UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended ~~December~~June 3130, ~~2004~~ 2005

Commission File Number 0-2762

MAXCO, INC.

(Exact Name of Registrant as Specified in its Charter)

Michigan		38-1792842
(State or other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification Number)
1118 Centennial Way
Lansing, Michigan		48917
(Address of principal executive offices)		(Zip Code)
Registrant’s Telephone Number, including area code:		(517) 321-3130

Registrant’s Telephone Number, including area code: (517) 321-3130

Indicate by check mark whether the registrant (1) has filed all annual, quarterly and other reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding twelve months and (2) has been subject to the filing requirements for at least the past 90 days.

Yes þ No o ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes o¨ No þ

Indicate the number of shares outstanding for each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at ~~January~~July 31, 2005
Common Stock		3,~~101~~446,~~195~~995 shares

MAXCO, INC. ~~INDEX TO QUARTERLY REPORT ON FORM 10-Q~~

	PAGE
Part I – Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets		3
Consolidated Statements of Operations		5
Consolidated Statement of Stockholders’ Equity		7
Consolidated Statements of Cash Flows		8
Notes to Consolidated Financial Statements		9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3. Quantitative and Qualitative Disclosures about Market Risk		15
Item 4. Controls and Procedures		15
Part II – Other Information
Item 1. Legal Proceedings		16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		16
Item 3. Defaults Upon Senior Securities		16
Item 4. Submission of Matters to a Vote of Security Holders		16
Item 5. Other Information		16
Item 6. Exhibits		16
Signatures		18
Certifications		19
Certification of Chief Executive Officer Pursuant to Section 302
Certification of Chief Financial Officer Pursuant to Section 302
Certification of Chief Executive Officer Pursuant to Section 906
Certification of Chief Financial Officer Pursuant to Section 906

INDEX TO QUARTERLY REPORT ON FORM 10-Q


	PAGE
Part I – Financial Information

Item 1. Financial Statements

Condensed Consolidated Balance Sheets		3

Condensed Consolidated Statements of Operations		5

Consolidated Statement of Stockholders’ Equity		6

Condensed Consolidated Statements of Cash Flows		7

Notes to Consolidated Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13

Item 3. Quantitative and Qualitative Disclosures about Market Risk		16

Item 4. Controls and Procedures		16

Part II – Other Information

Item 1. Legal Proceedings		17

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		17

Item 3. Defaults Upon Senior Securities		17

Item 4. Submission of Matters to a Vote of Security Holders		17

Item 5. Other Information		17

Item 6. Exhibits		17

Signatures		19

Certifications		20
Certification of Chief Executive Officer to Rule 13a-15(e)
Certification of Chief Financial Officer to Rule 13a-15(e)
Certification of Chief Executive Officer to 18 U.S.C. Section 1350
Certification of Chief Financial Officer to 18 U.S.C. Section 1350

PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS Maxco, Inc. and Subsidiaries

	December 31,
	June 30,
	2004			March 31,
	2005			March 31,
	(Unaudited)			~~2004~~2005
	(in thousands)
ASSETS
Current Assets
Cash and cash equivalents	$	~~129~~1,401		$	781,781
Accounts and notes receivable, less allowance of $98,000 ($134,000 at March 31, 2004)		5,987			7,629
Restricted cash—Note 3		750			—
Inventory—Note 9		387			408
Accounts and notes receivable, less allowance of $150,000 ($128,000 at March 31, 2005)		6,458			6,605
Prepaid expenses and other		404			429
Inventories—Note 9		646			534
Total Current Assets		6,907			8,544
Prepaid expenses and other		405			223
Marketable Securities—Long Term—Note 2		2			2
Total Current Assets		9,660			9,143
Property & Equipment
Property and Equipment—Note 1
Land		~~437~~564			~~446~~437
Buildings		68,~~008~~192			65,~~170~~997
Machinery, equipment, and fixtures		2930,~~761~~634			2930,~~068~~052
		36,206			35,684
		39,390			36,486
Allowances for depreciation		(1719,~~330~~880	)		(1518,~~265~~018	)
		18,876			20,419
		19,510			18,468
Other Assets
Investments		1,~~138~~014			~~1,138~~878
Notes and contracts receivable and other, less allowance of $0 ($350,000 at March 31, 2004)		1,032			1,338
Notes and contracts receivable and other		761			996
Advances to affiliate		2,200			2,200
Real estate investments held for sale		1,427			1,850
Accounts receivable—related parties		411			416
Real estate held for sale		3,275			—
Accounts receivable, related parties—Note 11		407			407
Intangibles		1,424			1,424
		6,205			6,516
		8,308			5,555
	$	3137,~~990~~478		$	3533,~~481~~166

CONDENSED CONSOLIDATED BALANCE SHEETS — CONTINUED Maxco, Inc. and Subsidiaries

	December 31,
	June 30,
	2004			March 31,
	2005			March 31,
	(Unaudited)			~~2004~~2005
	(in thousands)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes payable—Note 6	$	4,~~167~~067		$	42,~~885~~091
Accounts payable		34,~~686~~816			43,~~221~~870
Employee compensation		1,~~538~~666			1,~~525~~711
Taxes, interest, and other liabilities		3,918			3,585
Incentive compensation		825			650
Current maturities of long-term obligations		4,546			2,064
Taxes, interest, and other liabilities		3,899			3,850
Total Current Liabilities		17,855			16,280
Current maturities of long-term obligations		5,142			4,959
Long-Term Obligations, Less Current Maturities		6,145			11,480
Total Current Liabilities		20,415			17,131
Total Liabilities		24,000			27,760
Long -Term Obligations, Less Current Maturities—Notes 1 and 6		7,856			7,070
Total Liabilities		28,271			24,201
Stockholders’ Equity
Preferred stock:
Series Three: 10% cumulative redeemable, $60 face value; 14,784 shares issues and outstanding		678			678
Series Four: 10% cumulative redeemable, $51.50 face value; 46,414 shares issues and outstanding		2,390			2,390
Series Five: 10% cumulative redeemable, $120 face value; 6,648 shares issues and outstanding		798			798
Series Six: 10% cumulative callable, $160 face value; 20,000 shares authorized, issued — none		—			—
		3,866			3,866
Common stock, $1 par value; 10,000,000 shares authorized, 3,101,195 shares issued and outstanding		3,101			3,101
Common stock, $1 par value; 10,000,000 shares authorized, 3,446,995 shares issued and outstanding		3,447			3,447
Net unrealized losses		(63	)		(172	)
Accumulated other comprehensive loss		(23	)		(38	)
Retained earnings		1,~~086~~917			~~926~~1,690
Total Stockholders’ Equity		79,~~990~~207			78,~~721~~965
	$	3137,~~990~~478		$	3533,~~481~~166

See notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Maxco, Inc. and Subsidiaries (Unaudited)

	Three Months Ended December 31,
	Three Months Ended June 30,
	2004			2003
	2005			2004
	(in thousands, except per share data)
Net sales	$	11,414		$	10,562
Net Sales	$	11,448		$	11,367
Costs and expenses:
Costs and Expenses:
Cost of sales and operating expenses		7,~~437~~114			7,~~186~~370
Selling, general and administrative		2,~~654~~900			2,~~941~~778
Depreciation and amortization		~~742~~752			~~749~~744
		10,833			10,876
		10,766			10,892
Operating Earnings (Loss)		581			(314	)
Operating Earnings		682			475
Other income (expense)
Other Income (Expense)
Investment, interest, and other income (loss), net		—(2	)		~~(51~~135	)
Gain (loss) on sale of assets		2			(74	)
Gain on sale of assets		2			1
Interest expense		(~~371~~353	)		(~~468~~407	)
Income (Loss) Before Equity in Earnings of Affiliates		212			(907	)
Net Income		329			204
Equity in earnings of affiliates		—			50
Net Income (Loss)		212			(857	)
Less preferred stock dividends		(102	)		(102	)
Net Income (Loss) Applicable to Common Stock	$	110		$	(959	)
Net Income Applicable to Common Stock	$	227		$	102
Net Income (Loss) Per Common Share—Basic and Diluted	$	0.04		$	(0.31	)
Net Income Per Common Share—Basic and Diluted	$	0.07		$	0.03

See notes to condensed consolidated financial statements.

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~STOCKHOLDERS’ EQUITY Maxco, Inc. and Subsidiaries (Unaudited)

	Nine Months Ended December 31,
	Number of
	2004			2003
	Common								Accumulated
	(in thousands, except per share data)
	Shares			Preferred			Common		Comprehensive			Retained
Net sales	$	33,937		$	29,324
	Outstanding			Stock			Stock		Loss			Earnings			Totals
Costs and expenses:
	(in thousands, except number of common shares outstanding)
Cost of sales and operating expenses		22,152			19,408
Balances at April 1, 2005		3,446,995		$	3,866		$	3,447	$	(38	)	$	1,690		$	7,721
Selling, general and administrative		8,164			8,376
Net income for the period													329			329
Depreciation and amortization		2,229			2,202
Unrealized gain on swap agreement										15						15
		32,545			29,986
Total Comprehensive income																344
Operating Earnings (Loss)		1,392			(662	)
Preferred stock dividends													(102	)		(102	)
Other income (expense)
Balances at June 30, 2005		3,446,995		$	3,866		$	3,447	$	(23	)	$	1,917		$	9,207
Investment, interest, and other income (loss), net		151			(317	)
Gain on sale of assets		59			838
Interest expense		(1,136	)		(1,341	)
Income (Loss) Before Equity in Loss of Affiliates		466			(1,482	)
Equity in loss of affiliates, net of tax		—			(40	)
Net Income (Loss)		466			(1,522	)
Less preferred stock dividends		(306	)		(306	)
Net Income (Loss) Applicable to Common Stock	$	160		$	(1,828	)
Net Income (Loss) Per Common Share—Basic and Diluted	$	0.05		$	(0.59	)

See notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS’~~CASH ~~EQUITY~~FLOWS Maxco, Inc. and Subsidiaries (Unaudited)

	Number of
	Three Months Ended June 30,
	Common								Accumulated
	2005			2004
	Shares			Preferred			Common		Comprehensive			Retained
	(in thousands)
	Outstanding			Stock			Stock		Loss			Earnings			Totals
Operating Activities
	(in thousands, except number of common shares outstanding)
Net income	$	329		$	204
Balances at April 1, 2004		3,101,195		$	3,866		$	3,101	$	(172	)	$	926		$	7,721
Adjustments to reconcile net income to net cash provided by operating activities:
Net income for the year													466			466
Loss on investment		30			—
Unrealized gain on swap agreement										109						109
Net gains		(2	)		(1	)
Total Comprehensive income																575
Depreciation and amortization		752			744
Preferred stock dividends													(306	)		(306	)
Changes in operating assets and liabilities		734			948
Balances at December 31, 2004		3,101,195		$	3,866		$	3,101	$	(63	)	$	1,086		$	7,990
Net Cash Provided By Operating Activities		1,843			1,895
Investing Activities
Collections on notes receivable		116			993
Purchases of property and equipment		(582	)		(131	)
Purchase of subsidiaries		(342	)		—
Other		42			16
Net Cash (Used In) Provided By Investing Activities		(766	)		878
Financing Activities
Proceeds from new debt obligation		—			2,700
Net proceeds from (repayments on) line of credit		379			(941	)
Net repayments on other debt obligations		(1,086	)		(3,751	)
Net Cash Used In Financing Activities		(707	)		(1,992	)
Increase in Cash and Cash Equivalents		370			781
Cash and Cash Equivalents at Beginning of Period		1,781			78
Cash and Cash Equivalents at End of Period	$	2,151		$	859
Supplemental cash flows disclosure:
Interest paid	$	310		$	183

See notes to condensed consolidated financial statements.

~~CONDENSED~~NOTES TO CONSOLIDATED ~~STATEMENTS~~FINANCIAL ~~OF CASH FLOWS~~STATEMENTS Maxco, Inc. and Subsidiaries June 30, 2005 (Unaudited)

	Nine Months Ended December 31,
	2004			2003
	(in thousands)
Operating Activites
Net income (loss)	$	466		$	(1,522	)
Adjustments to reconcile net loss to net cash provided by operating activites:
Net gains on sale of assets		(59	)		(838	)
Non-cash investment losses		—			431
Depreciation and other non-cash items		2,230			2,242
Changes in operating assets and liabilities		592			1,723
Net Cash Provided By Operating Activities		3,229			2,036
Investing Activities
Payments received on notes receivable		1,013			—
Purchases of property and equipment		(685	)		(328	)
Proceeds from sale of assets		57			1,339
Other		7			86
Net Cash Provided By Investing Activities		392			1,097
Financing Activities
Net repayments on line of credit		(696	)		(1,368	)
Net repayments on other debt obligations		(2,874	)		(1,823	)
Net Cash Used In Financing Activities		(3,570	)		(3,191	)
Increase (Decrease) in Cash and Cash Equivalents		51			(58	)
Cash and Cash Equivalents at Beginning of Period		78			391
Cash and Cash Equivalents at End of Period	$	129		$	333
Supplemental cash flow disclosure:
Interest paid	$	1,030		$	1,261

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

~~See~~The ~~notes~~accompanying tounaudited, condensed, consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation of the results of the interim periods covered have been included. For further information, refer to the consolidated financial statements and notes thereto included in Maxco’s annual report on Form 10-K for the year ended March 31, 2005.

8In May 2005, Maxco acquired the stock of Ledges Commerce Park (“Ledges”) for $200,000 plus the assumption of certain liabilities from L/M Associates (“L/M”), an entity that Maxco has a 50% ownership interest. Maxco accounts for its interest in L/M as real estate investment held for sale. As a result of the above transaction, Maxco has recorded the assets acquired at their fair value, (all such assets are held for sale) and recorded the liabilities assumed at the amount at which they are expected to be settled. The effect of this transaction essentially grosses up the assets and liabilities on Maxco’s balance sheet. The amount expected to be realized upon sale, net of related liabilities, is approximately $340,000, which is the fair value less costs to sell recorded as of year end. This transaction effectively gives Maxco full control over the disposition of assets and the settlement of the liabilities as it relates to Ledges.

~~Table~~Also, in May 2005, Atmosphere Annealing (“Atmosphere”) acquired the stock of ~~Contents~~BCGW, Inc. (“BCGW”) for $200,000. BCGW owns the buildings that house Atmosphere’s operating facilities in Lansing, Michigan. The spouse of Maxco’s president, Max Coon, was a 25% owner of BCGW. At the acquisition date BCGW had $1.2 million in property and equipment and $1.0 million in debt. The results of operations include the operations of these entities from their acquisition dates. Such operating results are insignificant.

~~NOTES~~The TOresults ~~CONSOLIDATED~~of ~~FINANCIAL~~operations ~~STATEMENTS~~for the interim periods presented are not necessarily indicative of the results for the full year. Maxco,’s ~~Inc~~sales and operating results have varied substantially from quarter to quarter. Net heat treating sales are typically lower in the second and ~~Subsidiaries~~third ~~December 31,~~quarters. ~~2004~~The most significant factors affecting these fluctuations are the seasonal buying ~~(Unaudited)~~patterns of the Company’s heat treating customers due to a customer changeover and the reduced number of business days during the holiday season. In addition, the timing of acquisitions or the occasional sale of corporate investments may cause substantial fluctuations of operating results from quarter to quarter. Maxco expects its net sales and operating results to continue to fluctuate from quarter to quarter.

~~NOTE~~Certain 1amounts –in ~~BASIS~~the OFprior ~~PRESENTATION~~period ~~AND~~consolidated ~~SIGNIFICANT~~financial ~~ACCOUNTING~~statements ~~POLICIES~~have been reclassified to conform with the presentation used at June 30, 2005.

~~The~~NOTE ~~accompanying~~2 ~~unaudited,~~– ~~condensed,~~EARNINGS ~~consolidated~~PER ~~financial statements have been prepared in~~SHARE accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation of the results of the interim periods covered have been included. For further information, refer to Note 6 and the consolidated financial statements and notes thereto included in Maxco’s annual report on Form 10-K for the year ended March 31, 2004.

The ~~results~~following oftable ~~operations~~sets ~~for~~forth the ~~interim~~computation ~~periods presented are not necessarily indicative~~ of ~~the~~ ~~results~~basic ~~for the full year. Maxco’s sales~~ and ~~operating~~diluted ~~results~~earnings ~~have~~per ~~varied substantially~~share: from quarter to quarter. Net sales are typically lower in the second and third quarters. The most significant factors affecting these fluctuations are the seasonal buying patterns of the Company’s customers due to a customer changeover and the reduced number of business days during the holiday season. In addition, the timing of acquisitions or the occasional sale of corporate investments may cause substantial fluctuations of operating results from quarter to quarter. Maxco expects its net sales and operating results to continue to fluctuate from quarter to quarter.

NOTE 2 – MARKETABLE SECURITIES


	Three Months Ended June 30,
	2005			2004
	*(in thousands, except per share data)*
NUMERATOR:
Net income		329			204
Preferred stock dividends		(102	)		(102	)

Numerator for basic and diluted earnings per share—income available to common stockholders	$	227		$	102

DENOMINATOR:
Denominator for basic and diluted earnings per share—weighted average shares		3,447			3,101

BASIC AND DILUTED EARNINGS PER SHARE	$	0.07		$	0.03

~~The Company classifies its investments in equity securities with readily determinable fair~~8 values as securities available for sale under FASB 115, Accounting for Certain Investments in Debt and Equity Securities. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported as a separate component of stockholders’ equity.

NOTETable 3of – EARNINGS PER SHARE Contents

~~The~~NOTE ~~following~~3 ~~table~~– ~~sets~~RESTRICTED ~~forth the computation of basic and diluted earnings per share:~~CASH

	Three Months Ended						Nine Months Ended
	December 31,						December 31,
	2004			2003			2004			2003
	(in thousands, except per share data)
NUMERATOR:
Net income (loss)	$	212		$	(857	)	$	466		$	(1,522	)
Preferred stock dividends		(102	)		(102	)		(306	)		(306	)
Numerator for basic and diluted earnings per share— income (loss) available to common stockholders	$	110		$	(959	)	$	160		$	(1,828	)
DENOMINATOR:
Denominator for basic and diluted earnings per share—weighted average shares		3,101			3,101			3,101			3,101
BASIC AND DILUTED INCOME (LOSS) PER SHARE	$	0.04		$	(0.31	)	$	0.05		$	(0.59	)

At June 30, 2005 the Company had restricted cash of $750,000 held as collateral under its $2.7 million debt facility.

9NOTE 4 – COMPREHENSIVE INCOME

~~Table~~The components of ~~Contents~~comprehensive income for the three months ended June 30, 2005 and 2004 are as follows:

NOTE 4 – COMPREHENSIVE INCOME


	Three Months Ended
	June 30,
	2005		2004
	*(in thousands)*
Net income	$	329	$	204
Unrealized gain on swap agreement		15		64

Comprehensive income	$	344	$	268

~~The~~Accumulated ~~components~~other of comprehensive ~~income~~loss, ~~for~~net ~~the~~of ~~three~~related ~~and~~tax ~~nine~~benefits ~~months~~at ~~ended December~~June 3130, ~~2004~~2005 and ~~2003~~March 31, ~~are~~2005, asconsists ~~follows:~~of an unrealized loss on an interest rate swap agreement.

	Three Months Ended					Nine Months Ended
	December 31,					December 31,
	2004		2003			2004		2003
	(in thousands)
Net income (loss)	$	212	$	(857	)	$	466	$	(1,522	)
Unrealized gain on swap agreement		31		28			109		67
Comprehensive income (loss)	$	243	$	(829	)	$	575	$	(1,455	)

NOTE 5 – INDUSTRY SEGMENT INFORMATION

~~Accumulated~~The ~~comprehensive~~following ~~loss,~~summarizes ~~net~~Maxco’s ofindustry ~~related~~segment ~~tax was $63,000 at December 31, 2004 and~~information: ~~$172,000 at March 31, 2004 and consists of an unrealized loss on an interest rate swap agreement.~~

NOTE 5 – INDUSTRY SEGMENT INFORMATION


	June 30,		March 31,
	2005		2005
	*(in thousands)*
Identifiable Assets:
Heat treating	$	28,201	$	27,081
Corporate and other		6,836		3,357
Investments and advances		2,441		2,728

Total Identifiable Assets	$	37,478	$	33,166

The following summarizes Maxco’s industry segment information:


	Three Months Ended
	June 30,
	2005			2004
	*(in thousands)*
Net Sales:
Heat treating	$	11,448		$	11,367
Corporate and other		—			—

Total Net Sales	$	11,448		$	11,367


Operating Earnings (Loss):
Heat treating	$	1,306		$	963
Corporate and other		(624	)		(488	)

Total Operating Earnings (Loss)	$	682		$	475


Depreciation and Amortization Expense:
Heat treating	$	745		$	736
Corporate and other		7			8

Total Depreciation and Amortization Expense	$	752		$	744


Capital Expenditures:
Heat treating	$	575		$	131
Corporate and other		7			—

Total Capital Expenditures	$	582		$	131

	December 31,		March 31,
	2004		2004
	(in thousands)
Identifiable Assets:
Heat treating	$	26,881	$	29,472
Corporate and other		1,771		2,671
Investments and advances		3,338		3,338
Total Identifiable Assets	$	31,990	$	35,481

Accounting policies of the business segments are consistent with those described in the summary of significant accounting policies (see Note 1).

	Three Months Ended						Nine Months Ended
	December 31,						December 31,
	2004			2003			2004			2003
	(in thousands)
Net Sales:
Heat treating	$	11,414		$	10,562		$	33,937		$	29,280
Corporate and other		—			—			—			44
Total Net Sales	$	11,414		$	10,562		$	33,937		$	29,324
Operating Earnings (Loss):
Heat treating	$	997		$	331		$	2,665		$	971
Corporate and other		(416	)		(645	)		(1,273	)		(1,633	)
Total Operating Earnings (Loss)	$	581		$	(314	)	$	1,392		$	(662	)
Depreciation and Amortization Expense:
Heat treating	$	735		$	741		$	2,206		$	2,177
Corporate and other		6			8			23			25
Total Depreciation and Amortization Expense	$	741		$	749		$	2,229		$	2,202
Capital Expenditures:
Heat treating	$	148		$	74		$	685		$	328
Corporate and other		—			—			—			—
Total Capital Expenditures	$	148		$	74		$	685		$	328

AccountingTable policies of the business segments are consistent with those described in the summary of significant accounting policies (see Note 1). Contents

Identifiable assets are those assets that are used into carry out Maxco’s operations in ~~each~~its ~~industry~~heat treating segment. Corporate assets are principally cash, notes receivable, investments, and ~~corporate~~ corporate office properties.

Maxco has no significant foreign operations or export sales.

The nature of the Company’s heat treating services may produce sales to one or a small number of customers in excess of 10% of total sales in any one period. It is possible that the specific customers reaching this threshold may change from year to year. Loss of any one of these customers could have a material impact on the Company’s results of operations.

~~Table~~NOTE of6 ~~Contents~~– DEBT

~~The~~At ~~nature~~June 30, 2005 Atmosphere had a $6 million line of ~~the~~credit ~~Company’s~~facility. ~~services~~This ~~may~~facility ~~produce~~is ~~sales~~secured by toAtmosphere’s ~~one~~assets. orThe aamount ~~small~~that ~~number~~can ofbe ~~customers~~borrowed ~~in excess~~under ofthis ~~10%~~facility ofis ~~total~~dependent ~~sales~~on certain inaccounts ~~any~~receivable ~~one~~levels ~~period~~at Atmosphere. ItAt isJune 30, ~~possible~~2005, ~~that~~based ~~the~~on ~~specific~~these ~~customers~~specific ~~reaching~~collateral ~~this~~levels, ~~threshold~~Atmosphere ~~may~~could ~~change~~borrow ~~from~~up ~~year~~ to ~~year~~$3.4 million ~~Loss~~under its line of ~~any~~credit, approximately ~~one~~$917,000 of ~~these~~which ~~customers~~was ~~could~~borrowed. The agreement matures in August 2005 and, as ~~have~~such, aoutstanding ~~material~~borrowings ~~impact~~are onrecorded ~~the~~as ~~Company’s~~current ~~results~~in ofthe ~~operations~~accompanying balance sheets.

~~NOTE~~In 6addition, –the ~~DEBT~~Company has a debt facility of $2.7 million that requires interest only payments and matures in June 2006. Maxco is in the process of negotiating an agreement to sell its corporate office building. The proceeds from the sale are expected to be used to reduce the debt facility to $1.95 million.

AtA ~~December 31,~~summary ~~2004~~of the Company’s ~~heat~~debt ~~treating~~obligations ~~segment,~~as ~~Atmosphere Annealing (Atmosphere), had a $6 million line~~ of ~~credit facility. This facility is secured by Atmosphere’s assets. The amount that can be borrowed under this facility is dependent on certain accounts receivable levels at Atmosphere. At December~~June 3130, ~~2004,~~2005 ~~based~~and ~~on these specific collateral levels, Atmosphere could borrow up to $3.0~~March ~~million under its line of credit~~31, ~~approximately $1.9 million of which was borrowed. The facility matures in August~~ 2005 ~~and,~~is as ~~such, outstanding borrowings~~ ~~are recorded as current in the accompanying balance sheets.~~follows:

A summary of the Company’s debt obligations as of December 31, 2004 and March 31, 2004 is as follows:


	June 30,		March 31,
	2005		2005
	*(in thousands)*
Short term obligations:
Notes payable (various interest rates)	$	1,516	$	1,554
Mortgage notes payable (prime +3%)		1,634		—
Revolving line of credit (LIBOR + 2.0%)		917		537

	$	4,067	$	2,091


Long term obligations:
Term notes (various variable interest rates)	$	4,252	$	4,930
Mortgage notes payable (various variable interest rates)		5,907		4,962
Equipment purchase contracts and capitalized lease obligations (various interest rates)		1,451		1,791
Subordinated debt (fixed rate of 10.00%)		346		346
Other amounts due on real estate held for sale		1,042		—

		12,998		12,029
Less current maturities		5,142		4,959

	$	7,856	$	7,070

	December 31,		March 31,
	2004		2004
	(in thousands)
Short term obligations:
Notes payable (various interest rates)	$	2,310	$	2,333
Revolving line of credit (LIBOR1 + 2.25%)		1,857		2,552
	$	4,167	$	4,885
Long term obligations:
Term notes (various variable interest rates)	$	3,108	$	4,268
Mortgage note payable (LIBOR1 + 2.5%)		2,311		2,670
Equipment purchase contracts and capitalized lease obligations (various interest rates)		4,913		4,581
Subordinated debt (fixed rate of 10.00%)		359		2,025
		10,691		13,544
Less current maturities		4,546		2,064
	$	6,145	$	11,480

Maxco had provided the guarantee of certain debt obligations of certain real estate and other investments in an aggregate amount of approximately $2.0 million as of March 31, 2005. The Company’s real estate affiliates continue to operate under a forbearance agreement with a lender. In order to avoid foreclosure of the real estate assets that secure these loans, Maxco, as guarantor, agreed to purchase, through a subsidiary, the real estate secured by the Ledges land and buildings. As a result of the Company’s purchase of Ledges Commerce Park and its two buildings, a $1.8 million liability, which had been guaranteed, was assumed directly by the Company and is now included in short term debt in the accompanying June 30, 2005 balance sheet. At June 30, 2005, the debt balance approximated $1.6 million and as a result of a condominium unit sale subsequent to June 30, 2005, this balance was reduced to approximately $1.5 million. Subsequent to June 30, 2005 the Company agreed to indemnify Max A. Coon for any amounts he would be required to pay as a result of personal guarantees he had on the Company’s real estate entities that were made for the sole benefit of the Company. Such indemnification is subject in some situations to certain contingencies. Management estimates the amount of these guarantees to be up to $8.6 million. Based on negotiations with a certain lender, the Company does not believe that there is any unusual degree of risk related to the remaining guarantees of approximately $200,000 and any amounts the Company would have to pay due to the

~~1At December 31, 2004 the London Interbank Offered Rate (LIBOR) was 2.40%~~10

InTable May 2004, the Company reached an agreement with a new financial institution to repay lenders with which the Company was in default. The principal amount repaid was approximately $2.3 million. The new debt facility of $2.7 million requires interest only payments for one year and matures in May 2005. The remaining proceeds of approximately $400,000 were used for working capital requirements. Contents

~~Maxco~~indemnification ~~has provided the guarantee~~ of ~~various~~Max ~~debt~~A. ~~obligations~~Coon because of ~~certain real estate and other~~sufficient ~~investments~~underlying inasset anvalues ~~aggregate~~supporting ~~amount of approximately $2.7 million as of December 31, 2004. Certain of~~ the respective debt ~~agreements~~obligations ~~related to its real estate investments, which Maxco~~ and other ~~guarantors~~ ~~have~~conditions ~~guaranteed, are in default at December 31, 2004. An extension has been issued by one~~ of ~~the banks and the applicable entities are currently working to liquidate the~~such ~~properties to satisfy the requirements of the lenders~~indemnification. ~~The Company does not believe that there~~ ~~is any unusual degree of risk related to the guarantees because of sufficient underlying asset values supporting the respective debt obligations.~~

~~In addition to the $2.7 million mentioned above~~Additionally, the Company has recorded in the accompanying financial statements amounts that had been previously identified as guarantees. The amounts so recorded aggregated approximately $197,000 and $~~281~~249,000 as of ~~December~~June 30, 2005 and March 31, ~~2004~~2005, respectively.

The accompanying financial statements have been prepared on the basis that the Company will continue as a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Although there is concern about the Company’s ability to operate as a going concern due to current debt service requirements, ~~Management~~and recurring losses, management believes it has substantially reduced the risk as debt previously in default has been refinanced and the Company’s exposures relative to outstanding guarantees have been substantially ~~significantly reduced~~eliminated. The Company’s ability to meet its short term and long term debt service and other obligations (including compliance with financial covenants) will continue to be dependent upon its future operating performance. This dependency will be subject to financial, business and other factors, certain of which, such as prevailing economic conditions, are beyond the Company’s control. The Company believes that funds generated by its operations, funds available under its credit facilities, and funds that could be available under other credit facilities will be sufficient to finance near term capital needs, as well as to fund existing operations for the reasonably foreseeable future. Additionally, the Company has long term equity investments that could be liquidated to meet its debt service requirements.

11NOTE 7 – FEDERAL INCOME TAXES

~~Table~~The Company assumed the utilization of ~~Contents~~net operating loss carryforwards to offset taxable income in the first quarter of fiscal 2006.

~~financial~~NOTE ~~covenants)~~8 ~~will~~– ~~continue~~PREFERRED toSTOCK ~~be dependent upon its future operating performance. This dependency will be subject to financial, business and other factors,~~DIVIDENDS certain of which, such as prevailing economic conditions, are beyond the Company’s control. The Company believes that funds generated by its operations, funds available under its credit facilities, and funds that could be available under other credit facilities will be sufficient to finance near term capital needs, as well as to fund existing operations for the reasonably foreseeable future. Additionally the Company has long term equity investments that could be liquidated to meet its debt service requirements.

~~NOTE~~Effective 7January 1, –2002, ~~FEDERAL~~the ~~INCOME~~Maxco ~~TAXES~~Board of Directors suspended the payment of dividends on all preferred stock. These dividend payments have been accrued in the accompanying financial statements and totaled approximately $1.5 million at June 30, 2005.

~~The~~NOTE ~~Company~~9 ~~assumed~~– ~~the utilization of net operating loss carryforwards to offset taxable income~~INVENTORIES ~~in the first nine months of fiscal 2005.~~

~~NOTE~~ Inventories 8are –stated ~~DIVIDENDS~~at the lower of first-in, first-out cost or market and consisted of the following:

Effective January 1, 2002, the Maxco Board of Directors suspended the payment of dividends on all preferred stock. These dividend payments have been accrued in the accompanying financial statements and totaled approximately $1.3 million at December 31, 2004.


	June 30,		March 31,
	2005		2005
	*(in thousands)*
Raw materials	$	498	$	329
Work in progress		100		157
Finished goods		48		48

	$	646	$	534

NOTE 910 – ~~INVENTORIES~~REAL ESTATE INVESTMENT (DISCONTINUED AND HELD FOR SALE)

~~Inventories~~Maxco ~~are~~has ~~stated~~ownership atinterests ranging from 31-50% in primarily two LLC’s that have been involved in the ~~lower~~development and ownership of ~~first-~~real estate in central Michigan. In 2003, ~~first-out~~the ~~cost~~Company’s affiliated orentity, ~~market~~L/M ~~and~~Associates ~~consisted~~II, sold substantially all of the properties in its real ~~following:~~estate portfolio. Pursuant to the terms of the sale agreement, in July 2004, L/M Associates exercised its option to require the managing member of the acquired entity to repurchase its 16% interest in the acquiring entity. To date this requirement has not been satisfied and L/M Associates intends to aggressively pursue other collection remedies.

	December 31,		March 31,
	2004		2004
	(in thousands)
Raw materials	$	237	$	174
Work in progress		110		190
Finished goods		40		44
	$	387	$	408

NOTE 11 – ACCOUNTS RECEIVABLE AND PAYABLE—RELATED PARTIES

~~NOTE~~Accounts 10receivable, –related ~~SALE~~parties OFconsists ~~REAL~~primarily ~~ESTATE~~of ~~PORTFOLIO~~unsecured cash advances to officers, stockholders, and affiliates. Certain of the amounts are non-interest bearing. The ultimate settlement of the balances is generally expected to be made in cash, although not necessarily within the next year.

~~Maxco~~Vincent ~~has~~Shunsky, ~~ownership~~Vice ~~interests~~President, ofis ~~not~~indebted ~~more~~to ~~than~~the ~~50%~~Company in ~~primarily two LLC’s which have been involved in~~ the ~~development~~principal ~~and~~amount ~~ownership~~ of ~~real estate in central Michigan. Effective January~~ 1,approximately ~~2000~~$127,000. aThe ~~Master~~indebtedness ~~LLC (L/M Associates II)~~ was ~~formed~~incurred ~~consisting~~at ofvarious ~~the~~times ~~majority~~prior ofto ~~the stabilized buildings in which Maxco and others had an ownership interest. At December~~April ~~31,~~2002 ~~2004~~for ~~Maxco’s effective ownership interest in~~ the ~~Master~~purchase ~~LLC~~of ~~was~~affiliate ~~approximately~~company ~~31%.~~stock ~~The other LLC~~and ~~(L/M Associates) includes properties that are not fully leased or individual properties not included in the Master LLC.~~

~~In early 2002, Maxco, as managing member of L/M Associates, which is the managing member of L/M~~11 Associates II, began negotiations to sell substantially all of the properties in the real estate portfolio of L/M Associates II. In June 2002, L/M Associates II entered into an agreement to sell the properties within the Master LLC to an outside investor. The transaction was approved by more than 75% of the member interests in July 2002. This transaction was completed in January 2003. As part of this transaction, L/M Associates agreed to reinvest a portion of its distributable share of the proceeds to acquire approximately a 16% interest in the acquiring entity. By agreement, this investment may be repurchased by a member of the acquiring entity. However, pursuant to the agreement, in July 2004, L/M Associates exercised its option to require the same member to repurchase the investment. To date this requirement has not been satisfied and L/M Associates intends to aggressively pursue other collection remedies.

ThisTable realof estate investment is discontinued and Maxco is actively pursuing its liquidation. Contents

~~NOTE~~personal 11use. –This ~~ACCOUNTS~~debt ~~RECEIVABLE~~carries ~~AND~~interest ~~PAYABLE—RELATED~~rates ~~PARTIES~~up to 8%. As of June 30, 2005 the amount outstanding was approximately $175,000 including accrued interest. In October 2004 the Company entered into a Retention Agreement with Mr. Shunsky to provide him with a bonus of $200,000 to retain his services until at least March 31, 2006. Should he leave the employ of the Company prior to that date the bonus must be repaid. The Company is expensing the bonus ratably during the retention period.

~~Accounts~~In ~~receivable,~~April 2004 ~~related~~the ~~parties~~Company ~~consists~~entered ~~primarily~~into an incentive agreement with the President of ~~unsecured~~its wholly-owned ~~cash~~subsidiary ~~advances~~Atmosphere Annealing, Inc. The agreement provides for compensation to the ~~officers~~officer based on the increased value, ~~stockholders~~ as defined, ~~and~~of ~~affiliates~~the subsidiary by March 31, 2006. ~~Certain~~The incentive is equal to 1% of the ~~amounts~~first ~~are~~$25 million ~~non-interest~~in ~~bearing~~value plus 10% above that base amount. ~~The~~Any incentive ~~ultimate~~so earned is payable by Maxco, Inc. in cash assuming a sale by March 31, 2006. If no ~~settlement~~such sale occurs by that date, at the option of Maxco the ~~balances~~incentive is ~~generally~~payable ~~expected~~in tocash beor ~~made~~its equivalent in ~~cash~~stock of Atmosphere Annealing, ~~although~~Inc. ~~not~~held ~~necessarily~~by Maxco. As party to the agreement, ~~within~~Maxco, Inc. is recognizing incentive compensation expense on a pro-rata basis under the ~~next~~terms ~~year~~of the agreement. As of June 30, 2005, the amount accrued was $825,000, including $175,000 charged to operations during the quarter then ended.

~~Vincent~~In ~~Shunsky~~June 2003, ~~Vice~~the ~~President, is indebted to The~~ Company inassumed ~~the~~a ~~principal~~lease ~~amount~~with ~~of approximately~~CJC ~~$127~~Leasing,~~000.~~ ~~The~~a ~~indebtedness~~limited ~~was~~liability ~~incurred~~company atin ~~various~~which Company ~~times~~President ~~prior~~Max toA. ~~April 2002~~Coon ~~for the~~is ~~purchase~~a ofmember, ~~affiliate~~from ~~company~~Contractor ~~stock~~Supply ~~and~~Incorporated, ~~personal~~the ~~use.~~purchaser ~~This~~of the ~~debt~~Company’s ~~carries~~formerly ~~interest~~wholly ~~rates~~owned upsubsidiary, ~~to 8%~~Ersco Corporation. AsAt ~~of January~~June 3130, 2005 the amount owed ~~outstanding~~to CJC Leasing was approximately $~~171,000 including accrued interest~~1. ~~In October~~3 ~~2004 the Company entered into a Retention~~million.

12Included in accounts payable is $108,000 at both June 30, 2005 and March 31, 2005 that is due to entities in which Mr. Coon has an interest.

~~Table~~NOTE of12 ~~Contents~~– RECENT ACCOUNTING PRONOUNCEMENTS

~~Agreement~~In ~~with~~May 2005, Mrthe FASB issued SFAS 154, “Accounting Changes and Error Corrections,” which replaces APB Opinion No. ~~Shunsky~~20, to“Accounting ~~provide~~Changes,” ~~him~~and ~~with~~supersedes aFASB ~~bonus~~Statement No. 3, “Reporting Accounting Changes in Interim Financial Statements—an amendment of ~~$200,000~~APB Opinion No. 28.” SFAS 154 requires retrospective application to ~~retain~~prior ~~his~~periods’ ~~services~~financial ~~until~~statements atof changes ~~least~~in ~~March 31~~accounting principle, ~~2006.~~unless it is impracticable to determine either the ~~Should~~period-specific heeffects ~~leave~~or the ~~employ~~cumulative effect of the ~~Company~~change. ~~prior~~When it is impracticable to determine ~~that~~the ~~date~~period-specific effects of an accounting change on one or more individual prior periods presented, SFAS 154 requires that the ~~bonus~~new ~~must~~accounting principle be ~~repaid.~~applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable and that a corresponding adjustment be made to the opening balance of retained earnings for that period rather than being reported in an income statement.

InWhen ~~June 2003,~~it is impracticable to determine the ~~Company~~cumulative ~~assumed~~effect of applying a ~~lease~~change ~~with~~in ~~CJC~~accounting principle ~~Leasing~~to all prior periods, aSFAS ~~limited~~154 ~~liability~~requires ~~company~~that inthe ~~which Company~~new ~~President~~accounting ~~Max~~principle A.be ~~Coon~~applied as isif ait ~~member,~~were adopted prospectively from ~~Contractor~~the ~~Supply~~earliest ~~Incorporated,~~date ~~the~~practicable. ~~purchaser~~SFAS of154 shall be ~~the~~effective ~~Company’s~~for ~~formerly~~accounting ~~wholly~~changes ~~owned~~and ~~subsidiary,~~corrections ~~Ersco~~of ~~Corporation.~~errors Atmade in fiscal years beginning after December 3115, ~~2004~~2005. The Company does not expect the ~~amount~~ ~~owed~~provisions toof ~~CJC~~the ~~Leasing~~SFAS ~~was~~154 ~~approximately~~will $1have a significant impact on its results of operations.~~7 million.~~

~~Included~~In inDecember 2004, ~~accounts~~the ~~payable~~FASB isissued ~~$128~~SFAS 123(R),~~000~~ at“Share-Based ~~both~~Payments,” ~~December~~which replaces FASB Statement No. 31123, ~~2004~~Accounting for Stock-Based Compensation, and ~~March~~supersedes APB Opinion No. 3125, “Accounting ~~2004,~~for ~~which~~Stock isIssued to Employees.” SFAS 123(R) will require all share-based payments to ~~due~~employees, including grants of employee stock options, to ~~entities~~be recognized in ~~which~~the Mrstatement of operations based on their fair values. SFAS 123(R) offers alternative methods for determining the fair value. In April ~~Coon~~2005, ~~has~~the anSEC ~~interest~~issued a new rule that allows companies to implement Statement No. 123(R) at the beginning of the next fiscal year, instead of the next reporting period, that begins after June 15, 2005. As a result, the Company will implement SFAS 123(R) in the reporting period starting April 1, 2006. The Company expects that SFAS 123(R) will not have a significant impact on its financial statements. At the present time, management has not yet determined which valuation method it will use.

~~NOTE~~The ~~12—NEW~~FASB has proposed amending SFAS 128, “Earnings per Share,” to make it consistent with ~~ACCOUNTING~~International ~~PRONOUNCEMENTS~~Accounting Standard 33, “Earnings per Share”, and make earnings per share, or EPS, computations comparable on a global basis. Under the proposed amendment, the year-to-date EPS computation would be performed independently from the quarterly computations. Additionally, for all contracts that may be settled in either cash or shares of stock, companies must assume that settlement will occur by the issuance of shares for purposes of computing diluted EPS, even if they intend to settle by paying cash or have a history of cash-only settlements, regardless of who controls the

~~In December, 2004 the~~12 Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123R which will require the Company to measure the cost of employee services received in exchange for an award of common stock options as compensation expense in the statement of income using a fair value method. The Company will begin reporting these costs in the second quarter of fiscal 2006. The effect of implementing this new accounting standard has not been determined at this time, but is not expected to impact reported earnings per share in amounts significantly different from the pro forma results historically reported.

ITEMTable 2.of MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSContents

~~MATERIAL~~means ~~CHANGES~~of INsettlement. ~~FINANCIAL~~Lastly, ~~CONDITION~~under the proposed amendment, shares that will be issued upon conversion of a mandatory convertible security must be included in the weighted-average number of shares outstanding used in computing basic EPS from the date that conversion becomes mandatory, using the if-converted method, regardless of whether the result is anti-dilutive. The proposed amended standard was expected to be issued during the first quarter of 2005. However, the FASB has not yet finalized the revised effective date of the proposed amendment or its transition provisions. Retrospective application in all periods presented would be required, and could require the restatement of previously reported EPS. The Company does not expect the provisions of the amended SFAS 128 will have a significant impact on its results of operations.

~~Cash~~In ~~provided~~July 2005, bythe ~~operating~~FASB ~~activities~~published ~~amounted~~an Exposure Draft of a proposed Interpretation, “Accounting for Uncertain Tax Positions.” The Exposure Draft seeks to $3reduce the significant diversity in practice associated with recognition and measurement in the accounting for income taxes.~~2 million~~ It would apply to all tax positions accounted for in accordance with SFAS 109, “Accounting for Income Taxes.” The Exposure Draft requires that a tax position meet a “probable recognition threshold” for the ~~nine~~benefit ~~months~~of the uncertain tax position to be recognized in the financial statements. ~~Earnings,~~This threshold is to be met assuming that the tax authorities will examine the ~~after~~uncertain ~~non-cash~~tax ~~adjustments~~position. The Exposure Draft contains guidance with respect to the measurement of the benefit that is recognized for an uncertain tax position, ~~generated~~when $2that benefit should be de-recognized and other matters.~~6 million~~ ~~while~~This ~~changes~~proposed Interpretation would clarify the accounting for uncertain tax positions in ~~working~~accordance ~~capital~~with ~~components~~SFAS 109. This Interpretation, once approved, is ~~generated~~expected ~~$592~~to be effective as of the end of the first fiscal year ending after December 15,~~000~~ 2005. The Company is currently evaluating the impact this proposed Interpretation would have on its results of operations.

~~Cash~~ITEM was generated by investing activities during the nine month period from the receipt of payments on certain notes receivable, primarily $950,000 from the purchaser of the Company’s formerly wholly owned subsidiary, Wright Plastic Products2. ~~These proceeds were used primarily for working capital requirements. The Company~~MANAGEMENT’sS ~~heat~~DISCUSSION ~~treating~~AND ~~segment~~ANALYSIS ~~purchased~~OF ~~approximately~~FINANCIAL ~~$685,000 of~~CONDITION ~~equipment~~AND ~~during~~RESULTS ~~the~~OF ~~nine month period.~~OPERATIONS

InCRITICAL ~~May 2004,~~ACCOUNTING ~~the Company reached an agreement with a new financial institution to repay lenders~~POLICIES with which the Company was in default. The new debt facility of $2.7 million requires interest only payments for one year and matures in May 2005. Atmosphere Annealing repaid $696,000 on its line of credit during the period. Net repayments on other debt obligations amounted to $2.9 million for the nine month period.

~~Overall,~~The ~~the~~accompanying ~~Company’s~~consolidated ~~working~~financial ~~capital~~statements ~~deficit~~have ~~(defined~~been asprepared ~~current~~in ~~assets~~conformity ~~less~~with ~~current liabilities)~~accounting ~~increased~~principles ~~from~~generally ~~$7.7 million~~accepted atin ~~March 31,~~the ~~2004~~United ~~to $10~~States.~~9 million~~ atWhen ~~December 31,~~more ~~2004.~~than ~~This~~one isaccounting method or its ~~primarily~~application ~~due~~is togenerally accepted, management selects the ~~fact~~principle or method that $2is appropriate in the specific circumstances.~~7 million~~ Application of ~~debt~~these ~~became~~accounting ~~due~~principles ~~within~~requires ~~one~~the ~~year~~Company’s management ~~during~~to make estimates about the ~~period~~future resolution of existing uncertainties; as a result, actual results could differ from these estimates. In preparing these financial statements, ~~While~~management ~~this~~has ~~debt~~made isits ~~due~~best estimates and judgments of the amounts and disclosures included in ~~May 2005~~the financial statements, ~~the~~giving due regard to materiality. The Company ~~anticipates~~does itnot ~~will~~believe there is a great likelihood that materially different amounts would be ~~able~~reported tounder ~~extend~~different ~~the~~conditions ~~maturity~~or ~~date~~using different assumptions pertaining to the accounting policies described below.

~~The~~Principles Company’s ability to meet its short term and long term debt service and other obligations (including compliance with financial covenants) will continue to be dependent upon its future operating performance. This dependency will be subject to financial, business and other factors, certain of ~~which,~~Consolidation ~~such as prevailing economic conditions, are beyond the Company’s control. The Company believes that funds generated by its operations, funds available under its credit facilities,~~ and ~~funds~~Transactions ~~that~~With ~~could be available under other credit facilities will be sufficient to~~Affiliates finance near term capital needs, as well as to fund existing operations for the reasonably foreseeable future. Additionally the Company has long term equity investments that could be liquidated to meet its debt service requirements.

AtThe ~~December 31,~~consolidated ~~2004,~~financial statements include the 2accounts of Maxco,~~240,605~~ ~~shares~~Inc. ofand ~~Integral~~its ~~Vision~~majority ~~common~~owned subsidiaries. ~~stock~~Upon ~~that~~consolidation, ~~Maxco~~all ~~owns~~intercompany ~~had~~accounts anand transactions are eliminated. ~~aggregate~~Investments ~~fair~~in ~~value~~greater ofthan ~~approximately~~20% ~~$5.4 million.~~owned ~~Maxco’s~~unconsolidated ~~investment~~investments inare ~~Integral~~accounted ~~Vision~~for isunder the equity ~~reflected~~method. Investments in ~~Maxco’s~~less ~~financial~~than ~~statements~~20% owned affiliates are accounted for under the ~~equity~~cost method, with ~~for~~the ~~all~~exception ~~periods~~of ~~presented~~Integral asVision, Inc., which continues to be accounted for under the equity ~~Company~~method ~~maintains~~because of its representation on Integral Vision’s Board of Directors. Transactions with equity affiliates are in the ordinary course of business and are generally conducted on an arm’s-length basis. Certain investments in equity affiliates and other activities may be between related parties and are generally conducted on an arm’s-length basis.

AtMaxco ~~December 31,~~had ~~2004,~~provided the ~~2,837,089~~guarantee ~~shares~~ of ~~Provant~~certain ~~common~~debt ~~stock~~obligations ~~that~~of ~~Maxco~~certain ~~owns~~real ~~had~~estate and other investments in an aggregate ~~fair~~ ~~value~~amount of approximately $852.0 million as of March 31,~~000~~ 2005. ~~Maxco~~The Company’s ~~investment~~real inestate ~~Provant~~affiliates iscontinue ~~reflected~~to inoperate ~~Maxco’s~~under a forbearance agreement with a lender. ~~financial~~In ~~statements~~order ~~under~~to avoid foreclosure of the ~~cost~~real ~~method~~estate asassets anthat ~~available-for-sale~~secure ~~security~~these loans, Maxco, as guarantor, agreed to purchase, through a subsidiary, the ~~Company~~real ~~owns~~estate secured by the Ledges land and ~~less~~building. ~~than~~As ~~20%~~a result of ~~Provant~~the Company’s ~~outstanding~~purchase ~~stock~~of Ledges Commerce Park and its two buildings, a $1.8 million liability, which had been guaranteed, was assumed directly by the Company and is now included in short term debt in the accompanying June 30, 2005 balance sheet. At June 30, 2005, the debt balance approximated $1.6 million and as a result of a condominium unit sale subsequent to June 30, 2005, this balance was reduced to approximately $1.5 million.

~~MATERIAL CHANGES IN RESULTS OF OPERATIONS~~13

ThreeTable Monthsof Ended December 31, 2004 Compared to 2003 Contents

~~Net~~Subsequent ~~sales increased~~ to ~~$11.4~~June ~~million~~30, ~~compared~~2005 the Company agreed to ~~$10~~indemnify Max A.~~6 million~~ inCoon ~~last~~for ~~year’s~~any ~~third~~amounts ~~quarter.~~he ~~Third quarter~~would ~~results~~be ~~reflect~~required ~~operating~~to ~~earnings~~pay as a result of ~~$581,000~~personal ~~compared~~guarantees tohe ahad ~~loss~~on ofthe ~~$314,000~~Company’s real estate entities that were made for the sole ~~comparable~~benefit ~~period~~of the Company. Such indemnification is subject in ~~2003~~some situations to certain contingencies. ~~Net~~Management ~~income~~estimates ~~was~~the ~~$212,000~~amount orof these guarantees to be up to $8.046 million. Based ~~per~~on ~~share~~negotiations ~~after~~with ~~preferred~~a ~~dividends~~certain lender, the Company does not believe that there is any unusual ~~assuming~~degree ~~dilution~~of ~~compared~~risk related to ~~last~~the ~~year’s~~remaining ~~net~~guarantees ~~loss~~ of approximately $~~857~~200,000 orand $any amounts the Company would have to pay due to the indemnification of Max A.31 ~~per~~Coon ~~share~~because ~~after~~of ~~preferred~~sufficient ~~dividends~~underlying ~~assuming~~asset ~~dilution~~values supporting the respective debt obligations and other conditions of such indemnification.

13Additionally, the Company has recorded in the accompanying financial statements amounts that had been previously identified as guarantees. The amounts so recorded aggregated approximately $197,000 and $249,000 as of June 30, 2005 and March 31, 2005, respectively.

~~Table~~In May 2005, Maxco acquired the stock of ~~Contents~~Ledges Commerce Park (“Ledges”) for $200,000 plus the assumption of certain liabilities from L/M Associates (“L/M”), an entity that Maxco has a 50% ownership interest. Maxco accounts for its interest in L/M as real estate investment held for sale. As a result of the above transaction, Maxco has recorded the assets acquired at their fair value (all such assets are held for sale) and recorded the liabilities assumed at the amount at which they are expected to be settled. The effect of this transaction essentially grosses up the assets and liabilities on Maxco’s balance sheet. The amount expected to be realized upon sale, net of related liabilities, is approximately $340,000, which is the fair value less costs to sell recorded as of year end. This transaction effectively gives Maxco full control over the disposition of assets and the settlement of the liabilities as it relates to Ledges.

~~Sales~~Also, ~~and~~in ~~operating~~May 2005, ~~earnings~~Atmosphere ~~for~~Annealing ~~the~~(“Atmosphere”) ~~three~~acquired ~~months~~the ~~ended~~stock ~~December 31~~of BCGW, ~~2004~~Inc. ~~and~~(“BCGW”) for ~~2003~~$200,000. byBCGW owns the ~~Company~~buildings that house Atmosphere’s operating facilities in Lansing, ~~heat~~Michigan. ~~treating~~The spouse of Maxco’s president, Max Coon, was a 25% owner of BCGW. At the acquisition date BCGW had $1.2 million in property and ~~corporate~~equipment and ~~other~~$1.0 million ~~segments~~in ~~were~~debt. asThe ~~follows:~~results of operations include the operations of these entities from their acquisition dates. Such operating results are insignificant.

	Three Months Ended					Three Months Ended
	December 31, 2004					December 31, 2003
			Operating					Operating
	Net Sales		Earnings (Loss)			Net Sales		Earnings (Loss)
	(in thousands)
Heat treating	$	11,414	$	997		$	10,562	$	331
Corporate and other		—		(416	)		—		(645	)
	$	11,414	$	581		$	10,562	$	(314	)

Investments and Marketable Securities

The ~~increase~~Company inaccounts ~~net~~for ~~sales~~certain of its investments under SFAS 115 as securities available-for-sale. Available-for-sale securities are carried at fair value, with the ~~Company’s~~unrealized gains ~~heat~~and ~~treating~~losses, ~~segment~~net of tax, ~~Atmosphere~~reported ~~Annealing~~as a separate component of stockholders’ equity. The ~~(Atmosphere),~~amortized ~~was~~cost ~~due~~of securities in ~~part~~this tocategory ~~increased~~is ~~business~~adjusted ~~with~~for ~~Honda~~amortization of ~~America~~premiums ~~Manufacturing,~~and accretion ~~Inc~~of discounts to maturity. AnSuch amortization is included in investment income. Realized ~~expanded~~gains ~~customer~~and ~~base~~losses ~~also~~and ~~contributed~~declines in value judged to ~~the~~be ~~increase~~other than temporary on available-for-sale securities are included in ~~sales~~investment income or loss. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in investment income. The fair value of marketable securities is based on quoted market value. The Company reviews its investments to determine if the value shows a decline that has been deemed other than temporary.

~~Consolidated~~Revenue ~~gross profit (net sales less cost of sales and operating expenses) was approximately~~Recognition $4.0 million (35% of net sales) in the current quarter compared to $3.4 million (32% of net sales) in the prior year. The increase in heat treating sales was the primary reason that gross profit increased from the prior year.

~~Selling,~~The ~~general,~~Company ~~and~~recognizes ~~administrative~~service ~~decreased~~revenue toand ~~$2.6 million~~revenue from ~~$2.9 million~~product insales ~~the~~upon ~~prior~~transfer ~~year period.~~of ~~Atmosphere~~title, ~~experienced~~which is ~~reductions~~upon inshipment. ~~the~~An ~~cost~~estimate of ~~health~~reserves ~~insurance~~is ~~of approximately $180~~recorded,~~000.~~ ~~Conversely~~if material, ~~employee~~for ~~related~~anticipated ~~costs~~reworks ~~($27,000),~~and credit ~~state~~memos ~~income~~that ~~taxes~~will ~~($24,000),~~be ~~and professional~~issued ~~services~~on ~~($26,000)~~sales ~~increased~~recognized ~~over~~to ~~the~~date. ~~prior~~SEC ~~year~~Staff Accounting Bulletin (“SAB”) No. 101, ~~Maxco’s~~“Revenue ~~corporate~~Recognition,” ~~segment~~provides ~~saw employee~~guidance ~~costs~~on ~~lowered~~the byapplication ~~$53,000~~of ~~and~~generally ~~legal~~accepted accounting ~~costs~~principles ~~lowered~~to byselected ~~$48,000~~revenue recognition issues. ~~Additionally,~~The inCompany ~~the~~has ~~prior~~concluded its ~~year~~revenue ~~quarter,~~recognition ~~the~~policy ~~corporate~~is ~~segment~~appropriate ~~recorded~~and ain ~~charge~~accordance ofwith ~~$123,000~~generally ~~for~~accepted anaccounting principles ~~anticipated~~and ~~workers compensation~~SAB ~~claim~~No. 101.

~~As a result of the above~~Goodwill, ~~operating~~Intangible ~~earnings~~and ~~increased~~Other toLong-Lived ~~$581,000 from a loss of $314,000 in last~~Assets ~~year’s comparable period.~~

~~Investment~~Property, ~~interest~~plant, and ~~other income (loss)~~equipment, ~~net~~and ~~increased~~certain ~~from~~other adefinite-lived ~~loss~~assets ofare ~~$51,000~~amortized inover ~~the prior~~their ~~year~~useful tolives. aUseful ~~net~~lives $0are inbased ~~the~~on ~~current~~management’s ~~year.~~estimates Inof the ~~prior~~period ~~year~~that ~~quarter,~~ the ~~Company~~asset ~~recorded a charge of~~will ~~$57,000~~be asuseful ~~an other than temporary impairment~~ to the ~~value of its investment in Provant~~Company. ~~Interest~~ ~~expense decreased from $468,000 to $371,000 primarily due to reduced borrowing levels.~~

InEffective April 1, 2002, the ~~prior~~Company ~~year~~adopted ~~quarter~~SFAS No. 142, ~~the~~“Goodwill ~~Company~~and ~~recorded~~Other ~~$50~~Intangible Assets” (“SFAS No. 142”),~~000~~ inwhich ~~equity~~resulted in ~~earnings~~the discontinuance of ~~affiliates~~amortization toof goodwill and ~~record~~indefinite-lived ~~its~~intangible ~~share~~assets ofthat ~~earnings~~were ~~from~~recorded anin ~~unconsolidated~~connection ~~investment~~with previous business combinations, and SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”). Goodwill, intangible, and other long-lived assets are reviewed by management for impairment whenever events or changes in circumstances indicate the carrying amounts may not be recoverable. If management believes impairment may exist, an assessment is performed. This assessment consists of

~~Nine Months Ended December 31, 2004 Compared to 2003~~14

NetTable sales increased to $33.9 million compared to $29.3 million in last year’s comparable period. Results from this period reflect operating earnings of $1.4 million compared to a loss of $662,000 for the comparable period in 2003. Net income was $466,000 or $.05 per share after preferred dividends assuming dilution compared to last year’s net loss of $1.5 million or $.59 per share after preferred dividends assuming dilution. Contents

~~Sales~~comparing ~~and~~the ~~operating~~estimated ~~earnings~~undiscounted ~~for~~future cash flows with the ~~nine~~carrying amount ~~months~~of ~~ended~~the ~~December 31,~~long-lived ~~2004~~assets. ~~and~~If ~~2003~~the byundiscounted future cash flows are less than the carrying amounts of the long-lived assets, the Company’s adjusts the carrying amount of the long-lived assets ~~heat~~to ~~treating~~their ~~and~~estimated ~~corporate~~fair ~~and~~value. ~~other~~Fair ~~segments~~value ~~were~~is asdetermined ~~follows:~~by anticipated future cash flows discounted at a rate commensurate with the risk involved. All of the Company’s goodwill is related to the heat treating segment.

	Nine Months Ended					Nine Months Ended
	December 31, 2004					December 31, 2003
			Operating					Operating
	Net Sales		Earnings (Loss)			Net Sales		Earnings (Loss)
			(in thousands)
Heat treating	$	33,937	$	2,665		$	29,280	$	971
Corporate and other		—		(1,273	)		44		(1,633	)
	$	33,937	$	1,392		$	29,324	$	(662	)

During 2005, the Company performed the impairment tests of its goodwill, indefinite-long-lived intangibles, and other long-lived assets required by SFAS No. 142 and No. 144. The Company’s tests indicated that the fair value of its heat treating segment, which was determined by using discounted cash flows and market multiples, exceeded the carrying value. As a result, the Company did not record an impairment charge for this segment in the accompanying financial statements. The Company will continue to perform an impairment review on an annual basis (or more frequently if impairment indicators arise).

~~The~~Derivative ~~increase~~Financial ~~in net sales at the Company’s heat treating segment, Atmosphere Annealing~~Instruments ~~(Atmosphere), was due in part to increased business with Honda of America Manufacturing, Inc. An expanded customer base also contributed to the increase in sales.~~

14The Company applies hedge accounting pursuant to SFAS 133, as amended, with respect to interest rate swap agreements. Accordingly, changes in the fair value of the swap are reported as a component of other comprehensive income and are not included in operating results.

~~Table~~MATERIAL ofCHANGES ~~Contents~~IN FINANCIAL CONDITION

~~Consolidated~~Cash ~~gross~~provided ~~profit~~by ~~(net sales less cost of sales and~~ operating ~~expenses)~~activities ~~increased~~amounted to $111.8 ~~million from $9.9~~ million. ~~Gross~~for ~~margin~~the ~~(gross~~three ~~profit~~months. ~~as a percentage of net sales) was~~Earnings, ~~approximately~~after ~~34%~~non-cash ~~for~~adjustments, ~~both~~generated ~~periods~~$1.1 million ~~The~~while ~~increase~~changes in ~~heat~~working ~~treating~~capital ~~sales was the primary reason~~components ~~that~~generated ~~gross profit increased from the prior year~~$734,000.

~~Selling,~~Investing ~~general,~~activities ~~and~~during ~~administrative decreased to $8.2 million from $8.4 million in~~ the ~~prior year~~ period. ~~Atmosphere~~used ~~experienced~~cash ~~reductions in the cost~~ of ~~health and general insurances of approximately~~ $~~228~~766,000. ~~Conversely~~Specifically, ~~employee~~Maxco ~~related~~purchased ~~costs~~an entity ~~($136,000),~~that ~~state~~owns ~~income~~two ~~taxes ($76,000),~~buildings and ~~professional~~Atmosphere ~~services~~acquired ~~($106~~BCGW,~~000)~~ ~~increased over~~ the ~~prior~~entity ~~year~~that ~~period. Additionally,~~owns ~~bad debt expense at Atmosphere increased $150,000 over~~ the ~~prior year period to~~buildings ~~provide for receivables~~ that ~~are~~house noAtmosphere’s ~~longer~~operating ~~expected~~facilities toin beLansing, ~~collected~~Michigan. ~~Maxco’s~~These ~~corporate~~two ~~segment~~acquisitions ~~saw~~used ~~lower employee costs (~~$89342,000), ~~health~~of ~~and~~cash. ~~general~~Atmosphere ~~insurances~~purchased ~~($70,000),~~approximately ~~and legal costs (~~$~~114~~575,000). ~~Additionally,~~of inequipment during the ~~prior~~quarter ~~year~~and Maxco ~~quarter,~~received ~~the~~payments ~~corporate~~on ~~segment~~certain ~~recorded~~notes areceivable, ~~charge~~primarily of $~~123~~106,000 ~~for~~from anIntegral ~~anticipated~~Vision, ~~workers compensation claim~~Inc.

AsCash aused ~~result~~in offinancing ~~the~~activities ~~above~~amounted to $707,000 ~~operating~~during ~~earnings~~the ~~increased~~quarter toended ~~$1.4~~June ~~million~~30, ~~from~~2005. Atmosphere aborrowed ~~loss~~an ofadditional $~~662~~379,000 inon its line of credit. The Company repaid $1.1 million ~~last~~on ~~year’s~~other ~~comparable~~debt ~~period~~obligations.

~~Investment~~Overall, ~~interest,~~the ~~and~~Company’s ~~other~~working ~~income~~capital deficit (~~loss),~~defined ~~net~~as ~~increased~~current ~~from~~assets aless ~~loss~~current ~~of $317,000 to income of~~liabilities) ~~$151,000.~~increased ~~Atmosphere~~from ~~received a discount of~~ $~~94,000 as a result of paying off a note in the current period~~8.0 million Inat ~~the prior year period~~March 31, ~~the~~2005 ~~Company recorded a charge of $340,000 as an other than temporary impairment~~ to ~~the value of its investment in Provant. Interest expense decreased from~~ $110.38 million toat ~~$1.1~~June ~~million~~30, ~~primarily due to reduced borrowing levels~~2005.

~~Gain~~The onCompany’s ~~sale~~ability ofto ~~assets~~meet ~~includes~~its ~~$57,000~~short ~~for~~term aand ~~gain~~long onterm ~~the~~debt ~~sale~~service ofand aother ~~building~~obligations (including incompliance ~~the~~with ~~current~~financial ~~year~~covenants) will continue to be dependent upon its future operating performance. This dependency will be subject to financial, business and ~~$910~~other factors,~~000~~ certain ~~for~~of awhich, ~~gain~~such onas ~~sale~~prevailing ofeconomic ~~land~~conditions, inare beyond the ~~prior~~Company’s ~~year~~control. The Company believes that funds generated by its operations, funds available under its credit facilities, and funds that could be available under other credit facilities will be sufficient to finance near term capital needs, as well as to fund existing operations for the reasonably foreseeable future. Additionally the Company has long term equity investments that could be liquidated to meet its debt service requirements.

InAt ~~the~~June 30, ~~prior year~~2005, the ~~Company~~2,410,183 ~~recorded~~shares ~~$90,000~~of inIntegral ~~equity~~Vision incommon ~~losses~~stock ofthat ~~affiliates~~Maxco toowns ~~adjust~~had ~~its~~an aggregate market value of approximately $3.4 million. Maxco’s investment in Integral Vision tois reflected anin ~~estimated~~Maxco’s ~~realizable~~financial ~~amount~~statements ~~and~~under ~~$50,000~~the in equity inmethod ~~earnings of~~for ~~affiliates~~all toperiods ~~record~~presented ~~its~~as ~~share~~the Company ofmaintains ~~earnings~~representation ~~from~~on anIntegral ~~unconsolidated~~Vision’s ~~investment~~Board of Directors.

~~ITEM~~At 3June 30, 2005, the 2,837,089 shares of Provant common stock that Maxco owns had an aggregate market value of approximately $128,000. ~~QUANTITATIVE~~Maxco’s ~~AND~~investment ~~QUALITATIVE~~in ~~DISCLOSURES~~Provant ~~ABOUT~~is ~~MARKET~~reflected ~~RISK~~in Maxco’s financial statements under the cost method as an available-for-sale security as the Company owns less than 20% of Provant’s outstanding stock.

~~The~~RESULTS ~~Company’s~~OF ~~variable interest expense is sensitive to changes in the general level of United~~OPERATIONS States interest rates. While approximately $4.6 million of Maxco’s debt carries a fixed rate of interest, the Company entered into an interest rate swap agreement based on a notional amount of $2.7 million to manage its exposure to interest rate changes. The swap involves the exchange of fixed and variable interest payments without changing the notional principal amount. The Company had total outstanding variable rate short and long term borrowings of $10.3 million at December 31, 2004. A 1% increase from the prevailing interest rates at December 31, 2004 on the unhedged variable rate portion of the Company’s short and long-term borrowings would increase interest expense on an annualized basis by approximately $101,000 based on principal balances at December 31, 2004.

~~The~~Three ~~Company’s~~Months ~~heat~~Ended ~~treating segment experiences fluctuations in the price of natural gas used in the heat treating process. To the extent feasible in light of competitive factors~~June 30, ~~the~~2005 ~~Company~~Compared ~~has offset~~to ~~these fluctuations through selective price adjustments.~~2004

~~ITEM~~Net sales increased to $11.5 million compared to $11.4 million in last year’s first quarter. ~~DISCLOSURE~~First quarter ~~CONTROLS~~results ~~AND~~reflect ~~PROCEDURES~~operating earnings of $682,000 compared to $475,000 for the comparable period in 2004. Net income was $329,000 or

~~The Company’s Chief Executive Officer and Chief Financial Officer believe Maxco’s disclosure controls and procedures, as defined in Securities Exchange Act Rules 13a-~~15~~(e) and 15d-15(e), are~~ ~~effective. This conclusion was reached after an evaluation of these controls and procedures as of December 31, 2004.~~

15 Table of Contents

~~Table~~$0.07 per share after preferred dividends assuming dilution compared to last year’s net income of ~~Contents~~$204,000 or $.03 per share after preferred dividends assuming dilution.

~~PART~~Sales IIand operating earnings for the three months ending June 30, 2005 and 2004 by the Company’s ~~OTHER~~heat ~~INFORMATION~~treating and corporate and other segments were as follows:

Item 1. Legal Proceedings


	Three Months Ended					Three Months Ended
	June 30, 2005					June 30, 2004
			Operating					Operating
	Net Sales		Earnings (Loss)			Net Sales		Earnings (Loss)
	*(in thousands)*
Heat treating	$	11,448	$	1,306		$	11,367	$	963
Corporate and other		—		(624	)		—		(488	)

	$	11,448	$	682		$	11,367	$	475

~~None~~Consolidated gross profit (net sales less cost of sales and operating expenses) increased to $4.3 million from $4.0 million. Gross margin (gross profit as a percentage of sales) increased to 38% from 35%. Atmosphere experienced an increase in net sales due to increased volume from existing customers as well as an expanded customer base. Offsetting this increase was decreased business with Honda of America Manufacturing, Inc. Gross margin increased primarily as a result of decreased sales to Honda. By agreement, the Company is required to purchase and bill Honda for the steel used in the heat treating process resulting in lower margins. Atmosphere experienced increases in employee related expenses of $210,000 and natural gas of $236,000.

~~Item~~Selling, general, and administrative increased to $2.9 million from $2.8 million. ~~Unregistered~~Maxco ~~Sales~~recognized $175,000 of ~~Equity~~compensation ~~Securities~~expense ~~and~~under ~~Use~~the terms of ~~Proceeds~~an incentive agreement with the President of Atmosphere.

~~None~~Depreciation and amortization expenses were comparable to the prior year.

~~Item 3.~~As ~~Defaults~~a ~~Upon~~result ~~Senior~~of ~~Securities~~the above, operating earnings increased to $685,000 from $475,000 in the prior year.

~~None~~Investment, interest, and other income, net decreased from income of $135,000 to a loss of $2,000. The current quarter includes a loss related to Ledges of approximately $12,000. In the prior year quarter, Atmosphere received a discount of $94,000 as a result of paying off a note.

~~Item 4~~ITEM 3. ~~Submission~~QUANTITATIVE ofAND ~~Matters~~QUALITATIVE toDISCLOSURES aABOUT ~~Vote~~MARKET ~~of Security Holders~~RISK

~~None~~The Company’s variable interest expense is sensitive to changes in the general level of United States interest rates. While approximately $5.6 million of Maxco’s debt carries a fixed rate of interest, the Company entered into an interest rate swap agreement based on a notional amount of $2.7 million to manage its exposure to interest rate changes. The swap involves the exchange of fixed and variable interest payments without changing the notional principal amount. The Company had total outstanding variable rate short and long term borrowings of $12.1 million at June 30, 2005. A 1% increase from the prevailing interest rates at June 30, 2005 on the unhedged variable rate portion of the Company’s short and long-term borrowings would increase interest expense on an annualized basis by approximately $121,000 based on principal balances at June 30, 2005.

~~Item 5~~Atmosphere experiences fluctuations in the price of natural gas used in the heat treating process. To ~~Other~~the ~~Information~~extent feasible in light of competitive factors, the Company has offset these fluctuations through selective price adjustments.

~~The~~ITEM ~~annual meeting of shareholders has been delayed more than 30 days later than it is traditionally held~~4. ~~The~~CONTROLS ~~meeting~~AND ~~will be held on March 15, 2005.~~PROCEDURES

Item 6(a)		Exhibits
3		Restated Articles of Incorporation are hereby incorporated from Form 10-Q dated February 13, 1998.
3.1		By-laws are hereby incorporated by reference from Form S-4 dated November 4, 1991 (File No. 33-43855).
4.2		Resolution establishing Series Three Preferred Shares is hereby incorporated by reference from Form S-4 dated November 4, 1991 (File No. 33-43855).
4.3		Resolution authorizing the redemption of Series Two Preferred Stock and establishing Series Four Preferred Stock and the terms of the subordinated notes is hereby incorporated by reference from Form 10-Q dated February 14, 1997.
4.4		Resolution establishing Series Five Preferred Shares is hereby incorporated by reference from Form 10-K dated June 5, 1997.
4.5		Resolution establishing Series Six Preferred Shares is hereby incorporated by reference from Form 10-K dated June 23, 1999.
10.1		Incentive stock option plan adopted August 15, 1983, including the amendment (approved by shareholders August 25, 1987) to increase the authorized shares on which options may be granted by two hundred fifty thousand (250,000), up to five hundred thousand (500,000) shares of the common stock of the company is hereby incorporated by reference from the registrant’s annual report on Form 10-K for the fiscal year ended March 31, 1988.
10.11		Asset purchase agreement for the purchase of Atmosphere Annealing, Inc. is hereby incorporated by reference from Form 8-K dated January 17, 1997.

The Company’s Chief Executive Officer and Chief Financial Officer believe Maxco’s disclosure controls and procedures, as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e), are effective. This conclusion was reached after an evaluation of these controls and procedures as of June 30, 2005.

10.18		Maxco, Inc. 1998 Employee Stock Option Plan is hereby incorporated by reference from Form 10-Q dated November 12, 1998.
10.29		Obligor assignment agreement among Contractor Supply Incorporated, Maxco, Inc., and Ersco Corporation dated November 14, 2002 is hereby incorporated by reference from Form 10-Q dated November 25, 2002.
10.30		Stock purchase agreement between Ersco Corporation, Maxco, Inc., and Contractor Supply Incorporated dated November 14, 2002 is hereby incorporated by reference from Form 10-Q dated November 25, 2002.
10.31		Asset Purchase Agreement between Pak Sak Industries, Inc., Maxco, Inc., P-S Business Acquisition, Inc., and P&D Real Estate, LLC and Packaging Personified, Inc. dated September 27, 2002 is hereby incorporated by reference from Form 10-Q dated February 14, 2003.
10.32		First Amendment to Asset Purchase Agreement between Pak Sak Industries, Inc., Maxco, Inc., P-S Business Acquisition, Inc., and P&D Real Estate, LLC and Packaging Personified, Inc. dated October 30, 2002 is hereby incorporated by reference from Form 10-Q dated February 14, 2003.
10.33		Second Amendment to Asset Purchase Agreement between Pak Sak Industries, Inc., Maxco, Inc., P-S Business Acquisition, Inc., and P&D Real Estate, LLC and Packaging Personified, Inc. dated November 25, 2002 is hereby incorporated by reference from Form 10-Q dated February 14, 2003.
10.34		Credit Agreement between Atmosphere Annealing, Inc. and Huntington National Bank dated November 18, 2003 is hereby incorporated by reference from Form 10-Q dated November 19, 2003.
10.35		Subordination Agreement between Maxco, Inc., Atmosphere Annealing, Inc. and Comerica Bank and Huntington National Bank dated November 18, 2003 is hereby incorporated by reference from Form 10-Q dated November 19, 2003.
10.36		Incentive agreement between Sanjeev Deshpande and Maxco, Inc. dated April 20, 2004 is hereby incorporated by reference from Form 10-K dated July 13, 2004.
10.37		Business Loan Agreement between Capitol National Bank and Maxco, Inc. dated May 28, 2004 is hereby incorporated by reference from Form 10-K dated July 13, 2004.
31.1		Certification of Chief Executive Officer of periodic report pursuant to Rule 13a-15(e) or Rule 15d-15(e).
31.2		Certification of Chief Financial Officer of periodic report pursuant to Rule 13a-15(e) or Rule 15d-15(e).
32.1		Certification of Chief Executive Officer of periodic report pursuant to 18 U.S.C. §1350.
32.2		Certification of Chief Financial Officer of periodic report pursuant to 18 U.S.C. §1350.

PART II

17OTHER INFORMATION

~~Table~~Item 1. ofLegal ~~Contents~~Proceedings

~~SIGNATURES~~None

~~Pursuant~~Item 2. toUnregistered ~~the~~Sales ~~requirements~~ of ~~the~~Equity Securities ~~Exchange~~and ~~Act~~Use of ~~1934, the Registrant has duly caused~~Proceeds ~~this report to be signed on its behalf by the undersigned thereunto duly authorized.~~

		MAXCO, INC.
Date: February 14, 2005		/s/ VINCENT SHUNSKY
		Vincent Shunsky, Vice President-Finance
		and Treasurer (Principal Financial and
		Accounting Officer)

None

18Item 3. Defaults Upon Senior Securities

~~Table of Contents~~None

~~EXHIBIT~~Item 4. ~~INDEX~~Submission of Matters to a Vote of Security Holders

EX NO.		DESCRIPTION
31.1		Certification of Chief Executive Officer of periodic report pursuant to Rule 13a-15(e) or Rule 15d-15(e).
31.2		Certification of Chief Financial Officer of periodic report pursuant to Rule 13a-15(e) or Rule 15d-15(e).
32.1		Certification of Chief Executive Officer of periodic report pursuant to 18 U.S.C. §1350.
32.2		Certification of Chief Financial Officer of periodic report pursuant to 18 U.S.C. §1350.

None

19Item 5. Other Information

The annual meeting of shareholders is delayed more than 30 days later than it is traditionally held. An announcement will be made when the date is determined.

Item 6 Exhibits

3		Restated Articles of Incorporation are hereby incorporated from Form 10-Q dated February 13, 1998.

3.1		By-laws are hereby incorporated by reference from Form S-4 dated November 4, 1991 (File No. 33-43855).

4.2		Resolution establishing Series Three Preferred Shares is hereby incorporated by reference from Form S-4 dated November 4, 1991 (File No. 33-43855).

4.3		Resolution authorizing the redemption of Series Two Preferred Stock and establishing Series Four Preferred Stock and the terms of the subordinated notes is hereby incorporated by reference from Form 10-Q dated February 14, 1997.

4.4		Resolution establishing Series Five Preferred Shares is hereby incorporated by reference from Form 10-K dated June 5, 1997.

4.5		Resolution establishing Series Six Preferred Shares is hereby incorporated by reference from Form 10-K dated June 23, 1999.

10.1		Incentive stock option plan adopted August 15, 1983, including the amendment (approved by shareholders August 25, 1987) to increase the authorized shares on which options may be granted by two hundred fifty thousand (250,000), up to five hundred thousand (500,000) shares of the common stock of the company is hereby incorporated by reference from the registrant’s annual report on Form 10-K for the fiscal year ended March 31, 1988.

10.11		Asset purchase agreement for the purchase of Atmosphere Annealing, Inc. is hereby incorporated by reference from Form 8-K dated January 17, 1997.

10.12		Asset Purchase Agreement – Axson North America Inc. is hereby incorporated by reference from registrants Form 10-Q dated February 14, 1997.

10.18		Maxco, Inc. 1998 Employee Stock Option Plan is hereby incorporated by reference from Form 10-Q dated November 12, 1998.

10.29		Obligor assignment agreement among Contractor Supply Incorporated, Maxco, Inc., and Ersco Corporation dated November 14, 2002 is hereby incorporated by reference from Form 10-Q dated November 25, 2002.

10.30		Stock purchase agreement between Ersco Corporation, Maxco, Inc., and Contractor Supply Incorporated dated November 14, 2002 is hereby incorporated by reference from Form 10-Q dated November 25, 2002.

10.31		Asset Purchase Agreement between Pak Sak Industries, Inc., Maxco, Inc., P-S Business Acquisition, Inc., and P&D Real Estate, LLC and Packaging Personified, Inc. dated September 27, 2002 is hereby incorporated by reference from Form 10-Q dated February 14, 2003.

10.32		First Amendment to Asset Purchase Agreement between Pak Sak Industries, Inc., Maxco, Inc., P-S Business Acquisition, Inc., and P&D Real Estate, LLC and Packaging Personified, Inc. dated October 30, 2002 is hereby incorporated by reference from Form 10-Q dated February 14, 2003.

10.33		Second Amendment to Asset Purchase Agreement between Pak Sak Industries, Inc., Maxco, Inc., P-S Business Acquisition, Inc., and P&D Real Estate, LLC and Packaging Personified, Inc. dated November 25, 2002 is hereby incorporated by reference from Form 10-Q dated February 14, 2003.

10.34		Credit Agreement between Atmosphere Annealing, Inc. and Huntington National Bank dated November 18, 2003 is hereby incorporated by reference from Form 10-Q dated November 19, 2003.

10.35		Subordination Agreement between Maxco, Inc., Atmosphere Annealing, Inc. and Comerica Bank and Huntington National Bank dated November 18, 2003 is hereby incorporated by reference from Form 10-Q dated November 19, 2003.

10.36		Incentive agreement between Sanjeev Deshpande and Maxco, Inc. dated April 20, 2004 is hereby incorporated by reference from Form 10-K dated July 13, 2004.

10.37		Business Loan Agreement between Capitol National Bank and Maxco, Inc. dated May 28, 2004 is hereby incorporated by reference from Form 10-K dated July 13, 2004.

31.1		Certification of Chief Executive Officer of periodic report pursuant to Rule 13a-15(e) or Rule 15d-15(e).

31.2		Certification of Chief Financial Officer of periodic report pursuant to Rule 13a-15(e) or Rule 15d-15(e).

32.1		Certification of Chief Executive Officer of periodic report pursuant to 18 U.S.C. §1350.

32.2		Certification of Chief Financial Officer of periodic report pursuant to 18 U.S.C. §1350.

SIGNATURES

Pursuant to the requirements 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.


	MAXCO, INC.
Date: August 18, 2005	/s/ VINCENT SHUNSKY
	Vincent Shunsky, Vice President-Finance
	and Treasurer (Principal Financial and Accounting Officer)

Exhibit Index


Exhibit No.		Description
Exhibit 31.1		Certification of Chief Executive Officer of periodic report pursuant to Rule 13a-15(e) or Rule 15d-15(e).

Exhibit 31.2		Certification of Chief Financial Officer of periodic report pursuant to Rule 13a-15(e) or Rule 15d-15(e).

Exhibit 32.1		Certification of Chief Executive Officer of periodic report pursuant to 18 U.S.C. §1350.

Exhibit 32.2		Certification of Chief Financial Officer of periodic report pursuant to 18 U.S.C. §1350.

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