest payments on the
New Series A and Series B Notes of $6.1 million were recorded as a reduction in
the outstanding debt balance. The payment of additional consideration to


                                       16

<PAGE>

bondholders of $1.8 million was equivalent to $2.00 per every $120 in Old Notes
tendered in the October 2004 debt restructuring. Proceeds from long-term
obligations include $2 million in subordinated indebtedness to N.E.S. Investment
Co. used to fund the payment of additional consideration to bondholders.

Net cash used in financing activities in 2004 resulted from payments on Senior
Notes of $3.1 million, principal payments on long-term obligations of $1.3
million and payments of additional consideration to bondholders of $14.1
million, offset by a net increase in borrowings on notes payable of $2.9 million
and proceeds from long-term obligations of $14.4 million. The payment of
additional consideration to bondholders of $14.1 million was equivalent to
$15.50 per every $120 in Old Notes tendered in the debt restructuring. Proceeds
from long-term obligations primarily included a $10.0 million note payable to
N.E.S. Investment Co. used to partially fund the additional consideration
payment to bondholders and a $3.8 million increase in a term loan with Bank One.
Borrowings on notes payable at the Company's domestic subsidiaries increased
$4.1 million in 2004 while borrowings on notes payable at the Company's foreign
subsidiaries decreased $1.2 million in 2004.

The Company's primary capital requirements consist of capital expenditures and
debt service. The Company utilizes cash on hand and its available credit
facilities to satisfy these requirements. The Company's capital expenditures in
2006 and 2005 were approximately $3.8 million and $3.6 million, respectively,
which included expenditures to improve productivity and for maintenance capital.
In addition to the Company's debt service requirements for interest expense, as
of December 31, 2006, the Company's domestic and foreign credit facilities had
outstanding principal balances of approximately $5.4 million and $1.9 million,
respectively.

On October 4, 2004, the Company completed an exchange offer with respect to its
outstanding 11% Senior Notes due 2007 (the "Old Notes") and entered into an
Indenture by and among the Company, two of its wholly-owned subsidiaries, CCE
and GCC (collectively, the "Subsidiary Guarantors") and Wells Fargo Bank,
National Association, as trustee (the "Indenture"). Tenders with respect to Old
Notes representing approximately $109.3 million or 91% of the $120 million of
Old Notes outstanding principal amount were received by Wells Fargo Bank, N.A.,
which acted as depositary in the exchange offer. All Old Notes that were validly
tendered were accepted for exchange. According to the terms of the exchange
offer, on October 4, 2004, the Company issued approximately $59.2 million of 9%
New Series A Notes due 2008 and approximately $9.1 million of 13% New Series B
Notes due 2008. In addition, the Company made a cash payment as additional
consideration to the Series A and Series B bondholders of approximately $14.1
million, or $15.50 for every $120 of Old Notes tendered. On October 3, 2005, the
Company made an additional cash payment to the Series A and Series B bondholders
of approximately $1.8 million, or $2.00 for every $120 of Old Notes tendered.

According to the terms of the Indenture, the New Series A Notes will mature on
October 1, 2008. Interest will accrue at the rate of 9% per annum and will be
payable semiannually in arrears, in cash, on each April 1 and October 1 until
maturity. Interest accrued on the New Series A Notes from April 1, 2004, as if
the New Series A Notes had been issued on such date. The Company paid interest
of approximately $2.7 million on the first business day of April and October
beginning October 4, 2004 through October 2, 2006 related to the Series A Notes.
The New Series B Notes will also mature on October 1, 2008. Interest will accrue
at the rate of 13% per annum and will be payable semiannually in arrears, in
kind, on each April 1 and October 1 until maturity. However, the Company has the
right to make interest payment on the New Series B Notes in cash at the same
rate and on the same terms as the New Series A Notes. The Company has assumed
the interest will be paid in cash at a rate of 9% in all calculations involving
the interest payments on the Series B Notes in these consolidated financial
statements. Interest accrued on the New Series B Notes from April 1, 2004, as if
the New Series B Notes had been issued on such date. The Company paid interest
of approximately $0.4 million on the first business day of April and October
beginning October 4, 2004 through October 2, 2006 related to the Series B Notes.
The New Series A and Series B Notes are jointly and severally guaranteed by the
Subsidiary Guarantors and secured by substantially all of the assets of the
Subsidiary Guarantors.


                                       17

<PAGE>

The cash payment made on October 4, 2004 as additional consideration to the
Series A and Series B bondholders was funded by new subordinated indebtedness to
N.E.S. Investment Co. in the amount of $10 million and additional borrowings
from the Company's revolving line of credit. The note payable to N.E.S.
Investment Co. accrues interest at a rate of 9%, payable in kind, compounded
annually. The additional consideration paid by the Company on October 3, 2005 to
the Series A and Series B bondholders was funded with an additional $2 million
of subordinated indebtedness to N.E.S. Investment Co.

The debt exchange was accounted for according to Statement of Financial
Accounting Standards ("SFAS") No. 15, "Accounting by Debtors and Creditors for
Troubled Debt Restructurings". According to the requirements of SFAS No. 15, in
the fourth quarter of 2004, the Company recorded a gain on the exchange of bonds
of approximately $3.4 million, representing the difference between the future
cash outlays of the Series A and Series B Notes and the carrying value of the
Old Notes. All cash payments as additional consideration to Series A and Series
B bondholders and interest payments on the New Series A and Series B Notes will
be recorded as a reduction in the balance of outstanding indebtedness throughout
the terms of the Series A and Series B Notes, and accordingly, the Company will
not recognize any interest expense in the income statement related to the New
Series A and Series B Notes.

Because the debt exchange meets the definition of a troubled debt restructuring,
U.S. generally accepted accounting principles require that the Company follow
the provisions of SFAS No. 15. However, the Company believes that additional
information is necessary in order to keep the consolidated financial statements
from being misleading. The Company accrued interest expense on the $120 million
Old Notes during the first quarter of 2004. Beginning in the second quarter of
2004, under the provisions of SFAS No. 15, the Company accrued interest expense
related to its Senior Notes only on the $10.7 million of Old Notes not tendered.
All payments related to the New Series A and Series B Notes in 2004 and 2005
were recorded as a reduction in the balance of the Senior Notes. In future
periods, the Company will not record any of the interest payments on the Series
A and Series B Notes as interest expense in the statement of operations but
rather as a reduction of the debt balance on the balance sheet. Associated with
this debt exchange, the Company incurred in 2004 debt restructuring expenses of
approximately $2.6 million and recorded a gain on debt restructuring of
approximately $3.4 million, which are both included in miscellaneous expense
(income) in the consolidated statement of operations.

The outstanding indebtedness has been classified as short and long-term
liabilities as of December 31, 2006 based upon the payment terms of the new
debt. The following table summarizes the reduction in the balance of the Senior
Notes based upon the payment requirements over the terms of the Series A and
Series B Notes:

Balance at December 31, 2006 of Senior Notes, including
   current portion of $16,876,438                                $ 91,316,624
Interest payments on Series A Notes, 2007-2008                    (10,653,824)
Interest payments on Series B Notes, 2007-2008                     (1,639,050)
Maturity of outstanding 11% Senior Notes due 2007                 (10,730,000)
                                                               ----------------
Maturity of Series A and Series B Notes due 2008                 $ 68,293,750
                                                               ================

At December 31, 2006, the Company had cash and cash equivalents of approximately
$4.4 million and approximately $10.1 million available for use under its
domestic credit facility, representing approximately $14.5 million of liquidity.
This availability figure reflects a reserve of $10.7 million for the retirement
of the Company's outstanding 11% Senior Notes due 2007. Without this reserve,
the Company would have had approximately $20.8 million available for use under
its domestic credit facility. With the completion of the debt exchange in
October 2004, the Company reduced its annual debt service requirements related
to interest payments on its Senior debt by approximately $5.9 million. Annual
debt service on the New Series A and Series B Notes due 2008 combined with the
outstanding Senior Notes due 2007 is approximately $7.3 million, down from $13.2


                                       18

<PAGE>

million prior to the debt exchange. In order to partially fund the cash payments
as additional consideration to the Series A and Series B bondholders, the
Company increased the balance of a term loan with Bank One by approximately $3.8
million and entered into subordinated promissory notes with N.E.S. Investment
Co. in the amount of $12 million. The debt service for interest related to these
debt instruments in 2006 was approximately $0.4 million in cash and $1.2 million
in kind. The Company expects current financial resources, existing lines of
credit, and funds from operations to be adequate to meet anticipated cash
requirements.

The table below summarizes the Company's contractual payments, under debt
agreements (including interest), capital leases, operating leases, and material
purchase obligations as of December 31, 2006:

<TABLE>
<CAPTION>
                                                                  Payments due by period
                                              ---------------------------------------------------------------
                                                                Less than
(dollars in thousands)                            Total           1 year       1 - 3 years     3 - 5 years
                                              --------------- --------------- --------------- ---------------

<S>                                              <C>             <C>              <C>             <C>
Notes payable                                     $   7,258       $  7,258         $      -        $     -
Senior Notes                                         91,907         17,467           74,440              -
Other long-term debt obligations                     23,367          2,595           20,695             77
Capital leases                                          815            315              471             29
Operating leases                                      7,267          1,376            2,282          3,609
Purchase obligations                                      -              -                -              -
                                              --------------- --------------- --------------- ---------------
Total                                             $ 130,614       $ 29,011         $ 97,888        $ 3,715
                                              =============== =============== =============== ===============
</TABLE>

International Operations

The Company transacts business in a number of countries throughout the world and
has facilities in the United States, Australia, the United Kingdom, South
Africa, and a newly formed trading company in China. As a result, the Company is
subject to business risks inherent in non-U.S. operations, including political
and economic uncertainty, import and export limitations, exchange controls and
currency fluctuations. The Company believes that the risks related to its
foreign operations are mitigated by the relative political and economic
stability of the countries in which its largest foreign operations are located.
The principal foreign currencies in which the Company transacts business are the
Australian dollar, the British pound sterling, and the South African rand. As
the U.S. dollar strengthens and weakens against these foreign currencies, the
Company's financial results will be affected. As discussed previously, the
Company's net sales for the year ended December 31, 2006 decreased by
approximately $0.8 million over the prior year due to changes in foreign
currency translation rates, primarily the strengthening of the British pound
against the U.S. dollar. The fluctuation of the U.S. dollar versus other
currencies also resulted in foreign currency translation gains (losses) included
in the accumulated other comprehensive loss component of stockholder's equity
(deficit) of approximately $1.2 million and $(0.8) million for the years ended
December 31, 2006 and 2005, respectively.

Critical Accounting Policies

Management's discussion and analysis of its financial position and results of
operations are based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires
management to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses. The Company evaluates its estimates
on an on-going basis. The Company bases its estimates on historical experience
and on various other assumptions that are believed to be reasonable under the
circumstances. Our significant accounting policies are described in Note B to
the consolidated financial statements included in Item 8 of this Form 10-K.


                                       19

<PAGE>

The Company believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its consolidated
financial statements:

Revenue Recognition
The Company recognizes revenue, other than from long-term contracts of its
foreign subsidiaries, at the time of shipment. On long-term contracts of its
foreign subsidiaries, revenues are accounted for using the percentage of
completion method based on the cost of partial shipments and on the ratio of
actual costs incurred to date to the estimated total costs to complete. Net
sales include freight invoiced to customers with the related costs incurred
recorded in cost of sales.

Warranty Costs
New manufactured products sold are generally covered by a warranty for periods
ranging from six months to two years. Goods purchased for resale normally carry
the warranty of the respective manufacturer. The Company records a warranty
reserve for estimated costs to satisfy warranty obligations. The Company's
estimate of costs to service its warranty obligations is based on historical
experience and expectation of future conditions. To the extent the Company
experiences changes in warranty claims activity or costs associated with
servicing those claims, its warranty accrual is adjusted accordingly.

Allowance for Doubtful Accounts
The Company maintains allowances for doubtful accounts for estimated losses
based upon its evaluations of the probability of collection. The Company
evaluates the allowance for doubtful accounts based on the length of time the
receivables are past due, historical collection experience, and customer
credit-worthiness. In cases where the Company is aware of circumstances that may
affect the collectibility of accounts receivable from a specific customer, the
Company may record a specific allowance against the amount due from such
customer.

Inventories
The Company's inventories consists of raw material, manufactured and purchased
parts, and work in process. Since inventory records are maintained on a job
order basis, it is not practical to segregate inventories into their major
classes. The value of a portion of the inventories is determined using the
last-in, first-out ("LIFO") method with the remainder determined using the
first-in, first-out ("FIFO") method. The Company provides allowances for excess
and obsolete inventory based on the age and quality of its products.

Goodwill
The Company accounts for its goodwill under SFAS No. 142, "Goodwill and Other
Intangible Assets," and accordingly performs annual impairment tests of
goodwill. The goodwill impairment test is a two-step process, which requires
management to make judgments in determining what assumptions to use in the
calculation. The first step of the process consists of estimating the fair value
of each reporting unit to determine if there is impairment and the second step
of the process consists of determining the amount of the impairment. The Company
engages the assistance of independent valuation experts to assist in performing
the annual impairment test.

The Company uses the combination of two valuation methodologies, a market
approach and a discounted cash flow approach to develop its estimate of the fair
value of the reporting units. These two methodologies use a number of factors
and estimates that depend on, among other factors, projected future operating
results and future cash flows, estimated cash flow periods, terminal values
based on anticipated growth rates, discount rates, and market place data of
comparable companies.


                                       20

<PAGE>

The results of the annual impairment tests completed in the fourth quarters of
2006 and 2005 indicated that there was no impairment. Changes in any of the
assumptions underlying these estimates could result in a future impairment of
goodwill.

Employee Benefit Plans
The Company accounts for its defined benefit pension plan using SFAS No. 158.
Annual pension benefits under the Company's defined benefit plan are calculated
by third party actuaries using standard actuarial methodologies. Significant
assumptions used in the valuation of pension benefits include expected return on
plan assets, discount rate, and any plan amendments. As a result of declines in
interest rates and the market value of the Company's defined benefit pension
plan assets in recent years, at December 31, 2006 the Company's defined benefit
pension plan was underfunded by $1.5 million. The Company has recorded a
liability equal to this underfunded amount. For further details regarding the
Company's defined benefit pension plan, see Note G to the consolidated financial
statements.

Deferred Taxes
Deferred income taxes reflect the temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. Tax credits are recognized as a reduction
of income tax expense in the year the credit arises. A valuation allowance is
established when necessary to reduce deferred tax assets to the amount more
likely than not to be realized. At December 31, 2006, the Company had a
valuation allowance of approximately $1.0 million against its foreign net
operating loss carryforwards. Should the Company generate pre-tax income in
their foreign subsidiaries in future periods, portions of the valuation
allowance may be reversed against the current period tax expense (to the extent
that the allowance is available to be reversed), resulting in higher net income
for that period.

New Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement No. 109." FIN 48 clarifies the recognition
threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. FIN
48 also provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. FIN 48 is
effective for fiscal years beginning after December 15, 2006. The Company will
adopt this interpretation as required. The Company is currently evaluating the
impact of this Interpretation on its financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 158 "Employers' Accounting for Defined Benefit Pension and Other
Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and
132(R)." SFAS No. 158 requires plan sponsors to recognize the funded status of
their postretirement benefit plans in its statement of financial position,
measure the fair value of plan assets and benefit obligations as of the balance
sheet date and provide additional disclosures. On December 31, 2006, the Company
adopted the recognition and disclosure provisions of SFAS No. 158. The effect of
adopting SFAS No. 158 on the Company's financial condition at December 31, 2006
has been included in the 2006 consolidated financial statements and did not have
an effect on the Company's financial condition at December 31, 2005 or 2004 and
did not effect the Company's consolidated statements of income for 2006, 2005,
or 2004. The adoption of SFAS No. 158 resulted in an increase of $0.5 million on
a pre-tax basis and a decrease of $0.4 million net of deferred tax benefits of
$0.9 million on the Company's accumulated other comprehensive loss. See Note G,
"Employee Benefit Plans," for further discussion on the effect of adopting SFAS
No. 158 on the Company's consolidated financial statements.


                                       21

<PAGE>


Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

The following tables provide information about the Company's financial
instruments that are sensitive to changes in interest rates. The tables present
principal cash flows and related weighted-average interest rates by expected
maturity dates for debt obligations as of December 31, 2006 and 2005.

                                         Interest Rate Sensitivity
                                   Principal Amount by Expected Maturity
                                           Average Interest Rate
                                           (dollars in thousands)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                                                                     Fair
                                                                                                     Value,
As of December 31, 2006:      2007      2008       2009       2010      2011   Thereafter  Total    12/31/06
-------------------------------------------------------------------------------------------------------------

<S>                        <C>       <C>          <C>        <C>       <C>       <C>   <C>         <C>
Long-Term Obligations,
 including current portion
     Fixed Rate             $ 18,588  $ 89,031     $ 211      $ 67      $ -         $ - $ 107,897   $ 95,768
     Average interest rate        9%        9%        7%        7%

     Variable Rate             $ 506   $ 3,423       $ 6       $ 7      $ -         $ -   $ 3,942    $ 3,942
     Average interest rate        9%        9%       12%       12%
</TABLE>


<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                                                                     Fair
                                                                                                     Value,
As of December 31, 2005:      2006      2007      2008       2009      2010   Thereafter   Total    12/31/05
-------------------------------------------------------------------------------------------------------------

<S>                          <C>      <C>      <C>           <C>      <C>        <C>   <C>         <C>
Long-Term Obligations,
  including current portion
     Fixed Rate              $ 6,987  $ 16,965  $ 87,698      $ 71     $ 19         $ - $ 111,740   $ 93,901
     Average interest rate        9%        9%        9%        7%       7%

     Variable Rate             $ 500     $ 500   $ 3,417       $ -      $ -         $ -   $ 4,417    $ 4,417
     Average interest rate        8%        8%        8%
</TABLE>


The Company's interest income and expense are most sensitive to changes in the
general level of U.S. interest rates. In this regard, changes in U.S. interest
rates affect the interest earned on the Company's cash equivalents as well as
interest paid on its debt. To mitigate the impact of fluctuations in U.S.
interest rates, the Company generally borrows on a long-term basis to maintain a
debt structure that is fixed rate in nature.

A portion of the Company's operations consists of manufacturing and sales
activities in foreign jurisdictions. The Company manufactures and sells its
products in the United States, Australia, the United Kingdom, and South Africa.
As a result, the Company's financial results could be significantly affected by
factors such as changes in foreign currency exchange rates or weak economic
conditions in the foreign markets in which the Company distributes its products.
The Company's operating results are exposed to changes in exchange rates between
the U.S. dollar and the Australian dollar, the British pound sterling, and the
South African rand.


                                       22

<PAGE>


Item 8.  Financial Statements and Supplemental Data

The Report of Independent Registered Public Accounting Firm and the Consolidated
Financial Statements of Continental Global Group, Inc. for each of the three
years in the period ended December 31, 2006 are included herein.



                                       23

<PAGE>


             Report of Independent Registered Public Accounting Firm


To the Stockholder
Continental Global Group, Inc.

We have audited the accompanying consolidated balance sheets of Continental
Global Group, Inc. as of December 31, 2006 and 2005, and the related
consolidated statements of income, stockholder's equity (deficit), and cash
flows for each of the three years in the period ended December 31, 2006. 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 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. We were not engaged to perform an
audit of the Company's internal control over financial reporting. Our audits
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 also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Continental Global
Group, Inc. at December 31, 2006 and 2005, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2006, in conformity with U.S. generally accepted accounting
principles.

As discussed in Note B, Significant Accounting Policies, the Company adopted the
provisions of SFAS No. 158, Employers' Accounting for Defined Benefit Pension
and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106,
and 132(R), effective December 31, 2006.


                                                   /s/ Ernst & Young LLP

Cleveland, Ohio
April 2, 2007


                                       24

<PAGE>


                         Continental Global Group, Inc.

                           Consolidated Balance Sheets


<TABLE>
<CAPTION>
                                                                                    December 31
                                                                    -----------------------------------------
                                                                               2006                 2005
<S>                                                                    <C>                 <C>
Assets:
Current assets:
   Cash and cash equivalents                                            $   4,371,978        $     543,400
   Accounts receivable, less allowance for doubtful accounts
      of $957,524 in 2006 and $820,325 in 2005                             58,299,975           49,294,104
   Inventories                                                             45,266,133           42,170,889
   Deferred income taxes                                                    3,151,597            1,466,751
   Other current assets                                                       991,698            1,980,832
                                                                    -------------------- --------------------
Total current assets                                                      112,081,381           95,455,976

Property, plant and equipment                                              39,904,022           35,387,432
Less accumulated depreciation                                              24,172,196           21,821,194
                                                                    -------------------- --------------------
                                                                           15,731,826           13,566,238

Goodwill                                                                   14,016,311           13,789,054
Deferred financing costs                                                      129,975              649,878
Deferred income taxes                                                         859,106                    -
Other assets                                                                  101,256              745,199
                                                                    -------------------- --------------------
                                                                        $ 142,919,855        $ 124,206,345
                                                                    ==================== ====================
Liabilities and Stockholder's Equity (Deficit):
Current liabilities:
   Notes payable                                                        $   7,258,306        $  12,485,090
   Trade accounts payable                                                  30,747,620           33,797,142
   Accrued compensation and employee benefits                               9,427,026            7,270,396
   Accrued interest on senior notes                                           295,075              295,075
   Other accrued liabilities                                               10,814,520            9,376,016
   Management fees payable to Nesco, Inc.                                   5,327,224            2,996,054
   Income taxes payable                                                       787,549            2,942,570
   Current maturities of long-term obligations                             19,355,187            7,829,379
                                                                    -------------------- --------------------
Total current liabilities                                                  84,012,507           76,991,722

Pension obligations                                                         1,456,969            1,483,305
Deferred income taxes                                                       3,382,644            4,790,887
Senior Notes                                                               74,440,186           91,316,624
Note payable to N.E.S. Investment Company                                  14,356,926           13,171,985
Other long-term obligations, less current maturities                        4,402,723            4,697,353

Stockholder's equity (deficit):
   Common stock, $0.01 par value, authorized 5,000,000 shares,
     issued and outstanding 100 shares                                              1                    1
   Paid-in capital                                                          1,993,687            1,993,687
   Accumulated deficit                                                    (35,809,635)         (63,536,195)
   Accumulated other comprehensive loss                                    (5,316,153)          (6,703,024)
                                                                    -------------------- --------------------
                                                                          (39,132,100)         (68,245,531)
                                                                    -------------------- --------------------
                                                                        $ 142,919,855        $ 124,206,345
                                                                    ==================== ====================
</TABLE>

See notes to consolidated financial statements.


                                       25

<PAGE>


                         Continental Global Group, Inc.

                        Consolidated Statements of Income


<TABLE>
<CAPTION>
                                                                      Year ended December 31
                                                     ----------------------------------------------------------
                                                               2006               2005                2004

<S>                                                      <C>                 <C>                <C>
Net sales                                                $ 355,245,202       $ 302,245,921      $ 235,719,017
Cost of products sold                                      279,706,623         235,873,774        195,770,066
                                                     ------------------- ------------------ -------------------
Gross profit                                                75,538,579          66,372,147         39,948,951
Operating expenses:
   Selling and engineering                                  17,296,217          15,743,125         14,089,996
   General and administrative                               13,738,215          12,355,629         11,714,191
   Management fee                                            2,331,170           2,008,287            810,611
   Amortization expense                                         17,117              26,360             26,360
   Restructuring charges                                             -             123,206            203,483
                                                     ------------------- ------------------ -------------------
Total operating expenses                                    33,382,719          30,256,607         26,844,641
                                                     ------------------- ------------------ -------------------
Operating income                                            42,155,860          36,115,540         13,104,310
Other expense (income):
   Interest expense, net                                     4,820,118           4,809,166          6,908,598
   Miscellaneous expense (income)                            1,068,437           1,245,334           (930,840)
                                                     ------------------- ------------------ -------------------
Total other expenses                                         5,888,555           6,054,500          5,977,758
                                                     ------------------- ------------------ -------------------
Income before income taxes                                  36,267,305          30,061,040          7,126,552
Income tax expense                                           8,540,745           7,170,295          3,266,418
                                                     ------------------- ------------------ -------------------
Net income                                               $  27,726,560       $  22,890,745      $   3,860,134
                                                     =================== ================== ===================
</TABLE>

See notes to consolidated financial statements.


                                       26

<PAGE>


                         Continental Global Group, Inc.

            Consolidated Statements of Stockholder's Equity (Deficit)


<TABLE>
<CAPTION>
                                                                            Accumulated
                                                                               Other
                                  Common       Paid-in     Accumulated     Comprehensive
                                   Stock       Capital       Deficit       Income (Loss)        Total
                                 ----------- ------------ --------------- ---------------- ---------------
<S>                                 <C>     <C>           <C>             <C>             <C>
Balance at January 1, 2004           $  1    $ 1,993,687   $(90,287,074)   $ (5,981,752)   $ (94,275,138)
Comprehensive income:
   Net income                           -              -      3,860,134               -        3,860,134
   Foreign currency
     translation adjustment             -              -              -         448,552          448,552
   Minimum pension liability
     adjustment, net of tax             -              -              -        (206,622)        (206,622)
   Unrealized losses on cash
     flow hedges, net of tax            -              -              -        (241,209)        (241,209)
   Reclassification into
     earnings                           -              -              -         227,886          227,886
                                                                                            ---------------
Total comprehensive income                                                                     4,088,741
                                 ----------- ------------ --------------- ---------------- ---------------
Balance at December 31, 2004            1      1,993,687    (86,426,940)     (5,753,145)     (90,186,397)
Comprehensive income:
   Net income                           -              -     22,890,745               -       22,890,745
   Foreign currency
     translation adjustment             -              -              -        (765,033)        (765,033)
   Minimum pension liability
     adjustment, net of tax of
     $119,305                           -              -              -        (178,957)        (178,957)
   Reclassification into
     earnings of gains on cash
     flow hedges                        -              -              -          (5,889)          (5,889)
                                                                                           ---------------
Total comprehensive income                                                                    21,940,866
                                 ----------- ------------ --------------- ---------------- ---------------
Balance at December 31, 2005            1      1,993,687    (63,536,195)     (6,703,024)     (68,245,531)
Comprehensive income:
   Net income                           -              -     27,726,560               -       27,726,560
   Foreign currency
     translation adjustment             -              -              -       1,238,436        1,238,436
   Minimum pension liability
     adjustment, net of tax of
     $151,991                           -              -              -        (227,986)        (227,986)
                                                                                           ---------------
Total comprehensive income                                                                    28,737,010
Adoption of SFAS No. 158, net
   of tax benefits of $930,868          -              -              -         376,421          376,421
                                 ----------- ------------ --------------- ---------------- ---------------
Balance at December 31, 2006         $  1    $ 1,993,687   $(35,809,635)   $ (5,316,153)   $ (39,132,100)
                                 =========== ============ =============== ================ ===============
</TABLE>

See notes to consolidated financial statements.


                                       27

<PAGE>


                         Continental Global Group, Inc.

                      Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
                                                                         Year ended December 31
                                                           ---------------------------------------------------
                                                                  2006              2005             2004
<S>                                                          <C>              <C>                <C>
Operating activities:
   Net income                                                 $ 27,726,560     $ 22,890,745       $ 3,860,134
   Adjustments to reconcile net income to net cash
     provided by operating activities:
     Provision for depreciation and amortization                 2,136,366        2,041,922         2,297,306
     Amortization of deferred financing costs                      519,902          519,902           519,902
     Deferred income taxes                                      (2,822,174)         432,744         3,201,531
     Gain on debt restructuring                                          -                -        (3,391,923)
     Interest expense forgiven by bondholders                            -                -         3,004,925
     Non-cash interest paid in-kind                              1,184,941          963,012           208,973
     Provision (credit) for doubtful accounts                      322,498          (73,647)          751,022
     Loss (gain) on disposal of fixed assets                        84,860           (5,321)          (14,707)
     Changes in operating assets and liabilities:
       Decrease (increase) in accounts receivable               (7,308,512)     (11,734,830)       (6,531,500)
       Decrease (increase) in inventories                       (2,221,835)     (14,303,413)       (3,593,216)
       Decrease (increase) in other assets                       1,117,302          470,477        (1,548,138)
       Increase (decrease) in accounts payable and other
         liabilities                                            (1,849,770)      12,554,294         3,111,967
                                                           ---------------- ----------------- ----------------
Net cash provided by operating activities                       18,890,138       13,755,885         1,876,276
                                                           ---------------- ----------------- ----------------

Investing activities:
   Purchases of property, plant, and equipment (PP&E)           (3,774,412)      (3,591,676)         (719,246)
   Proceeds from disposals of PP&E                                  75,453           44,184            32,534
                                                           ---------------- ----------------- ----------------
Net cash used in investing activities                           (3,698,959)      (3,547,492)         (686,712)
                                                           ---------------- ----------------- ----------------

Financing activities:
   Net increase (decrease) in borrowings on notes payable
                                                                (5,541,677)      (4,211,931)        2,974,842
   Proceeds from long-term obligations                           1,197,234        2,523,269        14,395,032
   Payments on Senior Notes                                     (6,146,438)      (6,146,437)       (3,073,220)
   Principal payments on long-term obligations                  (1,054,016)        (890,676)       (1,341,883)
   Payments of additional consideration to bondholders                   -       (1,821,166)      (14,114,042)
                                                           ---------------- ----------------- ----------------
Net cash used in financing activities                          (11,544,897)     (10,546,941)       (1,159,271)
Effect of exchange rate changes on cash                            182,296           (5,308)            6,236
                                                           ---------------- ----------------- ----------------
Increase (decrease) in cash and cash equivalents                 3,828,578         (343,856)           36,529
Cash and cash equivalents at beginning of year                     543,400          887,256           850,727
                                                           ---------------- ----------------- ----------------
Cash and cash equivalents at end of year                      $  4,371,978     $    543,400       $   887,256
                                                           ================ ================= ================
</TABLE>

See notes to consolidated financial statements.


                                       28

<PAGE>


                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

A.  Organization and Basis of Presentation

Continental Global Group, Inc. (the "Company") was formed on February 4, 1997,
for the purpose of owning all of the common stock of Continental Conveyor &
Equipment Company ("CCE") and Goodman Conveyor Company ("GCC"). The Company,
which is a holding company with limited assets and operations other than its
investments in its subsidiaries, is owned 100% by N.E.S. Investment Co.

On October 4, 2004, the Company completed an exchange offer with respect to its
outstanding 11% Senior Notes due 2007 (the "Old Notes") and entered into an
Indenture by and among the Company, two of its wholly-owned subsidiaries, CCE
and GCC (collectively, the "Subsidiary Guarantors") and Wells Fargo Bank,
National Association, as trustee (the "Indenture"). Tenders with respect to Old
Notes representing approximately $109,270,000 or 91.06% of the $120,000,000 of
Old Notes outstanding principal amount were received by Wells Fargo Bank, N.A.,
which acted as depositary in the exchange offer. All Old Notes that were validly
tendered were accepted for exchange. According to the terms of the exchange
offer, on October 4, 2004, the Company issued $59,187,917 of 9% New Series A
Notes due 2008 and $9,105,833 of 13% New Series B Notes due 2008. In addition,
the Company made a cash payment as additional consideration to the Series A and
Series B bondholders of approximately $14,114,000, or $15.50 for every $120 of
Old Notes tendered. On October 3, 2005, the Company made an additional cash
payment to the Series A and Series B bondholders of approximately $1,821,000, or
$2.00 for every $120 of Old Notes tendered.

According to the terms of the Indenture, the New Series A Notes will mature on
October 1, 2008. Interest will accrue at the rate of 9% per annum and will be
payable semiannually in arrears, in cash, on each April 1 and October 1 until
maturity. Interest accrued on the New Series A Notes from April 1, 2004, as if
the New Series A Notes had been issued on such date. The Company paid interest
of $2,663,457 on the first business day of April and October beginning October
4, 2004 through October 2, 2006 related to the Series A Notes. The New Series B
Notes will also mature on October 1, 2008. Interest will accrue at the rate of
13% per annum and will be payable semiannually in arrears, in kind, on each
April 1 and October 1 until maturity. However, the Company has the right to make
interest payments on the New Series B Notes in cash at the same rate and on the
same terms as the New Series A Notes. The Company has assumed the interest will
be paid in cash at a rate of 9% in all calculations involving the interest
payments on the Series B Notes in these consolidated financial statements.
Interest accrued on the New Series B Notes from April 1, 2004, as if the New
Series B Notes had been issued on such date. The Company paid interest of
$409,763 on the first business day of April and October beginning October 4,
2004 through October 2, 2006 related to the Series B Notes. The New Series A and
Series B Notes are jointly and severally guaranteed by the Subsidiary Guarantors
and secured by substantially all of the assets of the Subsidiary Guarantors.

The cash payment made on October 4, 2004 as additional consideration to the
Series A and Series B bondholders was funded by new subordinated indebtedness to
N.E.S. Investment Co. in the amount of $10,000,000 and additional borrowings
from the Company's revolving line of credit. The note payable to N.E.S.
Investment Co. accrues interest at a rate of 9%, payable in kind, compounded
annually. The additional consideration paid by the Company on October 3, 2005 to
the Series A and Series B bondholders was funded with an additional $2,000,000
of subordinated indebtedness to N.E.S. Investment Co.


                                       29

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

A.  Organization and Basis of Presentation (Continued)

The debt exchange was accounted for according to Statement of Financial
Accounting Standards ("SFAS") No. 15, "Accounting by Debtors and Creditors for
Troubled Debt Restructurings". According to the requirements of SFAS No. 15, in
the fourth quarter of 2004, the Company recorded a gain on the exchange of bonds
of approximately $3,392,000, representing the difference between the future cash
outlays of the Series A and Series B Notes and the carrying value of the Old
Notes. All cash payments as additional consideration to Series A and Series B
bondholders and interest payments on the New Series A and Series B Notes will be
recorded as a reduction in the balance of outstanding indebtedness throughout
the terms of the Series A and Series B Notes, and accordingly, the Company will
not recognize any interest expense in the income statement related to the New
Series A and Series B Notes.

Because the debt exchange meets the definition of a troubled debt restructuring,
U.S. generally accepted accounting principles require that the Company follow
the provisions of SFAS No. 15. However, the Company believes that additional
information is necessary in order to keep the consolidated financial statements
from being misleading. The Company accrued interest expense on the $120 million
Old Notes during the first quarter of 2004. Beginning in the second quarter of
2004, under the provisions of SFAS No. 15, the Company accrued interest expense
related to its Senior Notes only on the $10,730,000 of Old Notes not tendered.
All payments related to the New Series A and Series B Notes in 2004 and 2005
were recorded as a reduction in the balance of the Senior Notes. In future
periods, the Company will not record any of the interest payments on the Series
A and Series B Notes as interest expense in the statement of operations but
rather as a reduction of the debt balance on the balance sheet. Associated with
this debt exchange, the Company incurred in 2004 debt restructuring expenses of
approximately $2,578,000 and recorded a gain on debt restructuring of
approximately $3,392,000, which are both included in miscellaneous expense
(income) in the consolidated statement of income.

B.  Significant Accounting Policies

Principles of Consolidation
The financial statements include the accounts of the Company and its
wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.

Revenue Recognition
The Company recognizes revenue, other than from long-term contracts of its
foreign subsidiaries, at the time of shipment. On long-term contracts of its
foreign subsidiaries, which represent less than 7%, 5% and 10% of consolidated
revenues in 2006, 2005, and 2004, respectively, revenues are accounted for using
the percentage of completion method based on the cost of partial shipments and
on the ratio of actual costs incurred to date to the estimated total costs to
complete. Net sales include freight invoiced to customers with the related costs
incurred recorded in cost of sales.

Cash Equivalents
The Company considers all highly liquid investments with maturities of three
months or less when purchased to be cash equivalents.


                                       30

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

B.  Significant Accounting Policies (Continued)

Allowance for Doubtful Accounts
The Company maintains allowances for doubtful accounts for estimated losses
based upon its evaluations of the probability of collection. The Company
evaluates the allowance for doubtful accounts based on the length of time the
receivables are past due, historical collection experience, customer
credit-worthiness, and other circumstances that may impair the collectibility of
accounts receivable from specific customers.

Inventories
Inventories, which consist of raw materials, manufactured and purchased parts,
and work in process are stated at the lower of cost or market. Since inventory
records are maintained on a job order basis, it is not practical to segregate
inventories into their major classes. The cost for approximately 62% and 67% of
inventories at December 31, 2006 and 2005, respectively, is determined using the
last-in, first-out ("LIFO") method with the remainder determined using the
first-in, first-out ("FIFO") method. Had the FIFO method of inventory (which
approximates replacement cost) been used to cost all inventories, inventories
would have increased by approximately $5,889,000 and $4,302,000 at December 31,
2006 and 2005, respectively.

Impairment of Long-Lived Assets
Long-lived assets, other than goodwill, are reviewed for impairment when events
or changes in circumstances indicate that the carrying amount of the asset, or
related groups of assets, may not be recoverable. The asset would be considered
impaired when the Company's estimate of future undiscounted cash flows over the
assets remaining estimated useful life is less than the asset's carrying value.
Measurement of the amount of impairment may be based on appraisal, market values
of similar assets, or estimated discounted future cash flows resulting from the
use and ultimate disposition of the asset.

Goodwill and Other Intangible Assets
The Company accounts for goodwill and other intangible assets according to the
provisions of SFAS No. 142, "Goodwill and Other Intangible Assets." Under SFAS
No. 142, goodwill and intangible assets deemed to have indefinite lives are not
amortized but are subject to annual impairment tests. Other intangible assets
are amortized over their useful lives. Goodwill and other intangibles that have
indefinite lives are tested for impairment at least annually, using a two step
process. The first step identifies if there is impairment using a
fair-value-based test and the second step determines the amount of the
impairment, if any. The Company engages the assistance of independent valuation
experts to perform the annual impairment tests. The impairment tests are
conducted using both a discounted cash flow valuation model, incorporating an
appropriate discount rate for the risks associated with the reporting unit, and
a market approach based on comparable public companies guidelines.


                                       31

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

B.  Significant Accounting Policies (Continued)

Warranty Costs
The Company's products are generally covered by warranties against defects in
material and workmanship for periods up to two years from the date of sale or
installation of the product. The Company records a provision for estimated
warranty cost based on historical experience and expectations of future
conditions and continuously assesses the adequacy of its product warranty
accrual and makes adjustments as needed. A summary of accrued warranty costs
follows:

<TABLE>
<CAPTION>
                                                2006              2005              2004
                                          ----------------- ---------------- -----------------
<S>                                         <C>               <C>              <C>
Balance as of January 1                      $ 1,731,456       $ 1,634,049      $ 1,275,401
Provision for warranties                       1,196,052         1,083,412          927,786
Settlements made during the year              (1,151,541)         (933,040)        (617,915)
Effect of exchange rate changes                   67,864           (52,965)          48,777
                                          ----------------- ---------------- -----------------
Balance as of December 31                    $ 1,843,831       $ 1,731,456      $ 1,634,049
                                          ================= ================ =================
</TABLE>

Restructuring Charges
The Company incurred restructuring charges of approximately $123,000, $203,000,
in 2005, and 2004, respectively, related to changes in staffing and production
requirements in its domestic operations. These charges consist primarily of
severance costs associated with a reduction in personnel which occurred in 2002
and 2003. As part of this restructuring, in 2002 the Company developed a plan to
discontinue the manufacturing operations in certain of its domestic facilities
and merge these operations with other existing facilities. The process of
merging the domestic operations began in 2003 and continued throughout 2004.
Since 2002, the Company has incurred approximately $1,033,000 in restructuring
charges. As of December 31, 2006, the Company has paid approximately $872,000 of
the charges incurred to date, with the majority of the remainder expected to be
paid by 2008.

Advertising Expense
The cost of advertising is expensed as incurred. The Company incurred
approximately $639,000, $604,000, and $506,000 in advertising costs for the
years ended December 31, 2006, 2005, and 2004, respectively.

Income Taxes
The provision for income taxes is calculated in accordance with SFAS No. 109,
"Accounting for Income Taxes," which requires the recognition of deferred income
taxes using the liability method. The Company's operations will be included in
the consolidated income tax returns filed by N.E.S. Investment Co. Income tax
expense in the Company's consolidated statement of operations is calculated on a
separate tax return basis as if the Company had operated as a stand-alone
entity.

Foreign Currency Translation
The assets and liabilities of the Company's foreign subsidiaries are translated
at current exchange rates, while revenues and expenses are translated at average
rates prevailing during the year. The effects of exchange rate fluctuations have
been reported in accumulated other comprehensive loss. The effect on the
statements of income of currency transaction gains and losses was not material
for all years presented.


                                       32

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

B.  Significant Accounting Policies (Continued)

Derivative Financial Instruments
The Company recognizes all derivative financial instruments as either assets or
liabilities at fair value. Derivative instruments that are not hedges are
adjusted to fair value through earnings. Changes in the fair value of derivative
instruments that are classified as fair value hedges are offset against changes
in the fair value of the hedged assets, liabilities, or firm commitments,
through earnings. Changes in the fair value of derivative instruments that are
classified as cash flow hedges are recognized in other comprehensive income
(loss) until such time as the hedged items are recognized in earnings. The
ineffective portions of a derivative instrument's change in fair value are
immediately recognized in earnings.

The Company uses forward exchange contracts (principally against the Australian
dollar and the U.S. dollar) to hedge certain firm sales commitments of its
foreign subsidiaries. Foreign currency forward contracts reduce the Company's
exposure to the risk that the eventual net cash inflows resulting from the sale
of products denominated in a currency other than the functional currency of the
respective business will be adversely impacted by changes in exchange rates. The
Company did not have any derivative financial instruments outstanding at
December 31, 2006 or 2005.

Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss at December 31 consisted of the following:

<TABLE>
<CAPTION>
                                                          2006              2005             2004
                                                    ---------------- ----------------- ----------------

<S>                                                   <C>              <C>               <C>
Foreign currency translation adjustments              $ (3,512,907)    $ (4,751,343)     $ (3,986,310)
Minimum pension liability adjustments (net of tax)               -       (1,951,681)       (1,772,724)
Pension plan adjustments, net of tax                    (1,803,246)               -                 -
Change in fair value of cash flow hedges (net of tax)            -                -             5,889
                                                    ---------------- ----------------- ----------------
                                                      $ (5,316,153)    $ (6,703,024)     $ (5,753,145)
                                                    ================ ================= ================
</TABLE>

Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.


                                       33

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

B.  Significant Accounting Policies (Continued)

New Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement No. 109." FIN 48 clarifies the recognition
threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. FIN
48 also provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. FIN 48 is
effective for fiscal years beginning after December 15, 2006. The Company will
adopt this interpretation as required. The Company is currently evaluating the
impact of this Interpretation on its financial statements.

In September 2006, the FASB issued SFAS No. 158 "Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB
Statements No. 87, 88, 106, and 132(R)" (SFAS No. 158). SFAS No. 158 requires
plan sponsors to recognize the funded status of their postretirement benefit
plans in its statement of financial position, measure the fair value of plan
assets and benefit obligations as of the balance sheet date and provide
additional disclosures. On December 31, 2006, the Company adopted the
recognition and disclosure provisions of SFAS No. 158. The effect of adopting
SFAS No. 158 on the Company's financial condition at December 31, 2006 has been
included in the 2006 consolidated financial statements and did not have an
effect on the Company's financial condition at December 31, 2005 or 2004 and did
not effect the Company's consolidated statements of income for 2006, 2005, or
2004. The adoption of SFAS No. 158 resulted in an increase of $554,447 on a
pre-tax basis and a decrease of $376,421 net of deferred tax benefits of
$930,868 on the Company's accumulated other comprehensive loss. See Note G,
"Employee Benefit Plans," for further discussion on the effect of adopting SFAS
No. 158 on the Company's consolidated financial statements.


                                       34

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

C.  Goodwill and Other Intangibles

The Company's goodwill had a value of $14,016,311 and $13,789,054 at December
31, 2006 and 2005, respectively. The change in goodwill from December 31, 2005
to December 31, 2006 resulted from foreign currency translation adjustments. All
of the Company's goodwill relates to the conveyor equipment segment. The results
of the annual impairment tests completed in accordance with SFAS No. 142 in the
fourth quarter of 2006, 2005, and 2004 indicated that there was no impairment.

The carrying amounts and related accumulated amortization balances of the
Company's other intangible assets as of December 31 are listed below:

<TABLE>
<CAPTION>
                                                     2006                              2005
                                            Carrying      Accumulated         Carrying      Accumulated
                                             Amount       Amortization         Amount       Amortization
                                      ---------------- ----------------- ---------------- -----------------
<S>                                         <C>             <C>                <C>             <C>
Amortized intangible assets                 $ 160,919       $ (149,895)        $ 160,919       $ (132,779)
Other intangible assets                        15,786                -           613,692                -
</TABLE>

Other intangible assets consist primarily of intangible assets related to a
minimum pension liability for the Company's pension plan, which was eliminated
with the adoption of SFAS No. 158. Estimated amortization expense related to
other intangible assets for each of the next five fiscal years is:

2007                   $  4,176
2008                      4,176
2009                      2,672
2010                          -
2011                          -
                 ----------------
Total                  $ 11,024
                 ================

D.  Property, Plant, and Equipment

Property, plant, and equipment are stated at cost. The balances of the major
classes of property, plant and equipment at December 31, 2006 and 2005 are as
follows:

                                            2006              2005
                                      ------------------ ----------------

Land and improvements                    $  1,334,063       $  1,261,579
Buildings and improvements                  7,851,145          7,430,781
Machinery and equipment                    30,718,814         26,695,072
                                      ------------------ ----------------
                                         $ 39,904,022       $ 35,387,432
                                      ================== ================

Depreciation expense for the years ended December 31, 2006, 2005, and 2004 was
$2,119,249, $2,015,562, and $2,270,946, respectively. Depreciation is primarily
computed using the straight-line method based on the expected useful lives of
the assets. The estimated useful lives for buildings and improvements range from
10 to 39 years; the estimated useful lives for machinery and equipment range
from 2.5 to 12.5 years. Repair and maintenance costs are expensed as incurred.


                                       35

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

E.  Financing Arrangements

Long-term obligations consist of the following:

<TABLE>
<CAPTION>
                                                                                   As of December 31
                                                                           ----------------------------------
                                                                                 2006              2005
<S>                                                                         <C>               <C>
Senior Notes due 2007; interest at 11% payable semi-annually in arrears      $ 10,730,000     $  10,730,000
Series A Notes due 2008; interest at 9% payable semi-annually in arrears       59,187,917        59,187,917
Future payments of interest on Series A Notes                                  10,653,824        15,980,737
Series B Notes due 2008; interest payable semi-annually in arrears at
   13% in kind or 9% in cash                                                    9,105,833         9,105,833
Future payments of interest on Series B Notes                                   1,639,050         2,458,575
Note payable to N.E.S. Investment Company; interest rate of 9%; maturity
   date of October 2, 2008                                                     14,356,926        13,171,985
Term loan payable by CCE; interest rate of prime plus 1/2 %; payable in
   monthly installments with balance due on March 31, 2008                      3,916,667         4,416,667
Term loan payable by Australian subsidiary; interest rate of  6.71%;
   maturity date of  March 31, 2007                                             1,420,740           730,100
Notes payable by Australian subsidiary for manufacturing equipment;
   interest rates from 7.13% to 7.6%; payable in monthly installments
   through November 2010                                                          803,181           374,652
Note payable by South African subsidiary payable in monthly installments
   through June 2010; variable interest rate (11.5% at December 31, 2006)          25,306                 -
Obligations under capital leases                                                  715,578           858,875
                                                                           ----------------- ----------------
                                                                              112,555,022       117,015,341
Less current maturities                                                        19,355,187         7,829,379
                                                                           ----------------- ----------------
                                                                             $ 93,199,835     $ 109,185,962
                                                                           ================= ================
</TABLE>

Maturities of long-term obligations are as follows:

              2007     $  19,355,187
              2008        92,706,607
              2009           392,301
              2010           100,927
                    ------------------
                       $ 112,555,022
                    ==================


                                       36

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

E.  Financing Arrangements (Continued)

On October 4, 2004, the Company completed an exchange offer with respect to its
outstanding 11% Senior Notes due 2007 (the "Old Notes") and entered into an
Indenture by and among the Company, two of its wholly-owned subsidiaries, CCE
and GCC (collectively, the "Subsidiary Guarantors") and Wells Fargo Bank,
National Association, as trustee (the "Indenture"). Tenders with respect to Old
Notes representing approximately $109,270,000 or 91.06% of the $120,000,000 of
Old Notes outstanding principal amount were received by Wells Fargo Bank, N.A.,
which acted as depositary in the exchange offer. All Old Notes that were validly
tendered were accepted for exchange. According to the terms of the exchange
offer, on October 4, 2004, the Company issued $59,187,917 of 9% New Series A
Notes due 2008 and $9,105,833 of 13% New Series B Notes due 2008.

The Old Notes are registered under the Securities Act of 1933. Interest of 11%
on the notes is payable semi-annually in arrears. The Old Notes are redeemable
at the option of the Company, in whole or in part, any time subject to certain
call premiums. The Old Notes are guaranteed by the Company's domestic
subsidiaries and contain various restrictive covenants that, among other things,
place limitations on the sale of assets, payment of dividends, and incurring
additional indebtedness and restrict transactions with affiliates.

According to the terms of the Indenture, the New Series A Notes will mature on
October 1, 2008. Interest will accrue at the rate of 9% per annum and will be
payable semiannually in arrears, in cash, on each April 1 and October 1 until
maturity. Interest accrued on the New Series A Notes from April 1, 2004, as if
the New Series A Notes had been issued on such date. The Company paid interest
of $2,663,457 on the first business day of April and October beginning October
4, 2004 through October 2, 2006 related to the Series A Notes. The New Series B
Notes will also mature on October 1, 2008. Interest will accrue at the rate of
13% per annum and will be payable semiannually in arrears, in kind, on each
April 1 and October 1 until maturity. However, the Company has the right to make
interest payments on the New Series B Notes in cash at the same rate and on the
same terms as the New Series A Notes. The Company has assumed the interest will
be paid in cash at a rate of 9% in all calculations involving the interest
payments on the Series B Notes in these consolidated financial statements.
Interest accrued on the New Series B Notes from April 1, 2004, as if the New
Series B Notes had been issued on such date. The Company paid interest of
$409,763 on the first business day of April and October beginning October 4,
2004 through October 2, 2006 related to the Series B Notes. The New Series A and
Series B Notes are jointly and severally guaranteed by the Subsidiary Guarantors
and secured by substantially all of the assets of the Subsidiary Guarantors.

The debt exchange was accounted for according to SFAS No. 15, "Accounting by
Debtors and Creditors for Troubled Debt Restructurings". According to the
requirements of SFAS No. 15, in the fourth quarter of 2004, the Company recorded
a gain on the exchange of bonds of approximately $3,392,000, representing the
difference between the future cash outlays of the Series A and Series B Notes
and the carrying value of the Old Notes. All cash payments as additional
consideration to Series A and Series B bondholders and interest payments on the
New Series A and Series B Notes will be recorded as a reduction in the balance
of outstanding indebtedness throughout the terms of the Series A and Series B
Notes, and accordingly, the Company will not recognize any interest expense in
the income statement related to the New Series A and Series B Notes.


                                       37

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

E.  Financing Arrangements (Continued)

The outstanding indebtedness has been classified as short and long-term
liabilities as of December 31, 2006 based upon the payment terms of the new
debt. The following table summarizes the reduction in the balance of the Senior
Notes based upon the payment requirements over the terms of the Series A and
Series B Notes:

Balance at December 31, 2006 of Senior Notes, including
   current portion of $16,876,438                                $ 91,316,624
Interest payments on Series A Notes, 2007                         (10,653,824)
Interest payments on Series B Notes, 2007                          (1,639,050)
Maturity of outstanding 11% Senior Notes due 2007                 (10,730,000)
                                                               ----------------
Maturity of Series A and Series B Notes due 2008                 $ 68,293,750
                                                               ================

Proceeds from new subordinated indebtedness to N.E.S. Investment Co. were used
to fund the cash payments made as additional consideration to the Series A and
Series B bondholders. In 2004, the Company received $10,000,000 that was used to
partially fund the cash payment made on October 4, 2004. In 2005, the Company
received an additional $2,000,000 to fund the cash payment made on October 3,
2005. The note payable to N.E.S. Investment Co. accrues interest at a rate of
9%, payable in kind, compounded annually.

CCE, GCC and JP Morgan Chase Bank, N.A. (successor by merger to Bank One, N.A)
are parties to the Second Amended and Restated Credit Facility and Security
Agreement dated October 4, 2004, as amended March 9, 2006, ("Credit Agreement")
pursuant to which JP Morgan Chase Bank has provided CCE and GCC jointly with a
line of credit of $30 million. The availability under the Credit Agreement is
equal to the sum of (i) 85% of eligible accounts receivable and (ii) 55% of
eligible inventory. The Credit Agreement is guaranteed by the Company and
secured by a lien on substantially all of the assets of CCE and GCC. In
addition, the Credit Agreement contains various restrictive covenants including
financial covenants related to debt coverage and minimum net worth and requires
the Company to pay a monthly unused commitment fee equal to 1/4% of the average
daily availability. The Credit Agreement matures on March 31, 2008, and bears
interest at a fluctuating rate based on the prime rate. At December 31, 2006,
approximately $10.1 million was available for use. At December 31, 2006 and
2005, the Company had an outstanding balance under the Credit Agreement of
$5,360,742 and $7,172,235, respectively. The weighted average interest rate for
this facility was 8.0% and 6.2% in 2006 and 2005, respectively. There were
approximately $3,836,000 and $3,385,000 of letters of credit outstanding at
December 31, 2006 and 2005, respectively. In addition to the letters of credit,
at December 31, 2006 the availability under the facility was reduced by a
reserve of $10.7 million for the retirement of the 11% Senior Notes due 2007.

The Credit Agreement also provided for an increase in CCE's secured term loan
with Bank One to a principal balance of $5 million at October 4, 2004. The term
loan bears interest at a rate of prime plus 1/2% and matures on March 31, 2008.
Principal and interest payments are made monthly with a balloon payment due at
maturity.


                                       38

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

E.  Financing Arrangements (Continued)

The Company's Australian subsidiary has a revolving credit facility with the
National Australia Bank Limited which provides a line of credit of $4.5 million
(Australian dollars). The facility is secured by a lien on substantially all of
the assets of the Australian subsidiary, bears interest at a fluctuating rate
based on the base rate of the National Australia Bank, and matures on March 31,
2007. At December 31, 2006, approximately $2.9 million (Australian dollars) was
available for use. The outstanding balance under this facility was $1,269,544
and $1,481,864 (U.S.$) at December 31, 2006 and 2005, respectively. The weighted
average interest rate for this facility was 8.5% and 7.9% in 2006 and 2005.

In 2005 and 2006, the Company's Australian subsidiary financed the purchase of
new manufacturing equipment through notes payable with the National Australia
Bank. The notes payable bear fixed interest rates ranging from 7.13% to 7.6% and
have maturity dates ranging from November 2007 to November 2010.

The Company's United Kingdom subsidiary has a revolving credit facility with the
Bank of Scotland of 2.25 million British pounds sterling. The facility is
secured by certain assets of the subsidiary, bears interest at a fluctuating
rate of 2.1% above the Bank of Scotland base rate, and matured on December 31,
2006. The subsidiary is negotiating an amendment with the Bank of Scotland for a
facility of 2.0 million British pounds sterling maturing on December 31, 2007.
The previous facility has been extended until these negotiations are complete.
At December 31, 2006, the facility was not utilized. The outstanding balance
under this facility was $3,530,601 (U.S.$) at December 31, 2005. The weighted
average interest rate for this facility was 6.8% in 2006 and 2005.

The Company's South African subsidiary has a credit facility with the Standard
Bank of South Africa of 6.5 million South African rand. The facility is secured
by the trade receivables of the subsidiary and bears interest at a fluctuating
rate of 1.5% above the bank's prime lending rate. The agreement continues
indefinitely until termination by either party with a minimum of three months
written notice. At December 31, 2006, approximately 2.1 million rand was
available for use. The outstanding balance under this facility was $628,020 and
$300,390 (U.S.$) at December 31, 2006 and 2005, respectively. The weighted
average interest rate for this facility was 12.5% and 12.0% in 2006 and 2005,
respectively.

During 2006, 2005, and 2004, the Company paid interest of $3,190,713,
$3,393,666, and $3,175,467, respectively. Interest paid does not include
payments of $6,146,438, $6,146,437 and $3,073,220 in 2006, 2005, and 2004,
respectively, related to the Company's New Series A and Series B Notes, which
were recorded as a reduction in the balance of outstanding indebtedness.


                                       39

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

F.  Leasing Arrangements

The Company's subsidiaries have numerous capital leases for certain machinery
and equipment. Amortization of these assets is included in depreciation expense
in the statement of operations. Capital lease obligations of approximately
$153,000 and $463,000 were incurred in 2006 and 2005, respectively. The gross
amount of assets recorded under capital leases and the related accumulated
amortization at December 31, 2006 and 2005 are as follows:

                                            2006              2005
                                      ----------------- -----------------
Asset Balances:
Buildings                                $    35,511       $    32,847
Machinery and Equipment                    1,645,038         1,377,935
                                      ----------------- -----------------
                                         $ 1,680,549       $ 1,410,782
                                      ================= =================

Accumulated Amortization:
Buildings                                  $  25,153        $   15,055
Machinery and Equipment                      544,806           436,673
                                      ----------------- -----------------
                                           $ 569,959        $  451,728
                                      ================= =================

The subsidiaries of the Company also have various leases for office space,
warehouse facilities, office equipment, and automobiles and trucks which are
accounted for as operating leases. Rent expense related to these operating
leases for the years ended December 31, 2006, 2005, and 2004 was approximately
$3,087,000, $2,981,000, and $2,765,000, respectively. Future minimum lease
payments for obligations under capital leases and for operating leases having
initial or remaining noncancelable lease terms in excess of one year are as
follows:

                                                     Capital        Operating
                                                     Leases           Leases
                                                 --------------- ---------------

2007                                                $ 315,498      $ 1,375,682
2008                                                  283,579        1,239,440
2009                                                  187,850        1,042,952
2010                                                   28,333          618,671
2011                                                        -          505,715
Thereafter                                                  -        2,484,991
                                                 --------------- ---------------
Total minimum lease payments                          815,260      $ 7,267,451
                                                                 ===============
Amounts representing interest                          99,682
                                                 ---------------
Present value of net minimum lease payments
   (including current portion of $260,370)          $ 715,578
                                                 ===============


                                       40

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

G.  Employee Benefit Plans

CCE maintains a defined benefit plan covering all union hourly-paid employees at
its Winfield plant hired prior to February 1, 2004. The actuarial computations
use the "projected unit credit cost method" and a measurement date of December
31. Actuarial gains and losses are amortized over a 15-year period, and prior
service costs are amortized over the average remaining service period of active
employees expected to receive benefits.

As discussed in Note B, in 2006 the Company adopted the recognition and
disclosure provisions of SFAS No. 158, which required the Company to recognize
the funded status (i.e., the difference between the fair value of plan assets
and the projected benefit obligations) of its defined benefit plan in the
December 31, 2006 consolidated balance sheet, with a corresponding adjustment to
accumulated other comprehensive loss, net of tax. The adjustment to accumulated
other comprehensive loss at adoption represents the net unrecognized actuarial
loss and unrecognized prior service costs which were previously netted against
the plan's funded status in the Company's consolidated balance sheet pursuant to
the provisions of SFAS No. 87. These amounts will be subsequently recognized as
net periodic pension cost pursuant to the Company's historical accounting policy
for amortizing such amounts. In addition, actuarial gains and losses that arise
in subsequent periods and not recognized as net periodic pension cost in the
same period will be recognized as a component of other comprehensive loss. Those
amounts will be subsequently recognized as a component of net periodic pension
cost on the same basis as the amounts recognized in accumulated other
comprehensive loss at adoption of SFAS No. 158.

The incremental effects of adopting the provisions of SFAS No. 158 on the
Company's consolidated balance sheet at December 31, 2006 are presented in the
following table. The adoption of SFAS No. 158 had no effect on the Company's
consolidated income statement for the year ended December 31, 2006, or for any
prior period presented. Had the Company not been required to adopt SFAS No. 158
at December 31, 2006, it would have recognized an additional minimum pension
liability pursuant to the provisions of SFAS No. 87. The effect of recognizing
the additional minimum liability is included in the table below in the column
labeled "Prior to Application of SFAS No. 158."

<TABLE>
<CAPTION>
                                                 At December 31, 2006
                                          --------------------------------------
                                              Prior to            Effect of
                                            Adopting SFAS       Adopting SFAS      As Reported at
                                               No. 158             No. 158        December 31, 2006
                                          ---------------------------------------------------------

<S>                                          <C>                   <C>               <C>
Other assets                                 $    655,703          $ (554,447)       $    101,256
Deferred income tax liability                   4,313,512            (930,868)          3,382,644
Pension obligation                              1,456,969                   -           1,456,969
Accumulated other comprehensive loss           (5,692,574)            376,421          (5,316,153)
</TABLE>


                                       41

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

G.  Employee Benefit Plans (Continued)

The following table sets forth the accumulated benefit obligation, change in
benefit obligation, change in plan assets, funded status and amounts recognized
in the Consolidated Balance Sheets as of December 31, 2006 and 2005, of the
Company's defined benefit plan.

<TABLE>
<CAPTION>
                                                                     2006                2005
                                                            ------------------- -------------------

<S>                                                              <C>                  <C>
Accumulated benefit obligation                                   $ 10,375,472         $ 9,352,419
                                                            =================== ===================

Change in projected benefit obligation:
Projected benefit obligation at beginning of year                $  9,352,419         $ 8,711,138
Service cost                                                          204,811             215,428
Interest cost                                                         529,398             513,390
Actuarial loss                                                        608,773             196,534
Benefits paid                                                        (319,929)           (284,071)
                                                            ------------------- -------------------
Projected benefit obligation at end of year                        10,375,472           9,352,419
                                                            ------------------- -------------------

Change in plan assets:
Fair value of plan assets at beginning of year                      7,869,114           7,478,588
Actual return on plan assets                                          769,318             424,597
Employer contributions                                                600,000             250,000
Benefits paid                                                        (319,929)           (284,071)
                                                            ------------------- -------------------
Fair value of plan assets at end of year                            8,918,503           7,869,114
                                                            ------------------- -------------------

Funded status of the plan (underfunded)                            (1,456,969)         (1,483,305)
Unrecognized prior service cost                                             -             599,090
Unrecognized net actuarial loss                                             -           2,070,986
                                                            ------------------- -------------------
Net amount recognized                                            $ (1,456,969)        $ 1,186,771
                                                            =================== ===================

Amounts recognized in the Consolidated Balance Sheets
   include:
Other assets                                                     $          -         $  599,090
Pension obligation                                                 (1,456,969)         (1,483,305)
Accumulated other comprehensive loss                                3,005,410           2,070,986

Amounts recognized in accumulated other comprehensive
  loss at December 31, 2006, before income tax
  benefits, consist of:
Unrecognized net loss                                             $ 2,450,963
Unrecognized prior service cost                                       554,447
                                                            -------------------
                                                                  $ 3,005,410
                                                            ===================
</TABLE>


                                       42

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

G.  Employee Benefit Plans (Continued)

Other changes in plan assets and benefit obligations recognized in accumulated
other comprehensive loss, before income tax benefits, are as follows:

                                                                       2006
                                                               -----------------
Accumulated other comprehensive loss at beginning of year        $ (2,070,986)
Change prior to adoption of SFAS No. 158                             (379,977)
Change due to adoption of SFAS No. 158                               (554,447)
                                                               -----------------
Accumulated other comprehensive loss at end of year              $ (3,005,410)
                                                               =================

The estimated net loss and prior service cost for the defined benefit plan that
will be recognized from accumulated other comprehensive loss into net periodic
benefit cost in 2007 are $97,612 and $44,643, respectively.

The components of net periodic benefit cost for the years ended December 31 are
as follows:

<TABLE>
<CAPTION>
                                                               2006              2005               2004
                                                       ----------------- ------------------ ------------------
<S>                                                         <C>                <C>              <C>
Service cost                                                $ 204,811          $ 215,428        $  221,543
Interest cost                                                 529,398            513,390           488,948
Expected return on plan assets                               (617,889)          (585,916)         (511,839)
Amortization of prior service cost                             44,643             44,643            44,643
Recognized loss                                                77,367             59,591            59,733
                                                       ----------------- ------------------ ------------------
Net periodic benefit cost                                   $ 238,330          $ 247,136        $  303,028
                                                       ================= ================== ==================
</TABLE>

The weighted-average assumptions used to determine benefit obligations at
December 31 were:

                                                  2006             2005
                                            ----------------- ----------------
Discount rate                                     5.75%             5.75%
Expected long-term return on plan assets          8.00              8.00

The weighted-average assumptions used to determine the net periodic benefit cost
for the years ended December 31 were:

                                                   2006       2005       2004
                                               ----------- ---------- ----------
Discount rate                                      5.75%      6.00%      6.25%
Expected long-term return on plan assets           8.00       8.00       8.00

To determine the expected long-term rate of return on plan assets, the Company
considered the long-term investment objectives of the plan, the target asset
allocation of the pension portfolio, as well as the future expectations for
returns for each asset category. This resulted in the selection of the 8.00%
expected long-term rate of return on plan assets assumption for 2006 and 2005.


                                       43

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

G.  Employee Benefit Plans (Continued)

The Company's investment policies and strategies for plan assets are to achieve
the greatest return consistent with the fiduciary character of the plan and to
maintain a level of liquidity that is sufficient to meet the need for timely
payment of benefits. The goals of the investment manager include minimizing risk
and achieving growth in principal value so that the purchasing power of such
value is maintained with respect to the rate of inflation. The Company has
established target asset allocations for plan assets of 60% equity securities
and 40% fixed income securities. The Company's defined benefit pension plan
weighted-average asset allocations at December 31, by asset category, are as
follows:

Asset Category:                                 2006             2005
                                          ----------------- ----------------
Equity securities                                58%               58%
Debt securities                                  42                42
                                          ----------------- ----------------
Total                                           100%              100%
                                          ================= ================

The contributions of CCE are made in amounts sufficient to fund the plan's
service cost on a current basis and meet the minimum funding requirements of the
Employee Retirement Income Security Act of 1974, as amended. While the Company
is not required to make any contributions to its pension plan in 2007,
management plans to make a contribution of approximately $600,000. The Company
expects to pay the following benefit payments, which reflect expected future
service, as appropriate:

2007                $   469,000
2008                    509,000
2009                    526,000
2010                    528,000
2011                    543,000
2012-2016             3,157,000


CCE also maintains a defined contribution plan covering substantially all
salaried and non-union hourly employees. CCE expenses annual contributions
(approximately $719,000, $687,000, and $590,000 in 2006, 2005, and 2004,
respectively) which fully fund retirement benefits. No participant contributions
to the plan are permitted. CCE also maintains a defined contribution savings and
profit sharing plan which covers substantially all salaried and non-union hourly
employees. Employees may elect to contribute up to 100% of their compensation.
CCE will match (approximately $374,000, $343,000, and $317,000 in 2006, 2005,
and 2004, respectively) a percentage of employee contributions up to 6% of each
employee's compensation.

GCC has a retirement savings plan covering all employees meeting certain
eligibility requirements. Under the terms of the plan, GCC voluntarily makes
annual cash contributions based on eligible employees' compensation. Expense for
the years ended December 31, 2006, 2005 and 2004 was approximately $189,000,
$128,000 and $58,000, respectively, which was equal to 4%, 3% and 1.5% of
eligible employee compensation in 2006, 2005, and 2004, respectively.

The foreign subsidiaries of the Company have various defined contribution plans
and retirement saving plans covering substantially all salaried and production
employees. For the years ended December 31, 2006, 2005, and 2004, the
subsidiaries contributed approximately $1,064,000, $969,000, and $929,000,
respectively, to the plans.


                                       44

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

G.  Employee Benefit Plans (Continued)

In 2002, the Company implemented a Phantom Stock Plan (the "Plan") whereby
officers and certain employees may be granted phantom stock units, which vest
over a certain period of time as determined for each grant. In 2005, the Company
paid approximately $307,000 in settlement of all vested and accrued phantom
stock units. At December 31, 2004, the Company had an accrual for the value of
vested phantom stock units granted for approximately $292,000.

H.  Related Party Transactions

Management fees are charged by Nesco, Inc., an affiliate of N.E.S. Investment
Co., to provide general management oversight services, including legal,
financial, strategic planning and business development evaluation for the
benefit of the Company. Under the management agreement, the Company has agreed
to pay Nesco, Inc. fees for such services equal to 5% of the Company's Adjusted
EBITDA earnings (earnings before interest and estimated taxes, depreciation,
amortization and miscellaneous expense or income). The Company incurred
management fee expenses of approximately $2,331,000, $2,008,000, and $811,000,
for the years ended December 31, 2006, 2005, and 2004, respectively. At December
31, 2006 and 2005, the Company had an accrual for management fees owed to Nesco,
Inc. of approximately $5,327,000 and $2,996,000, respectively.

I.  Fair Value of Financial Instruments and Concentration of Risk

The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:

Cash and cash equivalents: The carrying amount reported in the balance sheet for
cash and cash equivalents approximates its fair value.

Accounts receivable and accounts payable: The carrying amounts reported in the
balance sheet for accounts receivable and accounts payable approximate their
fair value.

Notes payable and long-term debt: The carrying amounts of the Company's
borrowings under its short-term revolving credit arrangements and variable rate
long-term debt approximate their fair value. The fair value of the Company's
Senior Notes at December 31, 2006 and 2005 is based on the quoted market value.
The fair value of the Company's remaining fixed rate long-term debt is based on
the present value of future cash outflows.


                                       45

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

I.  Fair Value of Financial Instruments and Concentration of Risk (Continued)

The carrying amounts and fair values of the Company's financial instruments at
December 31 are as follows:

<TABLE>
<CAPTION>
                                                  2006                              2005
                                         Carrying          Fair            Carrying        Fair
                                          Amount           Value            Amount         Value
                                     --------------- ---------------- ---------------- ----------------
                                                               (in thousands)

<S>                                      <C>              <C>             <C>              <C>
Cash and cash equivalents                $  4,372         $  4,372        $     543        $     543
Accounts receivable                        58,300           58,300           49,294           49,294
Accounts payable                           30,748           30,748           33,797           33,797
Notes payable                               7,258            7,258           12,485           12,485
Long-term debt                            111,839           99,710          116,156           98,318
</TABLE>

Accounts receivable from customers in the coal mining industry were
approximately 56% and 63% of net accounts receivable at December 31, 2006 and
2005, respectively. The Company's subsidiaries perform periodic credit
evaluations of their customers' financial condition and generally do not require
collateral. Credit losses relating to customers in the coal mining industry have
consistently been within management's expectations and are comparable to losses
for the portfolio as a whole.

Provisions (credits) for credit losses were approximately $322,000, $(74,000),
and $751,000 in 2006, 2005, and 2004, respectively. Accounts written off, net of
recoveries, were approximately $211,000, $330,000, and $507,000 in 2006, 2005,
and 2004, respectively.

J.  Income Taxes

Income taxes are provided using the liability method in accordance with SFAS No.
109, "Accounting for Income Taxes." For tax reporting purposes, the Company is
included in the consolidated federal tax return of N.E.S. Investment Co.
However, for financial reporting purposes, the Company's tax provision has been
calculated on a stand-alone basis.

The Company has subsidiaries located in Australia, the United Kingdom, and South
Africa which are subject to income taxes in their respective countries. The
Company's domestic subsidiaries paid approximately $13,556,000 and $4,658,000 in
income taxes in 2006 and 2005, respectively. Included in income taxes payable at
December 31, 2006 are advance payments to N.E.S. Investment Co. for income taxes
of $325,642. At December 31, 2005, the Company had a payable to N.E.S.
Investment Co. for income taxes of $2,942,570. The Company did not pay any
income taxes during the year ended December 31, 2004.

Income before income taxes for the years ended December 31 consists of the
following:

                          2006                 2005                 2004
                --------------------- -------------------- --------------------

Domestic              $ 32,146,667          $ 27,547,178          $ 4,488,465
Foreign                  4,120,638             2,513,862            2,638,087
                --------------------- -------------------- --------------------
                      $ 36,267,305          $ 30,061,040          $ 7,126,552
                ===================== ==================== ====================


                                       46

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

J.  Income Taxes (Continued)

Income taxes for the years ended December 31 are summarized as follows:

                              2006               2005                2004
                      ------------------- ------------------ -------------------
Current:
   Domestic:
     Federal                $ 9,001,408         $ 5,507,221      $      64,887
     State and local          1,285,915           1,230,330                  -
   Foreign                    1,075,596                   -                  -
                      ------------------- ------------------ -------------------
                             11,362,919           6,737,551             64,887
Deferred:
   Domestic:
     Federal                   (478,811)            705,353          3,346,252
     State and local            (68,401)            620,642            388,926
   Foreign                   (2,274,962)           (893,251)          (533,647)
                      ------------------- ------------------ -------------------
                             (2,822,174)            432,744          3,201,531
                      ------------------- ------------------ -------------------
                            $ 8,540,745         $ 7,170,295        $ 3,266,418
                      =================== ================== ===================

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.

At December 31, 2006 and 2005, the Company had foreign net operating loss
carryforwards of approximately $10,860,000 and $11,586,000, respectively. The
Company has established a valuation allowance of approximately $1,015,000 and
$3,379,000 at December 31, 2006 and 2005, respectively, against certain foreign
net operating loss carryforwards. This is based upon management's assessment
that it is more likely than not that the carryforwards and related assets will
not be realized.

At December 31, 2004, pursuant to Section 108 of the Internal Revenue Code, the
Company lost all domestic tax attributes due to the recognition of cancellation
of indebtedness income.

During 2006, the Company reversed approximately $2,168,000 of the valuation
allowance against its net operating loss carryforward in the United Kingdom due
to the continued profitability of the United Kingdom subsidiary. During 2004,
the Company reversed approximately $534,000 of the valuation allowance against
its net operating loss carryforward in Australia due to the continued
profitability of the Australian subsidiary.


                                       47

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

J.  Income Taxes (Continued)

Significant components of the Company's deferred income taxes at December 31 are
as follows:

                                                     2006              2005
                                              ---------------- -----------------
Deferred tax assets:
   Operating accruals                             $ 3,559,237     $  3,408,577
   Pension obligation                               1,202,164          119,305
   Other                                              807,192          803,315
   Net operating loss carryforwards                 3,258,087        3,379,196
   Valuation allowance                             (1,014,981)      (3,379,196)
                                              ---------------- -----------------
                                                    7,811,699        4,331,197

Deferred tax liabilities:
   Inventories                                     (1,791,640)      (1,607,326)
   Property, plant, and equipment                  (1,580,546)      (1,839,205)
   Goodwill                                        (3,811,454)      (4,208,802)
                                              ---------------- -----------------
                                                   (7,183,640)      (7,655,333)
                                              ---------------- -----------------
Net deferred tax asset (liability)                $   628,059     $ (3,324,136)
                                              ================ =================

Deferred income taxes are not provided on undistributed earnings of
international subsidiaries that are intended to be permanently invested in those
operations. These undistributed earnings aggregated approximately $12,906,000 at
December 31, 2006. The amount of the unrecognized deferred income taxes is not
practical to determine.

A reconciliation of income taxes computed at the statutory rate to the effective
rate for the years ended December 31 follows:

<TABLE>
<CAPTION>
                                                                         2006              2005              2004
                                                                   ----------------- ----------------- -----------------

<S>                                                                        <C>               <C>               <C>
Income taxes at the United States statutory rate                           35.0%             35.0%             35.0%
State income taxes, net of federal benefit                                  2.3               4.6               3.2
Effective tax rate differential of earnings outside the U.S.               (1.3)             (2.9)            (12.9)
Impact of cancellation of debt                                              -                (1.1)             27.0
Valuation allowance                                                        (6.0)              -                (7.5)
Non-deductible / non-taxable items                                         (5.8)             (7.2)              -
Other - net                                                                (0.7)             (4.5)              1.0
                                                                   ----------------- ----------------- -----------------
                                                                           23.5%             23.9%             45.8%
                                                                   ================= ================= =================
</TABLE>


                                       48

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

K.  Segment Information

While the Company primarily manages its operations on a geographical basis, the
Company operates in two principal business segments: conveyor equipment and
manufactured housing products. The conveyor equipment business, which comprised
approximately 92%, 89%, and 89% of net sales for 2006, 2005, and 2004,
respectively, markets its products in four main business areas. The mining
equipment business area includes the design, manufacture and testing of complete
belt conveyor systems and components for mining application primarily in the
coal industry. The conveyor components business area manufactures and sells
components for conveyor systems primarily for resale through distributor
networks. The engineered systems business area uses specialized project
management and engineering skills to combine mining equipment products,
purchased equipment, steel fabrication and other outside services for sale as
complete conveyor equipment systems that meet specific customer requirements.
The bulk conveyor equipment business area designs and manufactures a complete
range of conveyor equipment sold to transport bulk materials, such as cement,
lime, food products and industrial waste.

The Company's manufactured housing products business manufactures and/or
refurbishes axle components sold directly to the manufactured housing industry.
As part of this segment the Company also sells mounted tire and rim assemblies
to the manufactured housing industry. Included in the other category is
primarily the manufacture and sale of air filtration equipment for use in
enclosed environments, principally in the textile industry.

The Company evaluates performance and allocates resources based on operating
income before restructuring charges and allocation of management fees,
amortization and corporate expenses. The accounting policies of the reportable
segments are the same as those described in the summary of significant
accounting policies under Note B. The reportable segments are each managed
separately because they manufacture and distribute distinct products.


                                       49

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

K.  Segment Information (Continued)


<TABLE>
<CAPTION>
                                                                      Year ended December 31
                                                             2006               2005              2004
                                                       ------------------ ----------------- -----------------
                                                                           (in thousands)
<S>                                                         <C>                <C>               <C>
Net sales:
   Conveyor equipment                                        $ 326,691          $ 268,071         $ 208,921
   Manufactured housing products                                27,878             33,475            26,083
   Other                                                           676                700               715
                                                       ------------------ ----------------- -----------------
Total net sales                                              $ 355,245          $ 302,246         $ 235,719
                                                       ================== ================= =================

Depreciation and amortization:
   Conveyor equipment                                          $ 2,018            $ 1,908           $ 2,152
   Manufactured housing products                                   101                107               118
   Other                                                             -                  1                 1
   Amortization expense                                             17                 26                26
                                                       ------------------ ----------------- -----------------
Total depreciation and amortization                            $ 2,136            $ 2,042           $ 2,297
                                                       ================== ================= =================

Segment operating income:
   Conveyor equipment                                         $ 45,705           $ 37,000          $ 14,668
   Manufactured housing products                                 1,095              2,532             1,371
   Other                                                           108                131               164
                                                       ------------------ ----------------- -----------------
Segment operating income                                        46,908             39,663            16,203
   Management fee                                                2,331              2,008               811
   Amortization expense                                             17                 26                26
   Restructuring charge                                              -                123               203
   Corporate expense                                             2,404              1,391             2,059
                                                       ------------------ ----------------- -----------------
Total operating income                                          42,156             36,115            13,104
   Interest expense, net                                         4,820              4,809             6,909
   Miscellaneous expense (income)                                1,069              1,245              (931)
                                                       ------------------ ----------------- -----------------
Income before income taxes                                    $ 36,267           $ 30,061          $  7,126
                                                       ================== ================= =================

Segment assets:
   Conveyor equipment                                        $ 134,644          $ 117,015         $  92,914
   Manufactured housing products                                 5,960              6,138             5,653
   Other                                                           337                233               336
                                                       ------------------ ----------------- -----------------
Total segment assets                                           140,941            123,386            98,903
   Corporate assets                                              1,979                820             1,324
                                                       ------------------ ----------------- -----------------
Total assets                                                 $ 142,920          $ 124,206         $ 100,227
                                                       ================== ================= =================

Capital expenditures:
   Conveyor equipment                                          $ 3,735            $ 3,570             $ 699
   Manufactured housing products                                    39                 22                20
   Other                                                             -                  -                 -
                                                       ------------------ ----------------- -----------------
Total capital expenditures                                     $ 3,774            $ 3,592             $ 719
                                                       ================== ================= =================
</TABLE>


                                       50

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

K.  Segment Information (Continued)

Geographic Area Data
<TABLE>
<CAPTION>
                                                                      Year ended December 31
                                                            2006               2005               2004
                                                      ------------------ ------------------ -----------------
                                                                          (in thousands)
<S>                                                         <C>                <C>                <C>
Net sales:
   United States                                             $ 250,207          $ 216,855          $ 141,215
   Australia                                                    57,236             45,654             50,241
   United Kingdom                                               40,388             29,995             36,272
   Other countries                                               7,934              9,742              8,015
   Eliminations - transfers                                       (520)                 -                (24)
                                                      ------------------ ------------------ -----------------
Total net sales                                              $ 355,245          $ 302,246          $ 235,719
                                                      ================== ================== =================


Operating income (loss):
   United States                                              $ 36,688           $ 32,710           $ 10,011
   Australia                                                     4,041              1,917              2,456
   United Kingdom                                                2,553              1,113                520
   Other countries                                              (1,126)               375                117
                                                      ------------------ ------------------ -----------------
Total operating income                                        $ 42,156           $ 36,115           $ 13,104
                                                      ================== ================== =================

Long lived assets:
   United States                                              $  8,941           $  7,685           $  5,770
   Australia                                                     3,993              3,481              3,193
   United Kingdom                                                2,348              1,918              2,594
   Other countries                                                 450                482                550
                                                      ------------------ ------------------ -----------------
Total long lived assets                                       $ 15,732           $ 13,566           $ 12,107
                                                      ================== ================== =================
</TABLE>

Net sales are attributed to countries based on the location of the subsidiary
where the sale occurs.

The Company did not have sales to any single customer which exceeded 10% of the
Company's total net sales in 2006, 2005 and 2004.


                                       51

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

L.  Guarantor and Non-Guarantor Subsidiaries

Effective October 4, 2004, the Company's domestic subsidiaries, Continental
Conveyor & Equipment Company (CCE) and Goodman Conveyor Company (GCC), both of
which are wholly owned, are the guarantors of the Senior Notes. Prior to this
date, CCE, GCC, and certain of the Company's Australian subsidiaries were the
guarantors of the Senior Notes. The guarantees are full, unconditional, and
joint and several. Separate financial statements of these guarantor subsidiaries
are not presented as management has determined that they would not be material
to investors. The Company's United Kingdom and South African subsidiaries are
not guarantors of the Senior Notes. The operations and cash flows of the
Company's Australian subsidiaries are included in the "Combined Non-Guarantor
Subsidiaries" column in the following summarized consolidating financial
statements.

Summarized consolidating balance sheets for 2006 and 2005 and consolidating
statements of operations and cash flow statements for 2006, 2005, and 2004 for
the Company, the guarantor subsidiaries, and the non-guarantor subsidiaries are
as follows (in thousands):

<TABLE>
<CAPTION>
                                                     Combined        Combined
                                                     Guarantor     Non-Guarantor
December 31, 2006:                  The Company    Subsidiaries    Subsidiaries    Eliminations       Total
                                  -------------------------------------------------------------------------------
<S>                                   <C>            <C>              <C>           <C>              <C>
Current assets:
   Cash and cash equivalents           $     93       $     494        $  3,785      $        -       $   4,372
   Accounts receivable, net                   -          36,578          21,479             243          58,300
   Inventories                                -          33,317          11,949               -          45,266
   Deferred income taxes                  1,736               -           2,090            (674)          3,152
   Other current assets                  23,244           2,750             929         (25,931)            992
                                  -------------------------------------------------------------------------------
Total current assets                     25,073          73,139          40,232         (26,362)        112,082
Property, plant, and
   equipment, net                             -           8,941           6,791               -          15,732
Goodwill                                      -          10,986           3,030               -          14,016
Investment in subsidiaries               60,309          35,788               -         (96,097)              -
Deferred financing costs                    130               -               -               -             130
Deferred income taxes                         -               -             859               -             859
Other assets                                807           4,795              90          (5,591)            101
                                  -------------------------------------------------------------------------------
Total assets                           $ 86,319       $ 133,649        $ 51,002      $ (128,050)      $ 142,920
                                  ===============================================================================
Current liabilities:
   Notes payable                       $      -       $   5,360        $  2,595      $     (697)      $   7,258
   Trade accounts payable                   539          12,380          20,202          (2,373)         30,748
   Accrued compensation and
     employee benefits                        -           6,788           2,639               -           9,427
   Accrued interest                         295               -               -               -             295
   Other accrued liabilities              2,671           5,381           5,966          (3,203)         10,815
   Management fees payable                5,327               -               -               -           5,327
   Income taxes payable                       -          22,898           1,113         (23,224)            787
   Current maturities of
     long-term obligations               16,876             500           1,979               -          19,355
                                  -------------------------------------------------------------------------------
Total current liabilities                25,708          53,307          34,494         (29,497)         84,012
Pension obligation                            -           1,457               -               -           1,457
Deferred income taxes                         -           4,190               -            (807)          3,383
Senior notes                             74,440               -               -               -          74,440
N/P to N.E.S. Investment Co.             14,357               -               -               -          14,357
Other long-term obligations                   -           3,417           3,607          (2,621)          4,403
Stockholder's equity (deficit)          (28,186)         71,278          12,901         (95,125)        (39,132)
                                  -------------------------------------------------------------------------------
Total liabilities and
   stockholder's equity (deficit)      $ 86,319       $ 133,649        $ 51,002      $ (128,050)      $ 142,920
                                  ===============================================================================
</TABLE>


                                       52

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

L.  Guarantor and Non-Guarantor Subsidiaries (Continued)

<TABLE>
<CAPTION>
                                                 Combined        Combined
                                                 Guarantor     Non-Guarantor
December 31, 2005:              The Company    Subsidiaries    Subsidiaries    Eliminations       Total
                              -------------------------------------------------------------------------------
<S>                               <C>            <C>              <C>           <C>               <C>
Current assets:
   Cash and cash equivalents       $     40       $     470        $     33      $        -        $     543
   Accounts receivable, net               -          28,139          21,155               -           49,294
   Inventories                            -          33,310           8,861               -           42,171
   Deferred income taxes                 81             759             627               -            1,467
   Other current assets              18,729           2,242           1,804         (20,794)           1,981
                              -------------------------------------------------------------------------------
Total current assets                 18,850          64,920          32,480         (20,794)          95,456
Property, plant, and
   equipment, net                         -           7,685           5,881               -           13,566
Goodwill                                  -          10,986           2,803               -           13,789
Investment in subsidiaries           60,309          35,788               -         (96,097)               -
Deferred financing costs                650               -               -               -              650
Other assets                          1,138           4,916             118          (5,427)             745
                              -------------------------------------------------------------------------------
Total assets                       $ 80,947       $ 124,295        $ 41,282      $ (122,318)       $ 124,206
                              ===============================================================================
Current liabilities:
   Notes payable                   $      -       $   7,172        $  6,082      $     (769)       $  12,485
   Trade accounts payable               239          17,221          18,214          (1,877)          33,797
   Accrued compensation and
     employee benefits                    -           5,139           2,132               -            7,271
   Accrued interest                     295               -               -               -              295
   Other accrued liabilities          2,076           5,482           3,722          (1,904)           9,376
   Management fees payable            2,996               -               -               -            2,996
   Income taxes payable                   -          21,623               -         (18,680)           2,943
   Current maturities of
     long-term obligations            6,146             500           1,183               -            7,829
                              -------------------------------------------------------------------------------
Total current liabilities            11,752          57,137          31,333         (23,230)          76,992
Pension obligation                        -           1,483               -               -            1,483
Deferred income taxes                     -           5,929               -          (1,138)           4,791
Senior notes                         91,317               -               -               -           91,317
N/P to N.E.S. Investment Co.         13,172               -               -               -           13,172
Other long-term obligations               -           3,917           3,129          (2,349)           4,697
Stockholder's equity
(deficit)                           (35,294)         55,829           6,820         (95,601)         (68,246)
                              -------------------------------------------------------------------------------
Total liabilities and
   stockholder's equity
   (deficit)                       $ 80,947       $ 124,295        $ 41,282      $ (122,318)       $ 124,206
                              ===============================================================================
</TABLE>


                                       53

<PAGE>
                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

L.  Guarantor and Non-Guarantor Subsidiaries (Continued)

<TABLE>
<CAPTION>
                                                        Combined       Combined
                                                        Guarantor    Non-Guarantor
                                         The Company  Subsidiaries   Subsidiaries   Eliminations      Total
                                        ------------------------------------------------------------------------
<S>                                       <C>          <C>             <C>             <C>         <C>
Year ended December 31, 2006:
Net sales                                  $      -     $ 250,207       $ 105,545       $  (507)    $ 355,245
Cost of products sold                             -       191,422          88,791          (507)      279,706
                                        ------------------------------------------------------------------------
Gross profit                                      -        58,785          16,754             -        75,539
Total operating expenses                      3,002        19,095          11,286             -        33,383
                                        ------------------------------------------------------------------------
Operating income (loss)                      (3,002)       39,690           5,468             -        42,156
Interest expense, net                         2,885         1,180             755             -         4,820
Miscellaneous expense                           200           277             592             -         1,069
                                        ------------------------------------------------------------------------
Income (loss) before income taxes            (6,087)       38,233           4,121             -        36,267
Income tax expense (benefit)                 (5,867)       15,607          (1,199)            -         8,541
                                        ------------------------------------------------------------------------
Net income (loss)                          $   (220)    $  22,626       $   5,320       $     -     $  27,726
                                        ========================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                        Combined       Combined
                                                        Guarantor    Non-Guarantor
                                         The Company  Subsidiaries   Subsidiaries   Eliminations      Total
                                        ------------------------------------------------------------------------
<S>                                      <C>          <C>              <C>             <C>         <C>
Year ended December 31, 2005:
Net sales                                 $       -    $  216,855       $  85,391       $     -     $ 302,246
Cost of products sold                             -       164,563          71,311             -       235,874
                                        ------------------------------------------------------------------------
Gross profit                                      -        52,292          14,080             -        66,372
Total operating expenses                      1,799        17,783          10,675             -        30,257
                                        ------------------------------------------------------------------------
Operating income (loss)                      (1,799)       34,509           3,405             -        36,115
Interest expense, net                         2,663         1,450             696             -         4,809
Miscellaneous expense                           400           650             195             -         1,245
                                        ------------------------------------------------------------------------
Income (loss) before income taxes            (4,862)       32,409           2,514             -        30,061
Income tax expense (benefit)                 (7,101)       15,164            (893)            -         7,170
                                        ------------------------------------------------------------------------
Net income                                $   2,239    $   17,245       $   3,407       $     -     $  22,891
                                        ========================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                        Combined       Combined
                                                        Guarantor    Non-Guarantor
                                         The Company  Subsidiaries   Subsidiaries   Eliminations      Total
                                        ------------------------------------------------------------------------
<S>                                      <C>          <C>               <C>             <C>        <C>
Year ended December 31, 2004:
Net sales                                 $       -    $  141,215        $ 94,512        $   (8)    $ 235,719
Cost of products sold                             -       113,663          82,115            (8)      195,770
                                        ------------------------------------------------------------------------
Gross profit                                      -        27,552          12,397             -        39,949
Total operating expenses                      1,419        16,123           9,303             -        26,845
                                        ------------------------------------------------------------------------
Operating income (loss)                      (1,419)       11,429           3,094             -        13,104
Interest expense, net                         4,962         1,008             939             -         6,909
Miscellaneous expense (income)               (1,054)          606            (483)            -          (931)
                                        ------------------------------------------------------------------------
Income (loss) before income taxes            (5,327)        9,815           2,638             -         7,126
Income tax expense (benefit)                   (733)        3,999               -             -         3,266
                                        ------------------------------------------------------------------------
Net income (loss)                         $  (4,594)   $    5,816        $  2,638        $    -     $   3,860
                                        ========================================================================
</TABLE>

                                       54

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

L.  Guarantor and Non-Guarantor Subsidiaries (Continued)

<TABLE>
<CAPTION>
                                                        Combined       Combined
                                                        Guarantor    Non-Guarantor
                                         The Company  Subsidiaries   Subsidiaries   Eliminations      Total
                                        ------------------------------------------------------------------------

<S>                                       <C>           <C>               <C>            <C>        <C>
Year ended December 31, 2006:
Net cash  provided by (used in)
   operating activities                    $ (1,127)     $ 11,931          $ 8,131        $ (45)     $ 18,890

Investing activities:
   Purchases of property, plant and
     equipment                                    -        (2,419)          (1,355)           -        (3,774)
   Proceeds from disposals of PP&E                -            19               56            -            75
                                        ------------------------------------------------------------------------
Net cash used in investing activities             -        (2,400)          (1,299)           -        (3,699)

Financing activities:
   Net decrease in borrowings on notes
     payable                                      -        (1,811)          (3,730)           -        (5,541)
   Proceeds from long-term obligations            -             -            1,197            -         1,197
   Payments on Senior Notes                  (6,146)            -                -            -        (6,146)
   Principal payments on long-term
     obligations                                  -          (500)            (554)           -        (1,054)
   Intercompany loan activity                     -           130             (130)           -             -
   Distributions                              7,326        (7,326)               -            -             -
                                        ------------------------------------------------------------------------
Net cash provided by (used in)
   financing activities                       1,180        (9,507)          (3,217)           -       (11,544)
Exchange rate changes on cash                     -             -              137           45           182
                                        ------------------------------------------------------------------------
Increase in cash and cash equivalents            53            24            3,752            -         3,829
Cash and cash equivalents at beginning
   of year                                       40           470               33            -           543
                                        ------------------------------------------------------------------------
Cash and cash equivalents at end of
   year                                    $     93      $    494          $ 3,785        $   -      $  4,372
                                        ========================================================================
</TABLE>


                                       55

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

L.  Guarantor and Non-Guarantor Subsidiaries (Continued)

<TABLE>
<CAPTION>
                                                        Combined       Combined
                                                        Guarantor    Non-Guarantor
                                         The Company  Subsidiaries   Subsidiaries   Eliminations      Total
                                        ------------------------------------------------------------------------

<S>                                       <C>           <C>              <C>              <C>       <C>
Year ended December 31, 2005:
Net cash  provided by (used in)
   operating activities                    $ (1,331)     $ 16,861         $ (1,782)        $  8      $ 13,756

Investing activities:
   Purchases of property, plant and
     equipment                                    -        (2,889)            (702)           -        (3,591)
   Proceeds from disposals of PP&E                -            36                8            -            44
                                        ------------------------------------------------------------------------
Net cash used in investing activities             -        (2,853)            (694)           -        (3,547)

Financing activities:
   Net increase (decrease) in
     borrowings on notes payable                  -        (6,125)           1,913            -        (4,212)
   Proceeds from long-term obligations        2,000             -              523            -         2,523
   Payments on Senior Notes                  (6,146)            -                -            -        (6,146)
   Principal payments on long-term
     obligations                                  -          (596)            (295)           -          (891)
   Payments of additional
     consideration to bondholders            (1,821)            -                -            -        (1,821)
   Distributions                              7,326        (7,326)               -            -             -
                                        ------------------------------------------------------------------------
Net cash provided by (used in)
   financing activities                       1,359       (14,047)           2,141            -       (10,547)
Exchange rate changes on cash                     -             -                2           (8)           (6)
                                        ------------------------------------------------------------------------
Increase (decrease) in cash and cash
   equivalents                                   28           (39)            (333)           -          (344)
Cash and cash equivalents at beginning
   of year                                       12           509              366            -           887
                                        ------------------------------------------------------------------------
Cash and cash equivalents at end of
   year                                    $     40      $    470         $     33         $  -      $    543
                                        ========================================================================
</TABLE>


                                       56

<PAGE>

                         Continental Global Group, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2006

L.  Guarantor and Non-Guarantor Subsidiaries (Continued)

<TABLE>
<CAPTION>
                                                        Combined       Combined
                                                        Guarantor    Non-Guarantor
                                         The Company  Subsidiaries   Subsidiaries   Eliminations      Total
                                        ------------------------------------------------------------------------

<S>                                       <C>            <C>                <C>           <C>        <C>
Year ended December 31, 2004:
Net cash  provided by (used in)
   operating activities                    $ (2,674)      $ 3,633            $ 924         $ (7)      $ 1,876

Investing activities:
   Purchases of property, plant and
     equipment                                    -          (344)            (375)           -          (719)
   Proceeds from disposals of PP&E                -             6               26            -            32
                                        ------------------------------------------------------------------------
Net cash used in investing activities             -          (338)            (349)           -          (687)

Financing activities:
   Net increase (decrease) in
     borrowings on notes payable                  -         4,152           (1,177)           -         2,975
   Proceeds from long-term obligations       10,000         3,768              627            -        14,395
   Payments on Senior Notes                  (3,073)            -                -            -        (3,073)
   Principal payments on long-term
     obligations                                  -          (525)            (817)           -        (1,342)
   Payments of additional
     consideration to bondholders           (14,114)            -                -            -       (14,114)
   Distributions                              9,759        (9,759)               -            -             -
   Intercompany loan activity                     -        (1,156)           1,156            -             -
                                        ------------------------------------------------------------------------
Net cash provided by (used in)
   financing activities                       2,572        (3,520)            (211)           -        (1,159)
Exchange rate changes on cash                     -             -               (1)           7             6
                                        ------------------------------------------------------------------------
Increase (decrease) in cash and cash
   equivalents                                 (102)         (225)             363            -            36
Cash and cash equivalents at beginning
   of year                                      114           734                3            -           851
                                        ------------------------------------------------------------------------
Cash and cash equivalents at end of
   year                                    $     12       $   509            $ 366         $  -       $   887
                                        ========================================================================
</TABLE>

M.       Commitments and Contingencies

The Company is not a party to any pending legal proceeding which it believes
could have a material adverse effect upon its results of operations or financial
condition, or to any other pending legal proceedings other than ordinary,
routine litigation incidental to its business.


                                       57

<PAGE>



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

None.

Item 9A.  Controls and Procedures

As of December 31, 2006, the Company carried out an evaluation, under the
supervision and with the participation of the Company's management, including
the Company's Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. During the year, the Company's subsidiary Continental Conveyor
and Equipment Company installed a new information technology (IT) system. In the
course of the year-end audit of this subsidiary, our independent auditors
identified a material weakness in the IT system in the aggregation of cut-off
data for year end accounts payable and inventory balances as well as the
balances on the date of the physical inventory count. In addition, the
independent auditors identified an error in the manual aggregation of certain
information used within the physical inventory reconcilement. Management has
identified the source of the IT issue and corrections have been made. Management
has taken steps to ensure that the manual aggregation of information is properly
reviewed to eliminate future problems of this nature. Based upon its evaluation
and the findings noted above, the Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures are now
effective in timely alerting them to material information relating to the
Company (including its consolidated subsidiaries) required to be included in the
Company's periodic filings with the Securities and Exchange Commission. Other
than the changes noted above, no significant changes in the Company's internal
controls over financial reporting have occurred during the Company's most recent
fiscal quarter that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

The following table sets forth certain information regarding the directors and
executive officers of the Company, as of March 15, 2007:

Name                         Age    Position with the Company

Ronald W. Kaplan             55     President and Chief Executive Officer
James L. Smothers            50     Vice President
Jimmy L. Dickinson           64     Vice President and Chief Financial Officer
John Edwards                 54     Managing Director, Continental Conveyor &
                                      Equipment Pty. Ltd.
Anthony C. Sanders           55     Managing Director, Continental Conveyor Ltd.
Edward F. Crawford           67     Director
Donald F. Hastings           78     Director
Wayne F. Hunnell             60     Director
C. Wesley McDonald           66     Director
Robert J. Tomsich            76     Director
James W. Wert                60     Director


                                       58

<PAGE>


Set forth below is a brief description of the business experience of each
director and executive officer of the Company.

Mr. Kaplan was appointed President and Chief Executive Officer of the Company
effective February 13, 2006. Prior to joining the Company, Mr. Kaplan had been
employed since 1979 with Harsco Corporation, a multinational provider of
industrial services and engineered products. Mr. Kaplan held various positions
with Harsco, serving as President of the Harsco GasServ division since 1998.

Mr. Smothers has served as Vice President of the Company since October 2001 and
has also served as President of Continental Conveyor & Equipment Company since
April 2006. Prior to being named President of Continental Conveyor & Equipment
Company, Mr. Smothers served as Executive Vice President from October 2001
through April 2006 and as Vice President from August 1999 through October 2001.
In addition, Mr. Smothers served as Director of International Sales and Manager
of Systems Engineering of Continental Conveyor & Equipment Company from 1992
through 1999 and Managing Director of CCE Pty. Ltd. in 1999.

Mr. Dickinson has served as Vice President and Chief Financial Officer of the
Company since its inception. Mr. Dickinson has also served as Vice President of
Finance of Continental Conveyor & Equipment Company since 1973 and as a Director
of CCE Pty. Ltd. since 1996.

Mr. Edwards has served as Managing Director of Continental Conveyor & Equipment
Pty. Ltd., the Company's Australian operation, since February 2001. Mr. Edwards
joined the company with the acquisition of Huwood International in the United
Kingdom and transferred to the Australian operations serving as Operations
Director from 1998 to 2001.

Mr. Sanders has served as Managing Director of Continental Conveyor Ltd., the
Company's United Kingdom operation, since January 2001. Prior to joining the
Company, Mr. Sanders was employed as Global Business Development Manager of
Finning UMS (Canada), a heavy duty capital equipment distributor in the mining
area. In addition to service with other material handling equipment companies,
Mr. Sanders served 21 years with Huwood Ltd. and Dowty Meco Ltd. (Dowty Group
PLC), the predecessor companies to the Company's United Kingdom operations.

Mr. Crawford has served as a Director of the Company since its inception. In
addition to his service with the Company, Mr. Crawford has served as Chairman
and Chief Executive Officer and a Director of Park-Ohio Industries, Inc. since
1992.

Mr. Hastings has served as a Director of the Company since its inception. In
addition to his service with the Company, Mr. Hastings served as Chairman and
Chief Executive Officer and as Director of Lincoln Electric Company from 1992 to
1997.

Mr. Hunnell has served as a Director of the Company since January 2007. In
addition, from 2003 to 2006 Mr. Hunnell served as Vice President and Chief
Financial Officer of Blue Bird Corporation, a manufacturer and distributor of a
broad range of buses and related products, including transit and shuttle buses,
coaches, and luxury motor homes. Prior to his service with Blue Bird
Corporation, from 1998 to 2002 Mr. Hunnell served as Senior Vice President of
Joy Global and President and Chief Operating Officer of Joy Mining Machinery, a
manufacturer and distributor of underground mining equipment.

Mr. McDonald has served as a Director of the Company since August 2000. Prior to
his service with the Company, Mr. McDonald served as Executive Vice President of
Operations for Consol Inc. from 1985 to his retirement in 1999.


                                       59

<PAGE>

Mr. Tomsich has served as a Director of the Company since its inception. In
addition, Mr. Tomsich has served as President and Director of Nesco, Inc.
(including predecessors of Nesco, Inc.) since 1956.

Mr. Wert has served as a Director of the Company since its inception. In
addition, Mr. Wert is President of Clanco Management Corporation, an investment
advisory firm located in Cleveland, Ohio. Prior to his service with the Company,
he held a number of executive management positions including Chief Financial
Officer and Chief Investment Officer over his twenty year career with KeyCorp, a
financial services company based in Cleveland, Ohio, and its predecessor,
Society Corporation. He serves on the Board of Directors of Park-Ohio Holdings,
Inc., Cleveland, Ohio, and Marlin Leasing Corporation, Philadelphia,
Pennsylvania.

Audit Committee Membership
Effective May 19, 2005, the Company's Board of Directors elected the following
three independent board members to serve on the Audit Committee: Mr. James W.
Wert, Chairman, Mr. Donald F. Hastings, and Mr. Edward F. Crawford. During 2006,
Mr. Wert resigned from his position on the audit committee, leaving a vacancy on
the committee. Effective March 22, 2007, the Company's Board of Directors voted
to set the membership of the audit committee at two members, with Mr. Hastings
and Mr. Crawford filling these positions. The Audit Committee's principal
function is to assist the board of directors with its oversight responsibilities
with respect to the integrity of the Company's financial statements and
financial reporting process.

Audit Committee Financial Expert
The Company's board of directors has not determined whether the Company has an
audit committee financial expert as defined by Item 401(h) of Regulation S-K of
the Securities Exchange Act of 1934.

Code of Ethics
The Company has not adopted a written code of ethics governing the principal
executive officer, principal financial officer, principal accounting officer or
controller (or those performing similar functions). The Company does not believe
it is necessary to adopt a separate code of ethics relating to these officers.
The Company expects all of its employees to comport to the highest ethical
standards in the conduct of the Company's business.


                                       60

<PAGE>


Item 11.  Executive Compensation

Compensation Discussion and Analysis
Compensation of the Company's executive officers is established by the Board of
Directors of the Company. The Board of Directors consists of six members, all of
whom are independent from management. The Company's goal in establishing
executive compensation is to attract and retain qualified executive officers and
to reward short and long term performance of the executive officers based upon
the subjective judgment of the Board of Directors.

The compensation of the Company's CEO is based upon an employment agreement
negotiated and approved by the Board effective February 13, 2006. The employment
agreement was for a one-year basis and continues on an at-will basis subject to
the oversight of the Board of Directors and the Chairman of the Board. In
addition to the base salary, the CEO is entitled to an annual bonus upon the
achievement of certain pre-tax profit targets established by the Board of
Directors in connection with the approval of the Company's annual business plan.
In addition to benefits available to all salaried employees, defined
contribution pension plan, 401K, hospitalization and major medical plans, the
CEO's employment agreement provides for additional life insurance with a death
benefit of $750,000. Additionally, the CEO's employment agreement grants him the
right to voluntarily terminate his employment in the event that the Company
experiences a change of control, as defined in the agreement. This change of
control provision entitles the CEO to receive his base salary for a period of 24
months following the effective date of his resignation.

The Company's other named executive officers (NEOs) are not employed under
written employment agreements. The compensation of the other NEOs consist of
their base salary which is subject to annual review by the CEO, subject to
oversight of the Board of Directors and the Chairman of the Board.

The NEOs of the Company's domestic operations are participants in the Company's
defined contribution pension plan, 401K plan, life insurance, hospitalization
and major medical plans which are available to all salaried employees. The NEOs
of the Company's domestic operations may be awarded an annual bonus under the
Company's management bonus plan. This plan is designed to encourage management
to improve all operations of the Company, not only in profitability but also
improving all employee relations, competitiveness and continued growth. Payments
under this bonus plan are solely at the discretion of the Board of Directors.

The NEOs of the Company's foreign operations are participants in the Company's
group hospitalization plans and contributions are made to a superannuation fund
on behalf of all employees. The NEOs of the Company's foreign operations may be
awarded an annual bonus under the management incentive plan covering the foreign
operations. The NEOs shall be entitled to the payment of an annual incentive
bonus upon the achievement of certain operating profit growth. In addition to
the previously named benefits, the NEOs of the foreign operations are provided
the use of a fully expensed automobile for personal use and an annual travel
allowance for return airfares to England.


                                       61

<PAGE>


Summary Compensation Table

The following table sets forth certain information concerning compensation of
the Company's Chief Executive Officer and other most highly compensated officers
of the Company having total annual salary and bonus in excess of $100,000.

<TABLE>
<CAPTION>
                                                                                        Other Annual
Name and Principal Position                     Year        Salary         Bonus       Compensation(1)      Total

<S>                                             <C>       <C>            <C>                <C>          <C>
Ronald W. Kaplan, President and                 2006      $ 359,190      $ 420,355          $ 12,267     $ 791,812
    Chief Executive Officer

C. Wesley McDonald, Vice Chairman               2006         62,502              -                 -        62,502
    and Interim President and CEO (2)           2005        181,095              -                 -       181,095

Jimmy L. Dickinson, Vice President              2006        159,960         68,287            49,888       278,135
    and Chief Financial Officer                 2005        154,140         11,775            13,145       179,060
                                                2004        150,720          9,075            10,505       170,300

James Smothers, Vice President,                 2006        181,330         71,292            10,629       263,251
    President Continental Conveyor &            2005        165,255         11,209            11,012       187,476
    Equipment Company                           2004        163,800          8,342            10,763       182,905

John Edwards, Managing Director                 2006        164,332         47,525            53,448       265,305
    Continental Conveyor & Equipment            2005        158,417         26,365            53,262       238,044
    Pty. Ltd                                    2004        145,790              -            50,258       196,048

Anthony C. Sanders, Managing Director,          2006        180,513         36,860            38,426       255,799
    Continental Conveyor Ltd.                   2005        173,136              -            37,311       210,447
                                                2004        170,450              -            40,963       211,413
</TABLE>

(1)  Amounts shown reflect contributions made by the Company on behalf of the
     named executives in the domestic operations under the Continental Conveyor
     & Equipment Company Savings and Profit Sharing Plan (401k) and the
     Continental Conveyor & Equipment Retirement Plan for Salaried and Hourly
     (Non-Union) Employees at Salyersville, Kentucky (defined contribution
     pension plan). Amounts shown on behalf of named executives in the foreign
     operations reflect contributions under the Australian and United Kingdom
     subsidiaries' superannuation plans and the value of the use of a fully
     expensed automobile and the value of an annual travel allowance with
     respect to the NEO in Australia. Other than amounts provided for fully
     expensed automobile for personal use and annual travel allowance, no
     amounts shown were received by any of the named executives.
(2)  On May 1, 2005, the Company appointed Mr. McDonald as Interim President and
     CEO, where he served until February 13, 2006.

Director Compensation Table for 2006

                                                Fees Earned or
Name                                             Paid in Cash

Edward F. Crawford                                        $40,000
Donald F. Hastings                                         40,000
C. Wesley McDonald                                         60,000
Robert J. Tomsich                                         100,000
James W. Wert                                              40,000
Wayne F. Hunnell                                                -


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<PAGE>


Each director of the Company not employed by the Company or any entity
affiliated with the Company received $40,000 for serving as a director of the
Company during the year. Mr. Tomsich received $100,000 for serving as Chairman
of the Board during the year. Mr. McDonald received $60,000 for serving as a
director and Vice Chairman after the appointment of the Company's new President
and CEO. Also, the Company will reimburse such director for their travel and
other expenses incurred in connection with attending meetings of the Board of
Directors.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

The following table sets forth the beneficial ownership of the outstanding
equity securities of the Company as of March 15, 2007:

                                                     Name and Address of
Number of Shares   Title of Class                    Beneficial Owner

100                Common Stock, $0.01 par value     N.E.S. Investment Co.
                                                     6140 Parkland Boulevard
                                                     Mayfield Heights, OH  44124

All of the Company's issued and outstanding capital stock is owned by N.E.S.
Investment Co., which is 100 percent beneficially owned by Mr. Robert J.
Tomsich. Mr. Tomsich may be deemed to be the beneficial owner of the Company's
capital stock.

Item 13.  Certain Relationships and Related Transactions

Company Formation

The Company is a Delaware Corporation formed on February 4, 1997, for the
purpose of owning all of the common stock of Continental Conveyor & Equipment
Company ("CCE") and Goodman Conveyor Company ("GCC"). The Company, which is a
holding company with limited assets and operations other than its investments in
its subsidiaries, is owned 100% by N.E.S. Investment Co.

Prior to January 1, 1997, CCE and GCC were limited partnerships under common
control by NES Group, Inc. (the parent company of N.E.S. Investment Co.), the
99% limited partner. Effective January 1, 1997, NES Group, Inc., transferred its
interest in the limited partnerships to CCE and GCC. Effective February 1997,
NES Group, Inc. transferred to the Company all of the outstanding capital stock
of CCE and GCC.

Management Agreement

Effective April 1, 1997, the Company and Nesco, Inc. entered into a management
agreement ("Management Agreement"), the material terms of which are summarized
below. All of the outstanding capital stock of Nesco, Inc. is beneficially owned
by Robert J. Tomsich. Under the Management Agreement, Nesco, Inc., has agreed to
provide general management oversight services on a regular basis for the benefit
of the Company, in regard to business activities involving financial results,
legal issues, and long term planning relative to current operations and
acquisitions. Business development services include assistance in identifying
and acquiring potential acquisition candidates, including negotiations and
contractual preparations in connection therewith. Financial planning includes
assistance in developing banking relationships and monitoring cash investments
through professional money management accounts. Under the terms of the
Management Agreement, the Company has agreed to pay Nesco, Inc. a management fee
for such services equal to 5% of the Company's earnings before interest and
estimated taxes, depreciation, amortization, and other expense (income). The
aggregate amount expensed for management fees in 2006 under the Management
Agreement was $2,331,170. The Management Agreement will remain in effect until


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<PAGE>

terminated by either party upon not less than 60 days written notice prior to an
anniversary date of the Management Agreement.

The Company will also separately employ, as required, independent auditors,
outside legal counsel, and other consulting services. Such services will be paid
directly by the Company.

Item 14.  Principal Accountant Fees and Services

Audit Fees
The aggregate fees for professional services rendered by Ernst & Young LLP in
connection with the audit of the Company's annual financial statements for the
fiscal years ended December 31, 2006 and 2005, for review of the financial
information included in the Company's quarterly reports on Form 10-Q for such
fiscal years, and in connection with statutory and regulatory filings for such
fiscal years, were approximately $539,000 and $502,000, respectively.

Audit Related Fees
None.

Tax Fees
The aggregate fees for services rendered by Ernst & Young LLP in connection with
income tax compliance, tax advice and tax planning for the fiscal years ended
December 31, 2006 and 2005 were approximately $31,000 and $44,000, respectively.

All Other Fees
None.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services
The audit committee has considered whether the provision of non-audit services
by the auditors is compatible with maintaining the independence of the auditors.

All auditing services and permitted non-audit services (including the fees and
terms thereof) to be performed for the Company by its independent auditor must
be pre-approved by the audit committee. All audit and non-audit services
provided by the independent auditors during 2006 were approved by the audit
committee.


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<PAGE>


                                     PART IV

Item 15.  Exhibits and Financial Statement Schedules

             Documents Filed as Part of this Report:

             1. Consolidated Financial Statements.

                The consolidated financial statements listed below together with
                the report thereon of the independent registered public
                accounting firm dated April 2, 2007 are included in Item 8.

                Report of Independent Registered Public Accounting Firm.

                Consolidated Balance Sheets at December 31, 2006 and 2005.

                Consolidated Statements of Income for each of the three years in
                the period ended December 31, 2006.

                Consolidated Statements of Stockholder's Equity (Deficit) for
                each of the three years in the period ended December 31, 2006.

                Consolidated Statements of Cash Flows for each of the three
                years in the period ended December 31, 2006.

                Notes to Consolidated Financial Statements.

             2. Financial Statement Schedules

                No consolidated financial statement schedules are presented
                because the schedules are not required, the information is not
                present, or not present in amounts sufficient to require
                submission of the schedules or the required information is
                included in the Consolidated Financial Statements.

             3. Exhibits Required to be Filed by Item 601 of Regulation S-K.

                The information required by this paragraph is contained in the
                Index of Exhibits to this report.


                                       65

<PAGE>


Signatures

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on the 2nd day of April, 2007.

                                   CONTINENTAL GLOBAL GROUP, INC.

                                   By:  /s/ Ronald W. Kaplan
                                   ------------------------------
                                   Name: Ronald W. Kaplan
                                   Title: President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>
Signature                                                            Title                         Date

<S>                                          <C>                                                  <C>
/s/ Ronald W. Kaplan                          President and Chief Executive Officer                April 2, 2007
-----------------------------------------
Ronald W. Kaplan                              (Principal Executive Officer)

/s/ Jimmy L. Dickinson                        Vice President and Chief Financial Officer           April 2, 2007
-----------------------------------------
Jimmy L. Dickinson                            (Principal Financial Officer and Principal
                                               Accounting Officer)

/s/ Edward F. Crawford                        Director                                             April 2, 2007
-----------------------------------------
Edward F. Crawford

/s/ Donald F. Hastings                        Director                                             April 2, 2007
-----------------------------------------
Donald F. Hastings

/s/ Wayne F. Hunnell                          Director                                             April 2, 2007
-----------------------------------------
Wayne F. Hunnell

/s/ C. Wesley McDonald                        Director                                             April 2, 2007
-----------------------------------------
C. Wesley McDonald

/s/ Robert J. Tomsich                         Director                                             April 2, 2007
-----------------------------------------
Robert J. Tomsich

/s/ James W. Wert                             Director                                             April 2, 2007
-----------------------------------------
James W. Wert
</TABLE>

Supplemental information to be furnished with reports filed pursuant to Section
15(d) of the Act by registrants which have not registered securities pursuant to
Section 12 of the Act.

No annual report to security holders covering the registrant's last fiscal year
and no proxy statement, form of proxy, or other proxy soliciting material with
respect to any annual or other meeting of security holders has been or will be
sent to security holders.


                                       66

<PAGE>


                         Continental Global Group, Inc.

                                    Form 10-K

                                Index of Exhibits


Exhibit
Number        Description of Exhibit

    3.1
    (a)       Certificate of Incorporation of Continental Global Group, Inc.,
              as currently in effect.                                          *

    (b)       Certificate of Amendment of Certificate of Incorporation of
              Continental Global Group, Inc. (Filed as Exhibit 3.1(b) to the
              Company's Form 10-K for the year ended December 31, 2005, and is
              incorporated herein by reference.)

    3.2       By-Laws of Continental Global Group, Inc., as currently in
              effect.                                                          *

    3.3       Certificate of Incorporation of Continental Conveyor & Equipment
              Company, as currently in effect.                                 *

    3.4       By-Laws of Continental Conveyor & Equipment Company, as
              currently in effect.                                             *

    3.5       Certificate of Incorporation of Goodman Conveyor Company, as
              currently in effect.                                             *

    3.6       By-Laws of Goodman Conveyor Company, as currently in effect.     *

    4.1       Indenture, dated as of April 1, 1997, among Continental Global
              Group, Inc., Continental * Conveyor & Equipment Company, Goodman
              Conveyor Company, and the Trustee (containing, as exhibits,
              specimens of the Series A Notes and the Series B Notes).

    4.2       Supplemental Indenture, dated as of October 4, 2004, between
              Continental Global Group, Inc., Continental Conveyor & Equipment
              Pty., Ltd., Continental ACE Pty., Goodman Conveyor Company,
              Continental Conveyor & Equipment Company, and Wells Fargo Bank,
              National Association, as trustee. (Filed as Exhibit 4.2 to the
              Company's Form 10-Q for the quarter ended September 30, 2004, and
              is incorporated herein by reference.)

    4.3       Indenture, dated October 4, 2004, among Continental Global Group,
              Inc., Continental Conveyor & Equipment Company, Goodman Conveyor
              Company, and Wells Fargo Bank, National Association. (Filed as
              Exhibit 4.1 to Form 8-K filed by the Company on October 7, 2004,
              and is incorporated herein by reference.)

    4.4       9% Convertible Subordinated Promissory Note, dated October 4,
              2004, from Continental Global Group, Inc. to N.E.S. Investment
              Co. in the amount of $10,000,000. (Filed as Exhibit 4.3 to Form
              8-K filed by the Company on October 7, 2004, and is incorporated
              herein by reference.)

    10.1      Second Amended and Restated Credit Facility and Security
              Agreement, dated October 4, 2004, by and among Continental
              Conveyor & Equipment Company, Goodman Conveyor Company, and Bank
              One, N.A. (Filed as Exhibit 4.2 to Form 8-K filed by the Company
              on October 7, 2004, and is incorporated herein by reference.)

    10.2      Management Agreement, dated as of April 1, 1997, between
              Continental Global Group, Inc. and Nesco, Inc.                   *

    10.3      Employment Agreement, effective February 13, 2006, between
              Continental Global Group, Inc. and Ronald Kaplan.  (Filed as
              Exhibit 10.3 to Form 8-K filed by the Company on March 17, 2006,
              and is incorporated herein by reference.)


<PAGE>

                         Continental Global Group, Inc.

                                    Form 10-K

                                Index of Exhibits


  Exhibit
   Number     Description of Exhibit

   10.4       Amendment, dated October 26, 2006, to Employment Agreement,
              effective February 13, 2006, between Continental Global Group,
              Inc. and Ronald Kaplan.

   10.5       First Amendment to Second Amended and Restated Credit Facility and
              Security Agreement, dated March 9, 2006, by Continental Conveyor &
              Equipment Company, Goodman Conveyor Company, and JP Morgan Chase
              Bank, N.A., successor by merger to Bank One, N.A. (Filed as
              Exhibit 10.5 to the Company's Form 10-K for the year ended
              December 31, 2005, and is incorporated herein by reference.)

    10.6      Continental Global Group, Inc. incentive award letter dated
              October 26, 2006.

    10.7      Continental Global Group, Inc. retention letter dated October
              26, 2006.

   10.17      Restructuring Agreement, dated as of July 22, 2004, by and among
              Continental Global Group, Inc., N.E.S. Investment Co. and Wayzata
              Investment Partners LLC. (Filed as Exhibit 99.1 to Form 8-K filed
              by the Company on July 23, 2004, and is incorporated herein by
              reference.)

   10.18      First Amendment, dated as of July 30, 2004, to Restructuring
              Agreement, dated as of July 22, 2004, by and among Continental
              Global Group, Inc., N.E.S. Investment Co. and Wayzata Investment
              Partners LLC. (Filed as Exhibit 99.1 to Form 8-K filed by the
              Company on August 3, 2004, and is incorporated herein by
              reference.)

   10.19      Second Amendment, dated as of October 1, 2004, to Restructuring
              Agreement, dated as of July 22, 2004, by and among Continental
              Global Group, Inc., N.E.S. Investment Co. and Wayzata Investment
              Partners LLC. (Filed as Exhibit 10.19 to the Company's Form 10-Q
              for the quarter ended September 30, 2004, and is incorporated
              herein by reference.)

     12       Statement regarding computation of ratio of earnings to fixed
              charges

     21       Subsidiaries of registrant

    31.1      Certification of the Chief Executive Officer pursuant to Section
              302 of the Sarbanes-Oxley Act of 2002

    31.2      Certification of the Chief Financial Officer pursuant to Section
              302 of the Sarbanes-Oxley Act of 2002

     32       Certifications of the Chief Executive Officer and Chief Financial
              Officer pursuant to 18, U.S.C. 1350, as adopted pursuant to
              Section 906 of the Sarbanes-Oxley Act of 2002


Certain instruments with respect to long-term debt have not been filed as
exhibits as the total amount of securities authorized under any one of such
instruments does not exceed 10 percent of the total assets of the registrant and
its subsidiaries on a consolidated basis. The registrant agrees to furnish to
the Commission a copy of each such instrument upon request.

* Incorporated by reference from Form S-4 Registration Number 333-27665 filed
under the Securities Act of 1933.