==============================================================================
               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C.  20549-1004
                                  FORM 10-K
(Mark One)
  X   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the fiscal year ended December 31, 2006

                       Commission File Number 01-15739
                                              --------

                           REUNION INDUSTRIES, INC.
            ------------------------------------------------------
            (Exact name of Registrant as specified in its charter)

        DELAWARE                                       06-1439715
------------------------                  ------------------------------------
(State of Incorporation)                  (I.R.S. Employer Identification No.)

        11 STANWIX STREET, SUITE 1400, PITTSBURGH, PENNSYLVANIA 15236
        -------------------------------------------------------------
        (Address of principal executive offices, including zip code)

                                (412) 281-2111
             ----------------------------------------------------
             (Registrant's telephone number, including area code)

         Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class:                            COMMON STOCK, $.01 par value
Name of Each Exchange on Which Registered:      AMERICAN STOCK EXCHANGE
      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 15(d) of the Act.       Yes       No  X
                                                      -----   -----

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the 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 the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
                             -----

Indicate by check mark whether the Registrant is a
Large accelerated filer     Accelerated filer     Non-accelerated filer X
                       ---                   ---                       ---

Indicate by check mark whether the Registrant is a shell company Yes   No X
                                                                    ---  ---

At March 15, 2007, 17,419,019 shares of common stock were issued and
outstanding.  As of June 30, 2006, the aggregate market value of the voting
stock held by non-affiliates of the registrant (computed by reference to the
average of the high and low sales prices on the American Stock Exchange) was
$7,315,988.

DOCUMENTS INCORPORATED BY REFERENCE:  Part III, Items 10 through 14 of this
report, is incorporated from the Registrant's definitive proxy statement to be
filed on or before May 1, 2007.
==============================================================================




                           REUNION INDUSTRIES, INC.
                              TABLE OF CONTENTS
                                                                      Page No.
                                                                      --------
                                    PART I

Item 1.   Business                                                        4
Item 2.   Properties                                                      6
Item 3.   Legal Proceedings                                               6

                                   PART II

Item 5.   Market for the Registrant's Common Stock and
            Related Stockholder Matters                                   7
Item 6.   Selected Financial Data                                         8
Item 7.   Management's Discussion and Analysis of
            Financial Condition and Results of Operations                10
Item 7a.  Quantitative and Qualitative Disclosures about Market Risk     22
Item 8.   Consolidated Financial Statements and Supplementary Data       23
Item 9.   Changes in and Disagreements with Accountants
            on Accounting and Financial Disclosures                      23
Item 9a.  Controls and Procedures                                        23

                                   PART III

Item 10.  Directors and Executive Officers of the Registrant             24
Item 11.  Executive Compensation                                         24
Item 12.  Security Ownership of Certain Beneficial
            Owners and Management                                        24
Item 13.  Certain Relationships and Related Transactions                 24
Item 14.  Principal Accounting Fees and Services                         24

                                   PART IV

Item 15.  Exhibits, Financial Statements Schedules,
            and Reports on Form 8-K                                      25

SIGNATURES                                                               26


						- 2 -




	FORWARD LOOKING STATEMENTS

     This report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act that are intended to be covered by the safe harbors created thereby.  The
forward-looking statements that are contained in this report are enclosed in
brackets [ ] for ease of identification.  Note that all forward-looking
statements involve risks and uncertainties.  Factors which could cause the
future results and shareholder values to differ materially from those
expressed in the forward-looking statements include, but are not limited to,
the strengths of the markets which the Company serves, the Company's ability
to generate liquidity and the Company's ability to service its debts and meet
financial covenants.  Although the Company believes that the assumptions
underlying the forward-looking statements contained in this report are
reasonable, any of the assumptions could be inaccurate and, therefore, there
can be no assurances that the forward-looking statements included or
incorporated by reference in this report will prove to be accurate.  In light
of the significant uncertainties inherent in the forward-looking statements
included or incorporated by reference herein, the inclusion of such
information should not be regarded as a representation by the Company or any
other person that the Company's objectives and plans will be achieved.  In
addition, the Company does not intend to, and is not obligated to, update
these forward-looking statements after filing and distribution of this report,
even if new information, future events or other circumstances have made them
incorrect or misleading as of any future date.

						- 3 -




	PART I

ITEM 1.     BUSINESS

GENERAL

     Reunion Industries, Inc., a Delaware corporation ("Reunion Industries" or
"Reunion"), is the successor by merger, effective March 16, 2000, of Chatwins
Group, Inc. ("Chatwins Group") with and into Reunion Industries, Inc.  The
terms "Company" and "We" refer to Reunion after the merger.  Reunion
Industries' executive offices are located at 11 Stanwix Street, Suite 1400,
Pittsburgh, Pennsylvania 15222 and its telephone number is (412) 281-2111.

	The Company owns and operates industrial manufacturing operations that
design and manufacture engineered, high-quality products for specific customer
requirements.  Such products include large-diameter seamless pressure vessels,
hydraulic and pneumatic cylinders and metal bar grating. Until December 2005,
the Company's products included precision plastic components made by its
thermoplastics division ("Oneida").  During the year 2005, the Company decided
to exit the plastics business and, effective March 1, 2006, Oneida was sold.
See ITEM 7, MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, RECENT EVENTS-Sale of Oneida.

     The Company's customers include original equipment manufacturers and end-
users in a variety of industries, such as transportation, power generation,
chemicals, metals and electronics.  The Company's continuing operations are
comprised of the following businesses.

     CPI - CPI, founded in 1897 and located in McKeesport, Pennsylvania,
specializes in manufacturing large, seamless pressure vessels for the above
ground storage and transportation of highly pressurized gases such as natural
gas, hydrogen, nitrogen, oxygen and helium.  These pressure vessels are
provided to customers such as industrial gas producers and suppliers, the
alternative fueled vehicle compressed natural gas fuel industry, chemical and
petrochemical processing facilities, shipbuilders, NASA, public utilities and
gas transportation companies.

     Hanna - Hanna, founded in 1901 and located in Libertyville, Illinois,
designs and manufactures a broad line of hydraulic and pneumatic cylinders,
actuators, accumulators and manifolds.  These products are used in a wide
variety of industrial and mobile machinery and equipment requiring the
application of force in a controlled and repetitive process.  Hanna's
specialty is custom cylinders in both small quantities packaged by its
distributors with valves, pumps and controls as complete fluid power systems
and large quantities sold directly to equipment manufacturers.

     Shanghai Klemp Metal Products Co., Ltd.  Located in Shanghai, China, this
business was formed in 1995 when the Company entered into a joint venture
agreement with two other Chinese based entities.  The Company has a 65%
interest in the joint venture.  In 1999, the Company adopted a plan to exit
the grating manufacturing business and was able to sell all of its grating
businesses, with the exception of this business in China, in that year.  This
grating business was classified as a discontinued business from that time
until the year 2004.  In the four years since adopting this plan, the Company
had made several unsuccessful attempts to dispose of its investment in the
joint venture and now perceives that a presence in China is consistent with
its future plans for certain of its continuing operations.  As a result and in
connection with our Chinese partners' expressed desire to return control of
the business to the Company for various reasons, the Company has decided to
retain its investment in the Chinese joint venture and returned it to
continuing operations effective at the beginning of 2004

     Markets and Customers.   Our businesses operate in mature markets.
Except for pressure vessels, products are sold in highly competitive markets
both in the U.S. and internationally and compete with a significant number of
companies of varying sizes, including divisions or subsidiaries of larger
companies, on the basis of price, service, quality and the ability to supply
customers in a timely manner.  CPI is the largest provider of pressure vessels

						- 4 -


in the U.S.  Many of our competitors have financial and other resources that
are substantially greater than ours.  [Competitive pressures or other factors
could cause us to lose market share or erode prices which could negatively
impact the Company's results of operations.]

     Individual customers sometimes account for more than 10% of a business
unit's sales.  During 2006, one pressure vessel customer accounted for
approximately 13.6% of consolidated sales.  However, during 2005, no customer
accounted for more than 10% of consolidated sales.

     Sales and Marketing.   We market and distribute our products in a variety
of ways including in-house marketing and sales personnel at all of our
divisions, domestic independent and manufacturer representatives, domestic and
international agents and independent distributors that specialize in metal
products.

     Raw Materials.   The major raw materials used in our businesses include
welded and seamless steel tubing and pipe, steel alloy bars, steel plates,
brass tubing and bars and aluminum extrusions, all of which are supplied by
various domestic sources.  Prices began to rise half way through the 2004 year
and continued to rise in 2005 before leveling off in 2006 to a 4-5% increase.
[Increases in the prices of raw materials could negatively affect our
operating results if they cannot be passed on to our customers.]

     Backlog.   Our U.S. backlog, which the Company believes is firm, was
$ 19.5 million at December 31, 2006 and $22.2 million at December 31, 2005.

    Research and Development.   Our research and development activities relate
to improving the quality and performance of our products.  We also develop
ways to meet the design requirements and specifications of customers that
require customized products. To do this, there are engineering departments at
all manufacturing divisions. Products are not materially dependent on any
patents, licenses or trademarks.

REPORTABLE SEGMENT DATA - See PART IV, NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS, NOTE 17 of this report for financial information about Reunion's
segments. See Item 7A, QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK, of this report for financial information about geographic areas.

Employees

     At December 31, 2006, Reunion Industries employed 349 full time employees
in its continuing businesses, both in the United States and in China, of which
7 were Corporate employees.  The Company believes its relations with its
employees are good.  A breakdown of the Company's workforce by location and
function at December 31, 2006 is as follows.

                                          General and
 Location             Manufacturing      Administrative      Total
 --------           -----------------   -----------------    -----
                    Union   Non-Union   Union   Non-Union
                    -----   ---------   -----   ---------
McKeesport, PA      91(1)       8       8(1)       14         121
Libertyville, IL               94                  22         116
Shanghai, China                85                  19         104
Beijing, China                                      1           1

Corporate:
Pittsburgh, PA                                      7           7
                   ---        ---       -         ---       -----
  Totals            91        187       8          63         349
                   ===        ===       =         ===       =====
(1)  Employees belong to The United Steel, Paper & Forestry, Rubber,
Manufacturing, Energy, Allied Industrial and Service Workers International
Union.  A new agreement was signed in 2006 with an expiration date of May 31,
2011.

  The employee in Beijing, China is a Chinese national and relates to seamless
pressure vessel sales efforts in that region.  The employees in Shanghai,

						- 5 -
China are Chinese nationals and relate to the Company's grating subsidiary.
These Chinese nationals are not covered by a union nor are they covered by any
benefit or insurance plans sponsored by the Company.

     As of December 31, 2006, approximately 28% of the Company's workforce was
covered by collective bargaining agreements, all of which expire May 31, 2011.

Available Information

     Reunion's website is http://www.reunionindustries.com.  Reunion makes
available free of charge, through its website, its annual, quarterly and
current reports, and any amendments to those reports, as soon as reasonably
practicable after electronically filing such reports with the Securities and
Exchange Commission.  Information contained on Reunion's website is not part
of this report.

ITEM 1A. 	RISK FACTORS

	See ITEM 7, MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, FACTORS THAT COULD EFFECT FUTURE RESULTS, and ITEM
7A, QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK for risk
factors applicable to the Company.

ITEM 2.     PROPERTIES

     The Company owns a total of 37.0 acres and approximately 85,500 square
feet under roof being used for ongoing operations.  Except for CPI's sales
office in Beijing, China and the Company's corporate office in Pittsburgh, PA,
which are administrative, all locations are both manufacturing and
administrative facilities:

                         Approx.
                         Square      Land              Expiration
Location                  Feet       Acres     Title       Date
--------                 -------    -------    -----   ----------
McKeesport, PA           603,000      37.0     Owned         -
Beijing, China             1,000        -      Leased    10/31/07
Shanghai, China           20,500               Leased    01/01/25
Libertyville, IL          56,000        -      Leased    12/31/13
Headquarters:
       Pittsburgh, PA      8,000        -      Leased     4/30/07


     The Company also has land and a building in Lafayette, IN that housed the
Company's Rostone business, which business was sold in 2005.  Such property is
classified in discontinued operations as property held for sale.  The
Company's owned properties are subject to mortgages in favor of its lenders.

     We also own certain oil and gas properties in Louisiana that were
retained when we disposed of our oil and gas operations in 2000.  We retained
these properties because of litigation concerning environmental matters.  [We
plan to operate the wells on the property for the net production revenues as
required by a litigation settlement agreement]

     All of our facilities have been in operation for a sufficient period of
time to demonstrate their suitability for manufacturing and administrative
purposes.  [The production capacities of our facilities are sufficient for
future needs.]

ITEM 3. LEGAL PROCEEDINGS

     The Company is and has been involved in a number of lawsuits and
administrative proceedings, which have arisen in the ordinary course of
business of the Company and its subsidiaries.  A summary of pending legal
proceedings follows.




						- 6 -


Asbestos (ORC)
--------------

     Since July 10, 2001, various legal actions, some involving multiple
plaintiffs, alleging personal injury/wrongful death from asbestos exposure
have been filed in multiple states, including California, Oregon, Washington,
New York and Mississippi, against a large number of defendants, including
Oneida Rostone Corporation (ORC), pre-merger Reunion's Plastics subsidiary and
the Company's Plastics segment.  In October 2001, Allen-Bradley Company
(currently owned by Rockwell Automation), a former owner of the Rostone
business of ORC, accepted Reunion Industries' tender of its defense and
indemnification in the first such lawsuit filed, pursuant to a contractual
obligation to do so.  Subsequent to this acceptance in the first lawsuit,
Rockwell Automation has accepted and defended all additional lawsuits, a total
of 241 separate actions, that the Company has tendered.

Asbestos (Alliance)
-------------------

     The Company has been named in a multitude of separate asbestos suits
filed since January 1, 2001 by various plaintiffs' law firms in Michigan,
Pennsylvania, Ohio, Illinois, Maryland, Alabama and W. Virginia.  Currently,
there are 2,368 open and active claims.  The claims are primarily directed
against over 100 defendants, including Reunion, and allege that cranes from
the Company's former crane manufacturing location in Alliance, OH, were
present in various steel mills located in those states and that those cranes
contained asbestos to which plaintiffs were exposed over a 40 year span.
Counsel for the Company has filed an answer to each complaint denying
liability by the Company and asserting all alternative defenses permitted
under the various Courts' Case Management Orders.  Counsel for the Company has
successfully resolved approximately 750-800 cases without any liability to the
Company.  The Company denies that it manufactured any products containing
asbestos or otherwise knew or should have known that any component part other
manufacturers provided contained any dangerous or toxic materials. It has been
further denied that the Company was otherwise advised by component part
manufacturers that component parts could be hazardous, or otherwise
constitutes a health risk.  The Company intends to vigorously defend against
these lawsuits.

	PART II

ITEM 5.     MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
                STOCKHOLDER MATTERS

     Reunion Industries' common stock is traded on the American Stock
Exchange.  As of March 15, 2007, there were 775 holders of record of Reunion
Industries' common stock with an aggregate of 17,419,019 shares outstanding.
The table below reflects the high and low sales prices for the quarterly
periods for 2006 and 2005.

QUARTER ENDED                                        High          Low
-------------                                       ------        ------
2006
     March 31.......................................$ 1.50        $ 0.32
     June 30........................................$ 1.81        $ 0.40
     September 30...................................$ 0.95        $ 0.25
     December 31....................................$ 1.07        $ 0.27

2005
     March 31.......................................$ 0.39        $ 0.25
     June 30........................................$ 0.32        $ 0.15
     September 30...................................$ 0.22        $ 0.15
     December 31....................................$ 0.36        $ 0.20


     No cash dividends have been declared or paid during the past two fiscal
years. Cash dividends are limited by the availability of funds, by
restrictions contained in our loan agreements and by statutory restrictions on
a corporation's payment of dividends when it has negative net worth.  [We do
not anticipate paying cash dividends on our common stock in the foreseeable
future.]
						- 7 -
Equity Compensation Plan Information

     Securities issued, and securities available, under equity compensation
plans as of December 31, 2006 are as follows:

                                                  Equity Compensation Plans
                                                 ---------------------------
                                                 Approved by    Not Approved
                                                 Security        by Security
                                                 Holders             Holders
                                                ------------   ------------
Number of common stock shares to be issued upon
  exercise of outstanding options                  1,444,000            -
                                                   =========      =========
Weighted-average exercise price of
  outstanding options                                  $0.25            -
                                                   =========      =========
Number of common stock shares remaining available
  for future issuance under equity
  compensation plans (excluding outstanding
  options)                                           280,600            -
                                                   =========      =========

	During the past three years, the Company issued certain securities
without registration under the Securities Act of 1993 (the "Securities Act"),
as described in the next two paragraphs.

	In 2005, the Company issued a total of 378,000 shares of its common
stock to two of its executive officers (Kimball J. Bradley and Charles E.
Bradley, Sr.) in consideration of (i) a $68,440 reduction in the amount of
certain indebtedness owed to them by the Company and (2) their forgiveness of
an additional $309,960 of such indebtedness (the "Stock for Debt Issuance").

	In 2005, the Company issued warrants to two private capital funds to
purchase a total of 1,775,000 shares of the Company's common stock at a price
of $0.01 per share (the "Warrants").  The Company issued these Warrants as
part of the consideration for loans in the amount of $7,100,000 made by these
private capital funds to the Company.  In 2006, one of such private capital
funds exercised its Warrants in full to purchase 762,500 for a total price of
$7,625. (This warrant holder also is entitled to 16,920 shares resulting from
certain anti-dilution provisions of the converted warrants.  Such shares are
expected to be issued in 2007.) The Company used the proceeds for working
capital purposes.

	By reason of Section 4(2) of the Securities Act and Rules 505 and 506 of
Regulation D of the Securities and Exchange Commission, the issuances of
securities referred to in the preceding two paragraphs were exempt from the
registration requirements of the Act, based on the following:  (1) The
transactions were private placements involving only two persons, in the case
of the Stock for Debt Issuance, and only two entities, in the case of the
issuance of the Warrants.  (2) Each of such persons and entities represented
to the Company that it was an "accredited investor" within the meaning of Rule
501(a) of Regulation D.  (3) Such persons (as executive officers and directors
of the Company) and such entities (as significant lenders to the Company) at
all relevant times had access to the same kind of information that would have
been included in a registration statement covering such securities and, in the
case of the Warrants, the shares issued or issuable upon exercise thereof.
(4) Each of such persons and entities represented to the Company that he or it
was acquiring the applicable securities for his or its own account and not
with a view to the distribution thereof.  (5) By the terms of the relevant
governing documents, such securities may not be sold or transferred by the
holder in the absence of an effective registration statement under the
Securities Act covering such securities or an applicable exemption from such
registration.

ITEM 6. SELECTED FINANCIAL DATA

     All data is reported in thousands, except for per-share data.  The data
is derived from the consolidated financial statements presented in Item 15
which also should be read.

						- 8 -


Year Ended December 31,         2006      2005      2004     2003      2002
                              --------  -------- --------  --------  --------
EARNINGS DATA:

Net sales (1)                 $ 59,490  $ 49,727  $ 50,715 $ 39,262  $ 35,404
Cost of sales                   46,029    39,848    40,914   32,032    30,969
                              --------  -------- --------  --------  --------
Gross profit                    13,461     9,879     9,801    7,230     4,435
Selling, general and
  administrative expenses        7,081     7,046     7,152    7,722     9,311
Gain on extinguishment of debt  (4,945)   (3,450)   (3,540) (10,991)        -
Other (income) expense, net        (42)     (203)     (798)    (293)     (919)
                              --------  --------  --------  -------  --------
Operating profit (loss)         11,367     6,486     6,987   10,792    (3,957)
Interest expense, net(2)         8,725     8,906     7,933    6,902     8,010
                              --------  --------  --------  -------  --------
Income (loss) from continuing
  operations before income
  taxes and minority interests   2,642    (2,420)     (946)   3,890   (11,967)
Provision for
  income taxes                     115        49         -        -         -
                              --------  --------  --------  -------  --------
Income (loss) from
  continuing operations
  before minority interests      2,527    (2,469)     (946)   3,890   (11,967)
Less: minority interests	     494       211       330        -         -
                              --------  --------  --------  -------  --------
Income (loss) from
  continuing operations       $  2,033  $ (2,680) $ (1,276) $ 3,890  $(11,967)
					========  ========  ========  =======  ========
Income (loss) from continuing
  operations applicable to
  common stockholders         $  2,033  $ (2,680) $ (1,276) $ 3,890  $(11,967)
                              ========  ========  ========  =======  ========
Weighted average common shares
  Outstanding - basic           17,143    16,479    16,279   16,279    15,591
                              ========  ========  ========  =======  ========
Weighted average common shares
  Outstanding - diluted         21,931    16,479    16,279   16,654    15,591
                              ========  ========   =======  =======  ========
Income (loss) from continuing
  operations per common share
  - basic                     $   0.12  $  (0.16) $  (0.08) $   0.24 $  (0.77)
                              ========  ========  ========  ======== ========
Income (loss) from continuing
  operations per common share
  - diluted                   $   0.10  $  (0.16) $  (0.08) $   0.24 $  (0.77)
                              ========  ========  ========  ======== ========

OPERATING AND OTHER DATA:
Cash flow from (used in)
  operating activities(3)     $ (4,006) $    139  $ (3,323) $ (2,665)$   (979)
                              ========  ========  ========  ======== ========
Cash flow from (used in)
  investing activities(3)     $ 10,883  $  3,095  $   (780) $    173 $ 27,931
                              ========  ========  ========  ======== ========
Cash flow from (used in)
  financing activities(3)     $ (7,442) $ (2,311) $  4,565  $  2,440 $(27,337)
                              ========  ========  ========  ======== ========
Depreciation and
  amortization(4)             $    703  $    720  $    804  $    949 $  1,088
                              ========  ========  ========  ======== ========
Capital expenditures(5)       $    584  $    472  $    546  $    104 $    139
                              ========  ========  ========  ======== ========

							- 9 -






BALANCE SHEET DATA:

Total assets                  $ 44,418  $ 51,260 $ 56,596  $ 51,523  $ 51,009
                              ========  ======== ========  ========  ========
Debt in default               $ 39,957  $ 43,236 $      -  $      -  $ 40,049
                              ========  ======== ========  ========  ========
Revolving credit facility     $      -  $      - $ 14,485  $  9,214  $      -
                              ========  ======== ========  ========  ========
Long-term debt(6)             $      -  $      - $ 35,628  $ 31,915  $     61
                              ========  ======== ========  ========  ========
Stockholders' equity
  (deficit)                   $(23,029) $(27,517)$(25,583) $(27,755) $(30,840)
                              ========  ======== ========  ========  ========

EBITDA(7):                    $  7,125  $  3,756 $  4,251  $    750  $ (2,869)
                              ========  ======== ========  ========  ========

(1)   Represents sales from continuing operations. The Company has adjusted
prior year financial data for the classifications of its Oneida division as
discontinued operations.

(2)   Includes amortization of debt issuance expenses and estimated warrant
value of the following amounts for the following years:   2006: $1,111; 2005:
$1,241; 2004: $1,002; 2003: $87; and 2002: $754.

(3)   Not restated for discontinued operations.

(4)   Excludes amortization of debt issuance expenses and depreciation and
amortization related to discontinued operations.  See note (2) above.

(5)   Excludes capital expenditures of discontinued operations.

(6)	Excludes borrowings under revolving credit facilities.

(7)   EBITDA is calculated as follows:

                                2006     2005     2004      2003      2002
                              -------- -------- --------  --------  --------
Income (loss) from continuing
  operations before taxes     $ 2,642  $ (2,420)$   (946) $  3,890  $(11,967)
Interest expense, net(2)        8,725     8,906    7,933     6,902     8,010
Depreciation and
  amortization(4)                 703       720      804       949     1,088
Gain on extinguishment of debt (4,945)   (3,450)  (3,540)  (10,991)        -
                              -------- -------- --------  --------  --------
     EBITDA                   $ 7,125  $  3,756 $  4,251  $    750  $ (2,869)
                              ======== ======== ========  ========  ========

     EBITDA is presented in the Selected Historical Financial Data, not as an
alternative measure of operating results or cash flow from operations as
determined by accounting principles generally accepted in the United States,
but because it is a widely accepted financial indicator of a company's ability
to incur and service debt and due to the close relationship it bears to
Reunion's financial covenants in its borrowing agreements. Gains on
extinguishment of debt are excluded from the current definition of EBITDA.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS

     The following discussion and analysis is provided to assist readers in
understanding the Company's financial performance during the periods presented
and significant trends which may impact the future performance of the Company.
It should be read in conjunction with the consolidated financial statements
and accompanying notes included elsewhere in this Form 10-K.




						- 10 -


GENERAL

	The Company owns and operates industrial manufacturing operations that
design and manufacture engineered, high-quality products for specific customer
requirements.  Such products include large-diameter seamless pressure vessels,
hydraulic and pneumatic cylinders and metal bar grating. Until December 2005,
the Company's products included precision plastic components made by its
thermoplastics division ("Oneida").  During the year 2005, the Company decided
to exit the plastics business and, effective March 1, 2006, Oneida was sold.
See below RECENT EVENTS-Sale of Oneida.  Previously, during the year 2004, the
Company decided to exit the thermoset plastics portion ("Rostone") of its
plastics segment. The Rostone business was sold in the first quarter of 2005.
Until December 2004, the Company's products also included leaf springs. Such
business was sold in January 2005.  These sold businesses are reported as
discontinued operations.

     The Company's customers include original equipment manufacturers and end-
users in a variety of industries, such as transportation, power generation,
chemicals, metals and electronics.  The Company's continuing operations are
comprised of the following businesses.

RECENT EVENTS

Sale of Oneida

     During the 2005 year, the Company decided to exit the plastics business.
In January 2006, the Company signed an Asset Purchase Agreement to sell
substantially all of the assets of its Oneida business to an unrelated entity.
On March 2, 2006, effective March 1, 2006, the Company completed the sale for
a purchase price of $11,573,000 subject to a post-closing adjustment based on
a closing balance sheet.  Of the net sale proceeds, after deducting $374,621
in related expenses, $300,000 was put into a one-year escrow as security for
any claims by the buyer that may arise after the closing, $2,000,000 was used
to pay down a note payable to a private capital fund that was secured by the
real estate of the Company, $980,974 was used to completely pay off the
existing Wachovia Bank ("Wachovia") term loan and the remaining $7,917,405 was
used to pay down the revolving credit facility. The post-closing adjustment
reduced the purchase price by $116,000, $55,000 of which was paid from the
escrow fund.  The remaining $245,000 in the escrow fund is included in other
current assets on the balance sheet as of December 31, 2006.  The Company
recognized a $4.2 million gain on sale during 2006.

Change in Officers

	Effective March 2, 2006, Charles E. Bradley, Sr. resigned his
officership as Chairman of the Board of Directors and Chief Executive Officer
of the Company.  However, he will continue to serve as a director.  Effective
March 2, 2006, the Board of Directors elected Mr. Kimball J. Bradley Chairman
of the Board of Directors and Chief Executive Officer.

Note Payable Settlements

      On March 2, 2006, the Company entered into a settlement agreement with
the holder of a $1.017 million note payable from the Company, pursuant to
which the Company paid the holder a total of $400,000 for such note and all
accrued interest.  Such settlement was effected on March 3, 2006, and the
Company recognized a gain from this debt settlement of $925,000 during 2006.

	On March 21, 2006, the Company entered into a settlement agreement with
the Stanwich Financial Services Corp. Liquidating Agent ("SFSC"), pursuant to
which the Company agreed to pay SFSC $1.125 million in settlement of its
existing $4.290 million judgment and all accrued interest.  In connection with
such agreement, the Company made a $150,000 payment to SFSC during the first
quarter of 2006. As provided in the settlement agreement, payment of the
remaining $975,000 amount was subject to bankruptcy court approval in SFSC's
Chapter 11 proceeding.  Such approval was received in May 2006, the final
payment was promptly made and the Company recognized a gain from this debt
settlement of $4.0 million during 2006.


						- 11 -

Tender Offer

     On October 27, 2006, the Company initiated a tender offer to purchase for
cash all of its outstanding 13% Senior Notes ("Notes").  The consideration
offered in the tender offer, as amended, for each $1,000 principal amount of
the original 2003 Senior Notes and for each $880 principal amount of the
restructured Senior Notes was comprised of (i) a cash amount of $563.20, (ii)
warrants to purchase 140.82 shares of the common stock of the Company and
(iii) $160.93 principal amount of a junior subordinated note. The Company's
financing for such tender offer was contingent on acceptance of such offer by
holders of a significant percentage of the outstanding amount of such Senior
Notes. The tender offer was eventually terminated and withdrawn when a holder
of approximately 72% of the outstanding Notes did not accept the offer. (See
also PART IV, NOTE 3: SUBSEQUENT EVENTS.)

RESULTS OF OPERATIONS

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

Continuing Operations

  Net sales, gross margins and EBITDA percentages for 2005 and 2004 are as
follows.  The percentages of EBITDA to net sales exclude corporate and other
EBITDA.  Including corporate and other EBITDA, the percentages of consolidated
EBITDA to net sales for the years ended 2006 and 2005 are 12.0% and 7.6%.

                       Net Sales         Gross Margin       EBITDA
                  --------------------  --------------  --------------
                     2006       2005     2006    2005    2006    2005
                  ---------  ---------  ------  ------  ------  ------
Pressure vessels  $  34,386  $  22,894   25.7%   21.8%   22.5%   15.9%
Cylinders            16,662     19,611   14.2%   16.8%    1.7%    7.8%
Grating               8,442      7,222   26.9%   22.3%   16.7%    9.5%
                  ---------  ---------  ------  ------  ------  ------
  Totals          $  59,490  $  49,727   22.6%   19.9%   15.9%   11.8%
                  =========  =========  ======  ======  ======  ======

     Net sales of $59.5 million for the year ended December 31, 2006 were up
$9.8 million, approximately 20%, over net sales in 2005.  This increase
results from increases in the pressure vessel and grating segments of $12.7
million, offset by a decrease of $2.9 million in the cylinders segment.
Pressure vessel sales increased $11.5 million in 2006 over 2005 primarily as a
result of the Company's sale of Oneida that generated the liquidity necessary
to provide increased raw material to meet the demand in growing gas storage
markets.  The increase of $1.2 million in 2006 sales over 2005 sales in the
grating segment primarily reflects the growing economy in China where this
segment is located. The decrease in the cylinder business in year 2006 from
2005 reflects the loss of a customer in 2006 due to foreign competition and
the general lack of demand in this segment's mobile cylinder line.  Backlogs
at the U.S. locations are down 12% at December 31, 2006 compared to December
31, 2005 but this is not considered indicative of any trend.  As of February
28, 2007, backlogs were lower than the comparable period in 2006 but were up
over the December 31, 2006 amount by more than 20%.

     Gross margin as a percentage of sales increased to 22.6% in 2006 from
19.9% in 2005.  This increase in gross margin percentage is the net result of
increases in gross margin percentages in the pressure vessel and grating
segments offset marginally by a decrease in gross margin percentage in the
cylinder segment.  The gross margin increases in 2006 in the pressure vessel
and grating segments were primarily attributable to operating efficiencies
resulting from the higher production and sales activities in those segments as
noted above as compared to the 2005 year.  The gross margin decrease in the
cylinder segment primarily reflects manufacturing inefficiencies resulting
from the decrease in production and sales volume in 2006 compared to 2005.

     Management evaluates the Company's segments based on EBITDA, a measure of
cash generation, which is presented, not as an alternative measure of
operating results or cash flow from operations as determined by accounting
principles generally accepted in the United States, but because it is a widely

						- 12 -

accepted financial indicator of a company's ability to incur and service debt
and due to the close relationship it bears to Reunion's financial covenants in
its borrowing agreements. EBITDA as a percentage of sales increased in 2006
compared to 2005 primarily due to the same factors affecting gross profit
margin discussed above. A reconciliation of EBITDA to operating income for
2006 and 2005 by segment and corporate and other is as follows (in thousands):

                               Operating
                                  Profit    Deprec-
                                   (Loss)    iation     EBITDA
                               ---------  ---------  ---------
2006:
-----
Pressure vessels                $  7,216   $    525   $  7,741
Cylinders                            140        140        280
Grating                            1,400         12      1,412
Corporate and other(1)            (2,334)        26     (2,308)
                                --------   --------   --------
  Totals                           6,422   $    703   $  7,125
                                           ========   ========
Gain on debt extinguishment        4,945
                                --------
  Operating profit              $ 11,367
                                ========
2005:
-----
Pressure vessels                $  3,106   $    534   $  3,640
Cylinders                          1,398        134      1,532
Grating                              679          9        688
Corporate and other(1)            (2,147)        43     (2,104)
                                --------   --------   --------
  Totals                           3,036   $    720   $  3,756
                                           ========   ========
Gain on debt extinguishment        3,450
                                --------
  Operating profit              $  6,486
                                ========

(1) Excludes gain on debt extinguishment of $4.945 million in 2006 and
         $3.450 million in 2005.

Selling, General and Administrative

     Selling, general and administrative (SGA) expenses were approximately the
same for years 2006 and 2005 even though sales volume rose by almost 20%.  The
pressure vessel business had a significant volume increase in 2006 of more
than 50% over the prior year and yet recorded $264,000 less SGA expense in
2006.  This reduction was due primarily to a decrease in sales commissions and
marketing expense related to foreign sales as this business unit had a higher
percentage of sales in the U.S. in 2006 compared to year 2005.  Cylinder SGA
increased $338,000 in 2006 compared to 2005 due to an increase in marketing
and engineering expenses, including the hiring of new employees.  Grating SGA
expenses were down approximately 7% in 2006 compared to 2005 even though sales
volume increased due primarily to a reduction in administrative costs
resulting from the implementation of cost reduction programs while there was
no significant change in Corporate expenses.  Overall, SGA as a percentage of
sales decreased from 14.2% in 2005 to 11.9% in 2006.

Gains on Debt Extinguishments

     During 2006, as described above in this Item 7 under the caption RECENT
EVENTS ? Note Payable Settlements, a settlement agreement with the holder of a
$1.17 million note and with SFSC resulted in gains on debt settlements of
$.925 million and $4.020 million, respectively.  During 2005, the settlement
of the Company's obligations to NapTech resulted in a $3.45 million gain on
debt extinguishment.



						- 13 -


Other Income

     Other income from continuing businesses for 2006 was $42,000, compared to
other income of $203,000 for 2005.  During 2005, the Company completed the
sale of an inactive subsidiary, Reunion Potash Company (Potash). Proceeds of
the sale were $150,000 and a gain of that amount was recognized. There were no
other individually significant items of other income or expense in 2006 or
2005.

Minority Interests

     Minority interests of $0.5 million in 2006 and $0.2 million in 2005
represent income allocated to the minority ownerships of the Company's
consolidated foreign grating joint venture.  Minority interests are calculated
based on the percentage of minority ownership.

Interest Expense

     Interest expense for 2006 was $8.7 million compared to $8.9 million for
2005.  This decrease is the net of several offsetting factors.  In the middle
of 2005 and during the first half of 2006, several debt settlements occurred
as described above in Gains on Debt Extinguishments.  These settlements
resulted in an interest expense reduction of $0.6 million in 2006 compared to
2005.  Additionally, as a result of the Oneida sale in the first quarter of
2006, debt was paid down and resulted in an interest expense reduction of $0.3
million in 2006 compared to 2005.  Offsetting these reductions were increases
in interest expense as a result of recognizing interest expense on the
interest that should have been paid to the Senior Note holders and an increase
in interest expense related to the increase in the junior participation
interest in the Wachovia loan that occurred in the middle of 2005.

Income Taxes

     The tax provision in 2006 and 2005 relates solely to the Company's China
joint venture.  There was no U.S. tax provision from continuing operations in
either year.  At December 31, 2006, Reunion had net operating loss
carryforwards for federal tax return reporting purposes of approximately $61.5
million.  The years in which such net operating losses expire are as follows
(in thousands):

                        Year ending December 31:
                        ------------------------------
                     	2007              	  737
                        2008                      611
                        2009                    3,235
                        2010                    2,520
                        After 2010             54,433

     [The Company may be able to utilize its loss carryforwards against
possible future profitability.]  However, management has determined to fully
reserve for the total amount of net deferred tax assets as of December 31,
2006 [and to continue to do so during 2007 until management can conclude that
it is more likely than not that some or all of our loss carryforwards can be
utilized.]

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

Continuing Operations

  Net sales, gross margins and EBITDA percentages for 2005 and 2004 are as
follows.  The percentages of EBITDA to net sales exclude corporate and other
EBITDA.  Including corporate and other EBITDA, the percentages of consolidated
EBITDA to net sales for the years ended 2005 and 2004 are 7.6% and 8.4%.





						- 14 -

                       Net Sales         Gross Margin       EBITDA
                  --------------------  --------------  --------------
                     2005       2004     2005    2004    2005    2004
                  ---------  ---------  ------  ------  ------  ------
Pressure vessels  $  22,894  $  22,921   21.8%   21.4%   15.9%   17.4%
Cylinders            19,611     18,488   16.8%   14.0%    7.8%    3.1%
Grating               7,222      9,306   22.3%   24.9%    9.5%   13.7%      -
                  ---------  ---------  ------  ------  ------  ------
  Totals          $  49,727  $  50,715   19.9%   19.3%   11.8%   11.5%
                  =========  =========  ======  ======  ======  ======
     Net sales for the year ended December 31, 2005 were down approximately 2%
from the prior year.  This decrease was net of a $1.1 million increase in
sales at our cylinder operation offset by a $2.1 decrease in grating sales at
our China joint venture.  The increase in cylinders sales primarily reflects
the higher backlog at the beginning of the year over the backlog that existed
at the beginning of year 2004.  Due to an improving economy, backlogs
continued to grow throughout the 2005 year at both U.S. operations, and the
U.S. backlog has continued to increase in the first two months of the 2006
year at the pressure vessel business.  Pressure vessel sales were relatively
flat from year to year but would have been higher for the 2005 year were it
not for both a plant accident in January 2005 that crippled the plant's heat
treating operation, preventing this division from completing and shipping
product for a period in excess of five weeks which negatively impacted the
division's ability to take on additional new business, as well as a vendor
delay in the second half of the year in the manufacture and delivery of raw
material.  Material has now been received [and the recent declining trend in
sales when compared to the prior period is expected to be reversed in the
first quarter of 2006.] The reduction in sales at the grating business
reflects increased competition in China, [a condition that is expected to
level off in 2006].

     Gross margin as a percentage of sales increased from 19.3% in 2004 to
19.9% in 2005, as all U.S. operations had improving gross profit margins while
margins in China declined.  The increase in gross profit margins in the U.S.
is primarily attributable to operating efficiencies from the increase in sales
in 2005 combined with overall cost reduction efforts.  The pressure vessel
margin increase would have been larger were it not for the unreimbursed costs
and inefficiencies resulting from the plant accident in the first quarter of
2005 as noted above. Although approximately $714,000 was received from
business interruption insurance, the Company calculates that this amount does
not cover the costs incurred and opportunities lost. The decrease in gross
margin percentage in China is related to the reduction in sales volume in the
face of increasing competition in China.

     Management evaluates the Company's segments based on EBITDA, a measure of
cash generation, which is presented, not as an alternative measure of
operating results or cash flow from operations as determined by accounting
principles generally accepted in the United States, but because it is a widely
accepted financial indicator of a company's ability to incur and service debt
and due to the close relationship it bears to Reunion's financial covenants in
its borrowing agreements. EBITDA as a percentage of sales increased in 2005
compared to 2004 primarily due to the same factors affecting gross profit
margin discussed above. A reconciliation of EBITDA to operating income for
2005 and 2004 by segment and corporate and other is as follows (in thousands):
                               Operating
                                  Profit    Deprec-
                                   (Loss)    iation     EBITDA
                               ---------  ---------  ---------
2005:
-----
Pressure vessels                $  3,106   $    534   $  3,640
Cylinders                          1,398        134      1,532
Grating                              679          9        688
Corporate and other(1)            (2,147)        43     (2,104)
                                --------   --------   --------
  Totals                           3,036   $    720   $  3,756
                                           ========   ========
Gain on debt extinguishment        3,450
                                --------
  Operating profit              $  6,486
                                ========
						- 15 -
2004:
-----
Pressure vessels                $  3,395   $    584   $      -   $  3,979
Cylinders                            409        171          -        580
Grating                            1,267          7                 1,274
Corporate and other(2)            (1,624)        42          -     (1,582)
                                --------   --------   --------   --------
  Totals                           3,447   $    804   $      -   $  4,251
                                           ========   ========   ========
Gain on debt extinguishment        3,540
                                --------
  Operating profit              $  6,987
                                ========

(1) Excludes gain on debt extinguishment of $3.450 million in 2005 and $3.540
    million in 2004.
(2) Includes income totaling $0.6 million from reduction in environmental
    reserve.

Selling, General and Administrative

     Selling, general and administrative (SGA) expenses for 2005 were $7.0
million, compared to $7.2 million for 2004.  This decrease in SGA primarily
reflects decreased salaries, benefits and office expenses at Corporate, while
increased commissions in the pressure vessel business were offset by reduced
volume costs in the grating business in China. SGA as a percentage of sales
decreased marginally in 2005 compared 2004.

Gains on Debt Extinguishments

     As described above in this Item 7 under the caption RECENT EVENTS ?
NapTech Settlement, the settlement of the Company's obligations to NapTech
resulted in a $3.45 million gain on debt extinguishment in 2005.

Other Income

     Other income from continuing businesses for 2005 was $203,000, compared
to other income of $798,000 for 2004.  The components are as follows:
                                                 2005      2004     Change
                                               --------  --------  --------
Costs to consolidate cylinder locations        $      -  $    264  $   (264)
Adjustments of environmental reserve                  -      (601)      601
Reduction of the lease termination reserve            -       (97)       97
Other income, net                                  (203)     (364)      161
                                               --------  --------  --------
Total other income, net                        $   (203) $   (798) $    595
                                               ========  ========  ========

     During 2005, the Company completed the sale of an inactive subsidiary,
Reunion Potash Company (Potash). Proceeds of the sale were $150,000 and a gain
of that amount was recognized.  During May 2004, we completed the
consolidation of our cylinder manufacturing operations into a single facility
in Libertyville, Illinois.  Costs totaling $264,000 were incurred in 2004.
The Company finalized the settlement of a Louisiana environmental litigation
matter in 2004.  Such settlement resulted in a new estimate of the required
reserve, which resulted in a $601,000 adjustment.  There were no other
individually significant items of other income or expense in 2005 or 2004.

Minority Interests

     Minority interests of $0.2 million in 2005 and $0.3 million in 2004
represent income  allocated to the minority ownerships of the Company's
consolidated foreign grating joint venture.  Minority interests are calculated
based on the percentage of minority ownership

Interest Expense

     Interest expense for 2005 was $8.9 million compared to $7.9 million for
2004.  This increase is primarily attributable to two items.  First, Senior

						- 16 -


Note interest expense increased $584,000 as the Company was obliged to accrue
interest expense on the Senior Note interest that has not been paid as
discussed in Item 7 above under the caption RECENT EVENTS - 13% Senior Notes.
Second, the Company recorded $300,000 of additional financing and amortization
of warrant value expenses in 2005 over 2004.  The warrant amortization is
attributable to the Junior Participations in the Wachovia revolving credit
facility in both 2004 and 2005.

Income Taxes

     The tax provision in 2005 relates solely to the Company's China joint
venture.  There was no U.S. tax provision from continuing operations in 2005
or 2004.  At December 31, 2005, Reunion had net operating loss carryforwards
for federal tax return reporting purposes of approximately $66.5 million.  The
years in which such net operating losses expire are as follows (in thousands):

                        Year ending December 31:
                        ------------------------------
                     	2007              	6,067
                        2008                      611
                        2009                    3,235
                        2010                    2,520
                        After 2010             54,067

     [The Company may be able to utilize its loss carryforwards against
possible future profitability.]  However, management has determined to fully
reserve for the total amount of net deferred tax assets as of December 31,
2005 [and to continue to do so during 2006 until management can conclude that
it is more likely than not that some or all of our loss carryforwards can be
utilized.]

LIQUIDITY AND CAPITAL RESOURCES

General

     The Company manages its liquidity as a consolidated enterprise.  The
operating groups of the Company carry minimal cash balances.  Cash generated
from group operating activities generally is used to repay borrowings under
revolving credit arrangements, as well as other uses (e.g. corporate
headquarters expenses, debt service, capital expenditures, etc.).  Conversely,
cash required for group operating activities generally is provided from funds
available under the same revolving credit arrangements.

Summary of 2006 Activities

     Cash and cash equivalents totaled $ 1.6 million and $1.9 million at
December 31, 2006 and 2005, respectively. For 2006, $10.9 million of cash was
provided by investing activities of which $4.0 million was used in operating
activities and, along with cash on hand, $7.4 million was used in financing
activities.

Operating Activities
	Cash used in operating activities of $4.0 million was primarily for
increases of $5.1 million in receivables and inventory offset to some extent
by a net increase in other liabilities, mainly accruals of interest expense.

Investing Activities

	Cash provided by investing activities of $10.9 million consisted of
$10.4 million from the sale of Oneida and $1.1 million from the sale of
Milwaukee property less the use of $0.6 million for capital expenditures.

Financing Activities

	Cash used in financing activities of $7.4 million primarily consisted of
principal payments of debt and a reduction in the Company's revolving credit
facility.  Cash available from the sale of Oneida and the sale of the
Milwaukee property was used to pay the remaining Wachovia term loan of $1.0
million, pay $3.1 million on a note payable to a private capital fund that was

						- 17 -
secured by the real estate sold and pay $1.5 million in connection with
settlement agreements entered into with the holder of a $1.017 note and with
SFSC.  Additionally, the Company reduced amounts outstanding under its
revolving credit facility by $1.4 million during the year and the Company's
Chinese joint venture paid a dividend during the year of which $0.3 million
was paid to the minority partner.


CONTRACTUAL OBLIGATIONS

     The following represents a tabular summarization of the Company's
contractual obligations at December 31, 2006 for each of the next five years
and thereafter (in thousands):

Description         Total    2007    2008    2009    2010    2011   2011+
-----------------  ------- ------- ------- ------- ------- ------- -------
Wachovia revolving
 credit facility   $14,434 $14,434 $     -  $    - $     - $     - $     -
Note payable           882     882       -       -       -       -       -
Note payable         3,500   3,500       -       -       -       -       -
13% senior notes    22,013  22,013       -       -       -       -       -
Note payable-
 related parties       500     500       -       -       -       -       -
Noncancellable
 operating lease
 commitments         6,922   1,093     996     971     938     953   1,971
                   ------- ------- ------- ------- ------- ------- -------
Total contractual
  obligations      $48,251 $42,422 $   996 $   971 $   938 $   953 $ 1,971
                   ======= ======= ======= ======= ======= ======= =======

     The above table shows the contractual aggregate maturities of debt,
including $14.4 million of revolving credit facility borrowings, and
commitments under noncancellable operating leases. All debt obligations are
currently due or are in default.

CRITICAL ACCOUNTING POLICIES

Use of Estimates

     The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States.
Application of the accounting principles requires the Company's management to
make estimates about the future resolution of existing uncertainties and that
affect the reported amounts of assets, liabilities, revenues, expenses which
in the normal course of business are subsequently adjusted to actual results.
Actual results could differ from such estimates.  In preparing these financial
statements, management has made its best estimates and judgments of the
amounts and disclosures included in the consolidated financial statements
giving due regard to materiality.

Revenue Recognition, Accounts Receivable and Allowance for Doubtful Accounts

     Sales are recorded when title and risks of ownership transfer to the
buyer.  Shipping and handling fees charged to customers are recorded as
revenues and the related costs are recorded as cost of sales.

     The Company markets its products to a diverse customer base in the United
States and in other countries.  Credit is extended after a credit review by
management, which is based on a customer's ability to perform its obligations.
Such reviews are regularly updated.  The allowance for doubtful accounts is
based upon agings of customer balances and specific account reviews by
management.  Reunion Industries has no concentration of credit risks and
generally does not require collateral or other security from its customers.

     Accounts receivable are presented net of a reserve for doubtful accounts
of $183,000 at December 31, 2006 and $211,000 at December 31, 2005, which
represented 2.1% and 2.9%, respectively, of gross trade receivables (excluding
other non-trade receivables). Write-offs of accounts receivable in the last
two years have been insignificant.

						- 18 -

Inventories and Inventory Reserves

     At December 31, 2006, inventories are stated at the lower of cost or
market, at costs that approximate the first-in, first-out method of inventory
valuation.  Work-in-process and finished goods include material costs, labor
costs and manufacturing overhead.  Reserves for excess, slow-moving and
obsolete inventories are based on reviews of inventory usage reports for items
more than one year old.  The Company evaluates its inventories on a quarterly
basis to identify excess, slow-moving and obsolete inventories and assess
reserve adequacy.  When this evaluation indicates such inventories exist, the
reserve is increased by a charge to operations or such inventories are written
off.  Write-offs of inventory in the last two years have been insignificant.

Goodwill and Impairment

     The excess of the purchase consideration over the fair value of the net
assets of acquired businesses is considered to be goodwill.  The Company
reviews goodwill when events or changes in circumstances indicate that the
carrying amount of goodwill may not be recoverable.  We also review goodwill
as required by SFAS No. 142, "Goodwill and Other Intangible Assets", which
requires that goodwill be tested annually using a two-step process.  The first
is to identify any potential impairment by comparing the carrying value of
reporting units to their fair value.  If a potential impairment is identified,
the second step is to compare the implied fair value of goodwill with its
carrying amount to measure the impairment loss.  Reporting unit fair value is
estimated using the income approach, which assumes that the value of a
reporting unit can be computed as the present value of the assumed future
returns of an enterprise discounted at a rate of return that reflects the risk
of an investment.  A significant increase in the rate at which the assumed
future returns are discounted could result in an unexpected impairment charge
to goodwill, which could have a negative impact on our operating results.

     At December 31, 2006, the Company had $11.0 million of goodwill on its
consolidated balance sheet.  Of the $11.0 million of goodwill, $9.5 million
relates to the pressure vessels segment and $1.5 million relates to the
cylinders segment.  We have completed all transitional and annual impairment
tests necessary to date and concluded that our goodwill is not impaired.

     In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements" ("SFAS 157"). SFAS 157 clarifies the principle that fair
value should be based on the assumptions market participants would use when
pricing an asset or liability and establishes a fair value hierarchy that
prioritizes the information used to develop those assumptions. Under the
standard, fair value measurements would be separately disclosed by level
within the fair value hierarchy. SFAS 157 is effective for the Company on
January 1,2008. The Company is in the process of evaluating SFAS 157 but does
not believe it will have a significant effect on its financial position or
results of operations.

     In February 2007, the FASB issued SFAS 159, "The Fair Value Option for
Financial Assets and Financial Liabilities-Including an Amendment of FASB
Statement No. 115 ("SFAS 159"). SFAS 159 permits an entity to choose to
measure many financial instruments and certain other items at fair value. Most
of the provisions of SFAS 159 are elective, however, the amendment to SFAS
115, "Accounting for Certain Investments in Debt and Equity Securities",
applies to all entities with available for sale or trading securities. SFAS
159 is elective as of the beginning of an entity's first fiscal year that
begins after November 15, 2007. SFAS 159 was recently issued and the Company
is currently assessing the financial impact the statement will have on our
financial statements.

Pensions

     The Company accounts for its defined benefit pension plans in accordance
with U.S. generally accepted accounting standards which require that amounts
recognized in the consolidated financial statements be determined on an
actuarial basis.  In September 2006, the Financial Accounting Standards Board
issued Financial Accounting Standard 158 which requires that the funded status
of defined benefit pension and other post retirement benefit plans be fully

						- 19 -
recognized on the balance sheet.  The adoption of FAS 158 had no effect on the
recognition of pension related costs in the income statement.  The Company
makes contributions to the defined benefit plans based on the minimum funding
requirements of the Employee Retirement Income Security Act of 1974.

     The Company uses the fair value of plan assets to determine the expected
and actual returns on plan assets.  The difference between the expected return
and actual return is deferred for income statement purposes.  Although
management believes the long-term rates of return used to calculate the
expected returns on plan assets are reasonable, a trend of actual returns
being less than expected returns would cause future pension costs to increase.

     In determining the discount rates to be used at the end of each year to
determine plan liabilities, the Company looks at rates of return on high-
quality, fixed-income investments that receive one of the two highest ratings
given by a recognized ratings agency.  Changes in discount rates over the last
three years have not materially affected pension costs and the net effect of
changes in the discount rate, as well as the net effect of other changes in
actuarial assumptions and experience, have been deferred as allowed by SFAS
87.

     [The Company currently expects consolidated pension costs in 2007 will be
approximately $100,000 less than those incurred in 2006.]

Other Postretirement Benefits

     The Company provides health benefits for certain retired employees at the
Company's pressure vessel - and discontinued Plastics operations and of its
Corporate Executive Payroll.  These plans are not funded.  The other
postretirement benefit costs and the benefit obligation are actuarially
determined based on discount rates and expected trends in healthcare costs.
Costs from continuing operations increased slightly in 2006 over 2005 and [the
Company currently expects consolidated other postretirement benefit costs for
2007 to be more than $90,000 less than those incurred in 2006.]

Stock-Based Compensation

     Prior to January 1, 2006, the Company elected to follow Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
and related interpretations in accounting for stock options and awards.
Accordingly, no compensation costs for stock options is included in operating
results since all awards were made at exercise prices at or above their fair
value on the dates of grants.

     Effective January 1, 2006, the Company adopted the fair value recognition
provisions of Financial Accounting Standards No. 123R, "Share Based Payment",
which requires the Company to expense the cost of employee services received
in exchange for an award of equity instruments based on the grant date fair
value of such instruments.  The Company adopted the modified prospective
method to apply this Standard in which compensation cost is recognized for all
equity instrument awards after January 1, 2006 and for all awards granted to
employees prior to that date that remain unvested on that date. Had the
Company applied the fair value recognition provisions of SFAS No. 123R to
prior years,  there would have been no material effect on reported income
(loss) for such years.

Environmental Contingencies

     When it is probable that a liability has been incurred or an asset has
been impaired, a loss is recognized assuming the amount of the loss can be
reasonably estimated.  The Company believes it is currently in material
compliance with existing environmental protection laws and regulations and is
no longer involved in any significant remediation activities or administrative
or judicial proceedings arising under federal, state or local environmental
protection laws and regulations.  In addition to management personnel who are
responsible for monitoring environmental compliance and arranging for remedial
actions that may be required, the Company has also employed outside
consultants from time to time to advise and assist the Company's environmental
compliance efforts. As a result, the Company has no significant amount of
accruals for environmental costs.

						- 20 -
FACTORS THAT COULD AFFECT FUTURE RESULTS

The Majority of Reunion's debt for borrowed money is in default

	Since 2001, the Company has not been able to make any of the scheduled
interest payments on the Senior Notes and has not been able to make any
payments of principal on such currently matured Senior Notes.  Additionally,
the principal amount of the restructured Senior Notes matured on January 3,
2007 and was not paid.  As a result, events of default have occurred under the
Indenture ("Indenture Default") under which the Senior Notes were issued. With
an Indenture Default, holders of more than 25% of the principal amount of the
Senior Notes may, by written notice to the Company and to the Trustee, declare
the principal of and accrued but unpaid interest on all the Senior Notes to be
immediately due and payable (the "acceleration"). However, under an
Intercreditor and Subordination Agreement entered into in December 2003 among
Wachovia, the holders of the Senior Notes and certain other lenders, the
Senior Note holders can not commence any action to enforce their liens on any
collateral for a 180 day period beginning after the date of receipt by
Wachovia, the senior secured lender, of a written notice from the Senior Note
holders informing Wachovia of such Indenture Default and demanding
acceleration or immediate payment.  On February 2, 2007, Wachovia received
written notice of such demand for payment. (See PART IV,NOTE 3: SUBSEQUENT
EVENTS - 13% Senior Notes.)

	Additionally, a $3.5 million subordinated promissory note payable to a
private capital fund matured on December 5, 2006 and is in default.  The
defaults under the Senior Notes and the $3.5 million subordinated promissory
note payable have triggered cross default provisions in the Wachovia Bank loan
agreement and the Company' bank debt is also in default.

	Although the Company is investigating restructuring or recapitalization
scenarios in an effort to provide additional liquidity for the extinguishments
or deferrals of such debt obligations, (See NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS-Note 3: SUBSEQUENT EVENTS - Restructure Plan),  no assurances exist
that the Company will be successful in these efforts and failure to accomplish
these plans could have an adverse impact on the Company's liquidity, financial
position and future operations.

Reunion's vendors may restrict credit terms

     We have corrected many vendor-related problems with liquidity generated
from the refinancing of debt and from asset sales.  However, another period of
tight liquidity could result in key vendors restricting or eliminating the
extension of credit terms to us.  If this would happen, our ability to obtain
raw materials would be strained significantly and our ability to manufacture
products would be reduced.

Reunion's past performance could impact future prospects

     Because of losses suffered by the Company over the past several years,
potential or current customers may decide not to do business with us.  If this
were to happen, our sales may not increase or may decline.  If sales do not
increase, or we experience a decline in sales, our ability to cover costs
would be further reduced, which could negatively impact our financial position
and results of operations.

Reunion as a going concern

	The financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.  At December 31, 2006, the
Company has a deficiency in working capital of $39.1 million, a loss from
continuing operations of $2.9 million before gain on debt extinguishment and a
deficiency in assets of $22.8 million.  These conditions raise substantial
doubt about the Company's ability to continue as a going concern.  The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the
amounts and classifications of liabilities that may result from the outcome of
this uncertainty.


						- 21 -
	Over the past several years, the Company has taken steps to improve its
liquidity and defer the principal maturities of a significant portion of its
debt.  The Company is investigating other restructuring or recapitalization
scenarios in an effort to provide additional liquidity and extinguishments or
deferrals of debt obligations. (See PART IV, NOTE 3: SUBSEQUENT EVENTS -
Restructure Plan.)  No assurances exist that the Company will be successful in
these efforts and failure to accomplish these plans could have an adverse
impact on the Company's liquidity, financial position and future operations.

RECENT ACCOUNTING PRONOUNCEMENTS

     In September 2006, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 158, "Employers' Accounting
for Defined Benefit Pension and Other Postretirement Plans" ("SFAS 158"). This
statement amends several earlier issued statements, including Financial
Accounting Standards No. 87, "Employers' Accounting for Pensions ("SFAS 87")
and Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions ("SFAS 106").  For companies with
publicly traded equity securities, SFAS 158 is effective for fiscal years
ending after December 31, 2006.  The statement requires employers with pension
and other post-employment benefit plans to recognize the funded status of such
plans in its financial statements, recognize as a component of other
comprehensive income the gains or losses that arise during the period but are
not recognized as components of cost pursuant to SFAS 87 and SFAS 106 and
provide other additional disclosures. The Company has both defined pension
plans and other postretirement benefit plans and, in connection with the
adoption of FAS 158, recorded additional liabilities of $701,000 as of
December 31, 2006.  This amount was also recorded as a component of other
comprehensive loss in shareholders' deficit.

	In June 2006, the FASB issued Interpretation 48, "Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109"
("FIN 48").  FIN 48 prescribes a 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 is effective
for the 2007 year.  The Company is assessing the impact of FIN 48 but does not
anticipate that it will have a material effect on its financial statements.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     In the operation of its business, Reunion Industries has market risk
exposure to foreign currency exchange rates, raw material prices and interest
rates.  Each of these risks and Reunion Industries' strategies to manage the
exposure is discussed below.

	Excluding its subsidiary in Shanghai, China, Reunion Industries
manufactures its products in the United States and sells its products in the
United States and in foreign countries.   During 2006, one pressure vessel
customer accounted for approximately 13.6% of consolidated sales.  However,
during 2005, no one customer accounted for more than 10% of the net sales of
Reunion. Of Reunion's $51.0 million, $42.6 million and $41.4 million of
consolidated net sales from U.S continuing operations for 2006, 2005 and 2004,
respectively, approximately $5.0 million, $8.8 million and $6.4 million,
respectively, were export sales. Of these export sales, $2.8 million in 2006,
$6.4 million in 2005 and $4.3 million in 2004 were to customers in the Far
East (principally China and Taiwan) and $1.2 million in 2006, $1.0 in 2005 and
$1.3 million in 2004 were to customers in Canada.

     Export sales to foreign countries are denominated in U.S. dollars, the
Company's reporting currency.  Accordingly, transaction loss exposures due to
fluctuations in the currencies of the countries to which the Company's
domestic locations export are minimal.

     The major raw materials used include welded and seamless steel tubing and
pipe, steel alloy bars, steel plates, brass tubing and bars and aluminum
extrusions.  These materials are generally available from a number of
suppliers.  Prices for these materials are affected by changes in market
demand and prices of seamless steel tubing have risen by approximately 5% over
the past year. [There can be no assurances that prices for these and other raw

						- 22 -
materials will not increase in the future.]  [A 1.00% change in raw material
prices that is not passed through to the customer would affect results of
operations by approximately $129,000.

	Reunion Industries' operating results are subject to risk from interest
rate fluctuations on debt that carries variable interest rates.  The variable
rate debt was approximately $14.4 million at December 31, 2006, which is
representative of balances outstanding during the year.  A 1.00% change in
interest rates would affect results of operations by approximately $144,000.


ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Reunion's consolidated financial statements are set forth beginning at
Page F-1.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
              ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.


ITEM 9A. CONTROLS AND PROCEDURES

        As required by Rule 13a-15(b), Reunion's management, including the
Chief Executive Officer and Chief Financial Officer, conducted an evaluation
as of the end of the period covered by this report, of the effectiveness of
Reunion's disclosure controls and procedures as defined in Exchange Act
Rule 13a-15(e).  Based on that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that Reunion's disclosure controls and
procedures were effective as of the end of the period covered by this report.
As required by Rule 13a-15(d), Reunion's management, including the Chief
Executive Officer and Chief Financial Officer, also conducted an evaluation of
Reunion's internal control over financial reporting to determine whether any
changes occurred during the fourth fiscal quarter that have materially
affected, or are reasonably likely to materially affect, Reunion's internal
control over financial reporting.  Our auditors proposed numerous adjusting
entries and several were booked.  Such entries were deemed not material to the
financial statements taken as a whole.  Management has concluded that no
material decline in internal controls has occurred.
      It should be noted that any system of controls, however well designed
and operated, can provide only reasonable, and not absolute, assurance that
the objectives of the system will be met. In addition, the design of any
control system is based in part upon certain assumptions about the likelihood
of future events.
						- 23 -



	PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information under the captions "Proposal, Election of Directors" and
"Management Information; Executive Officers" is incorporated herein by
reference from the Company's definitive Proxy Statement to be filed with the
Securities and Exchange Commission on or before May 1, 2007.


ITEM 11. EXECUTIVE COMPENSATION

     The information under the captions "Management Information" and
"Proposal; Election of Directors; Director Compensation" is incorporated
herein by reference from the Company's definitive Proxy Statement to be filed
with the Securities and Exchange Commission on or before May 1, 2007.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
              AND MANAGEMENT

     The information under the caption "Ownership Information" is incorporated
herein by reference from the Company's definitive Proxy Statement to be filed
with the Securities and Exchange Commission on or before May 1, 2007.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information under the caption "Ownership Information; Certain
Relationships and Related Transactions" is incorporated herein by reference
from the Company's definitive Proxy Statement to be filed with the Securities
and Exchange Commission on or before May 1, 2007.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information under the caption "Fees Paid to Mahoney Cohen & Company,
CPA, P.C." is incorporated herein by reference from the Company's definitive
Proxy Statement to be filed with the Securities and Exchange Commission on or
before May 1, 2007.

						- 24 -




	PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a) Documents included in this report:

The following consolidated financial statements and financial statement
schedules of Reunion Industries, Inc. and its subsidiaries are included in
Part II, Item 8:

1.   Financial Statements (Pages F-1 through F-40)

     Report of Management
     Report of Independent Registered Public Accounting Firm ?
       Mahoney Cohen & Company, CPA, P.C.
     Consolidated Balance Sheets - December 31, 2006 and 2005
     Consolidated Statements of Operations and Comprehensive
       Income (Loss) - Years Ended December 31, 2006, 2005 and 2004
     Consolidated Statements of Cash Flows - Years Ended December 31, 2006,
       2005 and 2004
     Notes to Consolidated Financial Statements

2.   Financial Statement Schedules (Page S-1)

     Schedule II - Valuation and Qualifying Accounts and Reserves

     Other schedules have been omitted because they are either not required,
not applicable, or the information required to be presented is included in
Reunion Industries' financial statements and related notes.

3.   Exhibits

     See pages E-1 to E-4 for a listing of exhibits filed with this report or
incorporated by reference herein.

						- 25 -



                                 SIGNATURES

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

Date: April 2, 2007                  REUNION INDUSTRIES, INC.
      --------------
                                     By: /s/ Kimball J. Bradley
                                         ----------------------------
                                             Kimball J. Bradley
                                     Chairman and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report on Form 10-K has been signed by the following persons in the
capacities and on this 30th day of March, 2007.

Signature                                           Title
---------                                           -----

/s/ John M. Froehlich                 Executive Vice President, Chief
---------------------------           Financial Officer, Treasurer and
    John M. Froehlich                 Secretary (chief financial
                                      and accounting officer)

/s/ Thomas N. Amonett                 Director
---------------------------
    Thomas N. Amonett


/s/ Charles E. Bradley, Sr.           Director
---------------------------
    Charles E. Bradley, Sr.


/s/ Thomas L. Cassidy                 Director
---------------------------
    Thomas L. Cassidy


/s/ David E. Jackson                  Director
---------------------------
    David E. Jackson


/s/ Joseph C. Lawyer                  Vice Chairman and Director
---------------------------
    Joseph C. Lawyer


/s/ John G. Poole                     Director
---------------------------
    John G. Poole

	   - 26 -



                           REUNION INDUSTRIES, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                              Page
------------------------------------------                              ----

Report of Management....................................................F-2
Report of Independent Registered Public Accounting Firm ? Mahoney
  Cohen & Company, CPA, P.C.............................................F-3
Consolidated Balance Sheets.............................................F-4
Consolidated Statements of Operations and
  Comprehensive Income (Loss)...........................................F-5
Consolidated Statements of Cash Flows...................................F-7
Notes to Consolidated Financial Statements..............................F-9







						- F-1 -





	Report of Management
     Management is responsible for the preparation and integrity of the
consolidated financial statements appearing in this Annual Report on Form 10-
K.  The financial statements were prepared in conformity with accounting
principles generally accepted in the United States of America appropriate
under the circumstances and, accordingly, include some amounts based on
management's best judgments and estimates.  Financial information in this
Annual Report on Form 10-K is consistent with that in the financial
statements.
      Management is responsible for maintaining a system of internal business
controls and procedures to provide reasonable assurance, at an appropriate
cost/benefit relationship, that assets are safeguarded and that transactions
are authorized, recorded and reported properly.  The internal control system
is augmented by appropriate reviews by management, written policies and
guidelines, careful selection and training of qualified personnel and a
written code of business ethics applicable to all employees of Reunion and its
subsidiaries.  Management believes that Reunion's internal controls provide
reasonable assurance that assets are safeguarded against material loss from
unauthorized use or disposition and that the financial records are reliable
for preparing financial statements and other data and maintaining
accountability for assets.
      The Audit Committee of the Board of Directors, composed solely of
Directors who are not employees or officers of Reunion, meets on a regular
periodic basis with the independent auditors and management to discuss
internal business controls, auditing and financial reporting matters.  The
Committee reviews with the independent auditors the scope and results of the
audit effort.  The Committee also meets with the independent auditors without
management present to ensure that the independent auditors have free access to
the Audit Committee.
      The independent registered Public Accounting Firm, Mahoney Cohen &
Company, CPA, P.C., are engaged to audit the consolidated financial statements
of Reunion and to conduct such tests and related procedures as they deem
necessary in accordance with auditing standards promulgated by the Public
Company Accounting Oversight Board (United States).  The opinion of the
independent registered Public Accounting Firm, based upon their audits of the
consolidated financial statements, is contained in this Annual Report on
Form 10-K.

Date: April 2, 2007
      --------------

/s/ Kimball J. Bradley                  /s/ John M. Froehlich
------------------------------------    --------------------------------------
Kimball J. Bradley, Sr.                 John M. Froehlich
Chairman and Chief Executive Officer    Executive Vice President and
							Chief Financial Officer


						- F-2 -





Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders
Reunion Industries, Inc.

We have audited the accompanying consolidated balance sheets of Reunion
Industries, Inc. and Subsidiaries as of December 31, 2006 and 2005, and the
related consolidated statements of operations and comprehensive income (loss)
and cash flows for the years then ended.  Our audits also included the
financial statement schedule listed in the Index at Item 15.  These financial
statements and schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
schedule 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 audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  The Company is not
required to have, nor were we engaged to perform, an audit of its 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, as well as
evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Reunion Industries, Inc. and Subsidiaries at December 31, 2006 and 2005,
and the consolidated results of their operations and their cash flows for the
years then ended, in conformity with accounting principles generally accepted
in the United States of America.  Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects, the
information set forth therein.

The accompanying financial statements have been prepared assuming that Reunion
Industries, Inc. and Subsidiaries will continue as a going concern.  As more
fully described in Note 1, at December 31, 2006, the Company has a deficiency
in working capital of $39.3 million, a loss from continuing operations of $2.9
million before gain on debt extinguishment and a deficiency in assets of $23.0
million.  These conditions raise substantial doubt about the Company's ability
to continue as a going concern.  Management's plans in regard to these matters
are also described in Note 1 and Note 3.  The financial statements do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification
of liabilities that may result from the outcome of this uncertainty.


                     /s/ Mahoney Cohen & Company, CPA, P.C.


New York, New York
March 16, 2007


                                    - F-3 -





                REUNION INDUSTRIES, INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                              (in thousands)

                                           At December 31,     At December 31,
                                                     2006                2005
                                           --------------      --------------
     ASSETS:
Cash and cash equivalents                       $   1,575           $   1,923
Receivables, net                                    9,241               7,386
Inventories, net                                   11,316               8,606
Other current assets                                1,460               1,306
Assets of discontinued operations, current	        -               6,237
                                                ---------            --------
     Total current assets                          23,592              25,458

Property, plant and equipment, net                  4,476               4,594
Property, plant and equipment, held for sale        2,056               6,050
Due from related parties                              963                 891
Goodwill, net                                      10,994              10,994
Other assets, net                                   2,337               3,273
                                                ---------            --------
Total assets                                    $  44,418            $ 51,260
                                                =========            ========
     LIABILITIES AND STOCKHOLDERS' DEFICIT:

Debt in default						$  39,957            $ 43,236
Trade payables                                      3,057               6,129
Accrued salaries and benefits                       1,003               1,082
Accrued interest                                   11,113               8,052
Due to related party                                  365                 140
Other current liabilities                           5,715               4,182
Notes payable                                         882               8,240
Note payable - related party                          500                 500
Current liabilities of discontinued
   operations                                         300               2,641
                                                ---------            --------
     Total current liabilities                     62,892              74,202

Other liabilities                                   3,437               3,465
Non-current liabilities of
   discontinued operations                            620                 781
                                                ---------            --------
     Total liabilities                             66,949              78,448

Minority interests                                    498                 329

Commitments and contingent liabilities                  -                   -
     Stockholders' deficit:
Common stock ($.01 par value, 30,000,000 shares
  authorized, 17,419,019 shares issued
  and outstanding at December 31, 2006 and
  16,656,519 shares issued and outstanding
  at December 31, 2005)                               174                 167
Capital in excess of par value                     28,127              28,325
Accumulated other comprehensive loss               (2,587)             (1,879)
Accumulated deficit                               (48,743)            (54,130)
                                                ---------            --------
Stockholders' deficit                             (23,029)            (27,517)
                                                ---------            --------
Total liabilities and stockholders' deficit     $  44,418            $ 51,260
                                                =========            ========

         See accompanying notes to consolidated financial statements.

						- F-4 -




                       REUNION INDUSTRIES, INC. AND SUBSIDIARIES
        CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
                 (in thousands, except per share information)

                                                  Year Ended December 31,
                                                  2006       2005       2004
                                              --------   --------   --------

Net Sales                                     $ 59,490   $ 49,727   $ 50,715
Total cost of sales                             46,029     39,848     40,914
                                              --------   --------   --------
  Gross profit                                  13,461      9,879      9,801
Selling, general & administrative                7,081      7,046      7,152
Gain on debt extinguishment                     (4,945)    (3,450)    (3,540)
Other (income) expense, net                        (42)      (203)      (798)
                                              --------   --------   --------
  Operating profit                              11,367      6,486      6,987
Interest expense, net                            8,725      8,906      7,933
                                              --------   --------   --------
Income (loss) from continuing operations
  before income taxes and
  minority interests                             2,642     (2,420)      (946)
Provision for income taxes                         115         49          -
                                              --------   --------   --------
Income (loss) from continuing operations
  Before minority interests                      2,527     (2,469)      (946)
Less: Minority interests                           494        211        330
                                              --------   --------   --------
Income (loss) from continuing operations         2,033     (2,680)    (1,276)

  Discontinued operations, net of tax:
Income(loss)from discontinued Oneida operations,
  less applicable income taxes of $-0-            (297)     1,355      1,343
Gain on disposal of Oneida operations,
  less applicable income taxes of $-0-           4,239          -          -
Loss from sale of Milwaukee, WI property,
  less applicable income taxes of $-0-            (572)         -          -
Income(Loss) from discontinued Rostone operations,
  less applicable income taxes of $-0-		   230       (849)       (87)
Gain on disposal of Rostone operations,
  less applicable income taxes of $-0-               -        370          -
Loss on prior disposal of discontinued
  materials handling operations, less
  applicable income taxes of $-0-                    -       (119)         -
Loss on prior disposal of discontinued
  bridges and cranes operations, less
  applicable income taxes of $-0-                 (246)      (465)         -
Income(loss)from discontinued springs
  operations, less applicable income
  taxes of $-0-				                 -        (32)       176
Loss on disposal of springs operations,
  less applicable income taxes of $-0-	           -          -	      (318)
                                              --------   --------   --------
Income from discontinued operations              3,354        260      1,114
                                              --------   --------   --------

						- F-5-




                   REUNION INDUSTRIES, INC. AND SUBSIDIARIES
   CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
           (continued)(in thousands, except per share information)

                                                   Year Ended December 31,
                                                  2006      2005       2004
                                              --------    -------    -------
Net income (loss)                                5,387     (2,420)      (162)

  Other comprehensive income (loss),
    net of $-0- tax:
Reduction in (additional) pension
  liability in excess of unrecognized
  prior service cost                                (7)        23         77
                                              --------   --------   --------
Comprehensive income (loss)                   $  5,380   $ (2,397)  $    (85)
                                              ========   ========   ========
Earnings (loss) applicable to common
  stockholders                                $  5,397   $ (2,420)  $   (162)
                                              ========   ========   ========
Earnings (loss) per common share-basic:
Continuing operations                         $   0.12   $  (0.16)  $  (0.08)
Discontinued operations                           0.19       0.01       0.07
                                              --------   --------   --------
Income (loss) per common share-basic          $   0.31   $  (0.15)  $  (0.01)
                                              ========   ========   ========

Earnings (loss) per common share-diluted:
  - basic and diluted:
Continuing operations                         $   0.10   $  (0.16)  $  (0.08)
Discontinued operations                           0.15       0.01       0.07
                                              --------   --------   --------
Income (loss) per common share
  - basic and diluted                         $   0.25   $  (0.15)  $  (0.01)
                                              ========   ========   ========

Weighted average shares outstanding - basic     17,143     16,479     16,279
                                              ========   ========   ========
Weighted average shares outstanding - diluted   21,931     16,479     16,279
                                              ========   ========   ========

         See accompanying notes to consolidated financial statements.

						- F-6 -




                   REUNION INDUSTRIES, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)
                                                  Year Ended December 31,
                                                  2006       2005       2004
                                              --------   --------   --------
  Cash flow from operating activities:
Net income (loss)                             $  5,387   $ (2,420)  $   (162)
Adjustments to reconcile net (loss) income to
  net cash provided by(used in)
  operating activities:
  Depreciation                                     785      1,651      2,480
  Amortization of deferred financing fees          866        869        864
  Amortization of estimated warrant value          269        259        138
  Gain on extinguishment of debt                (4,945)    (3,450)    (3,540)
  Gain on sale of Oneida                        (4,239)         -          -
  Gain on sale of property and equipment             -       (360)         -
  Loss on sale of Milwaukee, WI property           572          -          -
  Increase in minority interest                    494        211        330
  Stock based compensation                          45         -          -
  Changes in assets and liabilities:
    (Increase)decrease in receivables           (1,855)     2,277     (4,014)
    (Increase)decrease in inventories           (3,295)      (948)    (2,819)
    (Increase) decrease in other current assets   (154)      (288)       517
    Increase (decrease) in trade payables
      and other current liabilities              2,100      2,552      1,076
    Net change in other assets and liabilities     (36)      (214)      (267)
    Capitalization from China joint venture          -          -      2,074
                                               --------   --------   --------
Cash provided by(used in) operating activities  (4,006)       139     (3,323)
                                               --------   --------   --------
  Cash flow from investing activities:
Proceeds from sale of discontinued
  operations, net of expenses                   10,437      3,680          -
Proceeds from sale of property                   1,068          -          -
Capital expenditures                              (622)      (585)      (780)
                                              --------   --------   --------
Cash provided by(used in) investing activities  10,883      3,095       (780)
                                              --------   --------   --------
  Cash flow from financing activities:
Proceeds from issuance of debt                       -      3,100      3,000
Repayments of debt                              (5,680)    (3,352)      (682)
China dividend paid to minority interest          (325)      (212)         -
Revolving credit facilities borrowings          58,215     67,964     70,774
Revolving credit facilities repayments         (59,659)   (69,826)   (68,340)
Payments of deferred financing costs                 -         (7)      (431)
Proceeds from sale of stock                          7          -          -
Net increase(decrease) in outstanding checks         -         22        244
                                              --------   --------   --------
Cash provided by (used in) financing activities (7,442)    (2,311)     4,565
                                              --------   --------   --------
Net increase (decrease) in cash and
 cash equivalents                                 (565)       923        462
Less: Change in cash of discontinued operations    217       (146)        28
Cash and cash equivalents, beginning of year     1,923      1,146        656
                                              --------   --------   --------
Cash and cash equivalents, end of year        $  1,575   $  1,923   $  1,146
                                              ========   ========   ========










						- F-7 -



                                                  Year Ended December 31,
                                                  2006       2005       2004
                                              --------   --------   --------

  Supplemental cash flow information:
Interest paid                                 $  3,130   $  3,156   $  2,642
                                              ========   ========   ========
Income taxes paid                             $      -   $      -   $      6
                                              ========   ========   ========
Non-cash financing and investing activities:
   Conversion of fees/interest to
   common stock                               $      -   $    378   $      -
                                              ========   ========   ========
Calculation of the previously recorded
   Chinese joint venture contribution -
   finalized in 2006 (Note 1)			    $    243   $      -   $      -
                                              ========   ========   ========

          See accompanying notes to consolidated financial statements.




						- F-8 -




                  REUNION INDUSTRIES, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              DECEMBER 31, 2006

NOTE 1:   ACCOUNTING POLICIES

Nature of Business

     Reunion Industries, Inc. (the Company) owns and operates industrial
manufacturing operations that design and manufacture engineered, high-quality
products for specific customer requirements.  Such products include large-
diameter seamless pressure vessels, hydraulic and pneumatic cylinders and
metal bar grating. Until December 2005, the Company's products included
precision plastic components made by its thermoplastics division ("Oneida").
During the year 2005, the Company decided to exit the plastics business and,
effective March 1, 2006, Oneida was sold. See Note 2: RECENT EVENTS-Sale of
Oneida.  Previously, during the year 2004, the Company decided to exit the
thermoset plastics portion ("Rostone") of its plastics segment. The Rostone
business was sold in the first quarter of 2005. Until December 2004, the
Company's products also included leaf springs.  Such business was sold in
January 2005.   Prior to 2003, the Company's products also included heavy duty
cranes, bridge structures and materials handling systems. These businesses
were sold during 2002.  All of these sold businesses are reported as
discontinued operations.

     In December 1995, the Company entered into a joint venture agreement with
China Metallurgical Import & Export Shanghai Company and Wanggang Township
Economic Development Corporation.  The Company has a 65% interest in the joint
venture.  During 1996, the Company capitalized its investment in the joint
venture by contributing cash of $150,000 and machinery and equipment with an
estimated fair market value of $1.9 million to the joint venture.  The joint
venture manufacturers grating panels and is located in Wanggang Township,
Pudong New Area, Shanghai in the People's Republic of China.

     In 1999, the Company adopted a plan to exit the grating manufacturing
business through the disposition of its grating businesses, including its
Chinese joint venture investment.  Upon adoption of the plan, the grating
businesses and assets were classified and accounted for as discontinued
operations, including a provision for estimated loss on disposal of the
Chinese joint venture of $2.0 million, and ceased consolidating the joint
venture as control of its daily operations was given to our joint venture
partners and our then expatriate management was removed.

     In the four years since adopting this plan, the Company has made several
unsuccessful attempts to dispose of its investment in the joint venture and
now perceives that a presence in China is consistent with its future plans for
certain of its continuing operations. As a result and in connection with our
Chinese partners' expressed desire to return control of the business to the
Company for various reasons, the Company has decided to retain its investment
in the Chinese joint venture and returned it to continuing operations
effective at the beginning of 2004. The calculation of the previously recorded
contribution to capital from this joint venture was finalized in 2006 and a
reduction of $243,000 was recorded in the current year.

	The Consolidated Statement of Operations for 2006, 2005 and 2004
includes the sales of this grating subsidiary along with the Company's
ownership share of the profits for the same periods.  The Consolidated Balance
Sheets at December 31, 2006 and 2005 include the existing assets and
liabilities of this subsidiary, excluding those assets that were previously
written down in 1999. The minority interest in this subsidiary represents the
calculated amount attributable to the 35% ownership not owned by the Company.

Going Concern

     The financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.  At December 31, 2006, the
Company has a deficiency in working capital of $39.1 million, a loss from
continuing operations of $2.9 million before gain on debt extinguishment and a
deficiency in assets of $22.8 million.  Additionally, at December 31, 2006,
						- F-9 -

the Company was in default on substantially all of its debt. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern.  The financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets
or the amounts and classifications of liabilities that may result from the
outcome of this uncertainty.

     Over the past several years, the Company has taken steps to improve its
liquidity and defer the principal maturities of a significant portion of its
debt.  During 2005, the Company sold its leaf spring business and all
operating assets of its Rostone business.  During the first quarter of 2006,
the Company sold its Oneida business, the remaining portion of its plastics
segment. (See Note 2: RECENT DEVELOPMENTS - Sale of Oneida.) Additionally,
during the first half of 2006, the Company effected a settlement with the
holder of a $1.017 million note payable and accrued interest of $308,000 from
the Company wherein the Company recognized a gain from this debt settlement of
$925,000 and effected a settlement with the holder of a $4.290 million
judgment and accrued interest of $880,000 payable by the Company, in
connection with which the Company recognized a gain from this debt settlement
of $4.0 million. (See Note 2: RECENT DEVELOPMENTS - Note Payable Settlements.)
The Company is investigating other restructuring or recapitalization scenarios
in an effort to provide additional liquidity and extinguishments or deferrals
of debt obligations. (See Note 3: SUBSEQUENT EVENTS - Restructure Plan.)  No
assurances exist that the Company will be successful in these efforts and
failure to accomplish these plans could have an adverse impact on the
Company's liquidity, financial position and future operations.

Principles of Consolidation

     The consolidated financial statements include the accounts of Reunion
Industries and its subsidiaries.  All significant intercompany transactions
and balances have been eliminated.

Use of Estimates

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates that affect the reported amounts of assets, liabilities, revenues,
expenses, and disclosures of contingencies during the reporting period.
Actual results could differ from management's estimates.

Cash and Cash Equivalents

     Cash and cash equivalents consist of demand deposit accounts and other
cash equivalents with original maturities of 3 months or less.

Accounts Receivable and Allowance for Doubtful Accounts

     Accounts receivable are net of $183,000 and $211,000 in allowance for
doubtful accounts at December 31, 2006 and 2005, respectively.  Credit is
extended after a credit review by management that is based on a customer's
ability to perform its obligations.  Such reviews are regularly updated.  The
allowance for doubtful accounts is based upon agings of customer balances and
specific account reviews by management.  The Company has no concentration of
credit risks and generally does not require collateral or other security from
its customers.

Inventories and Reserves for Obsolescence

     At December 31, 2006, inventories are stated at the lower of cost or
market, at costs that approximate the first-in, first-out method of inventory
valuation.  During the third quarter of 2003, for those locations of the
Company that had been using the last-in, first-out method of inventory
valuation, the Company changed the method of valuing inventory to the first-
in, first-out method.  Work-in-process and finished goods include material
costs, labor costs and manufacturing overhead.  Reserves for excess, slow-
moving and obsolete inventories are based on reviews of inventory usage
reports for items more than one year old.


						- F-10 -
Property, Plant and Equipment

     Property, plant and equipment is recorded at cost, including costs as
determined by the allocation of the purchase price in business acquisitions
accounted for using the purchase method, and depreciated over their estimated
useful lives using the straight-line method for financial statement purposes.
Estimated useful lives in years for depreciation are as follows: 25 to 40 for
buildings and improvements; 7 to 12 for machinery and equipment; 5 to 8 for
computer systems; 7 to 10 for furniture and fixtures.  Additions, betterments
and replacements are capitalized, while expenditures for repairs and
maintenance are charged to operations when incurred.  As units of property are
sold or retired, the related cost and accumulated depreciation are removed
from the accounts, and any resulting gain or loss is recognized in income.

Goodwill

     The Company has recorded goodwill totaling $11.0 million at December 31,
2006 and 2005, of which $9.5 million relates to our pressure vessels and $1.5
million relates to our cylinders segment.  Effective January 1, 2002, the
Company adopted Statement of Financial Accounting Standards (SFAS) No. 142,
"Goodwill and Other Intangible Assets" and ceased amortizing goodwill.  The
Company completed internal impairment tests of goodwill as of January 1, 2002
and engaged an independent valuation consultant to confirm our conclusions.
The Company completed additional impairment tests of goodwill as of December
31, for each succeeding year and has concluded that goodwill is not impaired.

Long-Lived Assets and Impairment

     The Company reviews long-lived assets for impairment whenever
circumstances indicate that the carrying amount of the asset may not be
recoverable, and recognizes an impairment loss when the undiscounted future
cash flows expected to be generated by the asset are less than the carrying
amount of the asset.  Long-lived assets held for sale, other than assets to be
disposed of in connection with disposal of a discontinued business segment,
are reported at the lower of carrying amount or fair value less cost to sell.

Revenue Recognition

     Sales are recorded when shipped and title and risks of ownership transfer
to the buyer.  Shipping and handling fees charged to customers are recorded as
revenues and the related costs are recorded as cost of sales.

Environmental Policies

     Environmental expenditures that relate to current operations are either
expensed or capitalized depending on the nature of the expenditure.
Expenditures relating to conditions caused by past operations that do not
contribute to current or future revenue generation are expensed.  Liabilities
are recorded when environmental assessments and/or remediation actions are
probable, and the costs can be reasonably estimated.

Income Taxes

     The Company provides deferred income taxes for all temporary differences
between financial and income tax reporting using the liability method.
Deferred taxes are determined based on the estimated future tax effect of
differences between the financial statement and tax bases of assets and
liabilities given the provisions of enacted tax laws.  A valuation allowance
is recorded for net deferred tax assets if it is more likely than not that
such assets will not be realized.  The Company has significant net operating
loss and investment tax credit carryforwards for tax purposes, portions of
which may expire unutilized.

Earnings Per Share

    Basic earnings per share is computed based on the weighted average number
of common shares outstanding during the period.  Diluted earnings per share
gives effect to all dilutive potential common shares outstanding during this
period.  Potential common shares include shares issuable upon exercise of the
Company's stock options and issuable upon exercise of warrants.

						- F-11 -
      Potential common shares relating to warrants and options to purchase
common stock aggregating approximately 4,787,754, 3,765,803 and 2,533,000
shares are included in the weighted average number of shares for the years
ended December 31, 2006, 2005 and 2004, respectively.  When the Company has
losses from continuing operations, such shares are anti-dilutive and are not
considered in earnings per share calculations for those years.

Recent Accounting Pronouncements

     In September 2006, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 158, "Employers'
Accounting for Defined Benefit Pension and Other Postretirement Plans" ("SFAS
158"). This statement amends several earlier issued statements, including
Financial Accounting Standards No. 87, "Employers' Accounting for Pensions
("SFAS 87") and Financial Accounting Standards No. 106, "Employers' Accounting
for  Postretirement Benefits Other than Pensions ("SFAS 106").  For companies
with publicly traded equity securities, SFAS 158 is effective for fiscal years
ending after December 31, 2006.  The statement requires employers with pension
and other post-employment benefit plans to recognize the funded status of such
plans in its financial statements, recognize as a component of other
comprehensive income the gains or losses that arise during the period but are
not recognized as components of cost pursuant to SFAS 87 and SFAS 106 and
provide other additional disclosures. The Company has both defined pension
plans and other postretirement benefit plans and, in connection with the
adoption of FAS 158, recorded additional liabilities of $701,000 as of
December 31, 2006.  This amount was also recorded as a component of other
comprehensive loss in shareholders' deficit.

	In June 2006, the FASB issued Interpretation 48, "Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109"
("FIN 48").  FIN 48 prescribes a 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 is effective
for the 2007 year.  The Company is assessing the impact of FIN 48 but does not
anticipate that it will have a material effect on its financial statements.

     In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements" ("SFAS 157"). SFAS 157 clarifies the principle that fair
value should be based on the assumptions market participants would use when
pricing an asset or liability and establishes a fair value hierarchy that
prioritizes the information used to develop those assumptions. Under the
standard, fair value measurements would be separately disclosed by level
within the fair value hierarchy. SFAS 157 is effective for the Company on
January 1,2008. The Company is in the process of evaluating SFAS 157 but does
not believe it will have a significant effect on its financial position or
results of operations.

     In February 2007, the FASB issued SFAS 159, "The Fair Value Option for
Financial Assets and Financial Liabilities-Including an Amendment of FASB
Statement No. 115 ("SFAS 159"). SFAS 159 permits an entity to choose to
measure many financial instruments and certain other items at fair value. Most
of the provisions of SFAS 159 are elective, however, the amendment to SFAS
115, "Accounting for Certain Investments in Debt and Equity Securities",
applies to all entities with available for sale or trading securities. SFAS
159 is elective as of the beginning of an entity's first fiscal year that
begins after November 15, 2007. SFAS 159 was recently issued and the Company
is currently assessing the financial impact the statement will have on our
financial statements.

Reclassifications

     Certain reclassifications of prior year amounts may have been made to
conform to 2006 classifications.







						- F-12 -

NOTE 2:   RECENT EVENTS

Sale of Oneida

     During the 2005 year, the Company decided to exit the plastics business.
In January 2006, the Company signed an Asset Purchase Agreement to sell
substantially all of the assets of its Oneida business to an unrelated entity.
On March 2, 2006, effective March 1, 2006, the Company completed the sale for
a purchase price of $11,573,000 subject to a post-closing adjustment based on
a closing balance sheet.  Of the net sale proceeds, after deducting $374,621
in related expenses, $300,000 was put into a one-year escrow as security for
any claims by the buyer that may arise after the closing, $2,000,000 was used
to pay down a note payable to a private capital fund that was secured by the
real estate of the Company, $980,974 was used to completely pay off the
existing Wachovia Bank ("Wachovia") term loan and the remaining $7,917,405 was
used to pay down the revolving credit facility. The post-closing adjustment
reduced the purchase price by $116,000, $55,000 of which was paid from the
escrow fund.  The remaining $245,000 in the escrow fund is included in other
current assets on the balance sheet as of December 31, 2006.  The Company
recognized a $4.2 million gain on sale during 2006.

Change in Officers

	Effective March 2, 2006, Charles E. Bradley, Sr. resigned his
officership as Chairman of the Board of Directors and Chief Executive Officer
of the Company.  However, he will continue to serve as a director.  Effective
March 2, 2006, the Board of Directors elected Mr. Kimball J. Bradley Chairman
of the Board of Directors and Chief Executive Officer.

Note Payable Settlements

	On March 2, 2006, the Company entered into a settlement agreement with
the holder of a $1.017 million note payable from the Company, pursuant to
which the Company paid the holder a total of $400,000 for such note and all
accrued interest.  Such settlement was effected on March 3, 2006, and the
Company recognized a gain from this debt settlement of $925,000 during 2006.

	On March 21, 2006, the Company entered into a settlement agreement with
the Stanwich Financial Services Corp. Liquidating Agent ("SFSC"), pursuant to
which the Company agreed to pay SFSC $1.125 million in settlement of its
existing $4.290 million judgment and all accrued interest.  In connection with
such agreement, the Company made a $150,000 payment to SFSC during the first
quarter of 2006. As provided in the settlement agreement, payment of the
remaining $975,000 amount was subject to bankruptcy court approval in SFSC's
Chapter 11 proceeding.  Such approval was received in May 2006, the final
payment was promptly made and the Company recognized a gain from this debt
settlement of $4.0 million during 2006.

Defaults

     The Company failed to make interest and principal payments on the Senior
Notes which are events of default under the Indenture under which the Senior
Notes were issued.  Such defaults also constitute cross defaults under the
Wachovia loan agreement and under the documents securing the $3.5 million loan
from a private capital fund. As a result, the Senior Notes and all cross
defaulted debt are shown as debt in default at December 31, 2006.

Wachovia Loan Agreement

	Under the terms of the Wachovia Loan Agreement, which had an expiration
date of December 3, 2006, the Agreement was to automatically renew from year
to year unless either party gave notice of non-renewal within a specified
time.  Wachovia did inform the Company that it would not extend the term of
the Loan Agreement. Subsequent to such notification, the Company and Wachovia
entered into letter agreements dated December 1, 2006 and December 19, 2006
under which Wachovia agreed to extend the Loan Agreement and all associated
financing agreements until December 22, 2006 and January 22, 2007,
respectively. (For a further extension, see NOTE 3: SUBSEQUENT EVENTS -
Wachovia Loan Agreement.)


						- F-13 -
Tender Offer

     On October 27, 2006, the Company initiated a tender offer to purchase for
cash all of its outstanding 13% Senior Notes ("Notes").  The consideration
offered in the tender offer, as amended, for each $1,000 principal amount of
the original 2003 Senior Notes and for each $880 principal amount of the
restructured Senior Notes was comprised of (i)a cash amount of $563.20, (ii)
warrants to purchase 140.82 shares of the common stock of the Company and
(iii) $160.93 principal amount of a junior subordinated note. The Company's
financing for such tender offer was contingent on acceptance of such offer by
holders of a significant percentage of the outstanding amount of such Senior
Notes. (See NOTE 3: SUBSEQUENT EVENTS - 13% Senior Notes.)

Milwaukee Property Sale

	In December 2006, the Company completed the sale of its property in
Milwaukee, WI, property that has been classified in discontinued operations as
held for sale,  for a purchase price of $1.175 million.  Net proceeds from the
sale were $1.067 million which was used to pay down a note payable to a
private capital fund that was secured by the real estate of the Company.  The
Company recorded a loss of $572,000 on this sale which is included in
income(loss) from discontinued operations.

NOTE 3: SUBSEQUENT EVENTS

13% Senior Notes

     The Company's tender offer, as discussed in NOTE 2 above, was not
accepted by a holder of approximately 72% of the outstanding Senior Notes.  As
a result, the tender offer was terminated and withdrawn on January 10, 2007.
The 13% restructured Senior Notes and accumulated interest, which totaled
$30.8 million at December 31, 2006, became due and payable on January 3, 2007.
The Company did not make such payment and thus continued to be in default
under the Indenture ("Indenture Default") under which the Senior Notes were
issued. With an Indenture Default, holders of more than 25% of the principal
amount of the Senior Notes may, by written notice to the Company and to the
Trustee, declare the principal of and accrued but unpaid interest on all the
Senior Notes to be immediately due and payable (an "acceleration"). However,
under an Intercreditor and Subordination Agreement entered into in December
2003 among Wachovia, the holders of the Senior Notes and certain other
lenders, the  Senior Note holders cannot commence any action to enforce their
liens on any collateral for a 180 day period beginning after the date of
receipt by Wachovia, the senior secured lender, of a written notice from the
Senior Note holders informing Wachovia of such Indenture Default and demanding
acceleration. On February 2, 2007, Wachovia received written notice of such
demand for payment.

Wachovia Loan Agreement

     On January 22, 2007, the Company and Wachovia entered into a letter
agreement to extend the term of the existing Loan Agreement and all other
associated financing agreements from January 22, 2007 until April 23, 2007.

Restructuring Plan

	In late January 2007, management decided that it would actively market
its pressure vessel business in order to provide liquidity to pay off all, or
the majority, of its debt either through a recapitalization of the Company or
the sale of this pressure vessel business. As of this date, several
recapitalization scenarios and indications of value for this business have
been received and the Company is investigating the various results that would
follow from transactions with either the potential investors or potential
buyers.






						- F-14 -


NOTE 4:   INVENTORIES

Inventories of continuing operations are comprised of the following (in
thousands):
                                                        At December 31,
                                                   2006                2005
                                                 --------            --------
Raw material                                     $  5,481            $  2,732
Work-in-process                                     3,136               2,997
Finished goods                                      3,284               2,877
                                                 --------            --------
  Inventories                                    $ 11,901            $  8,606
                                                 ========            ========

     Inventories are valued at the lower of cost or market, cost being
determined on the first-in, first-out method.  In the third quarter of 2003,
for those locations of the company that had been using the last-in, first-out
method of inventory valuation, the Company changed the method of valuing
inventory to the first-in, first-out method.  The effect on the results of
operations for the year ended December 31, 2003 was inconsequential.  The
above amounts are net of inventory reserves of $342 and $328 at December 31,
2006 and 2005, respectively.

NOTE 5:   PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment (PP&E) of continuing operations is comprised of
the following (in thousands):
                                                        At December 31,
                                                   2006                2005
                                                 --------            --------
Land                                             $    309            $    309
Buildings and improvements                          3,527               3,405
Machinery and equipment                            13,425              13,114
Computer systems                                    1,922               2,233
Furniture and fixtures                                422                 426
Construction-in-progress                              204                 147
                                                 --------            --------
  Property, plant and equipment                    19,809              19,634
Less:   Accumulated depreciation                  (15,333)            (15,040)
                                                 --------            --------
  Property, plant and equipment, net             $  4,476            $  4,594
                                                 ========            ========

NOTE 5:   OTHER ASSETS

	At December 31, 2006, other assets were composed almost entirely of the
cash surrender value of life insurance policies on key employees of the
Company.  At December, 2005, other assets were composed of $2.4 million of
such cash surrender values of these policies along with net deferred financing
costs of approximately $.9 million.  Such deferred financing costs were first
incurred when the Company refinanced its bank debt in 2003.  The Company
amortized such costs using a straight line amortization method, which
approximated the effective interest method of amortization, over the original
three year period of the bank debt which ended in December of 2006.  The cash
surrender values of these policies secure borrowings of $1.75 million under
the Wachovia revolving credit loan.

NOTE 6:   OTHER CURRENT LIABILITIES

Other current liabilities consist of the following (in thousands):
                                                        At December 31,
                                                   2006                2005
                                                 --------            --------
Customer deposits                                $  2,002            $  1,222
Accrued liabilities - legacy costs                  1,350                 708
Accrued health self-insurance liability               259                 451
Accrued liabilities - Shanghai China                  966                 393
Other                                               1,138               1,408
                                                 --------            --------
  Total other current liabilities                $  5,715            $  4,182
                                                 ========            ========
						- F-15 -
     Customer deposits represent advances received from customers to purchase
raw material for the pressure vessel business.  Accrued liabilities - legacy
costs represents the remaining estimated liabilities of our discontinued
operations which include employee-related legacy costs such as deferred and
workers compensation costs, legal/settlement costs associated with asbestos
claims and terminated lease obligations. The increase in accrued legacy costs
in 2006 primarily results from the sale of the Milwaukee property.  Accrued
liabilities - Shanghai China represent that subsidiary's accrued liabilities
in China.


NOTE 7:   DEBT IN DEFAULT AND LONG-TERM DEBT

       At December 31, 2006, the Company was in default on its Wachovia bank
financing (including the junior participation portion thereof), its note
payable to a private capital fund and its 13% senior notes.

Debt in default consists of the following (in thousands):
                                                        At December 31,
                                                    2006                2005
                                                 --------            --------
Wachovia revolving credit facility               $  8,334            $  9,788
Junior participation portion of the
  revolving credit facility (net of
  warrant value of $139 in 2005)                    6,100               5,961
Wachovia term loan                                      -               1,087
Note payable due December 5, 2006 (net of
  warrant value of $31 in 2005)                     3,500               3,469
13% senior notes (net of warrant value
  of $99 in 2005)                                  22,013              21,914
Notes payable					              -               1,017
								 --------             -------
  Total debt in default					 $ 39,947            $ 43,236
                                                 ========            ========

Long-term debt consists of the following (in thousands):
                                                        At December 31,
                                                    2006                2005
                                                 --------            --------
Note payable due December 1, 2006                $    882            $  3,950
Notes payable                                           -               4,290
Note payable - related party                          500                 500
                                                 --------            --------
  Total long-term debt                              1,382               8,740
Classified as current                              (1,382)             (8,740)
                                                 --------            --------
  Long-term debt                                 $      -            $      -
                                                 ========            ========

Wachovia Revolving and Term Loan Credit Facility

     On December 3, 2003, the Company entered into a revolving and term loan
bank credit facility with Wachovia Bank (formerly, Congress Financial
Corporation) (the "Wachovia Loan Facility").  At the time, the Wachovia Loan
Facility consisted of revolving credit, term loan and letter of credit
accommodations up to a maximum credit of $25.0 million. The term loan
amortized to the revolving credit availability at a rate of $53,000 per month
and was paid in full in March 2006 with proceeds from the sale of Oneida.  At
that time, the maximum credit was also reduced to $15.0 million.  The facility
had a three-year initial term with automatic renewals for additional one-year
increments unless either party gave the other notice of termination at least
90 days prior to the beginning of the next one-year term.  Wachovia did give
such termination notice but has, on two separate occasions, agreed to extend
the facility.  The facility now expires on April 23, 2007 unless a further
extension is granted.  The Wachovia Loan Facility is collateralized by a
continuing security interest and lien on substantially all of the Company's
assets.

     Interest on loans outstanding under the Wachovia facility (other than the
Wachovia Supplemental Loan described in the next paragraph) is payable monthly

						- F-16 -
at a variable rate tied to the prime rate publicly announced from time to time
by Wachovia Bank, National Association, plus 2.50%.  The facility also
provides for a default interest rate of the prime rate plus 4.50%. The
interest rate at December 31, 2006 was 10.75%.

     In May 2004, the Company and Wachovia entered an amendment to the loan
and security agreement whereby Wachovia provided an additional $3.0 million
Supplemental Loan to the Company.  Proceeds from the loan were used to pay
trade payables and for other corporate purposes.  Funds for the additional
$3.0 million of supplemental financing were provided to Wachovia by two
private capital funds as the result of the execution of a junior participation
loan transaction between Wachovia and the two funds.  Each fund participated
in the supplemental financing at a ratio of 50% each.  In addition to their
junior participation loan having the same collateral security as Wachovia, as
described below, each private equity fund received, subject to shareholder
approval, a warrant to purchase 375,000 shares of the Company's common stock
at an initial exercise price of $0.01 per share, together with registration
rights.  The warrants were issued in January 2005, following the approval by
the Company's stockholders to amend the Company's Articles of Incorporation to
increase the authorized number of shares of common stock of the Company by
10,000,000.  The value of the warrants was estimated to be $165,000 at
December 31, 2004 using the Black-Scholes pricing model.  This amount was
recorded as an original issue discount with an increase to paid-in capital and
was amortized to interest expense using the effective interest method of
amortization during 2005 and 2006.

	In July 2005, the Company and Wachovia entered into an amendment to the
loan and security agreement whereby Wachovia provided an additional $3.1
million of supplemental revolving credit financing to the Company.  Proceeds
from the loan were used to pay the settlement with Shaw NapTech in July 2005
and to fund inventory purchases.  Funds for the additional $3.1 million of
supplemental financing were provided to Wachovia by two private capital funds
as the result of the execution of a junior participation loan transaction
between Wachovia and the two funds.  Each fund participated in the additional
supplemental financing at a ratio of 50% each. In addition to their junior
participation loan having the same level of collateral security as Wachovia as
described below, each private equity fund received a warrant to purchase
375,000 shares of the Company's common stock at an initial exercise price of
$0.01 per share, together with registration rights.  The warrants were issued
in July 2005.  The value of the warrants was estimated to be $85,000 at July
1, 2005 using the Black-Scholes pricing model. This amount was recorded as an
original issue discount with an increase to paid-in capital and was amortized
to interest expense using the effective interest method of amortization during
2005 and 2006.

     Interest on the Wachovia Supplemental Loans is payable monthly at a fixed
rate of 15% per annum.  The Wachovia Supplemental Loans are collateralized by
a continuing security interest and lien on substantially all of the current
and after-acquired assets of Reunion including, without limitation, all
accounts receivable, inventory, real property, equipment, chattel paper,
documents, instruments, deposit accounts, contract rights and general
intangibles.

     The Wachovia Supplemental Loans are subject to the same financial
covenants and other covenants as the revolving credit and term loan
facilities, including the minimum amount of earnings before interest, taxes,
depreciation and amortization (EBITDA).

     Through August 2004, the Company achieved the minimum monthly EBITDA
required for compliance with the Wachovia covenant.  However, in September
2004 the Company was unable to achieve the required minimum monthly covenant
amount.  From that time forward, the Company and Wachovia have entered into
several amendments of the loan and security agreement which either reduced the
covenant threshold or eliminated certain covenants.  The Company is currently
in compliance with such revised financial covenants. However, the loan and
security agreement contains cross default provisions related to other debt
and, since the Company is in default with such other debt, the Company is in
default under the Wachovia loan facility.



						- F-17 -
Private Capital Fund Financing

     On August 11, 2003, Reunion borrowed $2.5 million from a private capital
fund by executing a senior subordinated secured promissory note payable in the
amount of and with cash proceeds of $2.5 million.  The note bore interest at
10% per annum, such interest being payable, in arrears, on the last day of
every month.  The principal amount of $2.5 million was due on August 11, 2005
with voluntary prepayments permitted but was extended to December 5, 2006 as
discussed below.  The note is secured by a majority of the assets of Reunion,
provided that such security interest is subordinate to the security interest
of Wachovia.  In addition to its subordinated security interest, the fund
received a warrant to purchase 625,000 shares of the Company's common stock
and registration rights with respect to the warrant and shares issuable
thereto at a price of $0.01 per share.  The value of the warrants was
estimated to be $90,000 at the time of their issuance using the Black-Scholes
pricing model.  This amount was recorded as an original issue discount with an
increase to paid-in capital and was amortized to interest expense using the
effective interest method of amortization during 2004, 2005 and 2006.  The
cash proceeds were used for working capital and other general corporate
purposes.

     In connection with the Wachovia refinancing on December 3, 2003, this
same private capital fund amended and restated its senior subordinated secured
promissory note to provide an additional $1.0 million of financing to the
Company at the same interest rate but changed the maturity date from August
11, 2005 to December 5, 2006.  Additional warrants to purchase 250,000 shares
were eventually issued to the fund in January 2005, following the approval by
the Company's stockholders to amend the Company's Articles of Incorporation to
increase the authorized number of shares of common stock of the Company by
10,000,000. The value of these warrants was estimated to be $18,000 at the
time of their issuance using the Black-Scholes pricing model.  This amount was
recorded as an original issue discount with an increase to paid-in capital and
was amortized to interest expense using the effective interest method of
amortization during 2005 and 2006.

	The principal of the above promissory note, due December 5, 2006, has
not been paid and the note is currently in default. Effective December 5,
2006, the interest rate on the note increased to the default rate of 13% per
annum.  Interest on the note has been paid on a current basis.

     In connection with the Wachovia refinancing on December 3, 2003, a
separate private capital fund provided the Company with a $4.2 million loan
evidenced by a senior subordinated secured promissory note payable with net
cash proceeds of $4.0 million after fees and expenses.  The note bore interest
at the rate of 12% until December 2005 when the rate increased to the then
prime rate as published in the Wall Street Journal plus 8%.  This rate is now
15%.  Interest is payable, in arrears, on the first day of every month.  The
principal amount of the note was due on December 3, 2006 but was extended by
mutual agreement until June 3, 2007.  The note is secured by mortgage liens
and/or deed of trust security interests encumbering all premises owned by the
Company.  In connection with the sale of the leaf spring segment in 2005, a
prepayment of $250,000 was made on this note.  In connection with the sale of
Oneida in March 2006, a prepayment of $2,000,000 was made on this note.  In
connection with the sale of the Milwaukee, WI property in December 2006, a
prepayment of $1,068,000 was made on this note.  In addition to its security
interest, the fund received a warrant to purchase 500,000 shares of the
Company's common stock and registration rights with respect to the warrant and
shares issuable thereto at a price of $0.50 per share.  The warrants were
estimated to have no value at the time of their issuance using the Black-
Scholes pricing model.

13% Senior Notes

     Prior to December 2003,the Company had a total of $24.855 million of 13%
senior notes outstanding.  The senior notes required semi-annual interest
payments every November 1st and May 1st and sinking fund payments of $12.5
million on May 1, 2002 and $12.355 million on May 1, 2003.  Since November 1,
2001, the Company was unable to make the required semi-annual interest
payments or the sinking fund payments due May 1, 2002 and 2003.  As a result,
an event of default, as defined in the indenture governing the 13% senior

						- F-18 -
notes, had existed since December 1, 2001 as the Company was not able to make
the November 1, 2001 semi-annual interest payment within the 30-day cure
period provided for in the indenture.

     In November 2003, the Company solicited the consent of our noteholders to
certain provisions and waivers of the indenture governing the 13% senior notes
in an effort to facilitate the Wachovia refinancing.  The significant
provisions of the solicitation requested that the noteholders consent to
permanently waive all then existing defaults under the indenture, cancel all
accrued and unpaid interest, cancel 12% of the principal amount of senior
notes and extend the maturity of the notes to December 2006.  In order for the
consent to be effective, the Company needed noteholders comprising at least
90% of the principal amount of outstanding senior notes to consent.  As of
December 1, 2003, the end of the consent period, $23,250,700 of the
$24,855,000 principal amount of senior notes, or 93.55%, had consented.
Accordingly, 12% of the $23,250,700 principal amount of senior notes of
noteholders that had consented to the various provisions and waivers, or $2.8
million, was extinguished pursuant to the provisions of the consent.

     In January 2004, the Company re-solicited our noteholders who had not
previously consented to the provisions and waivers referred to in the
preceding paragraph.  In the first consent in November 2003, $23,250,700 of
the $24,855,000 principal amount of senior notes, or 93.55%, had consented.
The second consent solicitation period ended on April 28, 2004 at which time
holders of an additional $434,300 principal amount of senior notes had
consented.    Accordingly, 12% of the $434,300 principal amount of senior
notes of noteholders that had consented to the various provisions and waivers
in the second solicitation, or $52,000, was extinguished pursuant to the
provisions of the consent.

     In exchange for their consent, each consenting noteholder received a
consent fee of $27.625, warrants to purchase 76.18 shares of the Company's
common stock at $0.01 per share for each $1,000 of principal amount of notes
owned and a junior priority lien on the Company's assets.  In the refinancing
that took place on December 3, 2003, the Company placed in escrow with the
trustee of the senior notes, $686,619 for payment of consent fees, of which
$642,301 has been or will be disbursed to consenting senior noteholders.
Warrants to purchase the Company's common stock totaling 1,771,217 have been
reserved for future issuance to consenting noteholders.  The value of the
warrants was estimated to be $324,000 at the time of their issuance using the
Black-Scholes pricing model.  This amount was recorded as an original issue
discount with an increase to paid-in capital and was amortized to interest
expense using the effective interest method of amortization during 2005 and
2006.  Effective with having obtained the consents of holders of at least 90%
of the principal amount of outstanding senior notes, all previously existing
defaults under the indenture for the 13% senior notes have been permanently
waived.

	On February 3, 2005, the Company announced that it was unable to make a
$2,928,000 interest payment by February 2, 2005 to the holders of the
Company's 13% Senior Notes.  Holders of more than 80% of the principal amount
of such Senior Notes entered into a Standstill Agreement with the Company,
pursuant to which such  holders agreed that they would not exercise and will
cause the Trustee not to exercise any remedies provided for in the Indenture
under which the Senior Notes were issued, or any other agreements related to
such notes, with respect to this payment default or with respect to a
potential event of default if the Company failed to make the next scheduled
interest payment due April 1, 2005 (which the Company did not make).   In the
Standstill Agreement, such holders agreed to defer such interest payments to
December 2006.

     Since 2001, the Company has not been able to make any of the scheduled
interest payments on the Senior Notes and has not been able to make any
payments of principal on such currently matured Senior Notes.  Additionally,
the principal amount of the restructured Senior Notes matured on January 3,
2007 and was not paid.  As a result, events of default have occurred under the
Indenture ("Indenture Default") under which the Senior Notes were issued. With
an Indenture Default, holders of more than 25% of the principal amount of the
Senior Notes may, by written notice to the Company and to the Trustee, declare
the principal of and accrued but unpaid interest on all the Senior Notes to be
immediately due and payable (the "acceleration"). However, under an
							- F-19 -
Intercreditor and Subordination Agreement entered into in December 2003 among
Wachovia, the holders of the Senior Notes and certain other lenders, the
Senior Note holders can not commence any action to enforce their liens on any
collateral for a 180 day period beginning after the date of receipt by
Wachovia, the senior secured lender, of a written notice from the Senior Note
holders informing Wachovia of such Indenture Default and demanding
acceleration or immediate payment.  On February 2, 2007, Wachovia received
written notice of such demand for payment. (See NOTE 3: SUBSEQUENT EVENTS -
13% Senior Notes.)

SFSC Judgment

     On March 21, 2006, the Company entered into a settlement agreement with
Stanwich Financial Services Corp. ("SFSC") pursuant to which the Company
agreed to pay SFSC $1.125 million in settlement of its existing $4.290 million
judgment and all accrued interest.  The settlement was subject to bankruptcy
court approval in SFSC's Chapter 11 proceeding.  Such approval was received in
May 2006 and the Company promptly made the final payment and recognized a gain
from this settlement of $4.0 million during 2006.

Notes Payable

     At December 31, 2005, included in Debt in default is a $1,017,000 note
payable assumed by Reunion in a previous year acquisition of a plastics
operation. Effective, March 3, 2006, the Company entered into a settlement
agreement with the holder of this note pursuant to which the Company paid the
holder a total of $400,000 for such note and all accrued interest. The Company
recognized a gain from this debt extinguishment of $925,000 during 2006.

Notes Payable - Related Parties

	Note payable to related parties consists only of a December 31, 2002
note payable to Mr. Charles E. Bradley, Sr. of $500,000 with interest at 10%
per annum, which note was issued to evidence a loan from him. Such note was
due on October 31, 2004.  This note is subordinated to the Company's
indebtedness to Wachovia.  No cash payments of principal or interest have been
made on this note.  See NOTE 8 regarding interest on this note that was
converted to equity in 2005.

NOTE 8:   STOCKHOLDERS' DEFICIT

     The Company's Certificate of Incorporation was amended by vote of the
stockholders in 2005 to increase the authorized common stock from 20,000,000
shares to 30,000,000 shares and to eliminate the 10,000,000 shares of "blank
check" preferred stock of the Company.  The common stock retained its par
value $.01 per share

     No dividends have been declared or paid during the year with respect to
the common stock of the Company.  Cash dividends are limited by the
availability of funds, by restrictions in the Company's debt agreements and by
statutory restrictions on a corporation's payment of dividends when it has
negative net worth.

     The following represents stockholders' equity (deficit) activity for each
year in the 3-year period ended December 31, 2006 (in thousands):

                                                   2006      2005      2004
                                                 --------  --------  --------
  Par value of common stock, January 1           $    167  $    163  $    163
Stock issuance                                          7         4         -
                                                 --------  --------  --------
  Par value of common stock, December 31         $    174  $    167  $    163
                                                 ========  ========  ========
  Capital in excess of par value, January 1      $ 28,325  $ 27,866  $ 25,609
Stock issuance                                          -       374         -
Stock based compensation                               45         -         -
Warrant issuances                                       -        85       183
Capitalization from China Joint Venture (NOTE 1)     (243)        -     2,074
                                                 --------  --------  --------
  Capital in excess of par value, December 31    $ 28,127  $ 28,325  $ 27,866
                                                 ========  ========  ========
						- F-20 -
                                                   2006      2005      2004
                                                 --------  --------  --------
  Accumulated other comprehensive
    loss, January 1                              $ (1,879) $ (1,902) $ (1,979)
Additional pension liability in excess of
  unrecognized prior service cost                      (7)       23        77
Adjustment to initially apply FASB 158,
  net of $-0- tax                                    (701)        -         -
                                                 --------  --------  --------
  Accumulated other comprehensive
    loss, December 31                            $ (2,587) $ (1,879) $ (1,902)
                                                 ========  ========  ========

  Accumulated deficit, January 1                 $(54,130) $(51,710) $(51,548)
Net income (loss)                                   5,387    (2,420)     (162)
                                                 --------  --------  --------
  Accumulated deficit, December 31               $(48,743) $(54,130) $(51,710)
                                                 ========  ========  ========
  Total stockholders' equity
    (deficit), January 1                         $(27,517) $(25,583) $(27,755)
Stock issuance                                          7         -         -
Share based compensation                               45         -         -
Conversion of debt                                      -       378         -
Warrant issuances                                       -        85       183
Capitalization from China Joint Venture (NOTE 1)     (243)        -     2,074
Other comprehensive income (loss)                    (708)       23        77
Net income (loss)                                   5,387    (2,420)     (162)
                                                 --------  --------  --------
  Total stockholders' deficit,
    December 31                                  $(23,029) $(27,517) $(25,583)
                                                 ========  ========  ========

     In 2005, 2004 and 2003, the Company issued to certain of its lenders
warrants to purchase an aggregate of 2.4 million shares of its common stock,
in each case at a price of $0.01 per share.  The warrants and the transactions
in connection with which they were issued are described above in NOTE 7 OF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. The values of the warrants issued
in 2005, 2004 and 2003 were estimated to be, respectively, $85,000, $183,000
and $414,000 at the times of their issuance, in all cases using the Black-
Scholes pricing model.  These amounts were recorded as original issue
discounts with an increase to paid-in-capital and were amortized to interest
expense using the effective interest method of amortization during 2005 and
2006.

     The following represents common stock activity for each of the three
years shown(in thousands of shares):
                                                   Year Ended December 31,
                                                   2006      2005      2004
                                                 --------  --------  --------
  Outstanding common stock, January 1              16,656    16,278    16,278
Stock issuance                                        763       378         -
                                                 --------  --------  --------
  Outstanding common stock, December 31            17,419    16,656    16,278
                                                 ========  ========  ========
	In May 2006, a warrant holder elected to convert all of its 762,500
outstanding warrants into common stock of the Company at the exercise price of
$0.01 per each share issued. (This warrant holder also is entitled to 16,920
shares resulting from certain anti-dilution provisions of the converted
warrants.  Such shares are expected to be issued in 2007.) In June 2005, the
Board of Directors granted approval for the Company to enter into settlement
agreements with Kimball J. Bradley and Charles E. Bradley, Sr., two officers
of the Company.  Under such agreements, the officers agreed to forgive
$309,960 of guarantee fees and interest owed to them by the Company and to
convert an additional $68,040 of such fees and interest into 378,000 shares of
common stock of the Company.  Such conversion added $378,000 to the Company's
equity, $4,000 to common stock and $374,000 to capital in excess of par value.

NOTE 9:   STOCK BASED COMPENSATION ARRANGEMENTS

	In December 2004, the Financial Accounting Standards Board (FASB) issued

						- F-21 -
SFAS No. 123R, "Share-Based Payment".  SFAS No. 123R established standards for
the accounting for transactions in which an entity exchanges its equity
instruments for goods or services.  It also addresses transactions in which an
entity incurs liabilities in exchange for goods or services that are based on
the fair value of the entity's equity instruments or that may be settled by
the issuance of those equity instruments.  This statement requires a public
entity to measure the cost of employee services received in exchange for an
award of equity instruments based on the grant-date fair value of the award
(with limited exceptions).  That cost will be recognized over the period
during which an employee is required to provide service in exchange for the
award.

	SFAS No.123R is effective for all awards granted on or after January 1,
2006 and for awards modified, repurchased, or cancelled after that date.  SFAS
No.123R requires that compensation cost be recognized on or after the
effective date for the unvested portions of outstanding awards, as of the
effective date, based on the grant-date fair value of those awards calculated
under SFAS No.123, "Accounting for Stock-Based Compensation".  Share-based
compensation expenses include the impact of expensing the fair value of the
stock options as well as expenses associated with non-vested share awards.
The Company adopted the provisions of SFAS No.123R effective January 1, 2006,
using the modified prospective transition method.

	Prior to 2006, the Company applied the intrinsic-value based method of
accounting prescribed by Accounting Principles Board (APB) Opinion No.25,
"Accounting for Stock Issued to Employees", and related interpretations,
including FASB Interpretation No.44, "Accounting for Certain Transactions
Involving Stock Compensation, an Interpretation of APB Opinion No. 25".  Under
this methodology, the Company adopted the disclosure requirements of SFAS
No.123, and recognized compensation expense only if, on the date of grant, the
market price of the underlying stock exceeded the exercise price.

	At September 30, 2006, the Company had two stock option plans,
stockholder approved, that permit the grants of share options and shares to
its key employees, directors and consultants.  As of December 31, 2006,
280,600 options remain available for grant under these plans, 1,444,000
options have been granted and 299,333 of the granted options are unvested. The
Company believes that such awards better align the interests of its key
employees, directors and consultants with those of its stockholders.  Option
awards are generally granted with an exercise price equal to the market value
of the Company's stock on the date of grant, generally vest over a two to
three year period and have exercise terms ranging from five to ten years.

     On July 18, 2006, 100,000 new options were approved for issuance and
74,000 options were actually issued to various non-officer employees of the
Company at an exercise price of $0.39, the then existing market price. These
options vested one-third at issuance date with the remaining options vesting
in equal amounts on the next two annual anniversary dates of the option grant.
Vested options are exercisable at any time within 10 years of the grant date.
Using the Black-Scholes option pricing model, which assumed a risk-free
interest rate of 6%, no dividend yield, expected volatility of 144% and an
expected option exercise life of 10 years, these options were determined to
have a fair value of $28,000 on the date of grant. Of this amount, $7,000 was
recognized as stock based compensation expense during 2006 and the remaining
amount will be recognized over the next 18 months.

     As to the outstanding options at January 1, 2006, the fair value of such
option grants was estimated on the date of grant using the Black-Scholes
option pricing model.  The Company is using the modified prospective
application method to transition to SFAS 123R. Accordingly, based on the
requirements of SFAS 123R, in addition to recognizing compensation cost for
all new awards beginning in 2006, the Company will also recognize compensation
cost for all unvested previously issued awards. Under SFAS 123R, $45,000 of
share based compensation expense was recognized during 2006 of which $38,000
related to compensation cost on prior year unvested options based upon the
requisite outstanding service period. Had compensation costs for the years
ended December 31, 2005 and 2004 been determined based on the fair value
recognition provisions of SFAS 123R, pro forma earnings and per share amounts
would not have been materially different from those reported.

						- F-22 -

     A summary of the status of the Company's stock options and warrants as of
December 31, 2006 and changes during the year is presented below:
                                                 Weighted
                                      Weighted    Average
                                       Average   Remaining    Aggregate
                                      Exercise  Contractual   Intrinsic
Fixed Options              Shares       Price      Term         Value
-------------             ---------   --------  -----------   ---------
Outstanding at
  beginning of year       1,370,000     $0.25      5.1 yrs        -
Granted                      74,000      0.39      9.5 yrs        -
                          ---------
Outstanding at
  end of year             1,444,000     $0.25      4.8 yrs
                          =========
Options exercisable
  at December 31 , 2006   1,144,667     $0.26      4.4 yrs        -
                          =========

A summary of the status of the Company's non-vested shares as of December 31,
2006 and changes during the year is presented below:
                                                         Weighted
                                                          Average
                                                         Grant Date
Nonvested Shares                       Shares            Fair Value
----------------                      ---------         -----------
Nonvested at January 1, 2006          690,001              $0.23
                                                           =====
Vested in June, 2006	             (250,002)             $0.11
                                                           =====
Issued in July, 2006                   74,000              $0.39
                                                           =====
Vested in July, 2006                  (81,333)             $0.33
                                                           =====
Vested in December, 2006             (133,333)             $0.35
                                      -------              =====
Nonvested at December 31, 2006        299,333              $0.22
                                      =======              =====

As of December 31, 2006, there was $40,000 of total unrecognized compensation
cost related to nonvested share-based compensation arrangements granted under
the Plans.

	The Company expects to issue shares upon exercise of the options from
its authorized but unissued shares of common stock.

     The following table summarizes information about stock options
outstanding at December 31, 2006:

                    Remaining           Number              Number
Exercise            Contractual         Outstanding         Exercisable
Price               Life                at 12/31/06         at 12/31/06
---------           -----------         -----------         -----------
$0.180               8.50 years             400,000             283,334
$0.200               3.50 years             400,000             266,667
$0.250               6.58 years              70,000              70,000
$0.275               1.58 years             100,000             100,000
$0.352               2.00 years             400,000             400,000
$0.390		   9.50 years		   74,000		     24,666
                                          ---------           ---------
                                          1,444,000           1,144,667
                                          =========           =========
NOTE 10:   EMPLOYEE BENEFIT PLANS

     The Company sponsors defined benefit plans and other postretirement
benefit plans for certain employees in its pressure vessel business and on its
Corporate Executive Payroll (as defined in the plan document). The Company
also sponsors a frozen defined benefit plan and provides a postretirement
benefit plan for certain employees in its recently sold plastics divisions.
Such benefit plans were not included in the sale of these divisions and
continue to be an obligation of the Company.
						- F-23 -
Continuing Operations

     Reunion sponsors a defined benefit pension plan ("DB plan") which covers
substantially all of its employees at its McKeesport, PA pressure vessel
manufacturing location. This plan was amended in May 2006 in connection with
the union contract negotiations so that new employees hired after May 2006 are
no longer eligible for this DB plan.  Rather, new hires are now entered into a
new 401(k) plan established in connection with the new union contract.
Benefits under the DB plan are based solely on continuous years of service and
are not affected by changes in compensation rates.

     The Company's funding policy with respect to this DB plan provides that
payments to the pension trusts be at least equal to the minimum funding
requirements of the Employee Retirement Income Security Act of 1974.  Assets
of the plan are invested principally in fixed income and equity securities.

     Reunion maintains various postretirement healthcare and life insurance
benefit plans for certain active and retired employees.  Covered active and
retired employees include those of the Company's McKeesport, PA pressure
vessel manufacturing location, pursuant to a November 1997 plan amendment
which became effective January 1, 1998 and employees of Reunion's Corporate
Executive Payroll.

     Eligible active and retired employees of the pressure vessel division for
which postretirement benefits are provided include both union and nonunion
employees.  Healthcare benefits for both union and nonunion retirees are
provided for the most part through comprehensive major medical and other
health benefit provisions subject to various retiree cost-sharing features.
The majority of employees eligible for healthcare benefits upon retirement are
former employees of USX Corporation (USX).  A significant portion of
postretirement healthcare earned by such employees prior to 1987 is the
responsibility of USX.  Life insurance benefits provided to eligible union
retirees are based on fixed amounts negotiated in labor agreements.  Life
insurance benefits provided to eligible nonunion retirees are based on the
employee's annual base salary at retirement subject to a maximum benefit.

     Postretirement healthcare benefits for eligible active and retired
employees of Reunion's Corporate Executive Payroll are paid for by Reunion and
subject to various retiree cost-sharing features.  Postretirement healthcare
benefits for Corporate Executive Payroll employees terminate when the retiree
becomes Medicare eligible.  Postretirement life insurance benefits for
eligible active and retired employees of Reunion's Corporate Payroll are paid
for by Reunion and are based on the employee's annual base salary at
retirement.  Except for certain life insurance benefits paid from reserves
held by insurance carriers, benefits have not been funded.  Contributions to
the plans by Reunion equal benefits paid.

	As described in NOTE 1: ACCOUTING POLICIES-Recent Accounting
Pronouncements, the Company is now required to recognize the funded status of
its pension and other post retirement plans on its balance sheet in accordance
with SFAS 158. Changes in the funded status of defined benefit plans are
recorded through comprehensive income in the year in which those changes
occur.  The following table showing the incremental effect on individual line
items in the Consolidated Balance Sheet as of December 31, 2006 is required as
part of adopting SFAS 158.(Amounts in thousands)

                                           Before      SFAS        After
							Adoption	Effect	Adoption
  							--------    ------      --------
Current assets					$ 23,714	$ (122)	$ 23,592
Total assets					$ 44,540    $ (122)     $ 44,418
Other liabilities					$  2,806    $  631      $  3,437
Non-current liabilities of
     Discontinued Operations			$    550	$   70	$    620
Accumulated other comprehensive loss      $  1,886    $  701      $  2,587
Total stockholders' deficit               $(22,328)	$ (701)	$(23,029)





						- F-24 -
	The following are amounts recognized in other comprehensive income(loss)
for the years ended December 31 (in thousands):
							2006		2005		2004
							----		----		----
Net gain(loss)					$ 11		$ 42		$ 97
Net prior year service cost			 (18)		 (19)		 (20)
							----		----		----
	Total						$ (7)		$ 23		$ 77
							====		====		====

	During the year ended December 31, 2006, upon adoption of SFAS 158, the
Company recognized a net transition obligation of approximately $246,000 that
is recognized as a component of net periodic benefit cost for the period.
Below are amounts that have not yet been recognized as components of net
period benefit cost at the dates indicated (in thousands):
	                                           2006	       2005
								-------	-------
Net actuarial loss					$ 2,222     $ 1,739
Prior year service cost					    119         140
Net transition obligation				    246           -
								-------     -------
	Total							$ 2,587     $ 1,879
							      =======	=======

	Amounts included in Accumulated other comprehensive loss that are
expected to be recognized as components of net periodic cost during the year
ended December 31, 2007 are as follows (in thousands):

Net actuarial loss				$ 162
Prior year service cost				   54
Net transition obligation			   12
							-----
	Total						$ 228
							=====

     The following table sets forth the details relating to pension benefits
and other post retirement benefits for the years ended December 31, 2006 and
2005(in thousands):
                                      Pension           Other Postretirement
                               --------------------     --------------------
                                 2006        2005         2006        2005
                               --------    --------     --------    --------
  Change in benefit obligation:
Benefit obligation, beginning  $  4,472    $  4,016     $  2,545    $  2,060
Service cost                        212         212          128         109
Interest cost                       240         226          140         114
Actuarial loss (gain)               (33)        203         (405)        355
Benefits paid                      (214)       (185)        (148)        (93)
                               --------    --------     --------    --------
Benefit obligation, ending     $  4,677    $  4,472     $  2,260    $  2,545
                               ========    ========     ========    ========
  Change in plan assets:
Fair value, beginning          $  3,590    $  2,689     $      -    $      -
Actual return                       182         702            -           -
Company contribution                446         384          148          93
Benefits paid                      (214)       (185)        (148)        (93)
                               --------    --------     --------    --------
Fair value, ending             $  4,004    $  3,590     $      -    $      -
                               ========    ========     ========    ========
  Funded status:
Net obligation, ending         $    673    $    882     $  2,260    $  2,545
					                          ========
  Unrecognized costs:
Additional minimum pension
  Liability                    $  1,022         997            -           -
Prior service costs                (122)       (140)                       4
Net loss                           (900)       (857)                    (739)
Transition obligation                 -           -                     (295)
                               --------    --------                  --------
Accrued benefit costs          $    673    $    882                 $  1,515
                               ========    ========                 ========
						- F-25 -

     At December 31, 2005, in addition to accrued benefit costs, amounts
recognized in the consolidated balance sheet include an intangible asset of
$140,000 and other comprehensive losses of $796,000.

     Net periodic pension and other postretirement benefits costs for the
following years for pension and other postretirement benefits plans ended
December 31 are as follows (in thousands):

                                     Pension           Other Postretirement
                              ----------------------  ----------------------
                               2006    2005    2004    2006    2005    2004
                              ------  ------  ------  ------  ------  ------
Benefits earned during year   $  212  $  212  $  139  $  128  $  109  $   93
Interest cost                    240     226     214     140     115     116
Early retirement incentive         -       -       -       -       -       -
  Amortization of:
Prior service cost                18      19      21      (1)     (1)     (1)
Unrecognized net loss (gain)      31      63      54      68      71      75
Unrecognized net obligation        -       -       -      49      48      48
Expected return on plan assets  (289)   (219)   (195)      -       -       -
                               -----   -----   -----   -----   -----   -----
Defined benefit pension and
  total other postretirement
  benefits costs              $  212  $  301  $  233  $   384 $  342  $  331
                               =====   =====   =====   ======  =====   =====

     Assumptions used to develop pension cost and projected benefit
obligations for the pressure vessels' defined benefit pension plan for the
following years ended December 31 are as follows:
                                                   2006      2005      2004
                                                 --------  --------  --------
Discount rate                                       5.75%     5.75%     6.00%
                                                 ========  ========  ========
Expected rate of return on plan assets              7.75%     7.75%     7.75%
                                                 ========  ========  ========
Rate of compensation increase                        2.0%      2.0%      2.0%
                                                 ========  ========  ========

     The details of the pressure vessels' pension plan assets by asset
category are as follows:
                                     2006                     2005
                               -----------------        -----------------
                               Assets    Percent        Assets    Percent
                               -------- --------        -------- --------
Equity securities		       $  3,171      79%        $  3,009      84%
Corporate bonds                     539      13              408      11
Government obligations              143       4              145       4
Cash and other                      151       4               28       1
                               -------- --------        -------- --------
Total                          $  4,004     100%        $  3,590     100%
                               ======== ========        ======== ========

     The Company's investment strategy for pension funds is to maintain at
least 50% of such funds in equity securities with the balance invested
primarily in bonds and other fixed income securities.  The Company believes
that the returns on common stock over the long term will be higher than
returns from fixed income securities.  Both equity and fixed income
investments are made across a wide range of industries and companies in order
to provide protection against the impact of volatility in any single industry
or company.  The Company is currently using an expected rate of return of
7.75% on our assets and a 2.5% anticipated inflation rate which produces an
expected real rate of return of 5.25%. This rate was chosen by taking into
account our intended asset mix and the historical returns of the plan since
its inception.  The Company expects to contribute $540,000 to the plan in
2007.




						- F-26 -

     Expected benefit payments under the pension plan, which reflect expected
future service, as appropriate, are as follows for the years indicated (in
thousands):

							Benefits
							--------
		2007					$    288
		2008                               286
		2009                               347
		2010                               341
		2011                               374
		2012-2016	                     1,738


     Assumptions used to develop the net periodic postretirement benefit costs
and accumulated postretirement benefit obligations for the following years
ended December 31 are as follows:
                                                   2006      2005      2004
                                                 --------  --------  --------
Discount rate                                       5.75%     5.75%     6.25%
                                                 ========  ========  ========
Healthcare cost trend rate (USX eligible)            2.0%      2.0%      2.0%
                                                 ========  ========  ========
Healthcare cost trend rate (All others)              7.0%      7.0%      7.0%
                                                 ========  ========  ========

     USX administers the postretirement healthcare plans for the eligible
employees of the McKeesport, PA location previously owned by USX and bills
Reunion for its share of the postretirement costs related to Reunion's
retirees covered by the plans.  The Company's actuary reviews the rates
charged by USX for retiree medical coverage on an annual basis and, as a
result, has calculated and elected to use 2% as the applicable healthcare cost
trend rate for all years subsequent to 2003.  For all others, 7.0% is the
weighted-average rate based on an assumed rate of increase in per capita
healthcare costs of 10% for 2006 with a gradual decrease over ten years to 5%
and remaining at that level thereafter.  A one percentage point increase in
the assumed healthcare cost trend rate would increase the benefit obligation
at December 31, 2006 by approximately $200,000 and increase the total of the
service and interest cost components by approximately $51,000.  Conversely, a
one percentage point decrease in the assumed healthcare cost trend rate would
result in approximate decreases in each by $172,000 and $41,000, respectively.

Discontinued Plastics Operations

     Reunion sponsors a defined benefit pension plan which covered
substantially all of its employees at its New York facilities.  Effective June
15, 1999, benefits were frozen.  These New York facilities were sold in
connection with the Oneida sale discussed in NOTE 2: RECENT EVENTS-Sale of
Oneida.  However, the defined benefit pension plan was not part of the sale
and was retained by the Company.

     Reunion maintains a postretirement healthcare plan for certain salaried
and union retirees and their dependents of the discontinued plastics segment.
Covered employees were eligible to participate in the medical benefit plan if,
at the time they retire, they had at least 10 years of service and had
attained 62 years of age.  This plan is contributory via employee
contributions, deductibles and co-payments and benefits are subject to certain
annual, lifetime and benefit-specific maximum amounts. The liabilities
associated with this plan were not assumed in the sale of the plastics segment
and continue to be retained by the Company.

	As described in NOTE 1: ACCOUTING POLICIES-Recent Accounting
Pronouncements, the Company is now required to recognize the funded status of
its pension and other post retirement plans on its balance sheet in accordance
with SFAS 158. The initial impact of this standard on the discontinued
operations of the Company was $69,571 and has been recognized as a charge to
accumulated other comprehensive loss in shareholders' deficit.  This charge
represents the net actuarial losses of the plans.


						- F-27 -

     The following table sets forth the details related to pension benefits
and other post retirement benefits for the years ended December 31, 2006 and
2005 (in thousands):
                                      Pension           Other Postretirement
                               --------------------     --------------------
                                 2006        2005         2006        2005
                               --------    --------     --------    --------
  Change in benefit obligation:
Benefit obligation, beginning  $  3,970    $  3,896     $    704    $    915
Service cost                          -           -            -           -
Interest cost                       219         224           31          46
Plan curtailment                      -           -            -           -
Actuarial loss (gain)               112          63          151         (81)
Benefits paid                      (209)       (213)        (265)       (176)
                               --------    --------     --------    --------
Benefit obligation, ending     $  4,092    $  3,970     $    621    $    704
                               ========    ========     ========    ========
  Change in plan assets:
Fair value, beginning          $  3,510    $  3,133     $      -    $      -
Actual return                       400         227            -           -
Company contribution                  -         363          265         176
Benefits paid                      (227)       (213)        (265)       (176)
                               --------    --------     --------    --------
Fair value, ending             $  3,683    $  3,510     $      -    $      -
                               ========    ========     ========    ========
  Funded status:
Net obligation, ending         $    409    $    460     $    621    $    709
                                                        ========
Unrecognized costs:
Additional minimum pension
  Liability                       1,447       1,525            -           -
Net loss                         (1,447)     (1,525)                      77
                               --------    --------     --------    --------
Accrued benefit costs          $    409    $    460                 $    786
                               ========    ========                 ========

     Net periodic pension and other postretirement benefits costs for the
following years for Plastics pension and other postretirement benefits plan
ended December 31 are as follows (in thousands):

                                     Pension           Other Postretirement
                              ----------------------  ----------------------
                               2006    2005    2004    2006    2005    2004
                              ------  ------  ------  ------  ------  ------
Benefits earned during year   $    -  $    -  $    -  $   -   $    -  $   56
Interest cost                    219     224     224     31       31     138
Unrecognized net loss (gain)      67      62      62     (1)      (1)     52
Plan curtailment                           -       -      -        -    (804)
Expected return on plan assets  (259)   (315)   (237)     -        -       -
                                ------  ------  ------  ------  ------  ------
Defined benefit pension and
  total other postretirement
  benefits costs (income)     $   27  $  (29) $   49  $  30   $   30   $(558)
                               ======  ======  ======  ======  ======  ======

      Assumptions used to develop the pension cost and projected benefit
obligation for the discontinued operations' defined benefit pension plan for
the following years ended December 31, 2006, 2005 and 2004 are as follows:


                                                   2006      2005      2004
                                                 --------  --------  --------
Discount rate                                       5.75%     5.75%     6.00%
                                                 ========  ========  ========
Expected rate of return on plan assets              7.75%     7.75%     7.75%
                                                 ========  ========  ========

						- F-28 -





The details of the pension plan assets by asset category are as follows:

                                      2006                     2005
                               -----------------        -----------------
                               Assets    Percent        Assets    Percent
                               -------- --------        -------- --------
Equity securities		       $  2,577      70%        $  2,470      70%
Fixed income/bond funds           1,081      29            1,021      29
Cash and other                       25       1               19       1
                               -------- --------        -------- --------
Total                          $  3,683     100%        $  3,510     100%
                               ======== ========        ======== ========

     The Company's investment strategy for pension funds is to maintain at
least 50% of such funds in equity securities with the balance invested
primarily in bonds and other fixed income securities.  The Company believes
that the returns on common stock over the long term will be higher than
returns from fixed income securities.  Both equity and fixed income
investments are made across a wide range of industries and companies in order
to provide protection against the impact of volatility in any single industry
or company.  The Company is currently using an expected rate of return of
7.75% on our assets and a 2.5% anticipated inflation rate which produces an
expected real rate of return of 5.25%. This rate was chosen by taking into
account our intended asset mix and the historical returns of the plan since
its inception.  The Company expects that it will contribute $101,000 to the
plan in 2007.

     Expected benefit payments under the Plastic's pension plan, which reflect
expected future service, as appropriate, are as follows for the years
indicated (in thousands):
							Benefits
							--------
		2007					$    180
		2008                               186
		2009                               189
		2010                               199
		2011                               199
		2012-2016	                     1,178


     Assumptions used to develop the net periodic postretirement benefit costs
and accumulated postretirement benefit obligations for the following years
ended December 31 are as follows:
                                                   2006      2005      2004
                                                 --------  --------  --------
Discount rate                                       5.75%     5.75%     6.25%
                                                 ========  ========  ========
Healthcare cost trend rate                          7.00%     7.00%     7.00%
                                                 ========  ========  ========

     For measurement purposes, an assumed rate of increase in per capita
healthcare costs of 10% was used for 2005 with a gradual decrease over ten
years to 5% and remaining at that level thereafter.  A one percentage point
increase in the assumed healthcare cost trend rate would increase the benefit
obligation at December 31, 2006 by approximately $32,000 and increase the
total of the service and interest cost components by approximately $1,000.
Conversely, a one percentage point decrease in the assumed healthcare cost
trend rate would result in approximate decreases in each by $29,000 and
$2,000, respectively.

Other Employee Benefit Plans

     The Company also sponsors qualified contributory 401(k) plans covering
substantially all employees. Additionally, as noted above in connection with
union negotiations in May 2006 at the pressure vessel business, a new 401(k)
plan was established for union employees at that business. For those employees
electing to participate in the 401(k) plans, employees can contribute up to an
annually determined maximum amount permitted by law and the Company makes

						- F-29 -
matching contributions up to specified limits.  Effective December 31, 2002,
the Company suspended its matching contributions to the then existing 401(k)
plans. Currently, matching contributions are made only for the new 2006 plan
and total matching contribution expense was $2,000 in 2006.

     The Company does not provide any other postemployment benefits to former
or inactive employees except for unemployment compensation benefits required
by law.

NOTE 11:   EARNINGS PER COMMON SHARE

     The computations of basic and diluted earnings per common share (EPS) for
the years ended December 31, 2006, 2005 and 2004 are as follows (in thousands,
except per share amounts):
                                                Income    Shares     EPS
                                               --------  --------  -------
      Year ended December 31, 2006:
Income applicable to common stockholders,
  weighted average shares outstanding
  and basic EPS                                $  5,387    17,143  $  0.31
                                                                   =======
Dilutive effect of stock options and warrants         -     4,788
                                               --------  --------
Income applicable to common stockholders,
  shares outstanding and diluted EPS           $  5,387    21,931  $  0.25
                                               ========  ========  =======
      Year ended December 31, 2005:
Loss applicable to common stockholders,
  weighted average shares outstanding
  and basic EPS                                $ (2,420)   16,479  $ (0.15)
                                                                   =======
Dilutive effect of stock options and warrants         -         -
                                               --------  --------
Loss applicable to common stockholders,
  shares outstanding and diluted EPS           $ (2,420)   16,479  $ (0.15)
                                               ========  ========  =======
    Year ended December 31, 2004:
Loss applicable to common stockholders,
  weighted average shares outstanding
  and basic EPS                                $   (162)   16,279  $ (0.01)
                                                                   =======
Dilutive effect of stock options and warrants        -          -
                                               --------  --------
Loss applicable to common stockholders,
  shares outstanding and diluted EPS           $   (162)   16,279  $ (0.01)
                                               ========  ========  =======

     At December 31, 2006, 2005 and 2004, the Company's stock options
outstanding totaled 1,444,000, 1,370,000 and 614,000, respectively.  Such
options included a dilutive component of 825,791, 182,588 and 128,711 shares,
respectively.  At December 31, 2006, 2005 and 2004, outstanding warrants to
purchase the Company's common stock totaled 4,173,489, 5,009,477 and
3,476,585, respectively.  Such warrants included a dilutive component of
3,961,963, 3,583,215 and 2,404,000 shares, respectively.

NOTE 12:   INCOME TAXES

     Due to the existence and use of the Company's net operating loss
carryforwards, there was no United States tax provision recorded for the years
ending December 31, 2006, 2005 and 2004.  The Company's majority owned joint
venture in China operates in a special economic zone.  Prior to 2005, this
entity enjoyed a tax holiday.  Beginning in 2005 and lasting through 2007,
this China entity will enjoy a reduced tax rate of 7.5% of net income.
Subsequent to 2007, the rate will go to the full income tax rate, which is
currently 15%. As a result, the 2005 and 2006 current year provisions relate
solely to the China entity.



						- F-30 -


     The Company's effective income tax rate from continuing operations,
reflected in the accompanying consolidated statement of income, differs from
the statutory rate due to the following (in thousands):

                                                   Year Ended December 31,
                                                   2006      2005      2004
                                                 --------  --------  --------
Computed amount at statutory rate (34%)          $  1,835  $   (823) $     43
Net change in valuation allowance                  (1,552)       921  (17,794)
Section 108 cancellation of indebtedness
  income exclusion                                  1,681     1,173     3,558
Section 108 reduction of loss carryforwards
  from cancellation of indebtedness
  income exclusion                                 (1,681)   (1,173)   (3,558)
Goodwill amortization                                (140)     (140)     (140)
Foreign sales exclusions                              (28)      (45)      (40)
Expiration of loss carryforwards                        -         -    18,054
Chinese income tax exclusion                         (284)     (158)     (336)
Federal return to prior year's
  provision adjustments                                 -         -        33
Foreign income tax                                    115        49         -
Non-deductible expenses                               123       138        84
Other - net                                            46       107        96
                                                 --------  --------  --------
  Total tax provision from continuing
    operations                                   $    115  $     49  $      -
                                                 ========  ========  ========

     Temporary differences and carryforwards that gave rise to significant
portions of deferred tax assets and liabilities are as follows (in thousands):

                                                        At December 31,
                                                   2006                2005
                                                 --------            --------
Depreciation                                     $      -            $      -
Historical goodwill                                (1,120)               (650)
Other                                                (114)               (179)
                                                 --------            --------
  Deferred tax liabilities                         (1,234)               (829)
                                                 --------            --------
Loss carryforwards (NOLs)                          20,922              22,555
Book reserves                                       2,579               2,376
Deferred compensation                                 251                 281
Tax credit carryforwards                              851                 851
Unicap adjustments                                    313                 336
Depreciation                                          382                 436
Other                                               2,131               1,741
                                                 --------            --------
  Deferred tax assets                              27,429              28,576
Less: Valuation allowance                         (26,195)            (27,747)
                                                 --------            --------
  Deferred tax assets, net                          1,234                 829
                                                 --------            --------
  Deferred taxes, net                            $      -            $      -
                                                 ========            ========

     At December 31, 2006, Reunion had net operating loss carryforwards for
federal tax return reporting purposes of approximately $61.5 million, of which
$737,000 will expire by the end of 2007.  Management has concluded that it is
more likely than not that the Company's loss carryforwards will expire
unutilized and has determined to continue to fully reserve for the total
amount of net deferred tax assets as of December 31, 2006.






						- F-31 -



   The current and noncurrent classifications of the deferred tax balances are
as follows (in thousands):
                                                        At December 31,
                                                   2006                2005
                                                 --------            --------
  Current:
Deferred tax assets                              $  3,794            $  3,565
Deferred tax liabilities                              (76)                (97)
Less:   Valuation allowance                        (3,623)             (3,462)
                                                 --------            --------
  Current deferred, net asset                          95                   6
                                                 --------            --------
  Noncurrent:
Deferred tax assets                                23,636              25,010
Deferred tax liabilities                           (1,159)               (732)
Less:   Valuation allowance                       (22,572)            (24,284)
                                                 --------            --------
  Noncurrent deferred, net (liability)                (95)                 (6)
                                                 --------            --------
  Deferred taxes, net                            $      -            $      -
                                                 ========            ========

     No U.S. federal or state corporate income tax return examinations are
currently in process.  The Company believes adequate provisions for income
taxes have been recorded for all years.

NOTE 13:   RELATED PARTIES, TRANSACTIONS AND BALANCES

Related Parties

     Reunion Industries, Inc. - Reunion is a publicly traded Delaware
corporation headquartered in Pittsburgh, Pennsylvania.  Charles E. Bradley,
Sr. (Mr. C. Bradley) was chairman of the board and Chief Executive Officer of
Reunion until March 2, 2006.  Kimball Bradley (Mr. K. Bradley) was President,
Chief Operating Officer, a director of Reunion and son of Mr. Bradley until
March 2, 2006. As described in Note 2: Recent Events, on March 2, 2006, Mr. C.
Bradley resigned as chairman of the board and CEO and Mr. K. Bradley was
elected chairman of the board and CEO. Mr. K. Bradley also retained his office
of President.

     Stanwich Financial Services Corp. - SFSC is a privately held, currently
inactive, corporation that was formerly in the structured settlement business.
SFSC is owned 100% by Mr. C. Bradley.  Prior to May 10, 2004, this company was
a related party to Reunion.  On that date, management control of SFSC was
vested in a liquidating trustee and an executive committee, of which Mr.
Bradley is not a member, in accordance with SFSC's plan of reorganization in
its proceeding under Chapter 11 of the Bankruptcy Code.  Accordingly, SFSC is
no longer a related party.  See also "SFSC Settlement" in NOTE 2 of NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.

Transactions and Balances

SFSC Indebtedness

     Pursuant to a settlement that became effective on May 10, 2004 (the "SFSC
Settlement"), the Company was indebted in the amount of $4.29 million, plus
interest that accrues on that amount after May 10, 2004 at the rate of 10% per
annum.  As previously discussed in NOTE 2: RECENT EVENTS - Note Payable
Settlements, during 2006, the Company entered into a settlement agreement with
the Stanwich Financial Services Corp. Liquidating Agent ("SFSC"), pursuant to
which the Company agreed to pay SFSC $1.125 million in settlement of its
existing $4.290 million judgment and all accrued interest.  The Company
recognized a gain from this debt settlement of $4.0 million during 2006.

Cash Surrender Value of Life Insurance Policies

     The Company pays the premiums on life insurance policies covering Mr. C.
Bradley and two directors, Mr. Joseph C. Lawyer (Mr. Lawyer) and Mr. John G.
Poole (Mr. Poole).  Pursuant to these arrangements, the Company will be

						- F-32 -

reimbursed for the premiums it pays for such policies from either the death
benefit of the policy or their cash surrender value.  The covered individuals
have agreed with the Company that if the policy proceeds are insufficient to
reimburse the Company for the full amount of the premiums paid, they will
cover the shortfall.  As of December 31, 2006 and 2005, premiums paid by the
Company in excess of the cash surrender values of the policies totaled
$963,000 and $891,000, respectively, and are included in due from related
parties in the accompanying consolidated balance sheets.

Mr. C. Bradley Note Payable

     In January 2003, Mr. C. Bradley made a $500,000 payment on behalf of the
Company to Shaw NapTech, Inc.  This payment was applied to reduce by $500,000
the Company's indebtedness to Shaw NapTech, Inc.  To evidence this loan by Mr.
C. Bradley, the Company issued to him its unsecured $500,000 10% note payable.
The note payable became due on October 31, 2004.  No principal or interest
payments have been made on this note.  In June 2005, as described in Note 8:
Stockholders' Deficit, Mr. C. Bradley agreed to forgive $98,400 of the
interest payable to him and to convert an additional $21,600 of such interest
payable to him into 120,000 shares of the Company's common stock.  At December
31, 2006 and 2005, accrued and unpaid interest related to this note totaled
$80,000 and $30,000, respectively, and is included in due to related parties
in the accompanying consolidated balance sheet.  Mr. C. Bradley's rights under
this note are subordinate to the Company's indebtedness to Wachovia Financial.

Mr. C. Bradley Guarantees

     To facilitate the closing of the Wachovia refinancing in December 2003,
Mr. C. Bradley provided a personal guarantee of $1.5 million of the revolving
credit portion of the Wachovia Loan Facility.  In exchange for his guarantee,
the Board of Directors approved a 2% per annum guarantee fee to be paid to Mr.
C. Bradley during the time period such guarantee is in place.  Amounts payable
under this arrangement were first offset against an employee advance of
$58,000 previously received by Mr. C. Bradley and owed to the Company at the
time of the refinancing.  Such advance has now been fully recovered and as of
December 31, 2006 and 2005, $34,000 and $4,219, respectively, is included in
Due to related party in the accompanying balance sheet.

Mr. K. Bradley Guarantees

     To facilitate obtaining new financing with two private investment funds
and the closing of the refinancing of the Company's bank debt with Wachovia in
December 2003, Mr. K. Bradley provided personal guarantees totaling $9.2
million, including guarantees of two notes payable totaling $7.7 million and
$1.5 of the revolving credit portion of the new Wachovia facilities.  In
exchange for his guarantees, the Board of Directors approved 2% per annum
guarantee fees to be paid to Mr. K. Bradley during the time period such
guarantees are in place.  In June 2005, as described in Note 8: Stockholders'
Deficit, Mr. K. Bradley agreed to forgive $211,560 of the guarantee fees
payable to him and to convert an additional $46,440 of such guarantee fees
payable to him into 278,000 shares of the Company's common stock. At December
31, 2006 and 2005, $251,000 and $105,351, respectively, of such fees are
included in Due to related parties in the accompanying consolidated balance
sheet.

NOTE 14:   COMMITMENTS AND CONTINGENCIES

     The Company is and has been involved in a number of lawsuits and
administrative proceedings, which have arisen in the ordinary course of
business of the Company and its subsidiaries.  A summary of such legal
proceedings follows.

Asbestos (ORC)
--------------

     Since July 10, 2001, various legal actions, some involving multiple
plaintiffs, alleging personal injury/wrongful death from asbestos exposure
have been filed in multiple states, including California, Oregon, Washington,
New York and Mississippi, against a large number of defendants, including

						- F-33 -

Oneida Rostone Corporation (ORC), pre-merger Reunion's Plastics subsidiary and
the Company's Plastics segment.  In October 2001, Allen-Bradley Company
(currently owned by Rockwell Automation), a former owner of the Rostone
business of ORC, accepted Reunion Industries' tender of its defense and
indemnification in the first such lawsuit filed, pursuant to a contractual
obligation to do so.  Subsequent to this acceptance in the first lawsuit,
Rockwell Automation has accepted and defended all additional lawsuits, a total
of 241 separate actions, that the Company has tendered.

Asbestos (Alliance)
------------------

     The Company has been named in approximately 2,368 separate asbestos suits
filed since January 1, 2001 by various plaintiffs' law firms in Michigan,
Pennsylvania, Ohio, Illinois, Maryland, Alabama and W. Virginia.  The claims
are primarily directed against over 100 defendants, including Reunion, and
allege that cranes from the Company's former crane manufacturing location in
Alliance, OH were present in various steel mills located in those states and
that those cranes contained asbestos to which plaintiffs were exposed over a
40 year span.  Counsel for the Company has filed an answer to each complaint
denying liability by the Company and asserting all alternative defenses
permitted under the various Courts' Case Management Orders.  Counsel for the
Company has successfully resolved approximately 750-800 cases without any
liability to the Company.  The Company denies that it manufactured any
products containing asbestos or otherwise knew or should have known that any
component part other manufacturers provided contained any dangerous or toxic
materials. It has been further denied that the Company was otherwise advised
by component part manufacturers that component parts could be hazardous, or
otherwise constitute a health risk.  The Company intends to vigorously defend
against these lawsuits.

Product Warranties

     The Company provides for warranty claims at its cylinders segment.
Amounts accrued are estimates of future claims based on historical claims
experience or a management estimate related to a specifically identified
issue.  The Company reevaluates its product warranty reserve quarterly and
adjusts it based on changes in historical experience and identification of new
or resolution of prior specifically identified issues. A tabular
reconciliation of the product warranty reserve follows (in thousands):

     Description                                      2006      2005
     ---------------------------------------------  --------  --------
       Beginning balance                            $    133  $    100
     Add: Provision for estimated future claims          100       168
     Deduct: Cost of claims                             (111)     (135)
                                                    --------  --------
       Ending balance                               $    122  $    133
                                                    ========  ========
Operating leases

     Minimum rental commitments under all noncancellable operating leases in
effect for continuing operations at December 31, 2006, were as follows (in
thousands):
                            Year ended December 31,
 Total      2007      2008      2009      2010      2011      After 2011
-------    ------    ------    ------    ------    ------     ----------
$ 6,922    $1,093    $  996    $  971    $  938    $ 953        $1,971
=======    ======    ======    ======    ======    ======       ======

     Operating lease rental expense related to continuing operations for the
years ended December 31, 2006, 2005 and 2004, amounted to $1,381,201,
$1,494,267, and $1,633,000, respectively.

NOTE 15:   FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:


						- F-34 -

     Cash and cash equivalents, accounts receivable and accounts payable - The
carrying amounts approximate fair value because of the short maturities of
these instruments.

     Debt - $14.4 million of the Company's debt has variable rates of interest
and $26.9 million bears interest at fixed rates.  Management estimates the
carrying value of variable-rate debt to approximate its fair value as its
stated rate of interest changes with changes in market rates of interest.  Of
the $26.9 million of fixed-rate debt, $22.0 million represents the 13% senior
note obligation.  Such notes were restructured in 2003 and there was little
trading activity until the last half of 2005.  Recent trading activity has
primarily centered on only large holders disposing of their entire positions
at a discount. Based on this, the fair value of such notes is not readily
determinable. Of the remaining fixed-rate debt, $0.5 million is to a related
party, for which comparable instruments do not exist, and $4.4 million relates
to debt that bears interest at rates ranging between 13% and 15.25%.  Given
our financial condition, the fair value of such debt is not readily
determinable.

NOTE 16:   DISCONTINUED OPERATIONS
     In December 2001, the Company classified and began accounting for its
bridges and cranes and materials handling systems businesses as discontinued
operations in accordance with Accounting Principles Board Opinion No. 30,
"Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions" (APB 30).

     On September 24, 2002, the Company sold Kingway, our discontinued
materials handling systems operations, for cash proceeds of $25.0 million and
a $7.0 million note receivable in amounts of up to $2.333 million in each of
2003, 2004 and 2005.  Future proceeds under the note receivable were
contingent upon the combined operations of the buyer's material handling
businesses exceeding certain specified EBITDA amounts.  Such amounts were not
achieved.  The net cash proceeds of $24.12 million after transaction-related
expenses were used to reduce borrowings under our BOA revolving credit
facility of $15.96 million, term loan A facility of $7.11 million and pay
overadvance fees of $1.05 million.  The Company realized a net gain of $3.1
million, classified within discontinued operations, on this transaction.
Finalization of this sale was subject to a post-closing working capital
adjustment.  The buyer alleged it was owed approximately $905,000 based on its
calculation of working capital on the closing date.  Pursuant to the asset
purchase agreement, the Company submitted this dispute to a mutually agreed-
upon independent accounting firm for resolution in arbitration.  The
arbitrator for the dispute determined that, of the $905,000 working capital
deficiency claimed by the buyer, $705,000 was not valid.  The Company paid the
additional $200,000. The additional loss in year 2005 reflects mainly legacy
insurance expenses in both the casualty and healthcare areas.

     On June 30, 2002, the Company sold the inventory and substantially all of
the property, plant and equipment of Alliance, our discontinued bridges and
cranes operations, for cash proceeds of $3.058 million and the assumption by
the buyer of $242,000 of accrued liabilities.  The Company retained all
receivables, trade payables and certain other liabilities of this discontinued
operation.  The net cash proceeds of $3.058 million were used to reduce
borrowings under our then existing Bank of America revolving credit facility
($322,000), term loan A facility ($1.87 million) and capital expenditure
facility ($866,000).  The Company realized a loss of $3.9 million, classified
within discontinued operations, on this transaction.   Additional losses in
the years ended December 31, 2003 and 2005 reflect higher than estimated on-
going legacy costs related mainly to health benefits and legal fees and
settlements associated with asbestos cases.

     In January, 2005, the Company sold its springs division operations for
cash proceeds of $792,000.  Net cash proceeds of $775,000 after transaction
related expenses were received on January 4, 2005, of which $250,000 was used
to reduce borrowings under the term loan from a private capital fund that is
secured by the real property, $41,000 was used to reduce borrowings under the
term loan portion of the Wachovia Loan Facility and the remaining balance of
$484,000 was used to reduce borrowings under the Wachovia revolving credit
facility.  The Company recorded a loss of $318,000 on such sale which was
provided for in the Company's 2004 year.
						- F-35 -
     In December 2004, the Company classified and began accounting for its
Rostone business, located in Lafayette, IN, as discontinued operations in
accordance with FAS 144.  During the first quarter of 2005, the Company sold
certain of the receivables, inventory and intangibles of Rostone along with
certain of its machinery and equipment.  The sale of such assets was
accomplished in two separate transactions, with the sale of certain of the
Rostone's compounding operation assets being sold to one unrelated entity and
the sale of certain of Rostone's molding operation assets being made to a
different unrelated entity. At the time of such sale, the Company entered into
tolling or manufacturing agreements with such buyers under which the Company
agreed to operate the compounding and molding operations at its Lafayette, IN
facility for a limited time until the buyers could move such operations to
different geographical locations.  The buyers agreed to reimburse the Company
for all expenses in connection with these activities.  The sale of the
selected assets noted above was for approximately $2.9 million.  Of this
amount, $712,000 was used to pay down the Wachovia term loan secured by the
machinery and equipment and the remaining amount was used to reduce the
borrowings under the revolving credit facility.  The Company recorded a gain
of approximately $370,000 on such sales during the year ended December 31,
2005.

	During the 2005 year, the Company reclassified its land and building in
Milwaukee, WI to property held for sale. In December 2006, the Company
completed the sale of this property for a purchase price of $1.175 million.
Net proceeds from the sale were $1.067 million which was used to pay down a
note payable to a private capital fund that was secured by the real estate of
the Company.  The Company recorded a loss of $572,000 on such sale.

	During the fourth quarter of 2005, the Company classified and began
accounting for its Oneida business as discontinued operations in accordance
with FAS 144.  As described in NOTE 2: Recent Events -, Oneida was ultimately
sold in March 2006.  The Company recognized a $4.2 million gain on sale during
2006.

     At December 31, 2006, the assets and liabilities of discontinued
operations are comprised of the remaining assets and liabilities of the
Rostone business.  At December 31, 2005, the assets and liabilities of
discontinued operations are comprised of the assets and liabilities of the
Oneida business, the remaining Rostone assets and liabilities and the
Company's land and building in Milwaukee, WI that was held for sale.  Such
assets and liabilities are as follows (in thousands):
                                                          At December 31,
                                                       2006            2005
                                                     --------        --------
     CURRENT ASSETS:
Cash and cash equivalents                            $      -        $    217
Receivables, net                                            -           3,236
Inventories, net                                            -           1,878
Other current assets                                        -             906
                                                     --------        --------
Total current assets                                 $      -        $  6,237
                                                     ========        ========
     CURRENT LIABILITIES:
Trade payables                                       $      -        $  1,964
Other current liabilities                                 300             677
                                                     --------        --------
Total current liabilities                            $    300        $  2,641
                                                     ========        ========
     OTHER ASSETS:
Property, plant and equipment, held for sale         $  2,056        $  6,050

                                                     ========        ========
     OTHER LIABILITIES:
Other liabilities                                    $    620        $    781
                                                     ========        ========




						- F-36 -



     Summarized results of discontinued operations for the years ended
December 31, 2005, 2004 and 2003 follow (in thousands):

                                                2005       2005       2004
                                              --------   --------   --------
Net sales                                    $   3,163  $ 22,914    $ 30,334
Income (loss) before taxes                       3,354       260       1,114

     The income from discontinued operations in 2006 includes a gain on
disposal of Oneida of $4.2 million and a loss from the sale of the Milwaukee,
WI property of $0.6 million.  The gain from discontinued operations in 2005
includes a gain on disposal of Rostone of $0.37 million.  The gain from
discontinued operations in 2004 includes a loss on disposal of our springs
operation of $0.3 million.

NOTE 17:   SEGMENT DISCLOSURES AND RELATED INFORMATION

     The Company owns and operates industrial manufacturing operations that
design and manufacture engineered, high-quality products for specific customer
requirements, such as large-diameter seamless pressure vessels, hydraulic and
pneumatic cylinders and metal bar grating.

     The Company's customers include original equipment manufacturers and end-
users in a variety of industries, such as transportation, power generation,
chemicals, metals and electronics.

     Excluding its subsidiary in Shanghai, China, Reunion Industries
manufactures its products in the United States and sells its products in the
United States and in foreign countries.    During 2006, one pressure vessel
customer accounted for approximately 13.6% of consolidated sales.  However,
during 2005 and 2004, no one customer accounted for more than 10% of the net
sales of Reunion. Of Reunion's $51.0 million, $42.5 million and $41.4 million
of consolidated net sales from U.S continuing operations for 2006, 2005 and
2004, respectively, approximately $5.0 million, $8.8 million and $6.4 million,
respectively, were export sales. Of these export sales, $2.8 million in 2006,
$6.4 million in 2005 and $4.3 million in 2004 were to customers in the Far
East (principally China and Taiwan) and $1.2 million in 2006, $1.0 in 2005 and
$1.3 million in 2004 were to customers in Canada.

						- F-37 -



	Segment data, including earnings before interest, taxes, depreciation
and amortization (EBITDA) (in thousands except for related notes):

                                                     Capital     Total
                               Net Sales  EBITDA(1)   Spending  Assets(2)
                               ---------  ---------  ---------  ---------
2006:
-----
  Operating Businesses:
Pressure vessels                $ 34,386   $  7,741   $    202   $ 18,429
Cylinders                         16,662        280        325      6,825
Grating				     8,442      1,412         55      4,565
                                --------   --------   --------   --------
  Subtotal                        59,490      9,433        582     29,819
Corporate and other                    -     (2,308)         2     12,543
Discontinued Operations                -          -         38      2,056
                                --------   --------   --------   --------
  Totals                        $ 59,490      7,125   $    622   $ 44,418
                                ========              ========   ========
Gain on extinguishment of debt                4,945
Depreciation                                   (703)
Interest expense                             (8,725)
                                           --------
  Loss from continuing operations
    before income taxes and minority
    interests                              $  2,642
                                           ========
2005:
-----
  Operating Businesses:
Pressure vessels                $ 22,894   $  3,640   $    298   $ 14,114
Cylinders                         19,611      1,532        144      7,082
Grating				     7,222        688         25      4,158
                                --------   --------   --------   --------
  Subtotal                        49,727      5,860        467     25,354
Corporate and other                    -     (2,104)         5     13,619
Discontinued Operations                -          -        113     12,287
                                --------   --------   --------   --------
  Totals                        $ 49,727      3,756   $    585   $ 51,260
                                ========              ========   ========
Gain on extinguishment of debt                3,450
Depreciation                                   (720)
Interest expense                             (8,906)
                                           --------
  Loss from continuing operations
    before income taxes and minority
    interests                              $ (2,420)
                                           ========
2004:
-----
  Operating Businesses:
Pressure vessels                $ 22,921   $  3,979   $    218   $ 15,403
Cylinders                         18,488        580        202      8,452
Grating				     9,306      1,274         70      4,013
                                --------   --------   --------   --------
  Subtotal                        50,715      5,833        490     27,868
Corporate and other (3)                -     (1,582)        56     14,601
Discontinued Operations                -          -        234     14,127
                                --------   --------   --------   --------
  Totals                        $ 50,715      4,251   $    780   $ 56,596
                                ========              ========   ========
Gain on extinguishment of debt                3,540
Depreciation                                 (  804)
Interest expense                             (7,933)
                                           --------
  Loss from continuing operations
    before income taxes and minority
    interests                              $   (946)
                                           ========

						- F-38 -

 (1) EBITDA is presented as it is the primary measurement used by management
    in assessing segment performance and not as an alternative measure of
    operating results or cash flow from operations as determined by
    accounting principles generally accepted in the United States, but
    because it is a widely accepted financial indicator of a company's
    ability to incur and service debt.

(2) Corporate and other assets at December 31, 2006, 2005 and 2004 includes
    $8.0 million of goodwill that relates to the Company's pressure vessel
    business.  For evaluation purposes under SFAS No. 142, this
    goodwill is included in the carrying value of pressure vessels.

(3) Includes income totaling $0.6 million from reduction in environmental
    reserve.


						- F-39 -



NOTE 18:   QUARTERLY DATA (unaudited)

     Results by quarter for 2006 and 2005 follow:

                                              2006 Quarter Ended
                                       --------------------------------------
                                       March 31   June 30   Sept 30   Dec 31
                                       --------  --------  --------  --------
Operating revenue                      $ 13,641  $ 14,800  $ 15,710  $ 15,339
Operating costs and expenses             11,447     9,310    14,036    13,330
                                       --------  --------  --------  --------
  Operating income                     $  2,194  $  5,490  $  1,674  $  2,009
                                       ========  ========  ========  ========
Income (loss) from continuing
  operations                           $    (41) $  3,324  $   (573) $   (677)
Income (loss) from discontinued
  operations                              4,480         -         -    (1,126)
                                       --------  --------  --------  --------
  Net income (loss)                    $  4,439  $  3,324  $   (573) $ (1,803)
                                       ========  ========  ========  ========
  Income (loss) from continuing
    operations per common share:
Basic                                  $  (0.00) $   0.20  $  (0.03) $  (0.04)
                                       ========  ========  ========  ========
Diluted                                $  (0.00) $   0.15  $  (0.03) $  (0.04)
                                       ========  ========  ========  ========
Significant item included in results
  of continuing operations which might
  affect comparability:
Gain on extinguishment of debt         $    925  $  4,020  $      -  $      -
                                       ========  ========  ========  ========


                                               2005 Quarter Ended
                                       --------------------------------------
                                       March 31   June 30   Sept 30   Dec 31
                                       --------  --------  --------  --------
Operating revenue                      $ 12,365  $ 14,163  $ 12,429  $ 10,770
Operating costs and expenses             12,172    12,163     8,404    10,502
                                       --------  --------  --------  --------
  Operating income                     $    193  $  2,000  $  4,025  $    268
                                       ========  ========  ========  ========
Income (loss) from continuing
  operations                           $ (1,999) $   (227) $  1,641  $ (2,095)
Income (loss) from discontinued
  operations                                293         -      (130)       97
                                       --------  --------  --------  --------
  Net income (loss)                    $ (1,706) $   (227) $  1,511  $ (1,998)
                                       ========  ========  ========  ========
  Income (loss) from continuing
    operations per common share:
Basic                                  $  (0.10) $   0.02  $   0.09  $  (0.12)
                                       ========  ========  ========  ========
Diluted                                $  (0.10) $   0.01  $   0.07  $  (0.12)
                                       ========  ========  ========  ========
Significant item included in results
  of continuing operations which might
  affect comparability:
Gain on extinguishment of debt         $      -  $      -  $  3,450  $      -
                                       ========  ========  ========  ========





						- F-40 -



                           REUNION INDUSTRIES, INC.
                      VALUATION AND QUALIFYING ACCOUNTS
                                 SCHEDULE II
                            (dollars in thousands)

                                  Charged to
                      Beginning   Costs and                           Ending
Year ended:           Balance     Expenses     Other     Deductions   Balance
-----------           ---------   ----------  -------    ----------   -------
    December 31, 2006:
Allowance for doubtful
  accounts             $   211    $    64     $    -      $     92 (1) $   183
Inventory obsolescence
  reserve                  328         70          -            56 (2)     342
Deferred tax valuation
  allowance             27,747          -          -         1,552 (7)  26,195
Reserve for
  restructuring            307          -          -           307           -
Product warranty
  reserve                  133        100          -           111 (3)     122

    December 31, 2005:
Allowance for doubtful
  accounts             $   202    $    60     $  (40)(4)  $     11 (1) $   211
Inventory obsolescence
  reserve                  682         96       (362)(4)        88 (2)     328
Deferred tax valuation
  allowance             26,826        921          -                    27,747
Reserve for
  restructuring            240        206        192 (5)        125        307
Product warranty
  reserve                  100        168          -            135 (3)    133

    December 31, 2004:
Allowance for doubtful
  accounts             $   485    $   (36)    $ (151)(4)  $     96(1)  $   202
Inventory obsolescence
  reserve                  560        229         (7)(4)       100(2)      682
Deferred tax valuation
  allowance             44,620          -          -        17,794(6)   26,826
Reserve for
  restructuring            474          -          -           234         240
Product warranty
  reserve                  211         (2)         -           109(3)      100

_________________________
(1)  Uncollectible accounts written off, net of recoveries.
(2)  Inventory written off.
(3)  Cost of claims.
(4)  Reduction to beginning balance due to businesses classified as
     discontinued operations during the year.
(5)  Primarily a reclassification from trade payables.
(6)  Primarily related to reduction in expired net operating losses.
(7)  Primarily related to usage of net operating losses in connection
     with gains on settlements of debt.

						- S-1 -




                                 EXHIBIT INDEX

3.1		Certificate of Incorporation of the Company.    Incorporated by
reference to Exhibit 3.1 to Registration Statement on Form S-4
filed on March 4, 1996 (File No. 33-64325).

3.2		Bylaws of the Company.  Incorporated by reference to Exhibit 3.2
to Registration Statement on Form S-4 filed on March 4, 1996 (File
No. 33-64325).

3.3		Certificate of Amendment of Certificate of Incorporation of the
Company, dated December 17, 2004. (2)

3.4		Amendment to Bylaws (1)

4.1		Specimen Stock Certificate evidencing the Common Stock, par value
$.01 per share, of Reunion Industries, Inc.  Incorporated by
reference to Exhibit 4.1 to Registration Statement on Form S-4
filed on March 4, 1996 (File No. 33-64325).

10.1 -
10.4		Not used.

10.5*		The 1998 Stock Option Plan of the Company.   Incorporated by
reference to Exhibit 2.2 to Registration Statement on Form S-4
filed on June 26, 1998 (File No. 333-56153).

10.6*		Form of Stock Option Agreement for options issued pursuant to the
1998 Stock Option Plan of the Company.  Incorporated by reference
to Exhibit 10.7 to Reunion Industries' Annual Report on Form 10-K
for the year ended December 31, 1998 (File No. 33-64325).

10.7 -
10.15   	Not used.

10.16   	Indenture (the "Indenture"), dated as of May 1, 1993, by and
between Chatwins Group, Inc. and The First National Bank of
Boston, as trustee.  Incorporated by reference to Exhibit 4.4 to
Chatwins Group, Inc.'s Registration Statement on Form S-1 filed on
July 30, 1993 (File No. 33-63274).

10.17		First Supplemental Indenture and Wavier of Covenants of Indenture
between The First National Bank of Boston, as trustee, and
Chatwins Group, Inc.  Incorporated by reference to Exhibit 4.32 to
Chatwins Group, Inc.'s Current Report on Form 8-K dated June 30,
1995 and filed with the Commission on July 3, 1995 (File No. 33-
63274).

10.18		Second Supplemental Indenture between The First National Bank of
Boston, as trustee, and Chatwins Group, Inc.  Incorporated by
reference to Exhibit 4.33 to Chatwins Group, Inc.'s Current Report
on Form 8-K dated June 30, 1995 and filed with the Commission July
3, 1995 (File No. 33-63274).

10.19		Third Supplemental Indenture, dated as of May 28, 1999, between
Chatwins Group, Inc. and  State Street Bank and Trust company, as
successor Trustee to The First National Bank of Boston.
Incorporated by reference to exhibit 10.19 in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999 (File No.
33-64325).

10.20		Fourth Supplemental Indenture, dated as of March 8, 2000, between
Chatwins Group, Inc. and State Street Bank and Trust Company, as
successor Trustee to The First National Bank of Boston.
Incorporated by reference to exhibit 10.20 in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999 (File No.
33-64325).


						- E-1 -



10.21		Fifth Supplemental Indenture, dated as of March 16, 2000, between
Chatwins Group, Inc., the Company and State Street Bank and Trust
Company, as successor Trustee to The First National Bank of
Boston.  Incorporated by reference to Exhibit 10.21 in the
Company's Annual Report on Form 10-K for the year ended December
31, 1999 (File No. 33-64325).

10.22		Memorandum regarding Notice of Consent Solicitation dated November
26, 2003 from the Company to the holders of the Company's 13%
Senior Notes (the "Consent Solicitation"). (2)

10.23		Security Agreement dated December 2, 2003 between the Company and
U.S. Bank, N.A., as successor trustee under the Indenture ("U.S.
Bank, as trustee") for the holders of the Company's 13% Senior
Notes. (2)

10.24		Form of Warrant issued by the Company to the holders of its 13%
Senior Notes who provided consents to its Consent Solicitation.
The Company has reserved a total of 1,771,217 shares of its common
stock for issuance upon exercise of these Warrants.  Each such
Warrant is identical to all such other Warrants issued to such
holders, except as to the name of the holder and the number of
shares covered thereby. (2)

10.25		Not used.

10.26		Standstill Agreement regarding Default in Payment of Interest
dated as of February 2, 2005 among Reunion and certain holders of
its 13% Senior Notes. (2)

10.27		Loan and Security Agreement dated as of December 3, 2003 between
the Company and Wachovia Bank, N.A.("Wachovia"), successor to
Congress Financial Corporation ("Congress Financial").
Incorporated by reference to Exhibit 10.46 in the Company's Annual
Report on Form 10-K for the year ended December 31, 2003.  (File
No. 01-15739)

10.28		Amendment No. 1 to Loan and Security Agreement dated May 19, 2004
between the Company and Wachovia, successor to Congress Financial.
(2)

10.29		Amendment No. 2 to Loan and Security Agreement dated October 18,
2004 between the Company and Wachovia, successor to Congress
Financial. (2)

10.30		Amendment No. 3 to Loan and Security Agreement dated November 22,
2004 between the Company and Wachovia, successor to Congress
Financial. (2)

10.31		Amendment No.4 to Loan and Security Agreement dated July 12, 2005
between Wachovia, successor to Congress Financial, and the
Company. (2)

10.32		Intercreditor and Subordination Agreement dated December 3, 2003
among Wachovia (successor to Congress Financial), Mercury Capital
Corporation ("Mercury Capital"), LC Capital Master Fund, Ltd. ("LC
Capital") and U.S. Bank, N.A., as trustee ("U.S. Bank"), and
acknowledged and agreed to by the Company. (2)

10.33		Amendment No.5 to Loan and Security Agreement dated February 28,
	      2006 between Wachovia, successor to Congress Financial, and the
            Company. (2)


10.34		Stipulation and Agreement between Stanwich Financial Services
            Corp. and the Company regarding Judgment dated March 21, 2006. (2)


						- E-2 -



10.35		Asset Purchase Agreement dated January 13, 2006 between Oneida
Molded Plastics, LLC and the Company (without Exhibits and
Schedules). (2)

10.36		Amendment No.1 to Asset Purchase Agreement dated February 14, 2006
between Oneida Molded Plastics, LLC and the Company (without
Exhibits and Schedules). (2)

10.37 ?
10.45		Not used.

10.46		Promissory Note dated November 25, 2003 in the original principal
amount of $4,200,000 issued by the Company to Mercury Capital. (2)

10.47		Option to Purchase dated November 25, 2003 issued by the Company
to Mercury Capital. (2)

10.48		Open-End Mortgage, Assignment of Leases and Rents, Fixture Filing
and Security Agreement dated November 25, 2003 granted by the
Company to Mercury Capital with respect to Reunion's real property
located in Pennsylvania.  In November and December 2003, the
Company also granted mortgages to the Other Mortgagees (as defined
below) on this property and to Mercury Capital and the Other
Mortgagees on the Company's other real properties.  Such other
mortgages are not being filed as exhibits to this report, because
they are similar to this Exhibit in all material respects, except
as to the location and description of the mortgaged properties,
the names of the mortgagees and/or the debt secured thereby.  As
used in this paragraph the term "Other Mortgagees" means Wachovia
(as successor to Congress Financial), LC Capital and U.S. Bank.
(2)

10.49		Amended and Restated Senior Subordinated Secured Promissory Note
dated December 3, 2003 in the original principal amount of $3.5
million issued by the Company to LC Capital. (2)

10.50		Amended and Restated Security Agreement dated December 3, 2003
between the Company and LC Capital. (2)

10.51		Not used.

10.52		Warrant dated August 11, 2003 issued by the Company to LC Capital.
(2)

10.53		Amendment to Warrant dated December 3, 2003 between the Company
and LC Capital. (2)

10.54		Amendment No. 2 to Warrant dated May 19, 2004 between the Company
and LC Capital. (2)

10.55		Registration Rights Agreement dated August 11, 2003 between the
Company and LC Capital. (2)

10.56		Amendment to Registration Rights Agreement dated December 3, 2003
between the Company and LC Capital. (2)

10.57		Letter Agreement dated May 19, 2004 among the Company, LC Capital
and WebFinancial Corporation ("WebFinancial"). (2)

10.58		Letter Agreement dated December 14, 2004 among the Company, LC
Capital and WebFinancial. (2)

10.59		Warrant dated January 14, 2005 issued by the Company to LC
Capital. (2)

10.60		Warrant dated January 14, 2005 issued by the Company to
WebFinancial. (2)

						- E-3 -



10.61		Chapter 11 Settlement Agreement dated as of December 1, 2003 among
Stanwich Financial Services Corp., the Other Released Parties, the
Further Released Parties and Bankers Trust. (2)

10.62		Warrant dated July 12, 2005 issued by the Company to LC Capital.
(2)

10.63		Warrant dated July 12, 2005 issued by the Company to WebFinancial.
(2)

10.64		Chapter 11 Settlement Agreement dated July 8, 2005 among Stanwich
Financial Services Corp., Shaw NapTech, Inc. and the Company. (2)

21.1		List of subsidiaries and jurisdictions of organization.(1)

23.1		Consent of Independent Registered Public Accounting Firm ? Mahoney
Cohen & Company, CPA, P.C.(1)

31.2	Not used.

31.1		Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.(1)

31.2		Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.(1)

32.1		Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.(1)

32.2		Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.(1)

(1) -		Filed herewith.

(2) -   	To be filed as an Amendment to this Form 10-K.

*   -   	Compensatory plan or arrangement.

						- E-4 -



											Exhibit 3.4



                           REUNION INDUSTRIES, INC.
                              BY-LAW AMENDMENT


	In 2006, the Board of Directors of the Company amended Section 2.3 of
the Bylaws to change the first sentence thereof to read in its entirety as
follows:

	"Special meetings of stockholders may be called at any
time by the President, or a majority of the
Board of Directors, or the holder or holders of
not less than 30% of all the shares of the
capital stock of the Corporation outstanding and
entitled to vote at the particular meeting."











						- E-5 -





 Exhibit 21.1

                           REUNION INDUSTRIES, INC.
                     SUBSIDIARIES AS OF DECEMBER 31, 2005

Company                                       Incorporated        Parent
-------                                       ------------        ------
1  Reunion Industries, Inc.                   Delaware
2  Buttes Drilling-C Company                  Texas                  1
3  Reunion Titan, Inc.                        Texas                  2
4  Shanghai Klemp Metals Products Company     Peoples Republic
                                                of China             1 (65.0%)

Inactive Companies
------------------
6  Ocean Phoenix Transport, Inc.              District of Columbia   1
7  Reunion Sub I, Inc.                        Delaware               1
8  Reunion Sub II, Inc.                       Delaware               1
9  Reunion Sub III, Inc.                      Delaware               1
10 Asie-Dolphin Drilling SDN BHD              Malaysia               2 (49%)
11 Buttes Gas & Oil do Brasil, Ltda.          Brazil                 1 (49%)
12 Dolphin Titan do Brazil Servicos
     de Perfuracoes, Ltd.                     Brazil                 2
13 Monaco Corporation                         British Virgin Is.     2
14 Ocean Phoenix Holdings, N. V.              Netherlands Antilles   1
15 Progress Drilling International, Inc.      Panama                 2
16 Progress Perfuracoes do Brasil, Ltd.       Brazil                15

						- E-6 -




                                                                  EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-37702) pertaining to the 1998 Stock Option Plan, the
Registration Statement (Form S-8 No. 333-62074) pertaining to the 1998 Stock
Option Plan, the Registration Statement (Form S-8 No. 33-77232) pertaining to
the 1993 Stock Option Plan, the Registration Statement (Form S-3 No. 33-77566)
pertaining to the registration of 248,500 shares of common stock, the
Registration Statement (Form S-3 No. 333-37368) pertaining to the registration
of 8,269,479 shares of common stock and the Registration Statement (Form S-3
No. 333-41842) pertaining to the registration of 3,245,515 shares of common
stock of Reunion Industries, Inc. and Subsidiaries of our report dated March
17, 2006, with respect to the consolidated financial statements and schedule of
Reunion Industries, Inc. and Subsidiaries included in the Annual Report (Form
10-K) for the year ended December 31, 2006.


                    /s/ Mahoney Cohen & Company, CPA, P.C.


New York, New York
April 2, 2007

						- E-7 -





                                                                  EXHIBIT 31.1
                                  CERTIFICATION

I, Kimball J. Bradley, Sr., certify that:

1. I have reviewed this annual report on Form 10-K of Reunion Industries,
Inc.;

2. Based on my knowledge, this report does not contain any untrue statement
   of a material fact or omit to state a material fact necessary to make the
   statements made, in light of the circumstances under which such statements
   were made, not misleading with respect to the period covered by this
   report;

3. Based on my knowledge, the financial statements, and other financial
   information included in this report, fairly present in all material
   respects the financial condition, results of operations and cash flows
   of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such
   disclosure controls and procedures to be designed under our supervision,
   to ensure that material information relating to the registrant,
   including its consolidated subsidiaries, is made known to us by
   others within those entities, particularly during the period in which
   this report is being prepared;
b)	Evaluated the effectiveness of the registrant's disclosure controls and
   procedures and presented in this report our conclusions about the
   effectiveness of the disclosure controls and procedures, as of the end
   of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant's internal control
   over financial reporting that occurred during the registrant's most
   recent fiscal quarter (the registrant's fourth fiscal quarter in the
   case of an annual report) that has materially affected, or is reasonably
   likely to materially affect, the registrant's internal control over
   financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on
   our most recent evaluation of internal control over financial reporting,
   to the registrant's auditors and the audit committee of the registrant's
   board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or
   operation of internal control over financial reporting which are
   reasonably likely to adversely affect the registrant's ability to
   record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other
   employees who have a significant role in the registrant's internal
   control over financial reporting.


Date:  April 2, 2007

/s/ Kimball J. Bradley
-------------------------------------
    Chief Executive Officer

				    - E-8 -




                                                                  EXHIBIT 31.2
                                  CERTIFICATION

I, John M. Froehlich, certify that:

1. I have reviewed this annual report on Form 10-K of Reunion Industries,
Inc.;

2. Based on my knowledge, this report does not contain any untrue statement
   of a material fact or omit to state a material fact necessary to make the
   statements made, in light of the circumstances under which such statements
   were made, not misleading with respect to the period covered by this
   report;

3. Based on my knowledge, the financial statements, and other financial
   information included in this report, fairly present in all material
   respects the financial condition, results of operations and cash flows
   of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such
   disclosure controls and procedures to be designed under our supervision,
   to ensure that material information relating to the registrant,
   including its consolidated subsidiaries, is made known to us by
   others within those entities, particularly during the period in which
   this report is being prepared;
b)	Evaluated the effectiveness of the registrant's disclosure controls and
   procedures and presented in this report our conclusions about the
   effectiveness of the disclosure controls and procedures, as of the end
   of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant's internal control
   over financial reporting that occurred during the registrant's most
   recent fiscal quarter (the registrant's fourth fiscal quarter in the
   case of an annual report) that has materially affected, or is reasonably
   likely to materially affect, the registrant's internal control over
   financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on
   our most recent evaluation of internal control over financial reporting,
   to the registrant's auditors and the audit committee of the registrant's
   board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or
   operation of internal control over financial reporting which are
   reasonably likely to adversely affect the registrant's ability to
   record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other
   employees who have a significant role in the registrant's internal
   control over financial reporting.


Date:  April 2, 2007

/s/ John M. Froehlich
-------------------------------------
    Chief Financial Officer

				    - E-9 -




                                                                  EXHIBIT 32.1

                             REUNION INDUSTRIES, INC.
                  SARBANES-OXLEY ACT SECTION 906 CERTIFICATION

In connection with this annual report on Form 10-K of Reunion Industries, Inc.
for the fiscal year ended December 31, 2006, I, Kimball J. Bradley, Chief
Executive Officer of Reunion Industries, Inc., hereby certify pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 Of the Sarbanes-Oxley
Act of 2002, that:

1. this Form 10-K for the fiscal year ended December 31, 2006 fully complies
with the requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and

2. the information contained in this Form 10-K for the fiscal year ended
   December 31, 2006 fairly presents, in all material respects, the financial
   condition and results of operations of Reunion Industries, Inc. for the
   periods presented therein.


Date: April 2, 2007

/s/ Kimball J. Bradley
---------------------------
Chief Executive Officer

				    - E-10 -




                                                                  EXHIBIT 32.2

                             REUNION INDUSTRIES, INC.
                  SARBANES-OXLEY ACT SECTION 906 CERTIFICATION

In connection with this annual report on Form 10-K of Reunion Industries, Inc.
for the fiscal year ended December 31, 2006, I, John M. Froehlich, Chief
Financial Officer of Reunion Industries, Inc., hereby certify pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 Of the Sarbanes-Oxley
Act of 2002, that:

1. this Form 10-K for the fiscal year ended December 31, 2006 fully complies
with the requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and

2. the information contained in this Form 10-K for the fiscal year ended
   December 31, 2006 fairly presents, in all material respects, the financial
   condition and results of operations of Reunion Industries, Inc. for the
   periods presented therein.


Date: April 2, 2007

/s/ John M. Froehlich
---------------------------
Chief Financial Officer

  				    - E-11 -