----

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**FORM          10-Q/A**

**Amendment          No. 2**

**For          the Quarter Ended December 31,          2005**

**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                        |   | 48917                                       |
| Lansing,                    Michigan                          |   | *(Zip                    Code)*             |
| *(Address                    of principal executive offices)* |   |                                        |

| Class                           | Outstanding                    at January 31, 2006 |
|---------------------------------|----------------------------------------------------|
| Common                    Stock | 3,446,995                    shares                |

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**MAXCO,      INC.**

**EXPLANATORY      NOTE**

**INDEX      TO QUARTERLY REPORT ON FORM 10-Q**

|                                                                                                                                       |  **Page** |
|--------------------------------------------------------------------------------------------------------------------------------------------|----------------|
| Part                I — Financial Information                                                                                        | 3              |
|                                                                                                                                       |           |
| Item                1. Consolidated Financial Statements                                                                                   | 3              |
|                                                                                                                                       |           |
| Condensed                Consolidated Balance Sheets                                                                                       | 3              |
|                                                                                                                                       |           |
| Condensed                Consolidated Statements Of Operations                                                                             | 5              |
|                                                                                                                                       |           |
| Consolidated                Statements Of Stockholders’ Equity                                                                       | 7              |
|                                                                                                                                       |           |
| Condensed                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 | 15             |
|                                                                                                                                       |           |
| Item                3. Quantitative And Qualitative Disclosures About Market                Risk                                           | 20             |
|                                                                                                                                       |           |
| Item                4. Controls And Procedures                                                                                             | 21             |
|                                                                                                                                       |           |
| Part                II — Other Information                                                                                           | 22             |
|                                                                                                                                       |           |
| Item                1. Legal Proceedings                                                                                                   | 22             |
|                                                                                                                                       |           |
| Item                2. Unregistered Sales Of Equity Securities And Use Of                Proceeds                                          | 22             |
|                                                                                                                                       |           |
| Item                3. Defaults Upon Senior Securities                                                                                     | 22             |
|                                                                                                                                       |           |
| Item                4. Submission Of Matters To A Vote Of Security Holders                                                                 | 22             |
|                                                                                                                                       |           |
| Item                5. Other Information                                                                                                   | 22             |
|                                                                                                                                       |           |
| Item                6. Exhibits                                                                                                            | 22             |
|                                                                                                                                       |           |
| Signatures                                                                                                                                 | 24             |
|                                                                                                                                       |           |
| Certification                                                                                                                              | *25*           |

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**PART      I — FINANCIAL INFORMATION**

**ITEM      1. CONSOLIDATED FINANCIAL STATEMENTS**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

**Maxco,      Inc. and Subsidiaries**

|                                                                 |   | **December                  31,**                 |    | **March                  31,** |   |
|----------------------------------------------------------------------|--------|---------------------------------------------------|---------|--------------------------------|--------|
|                                                                 |   | **2005**                                          |    | **2005**                       |   |
|                                                                 |   | **(Unaudited)**                                   |    |                           |   |
|                                                                 |   | ***(in                  thousands)*  ** |    |
| **ASSETS**                                                           |   |                                              |    |                           |   |
| **Current                  Assets**                                  |   |                                              |    |                           |   |
| Cash                  and cash equivalents                           |   | $                                                 | 1,209   |                           | $      | 1,781 |   |
| Restricted                  cash—Note 3                        |   |                                              | 750     |                           |   | - |   |
| Accounts                  and notes receivable, less allowance of    |   |                                              |    |                           |   |   |   |
| $194,000                  ($128,000 at March 31, 2005)               |   |                                              | 6,546   |                           |   | 6,605 |   |
| Inventories—Note                  9                            |   |                                              | 832     |                           |   | 534 |   |
| Prepaid                  expenses and other                          |   |                                              | 502     |                           |   | 223 |   |
| **Total                  Current Assets**                            |   |                                              | 9,839   |                           |   | 9,143 |   |
|                                                                 |   |                                              |    |                           |   |   |   |
| **Property                  and Equipment—Note 1**             |   |                                              |    |                           |   |   |   |
| Land                                                                 |   |                                              | 564     |                           |   | 437 |   |
| Buildings                                                            |   |                                              | 8,220   |                           |   | 5,997 |   |
| Machinery,                  equipment, and fixtures                  |   |                                              | 31,307  |                           |   | 30,052 |   |
|                                                                 |   |                                              | 40,091  |                           |   | 36,486 |   |
| Allowances                  for depreciation                         |   |                                              | (21,377 | )                              |   | (18,018 | ) |
|                                                                 |   |                                              | 18,714  |                           |   | 18,468 |   |
|                                                                 |   |                                              |    |                           |   |   |   |
| **Other                  Assets**                                    |   |                                              |    |                           |   |   |   |
| Investments                                                          |   |                                              | 1,014   |                           |   | 878 |   |
| Notes                  and contracts receivable and other            |   |                                              | 692     |                           |   | 996 |   |
| Real                  estate investments held for sale—Note 10 |   |                                              | 1,427   |                           |   | 1,850 |   |
| Real                  estate held for sale                           |   |                                              | 2,900   |                           |   | - |   |
| Accounts                  receivable, related parties—Note 11  |   |                                              | 407     |                           |   | 407 |   |
| Intangibles                                                          |   |                                              | 1,424   |                           |   | 1,424 |   |
|                                                                 |   |                                              | 7,864   |                           |   | 5,555 |   |
|                                                                 |   |                                              |    |                           |   |   |   |
|                                                                 |   | $                                                 | 36,417  |                           | $      | 33,166 |   |

----

**CONDENSED      CONSOLIDATED BALANCE SHEETS — CONTINUED**

**Maxco,      Inc. and Subsidiaries**

|                                                                                                                                |   | **December                  31,** |   | **March                  31,** |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|--------------------------------|--------|
|                                                                                                                                |   | **2005**                          |   | **2005**                       |   |
|                                                                                                                                |   | **(Unaudited)**                   |   |                           |   |
|                                                                                                                                |   | *(in                  thousands)* |   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**                                                                           |   |                              |   |                           |   |
| **Current                  liabilities**                                                                                            |   |                              |   |                           |   |
| Notes                  payable—Note 6                                                                                         |   | $                                 | 1,414  |                           | $      | 2,091 |   |
| Accounts                  payable                                                                                                   |   |                              | 2,973  |                           |   | 3,870 |   |
| Employee                  compensation                                                                                              |   |                              | 1,783  |                           |   | 1,711 |   |
| Incentive                  compensation                                                                                             |   |                              | 1,175  |                           |   | 650 |   |
| Taxes,                  interest, and other liabilities                                                                             |   |                              | 4,862  |                           |   | 3,850 |   |
| Current                  maturities of long-term obligations                                                                        |   |                              | 5,328  |                           |   | 4,959 |   |
| **Total                  Current Liabilities**                                                                                      |   |                              | 17,535 |                           |   | 17,131 |   |
|                                                                                                                                |   |                              |   |                           |   |   |   |
| **Long-Term                  Obligations, Less Current Maturities—Notes 1 and                  6**                            |   |                              | 8,782  |                           |   | 7,070 |   |
| **Total                  Liabilities**                                                                                              |   |                              | 26,317 |                           |   | 24,201 |   |
|                                                                                                                                |   |                              |   |                           |   |   |   |
| **Stockholders'                  Equity**                                                                                           |   |                              |   |                           |   |   |   |
| Preferred                  stock:                                                                                                   |   |                              |   |                           |   |   |   |
| Series                  Three: 10% cumulative redeemable, $60 face                                                                  |   |                              |   |                           |   |   |   |
| value;                  14,784 shares issued                                                                                        |   |                              | 678    |                           |   | 678 |   |
| Series                  Four: 10% cumulative redeemable, $51.50 face                                                                |   |                              |   |                           |   |   |   |
| value;                  46,414 shares issued                                                                                        |   |                              | 2,390  |                           |   | 2,390 |   |
| Series                  Five: 10% cumulative redeemable, $120 face                                                                  |   |                              |   |                           |   |   |   |
| value;                  6,648 shares issued                                                                                         |   |                              | 798    |                           |   | 798 |   |
| Series                  Six: 10% cumulative callable, $160 face                                                                     |   |                              |   |                           |   |   |   |
| value;                  7,812.5 shares issued                                                                                       |   |                              | 1,250  |                           |   | - |   |
|                                                                                                                                |   |                              | 5,116  |                           |   | 3,866 |   |
|                                                                                                                                     |   |                              |   |                           |   |   |   |
| Common                  stock, $1 par value; 10,000,000 shares authorized,                  3,446,995 shares issued and outstanding |   |                              | 3,447  |                           |   | 3,447 |   |
| Accumulated                  other comprehensive loss                                                                               |   |                              | -      |                           |   | (38 | ) |
| Retained                  earnings                                                                                                  |   |                              | 1,537  |                           |   | 1,690 |   |
| **Total                  Stockholders' Equity**                                                                                     |   |                              | 10,100 |                           |   | 8,965 |   |
|                                                                                                                                |   |                              |   |                           |   |   |   |
|                                                                                                                                |   | $                                 | 36,417 |                           | $      | 33,166 |   |
|                                                                                                                                |   |                              |   |                           |   |   |   |
|                                                                                                                                |   |                              |   |                           |   |   |   |
| See                  notes to condensed consolidated financial statements.                                                          |   |                              |   |                           |   |   |   |

----

**CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS**

**Maxco,      Inc. and Subsidiaries**

**(Unaudited)**

|                                                                            |   | **Three                  Months Ended December 31,**         |   |
|---------------------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|
|                                                                            |   | **2005**                                                     |   | **2004** |   |
|                                                                            |   | ***(in                  thousands, except per share data)*** |   |
| **Net                  Sales**                                                  |   | $                                                            | 11,144 |   | $ | 11,414 |   |
| **Costs                  and Expenses:**                                        |   |                                                         |   |   |   |   |   |
| Cost                  of sales and operating expenses                           |   |                                                         | 7,387  |   |   | 7,437 |   |
| Selling,                  general and administrative                            |   |                                                         | 2,881  |   |   | 2,654 |   |
| Depreciation                  and amortization                                  |   |                                                         | 778    |   |   | 742 |   |
|                                                                            |   |                                                         | 11,046 |   |   | 10,833 |   |
| **Operating                  Income**                                           |   |                                                         | 98     |   |   | 581 |   |
| **Other                  Income (Expense)**                                     |   |                                                         |   |   |   |   |   |
| Investment,                  interest, and other income, net                    |   |                                                         | 7      |   |   | - |   |
| Gain                  on sale of assets                                         |   |                                                         | -      |   |   | 2 |   |
| Interest                  expense                                               |   |                                                         | (345   | ) |   | (371 | ) |
| **Net                  Income (Loss)**                                          |   |                                                         | (240   | ) |   | 212 |   |
| Less                  preferred stock dividends                                 |   |                                                         | (102   | ) |   | (102 | ) |
| **Net                  Income (Loss) Applicable to Common Stock**               |   | $                                                            | (342   | ) | $ | 110 |   |
|                                                                            |   |                                                         |   |   |   |   |   |
| **Net                  Income (Loss) Per Common Share—Basic and Diluted** |   | $                                                            | (0.10  | ) | $ | 0.04 |   |
|                                                                            |   |                                                         |   |   |   |   |   |
|                                                                            |   |                                                         |   |   |   |   |   |
|                                                                            |   |                                                         |   |   |   |   |   |
| See                  notes to consolidated financial statements                 |   |                                                         |   |   |   |   |   |

----

**CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS**

**Maxco,      Inc. and Subsidiaries**

**(Unaudited)**

|                                                                            |   | **Nine                  Months Ended December 31,**          |   |
|---------------------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|
|                                                                            |   | **2005**                                                     |   | **2004** |   |
|                                                                            |   | ***(in                  thousands, except per share data)*** |   |
| **Net                  Sales**                                                  |   | $                                                            | 33,988 |   | $ | 33,937 |   |
| **Costs                  and Expenses:**                                        |   |                                                         |   |   |   |   |   |
| Cost                  of sales and operating expenses                           |   |                                                         | 21,813 |   |   | 22,152 |   |
| Selling,                  general and administrative                            |   |                                                         | 8,674  |   |   | 8,164 |   |
| Depreciation                  and amortization                                  |   |                                                         | 2,310  |   |   | 2,229 |   |
|                                                                            |   |                                                         | 32,797 |   |   | 32,545 |   |
| **Operating                  Income**                                           |   |                                                         | 1,191  |   |   | 1,392 |   |
| **Other                  Income (Expense)**                                     |   |                                                         |   |   |   |   |   |
| Investment,                  interest, and other income, net                    |   |                                                         | 42     |   |   | 151 |   |
| Gain                  on sale of assets                                         |   |                                                         | 2      |   |   | 59 |   |
| Interest                  expense                                               |   |                                                         | (1,082 | ) |   | (1,136 | ) |
| **Net                  Income**                                                 |   |                                                         | 153    |   |   | 466 |   |
| Less                  preferred stock dividends                                 |   |                                                         | (306   | ) |   | (306 | ) |
| **Net                  Income (Loss) Applicable to Common Stock**               |   | $                                                            | (153   | ) | $ | 160 |   |
|                                                                            |   |                                                         |   |   |   |   |   |
| **Net                  Income (Loss) Per Common Share—Basic and Diluted** |   | $                                                            | (0.04  | ) | $ | 0.05 |   |
|                                                                            |   |                                                         |   |   |   |   |   |
|                                                                            |   |                                                         |   |   |   |   |   |
|                                                                            |   |                                                         |   |   |   |   |   |
| See                  notes to consolidated financial statements                 |   |                                                         |   |   |   |   |   |

----

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ EQUITY**

**Maxco,      Inc. and Subsidiaries**

**(Unaudited)**

|                                                             |   | **Number                  of Common Shares Outstanding**                                           |      | **Preferred                  Stock** |   | **Common                  Stock** |   | **Accumulated                  Comprehensive Loss** |   | **Retained                  Earnings** |   | **Totals** |   |
|------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------|-----------|--------------------------------------|--------|-----------------------------------|--------|-----------------------------------------------------|--------|----------------------------------------|--------|------------|--------|
|                                                             |   | ***(in                  thousands, except number of common shares                  outstanding)*** |      |
|                                                             |   |                                                                                               |      |                                 |   |                              |   |                                                |   |                                   |   |       |   |
| **Balances                  at April 1, 2005**                   |   |                                                                                               | 3,446,995 |                                 | $      | 3,866                             |   | $                                                   | 3,447  |                                   | $      | (38        | )      | $ | 1,690 |   | $ | 8,965 |   |
| Net                  income for the period                       |   |                                                                                               |      |                                 |   |                              |   |                                                |   |                                   |   |       |   |   | 153 |   |   | 153 |   |
| Unrealized                  gain on expiration of swap agreement |   |                                                                                               |      |                                 |   |                              |   |                                                |   |                                   |   | 38         |   |   |   |   |   | 38 |   |
| Comprehensive                  income                            |   |                                                                                               |      |                                 |   |                              |   |                                                |   |                                   |   |       |   |   |   |   |   | 191 |   |
| Conversion                  of debt to preferred stock           |   |                                                                                               |      |                                 |   | 1,250                             |   |                                                |   |                                   |   |       |   |   |   |   |   | 1,250 |   |
| Preferred                  stock dividends                       |   |                                                                                               |      |                                 |   |                                   |   |                                                |        |                                   |   |            |   |   | (306 | ) |   | (306 | ) |
| **Balances                  at December 31, 2005**               |   |                                                                                               | 3,446,995 |                                 | $      | 5,116                             |   | $                                                   | 3,447  |                                   | $      | -          |   | $ | 1,537 |   | $ | 10,100 |   |
|                                                             |   |                                                                                               |      |                                 |   |                              |   |                                                |   |                                   |   |       |   |   |   |   |   |   |   |
|                                                             |   |                                                                                               |      |                                 |   |                              |   |                                                |   |                                   |   |       |   |   |   |   |   |   |   |
| See                  notes to consolidated financial statements. |   |                                                                                               |      |                                 |   |                              |   |                                                |   |                                   |   |       |   |   |   |   |   |   |   |

----

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**Maxco,      Inc. and Subsidiaries**

**(Unaudited)**

|                                                                     |   | **Nine                  Months Ended December 31,** |   |
|--------------------------------------------------------------------------|--------|-----------------------------------------------------|--------|
|                                                                     |   | **2005**                                            |   | **2004** |   |
|                                                                     |   | ***(in                  thousands)***               |   |
| **Operating                  Activites**                                 |   |                                                |   |   |   |
| Net                  income                                              |   | $                                                   | 153    |   | $ | 466 |   |
| Adjustments                  to reconcile net income to net cash         |   |                                                |   |   |   |   |   |
| provided                  by operating activites:                        |   |                                                |   |   |   |   |   |
| Net                  gains                                               |   |                                                | (2     | ) |   | (59 | ) |
| Depreciation                  and other non-cash charges                 |   |                                                | 2,340  |   |   | 2,230 |   |
| Changes                  in operating assets and liabilities             |   |                                                | (719   | ) |   | 592 |   |
| **Net                  Cash Provided By Operating Activities**           |   |                                                | 1,772  |   |   | 3,229 |   |
|                                                                     |   |                                                |   |   |   |   |   |
| **Investing                  Activities**                                |   |                                                |   |   |   |   |   |
| Collections                  on notes receivable                         |   |                                                | 143    |   |   | 1,013 |   |
| Sale                  of buildings                                       |   |                                                | 409    |   |   | - |   |
| Purchase                  of subsidiaries                                |   |                                                | (342   | ) |   | - |   |
| Purchases                  of property and equipment                     |   |                                                | (1,341 | ) |   | (685 | ) |
| Other                                                                    |   |                                                | 49     |   |   | 64 |   |
| **Net                  Cash (Used In) Provided By Investing Activities** |   |                                                | (1,082 | ) |   | 392 |   |
|                                                                     |   |                                                |   |   |   |   |   |
| **Financing                  Activities**                                |   |                                                |   |   |   |   |   |
| Net                  proceeds from (repayments on) line of credit        |   |                                                | 1,957  |   |   | (696 | ) |
| Net                  repayments on other debt obligations                |   |                                                | (2,469 | ) |   | (2,874 | ) |
| **Net                  Cash Used In Financing Activities**               |   |                                                | (512   | ) |   | (3,570 | ) |
|                                                                     |   |                                                |   |   |   |   |   |
| **Increase                  in Cash and Cash Equivalents**               |   |                                                | 178    |   |   | 51 |   |
| **Cash                  and Cash Equivalents at Beginning of Period**    |   |                                                | 1,781  |   |   | 78 |   |
| **Cash                  and Cash Equivalents at End of Period**          |   | $                                                   | 1,959  |   | $ | 129 |   |
|                                                                     |   |                                                |   |   |   |   |   |
| **Supplemental                  cash flow disclosure:**                  |   |                                                |   |   |   |   |   |
| Interest                  paid                                           |   | $                                                   | 1,153  |   | $ | 1,030 |   |
| Conversion                  of debt to preferred stock                   |   |                                                | 1,250  |   |   | - |   |
|                                                                     |   |                                                |   |   |   |   |   |
|                                                                     |   |                                                |   |   |   |   |   |
| See                  notes to consolidated financial statements.         |   |                                                |   |   |   |   |   |

----

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**Maxco,      Inc. and Subsidiaries**

**December      31, 2005**

**NOTE      1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING      POLICIES**

----

**NOTE      2 - EARNINGS PER SHARE**

|                                                                           |   | **Three                  Months Ended**                      |   | **Nine                  Months Ended** |   |
|--------------------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                                           |   | **December                  31,**                            |   | **December                  31,**      |   |
|                                                                           |   | **2005**                                                     |   | **2004**                               |   | **2005** |   | **2004** |   |
| **NUMERATOR:**                                                                 |   | ***(in                  thousands, except per share data)*** |   |
| Net                  income (loss)                                             |   | $                                                            | (240   | )                                      | $      | 212 |   | $ | 153 |   | $ | 466 |   |
| Preferred                  stock dividends                                     |   |                                                         | (102   | )                                      |   | (102 | ) |   | (306 | ) |   | (306 | ) |
| **Numerator                  for basic and diluted earnings per share—** |   |                                                         |   |                                   |   |   |   |   |   |   |   |   |   |
| **income                  (loss) available to common stockholders**            |   | $                                                            | (342   | )                                      | $      | 110 |   | $ | (153 | ) | $ | 160 |   |
| **DENOMINATOR:**                                                               |   |                                                         |   |                                   |   |   |   |   |   |   |   |   |   |
| **Denominator                  for basic and diluted earnings per**            |   |                                                         |   |                                   |   |   |   |   |   |   |   |   |   |
| **share—weighted                  average shares**                       |   |                                                         | 3,447  |                                   |   | 3,101 |   |   | 3,447 |   |   | 3,101 |   |
| **BASIC                  AND DILUTED EARNINGS (LOSS) PER SHARE**               |   | $                                                            | (0.10  | )                                      | $      | 0.04 |   | $ | (0.04 | ) | $ | 0.05 |   |

**NOTE      3 - RESTRICTED CASH**

**NOTE      4 - COMPREHENSIVE INCOME**

|                                               |   | **Three                  Months Ended** |   | **Nine                  Months Ended** |   |
|----------------------------------------------------|--------|-----------------------------------------|--------|----------------------------------------|--------|
|                                               |   | **December                  31,**       |   | **December                  31,**      |   |
|                                               |   | **2005**                                |   | **2004**                               |   | **2005** |   | **2004** |   |
|                                               |   | ***(in                  thousands)***   |   |                                   |   |   |   |   |   |
| Net                  income (loss)                 |   | $                                       | (240   | )                                      | $      | 212 |   | $ | 153 |   | $ | 466 |   |
| Unrealized                  gain on swap agreement |   |                                    | 9      |                                   |   | 31 |   |   | 38 |   |   | 109 |   |
| Comprehensive                  income (loss)       |   | $                                       | (231   | )                                      | $      | 243 |   | $ | 191 |   | $ | 575 |   |

**NOTE      5 - INDUSTRY SEGMENT INFORMATION**

|                                           |   | **December                  31,**     |   | **March                  31,** |   |
|------------------------------------------------|--------|---------------------------------------|--------|--------------------------------|--------|
|                                           |   | **2005**                              |   | **2005**                       |   |
|                                           |   | ***(in                  thousands)*** |   |
| **Identifiable                  Assets:**      |   |                                  |   |                           |   |
| Heat                  treating                 |   | $                                     | 27,754 |                           | $      | 27,081 |   |
| Corporate                  and other           |   |                                  | 6,222  |                           |   | 3,357 |   |
| Investments                  and advances      |   |                                  | 2,441  |                           |   | 2,728 |   |
| **Total                  Identifiable Assets** |   | $                                     | 36,417 |                           | $      | 33,166 |   |

----

|                                                             |   | **Three                  Months Ended** |   | **Nine                  Months Ended** |   |
|------------------------------------------------------------------|--------|-----------------------------------------|--------|----------------------------------------|--------|
|                                                             |   | **December                  31,**       |   | **December                  31,**      |   |
|                                                             |   | **2005**                                |   | **2004**                               |   | **2005** |   | **2004** |   |
|                                                             |   | ***(in                  thousands)***   |   |
| **Net                  Sales:**                                  |   |                                    |   |                                   |   |   |   |   |   |
| Heat                  treating                                   |   | $                                       | 11,144 |                                   | $      | 11,414 |   | $ | 33,988 |   | $ | 33,937 |   |
| Corporate                  and other                             |   |                                    | -      |                                   |   | - |   |   | - |   |   | - |   |
| **Total                  Net Sales**                             |   | $                                       | 11,144 |                                   | $      | 11,414 |   | $ | 33,988 |   | $ | 33,937 |   |
|                                                             |   |                                    |   |                                   |   |   |   |   |   |   |   |   |   |
| **Operating                  Earnings (Loss):**                  |   |                                    |   |                                   |   |   |   |   |   |   |   |   |   |
| Heat                  treating                                   |   | $                                       | 833    |                                   | $      | 997 |   | $ | 3,200 |   | $ | 2,665 |   |
| Corporate                  and other                             |   |                                    | (735   | )                                      |   | (416 | ) |   | (2,009 | ) |   | (1,273 | ) |
| **Total                  Operating Earnings**                    |   | $                                       | 98     |                                   | $      | 581 |   | $ | 1,191 |   | $ | 1,392 |   |
|                                                             |   |                                    |   |                                   |   |   |   |   |   |   |   |   |   |
| **Depreciation                  and Amortization Expense:**      |   |                                    |   |                                   |   |   |   |   |   |   |   |   |   |
| Heat                  treating                                   |   | $                                       | 772    |                                   | $      | 735 |   | $ | 2,290 |   | $ | 2,206 |   |
| Corporate                  and other                             |   |                                    | 6      |                                   |   | 6 |   |   | 20 |   |   | 23 |   |
| **Total                  Depreciation and Amortization Expense** |   | $                                       | 778    |                                   | $      | 741 |   | $ | 2,310 |   | $ | 2,229 |   |
|                                                             |   |                                    |   |                                   |   |   |   |   |   |   |   |   |   |
| **Capital                  Expenditures:**                       |   |                                    |   |                                   |   |   |   |   |   |   |   |   |   |
| Heat                  treating                                   |   | $                                       | 353    |                                   | $      | 148 |   | $ | 1,328 |   | $ | 685 |   |
| Corporate                  and other                             |   |                                    | -      |                                   |   | - |   |   | 13 |   |   | - |   |
| **Total                  Capital Expenditures**                  |   | $                                       | 353    |                                   | $      | 148 |   | $ | 1,341 |   | $ | 685 |   |

**NOTE      6 - DEBT**

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|                                                                                                                      |   | **December                  31,**     |   | **March                  31,** |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------------------------------|--------|
|                                                                                                                      |   | **2005**                              |   | **2005**                       |   |
|                                                                                                                      |   | ***(in                  thousands)*** |   |
| **Short                  term obligations:**                                                                              |   |                                  |   |                           |   |
| Notes                  payable (various interest rates)                                                                   |   | $                                     | 226    |                           | $      | 1,554 |   |
| Mortgage                  notes payable (prime +3%)                                                                       |   |                                  | 1,188  |                           |   | - |   |
| Revolving                  line of credit (LIBOR + 2%)                                                                    |   |                                  | -      |                           |   | 537 |   |
|                                                                                                                      |   | $                                     | 1,414  |                           | $      | 2,091 |   |
|                                                                                                                      |   |                                  |   |                           |   |   |   |
| **Long                  term obligations:**                                                                               |   |                                  |   |                           |   |   |   |
| Term                  notes (various variable interest rates)                                                             |   | $                                     | 2,905  |                           | $      | 4,930 |   |
| Revolving                  line of credit (LIBOR + 1.25%)                                                                 |   |                                  | 2,494  |                           |   | - |   |
| Mortgage                  notes payable (various variable interest rates)                                                 |   |                                  | 5,744  |                           |   | 4,962 |   |
| Equipment                  purchase contracts and capitalized lease                  obligations (various interest rates) |   |                                  | 1,587  |                           |   | 1,791 |   |
| Subordinated                  debt (fixed rate of 10.00%)                                                                 |   |                                  | 346    |                           |   | 346 |   |
| Other                  amounts due on real estate held for sale                                                           |   |                                  | 1,034  |                           |   | - |   |
|                                                                                                                      |   |                                  | 14,110 |                           |   | 12,029 |   |
| Less                  current maturities                                                                                  |   |                                  | 5,328  |                           |   | 4,959 |   |
|                                                                                                                      |   | $                                     | 8,782  |                           | $      | 7,070 |   |

**Settlement        Agreement and Indemnification**

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** **

**NOTE      7 - FEDERAL INCOME TAXES**

**NOTE      8 - PREFERRED STOCK DIVIDENDS**

**NOTE      9 - INVENTORIES**

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|                              |   | **December                  31,**     |   | **March                  31,** |   |
|-----------------------------------|--------|---------------------------------------|--------|--------------------------------|--------|
|                              |   | **2005**                              |   | **2005**                       |   |
|                              |   | ***(in                  thousands)*** |   |
| Raw                  materials    |   | $                                     | 710    |                           | $      | 329 |   |
| Work                  in progress |   |                                  | 121    |                           |   | 157 |   |
| Finished                  goods   |   |                                  | -      |                           |   | 48 |   |
|                              |   | $                                     | 831    |                           | $      | 534 |   |

**NOTE      10 - REAL ESTATE INVESTMENT (DISCONTINUED AND HELD FOR      SALE)**

**NOTE      11 - ACCOUNTS RECEIVABLE AND PAYABLE—RELATED PARTIES**

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**NOTE      12 - BOARD RESOLUTION AND DEREGISTRATION**

**ITEM      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS      OF      OPERATIONS**

**CRITICAL      ACCOUNTING POLICIES**

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***Principles      of Consolidation and Transactions with Affiliates***

***Revenue      Recognition***

***Goodwill,      Intangible and Other Long-Lived Assets***

***Derivative      Financial Instruments***

***Material      Trends and Uncertainties***

**Caution      Concerning Forward Looking Statements and Certain Risks Related to Our Business      and Our Company — Safe Harbor Statements**

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    -  ***Dependence            on Automotive Industry and Industry Cyclicality***—The            industries in which we operate depend upon general economic conditions            and are            highly cyclical. Our performance is affected particularly by new vehicle            sales, which can be highly sensitive to changes in interest rates, consumer            confidence and fuel costs. We experience sales declines during the third            and            fourth calendar quarter as a result of scheduled OEM shutdowns. 
    -  ***Customer            Concentration***—Our            base of customers is concentrated among original equipment manufacturers            as            well as Tier I and Tier II suppliers in North America. The loss of business            from a major customer, the discontinuance of particular vehicle models            or a            change in regulations or auto consumer preferences could materially adversely            affect us. In addition, certain of our customers have suffered financial            distress, which may materially adversely impact us as well in terms of            the            potential for lost revenue and/or uncollectible accounts            receivable. 
    -  ***Ability            to Finance Capital Requirements***—Our            business is capital intensive. We have made substantial capital investments            to            improve capacity and productivity and to meet customer requirements.            More            investment is required to maintain and expand our future business awards.            If            we are unable to meet future capital requirements, our business may be            materially adversely affected. 
    -  ***Increases            in Energy Costs***—            Increases in energy costs could negatively affect our financial health            and            results. To the extent feasible, in light of competitive factors, we            have            offset these fluctuations through selective price adjustments. 
    -  ***Increases            in Healthcare Costs***—            Increases in our healthcare costs could negatively affect our financial            health            and results. 
    -  ***Our            Industries are Highly Competitive***—            Continuing trends among our customers will increase competitive pressures            in            our businesses. The continuing trend towards limiting outside suppliers            involves significant risks, as well as opportunities, and has increased            competition. We have experienced and may continue to experience adverse            pricing pressures as a result. 
    -  ***Changing            Technology***—Our            processes are subject to changing technology, which could place us at            a            competitive disadvantage relative to alternative processes introduced            by            competitors. We may require significant ongoing and recurring additional            capital expenditures to remain competitive. 
    -  ***Changing            Processes***—A            change in a foundry’s            mold            line may eliminate the need for heat treating by controlled cooling in            mold            which would have a materially adverse affect on our business. 
    -  ***Dependence            on Key Personnel and Relationships***—We            depend on the services of key individuals, particularly our executive            officers            and senior managers. The loss of any key individual could materially            and            adversely harm us. 
    -  ***Labor            Stoppages***—Our            customers or suppliers may be subject to work stoppages at their facilities,            which could materially and adversely harm us. 
    -  ***Outsourcing            Trend***—Our            strategies may not succeed if anticipated outsourcing fails to materialize            to            the extent we have assumed. Principal risks to continued outsourcing            are            union/labor considerations and objections. 
    -  ***Offshoring            Trend***—Our            customers could relocate their manufacturing facilities out of the United            States which could materially and adversely harm            us. 

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-  ***Environmental          Matters***—Our          business may be materially and adversely affected by compliance obligations          and liabilities under environmental laws and regulations. 

**Market      Opportunities and Growth Strategies**

| ·   |                       Companies are focusing on core competencies and outsourcing non-core                    processes such as heat treating and coating. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   |                     In some cases, our customers are consolidating their supply                  base. |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   |                     Foreign automakers are locating manufacturing facilities in the                  United                  States. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------|

-  ***Expand          Capabilities***.    By          adding new capabilities in our existing plants we believe that we could          secure          new business from our existing customer base. By offering a “one-stop" shop we          could significantly reduce logistical costs for our customers. 
-  ***Provide          Technical Expertise To Support Our Customers*****.**    We          believe that our technical expertise is one of our competitive advantages.          We          partner with our customers to find ways to improve quality and reduce          cost. 
-  ***Cost          Savings Opportunities and Efficiency Improvements***.    We          have pursued, and will continue to pursue, cost savings that enhance our          competitive position in serving our customers. We have made significant          investments in material handling equipment in order to improve efficiency          and          to provide a safer environment for our employees. 
-  ***Pursue          Strategic Acquisitions***.    We          plan to pursue acquisitions that strategically expand our process capabilities          and contribute to our geographic diversity and market share. Our ability          to          execute this element of our strategy may be limited by our capital          resources. 

**MATERIAL        CHANGES IN FINANCIAL CONDITION**

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**RESULTS      OF OPERATIONS**

**Three      Months Ended December 31, 2005 Compared to 2004**

|                                 |   | **Three                  Months Ended** |   | **Three                  Months Ended** |   |
|--------------------------------------|--------|-----------------------------------------|--------|-----------------------------------------|--------|
|                                 |   | **December                  31, 2005**  |   | **December                  31, 2004**  |   |
|                                 |   |                                    |   | **Operating**                           |   |   |   | **Operating** |   |
|                                 |   | **Net                  Sales**          |   | **Earnings                  (Loss)**    |   | **Net                  Sales** |   | **Earnings                  (Loss)** |   |
|                                 |   | ***(in                  thousands)***   |   |
| Heat                  treating       |   | $                                       | 11,144 |                                    | $      | 829 |   | $ | 11,414 |   | $ | 997 |   |
| Corporate                  and other |   |                                    | -      |                                    |   | (731 | ) |   | - |   |   | (416 | ) |
|                                 |   | $                                       | 11,144 |                                    | $      | 98 |   | $ | 11,414 |   | $ | 581 |   |

**Nine      Months Ended December 31, 2005 Compared to 2004**

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|                                 |   | **Nine                  Months Ended** |   | **Nine                  Months Ended** |   |
|--------------------------------------|--------|----------------------------------------|--------|----------------------------------------|--------|
|                                 |   | **December                  31, 2005** |   | **December                  31, 2004** |   |
|                                 |   |                                   |   | **Operating**                          |   |   |   | **Operating** |   |
|                                 |   | **Net                  Sales**         |   | **Earnings                  (Loss)**   |   | **Net                  Sales** |   | **Earnings                  (Loss)** |   |
|                                 |   | ***(in                  thousands)***  |   |
| Heat                  treating       |   | $                                      | 33,988 |                                   | $      | 3,200 |   | $ | 33,937 |   | $ | 2,665 |   |
| Corporate                  and other |   |                                   | -      |                                   |   | (2,009 | ) |   | - |   |   | (1,273 | ) |
|                                 |   | $                                      | 33,988 |                                   | $      | 1,191 |   | $ | 33,937 |   | $ | 1,392 |   |

**ITEM      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK**

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**ITEM      4. CONTROLS AND PROCEDURES**

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**PART      II — OTHER INFORMATION**

| Item                  1. | Legal                  Proceedings                                           |
|--------------------------|------------------------------------------------------------------------------|
|                     |                                                                         |   |
|                     |                                                                         | None |
|                     |                                                                         |   |
| Item                  2. | Unregistered                  Sales of Equity Securities and Use of Proceeds |
|                     |                                                                         |   |
|                     |                                                                         | None |
|                     |                                                                         |   |
| Item                  3. | Defaults                  upon Senior Securities                             |
|                     |                                                                         |   |
|                     |                                                                         | None |
|                     |                                                                         |   |
| Item                  4. | Submission                  of Matters to a Vote of Security Holders         |
|                     |                                                                         | None |
|                     |                                                                         |   |
| Item                  5. | Other                  Information                                           |
|                     |                                                                         |   |
|                     |                                                                         | The                  annual meeting of shareholders has been delayed more than 30 days                  later                  than it is traditionally held. The meeting will be held on March                  14,                  2006. |
|                     |                                                                         |   |
| 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). |
|                     |                                                                         |   |
| 3.2                      |                                                                         | First                  Amendment to the By-laws is hereby incorporated by reference from                  Form 8-K                  dated November 14, 2005 |
|                     |                                                                         |   |
| 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. |

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| 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.                                                                                                                                            |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.38       |   | Settlement                Agreement between and among American Realty Equities,                Inc., Capital Center Associates, L.L.C., L/M Associates, LLC, Max                A. Coon,                and Maxco, Inc. dated October 27, 2005 is hereby incorporated by                reference                from Form 8-K dated November 2, 2005.                                 |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                   |
| 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.                                                                                                                                                                                                                                                      |

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|                                          |                                                                                                                                  |                                             |
|-----------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|
|                                          | MAXCO,                  INC.                                                                                                          |
|                                     |                                                                                                                             |                                        |
| Date: April                 3, 2006 | By:                                                                                                                         | /s/ LAWRENCE                O. FIELDS  |
|                                          | Lawrence                O. Fields,                                                                                                    |
|                                          | Chief                  Financial Officer and                  Treasurer (Principal Financial and Accounting                  Officer) |

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