----

----

**FORM      10-Q**

**For      the Quarter Ended December 31, 2006**

**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)* |   |
|   |                                                                           |   |                                    |   |
|   |                                                                           |   |                                    |   |
|   | 1005                Charlevoix Drive, Suite 100                                |   |                                    |   |
|   | Grand                Ledge, Michigan                                           |   | 48837                                   |   |
|   | *(Address                of principal executive                offices)*  |   | *(Zip                Code)*             |   |

|   | Yes þ | No  ̈ |   |
|--------|-----------------|----------------|--------|

|   | Yes  ̈ | No þ |   |
|--------|-----------------|----------------|--------|

| Class                        |   | Outstanding                at January 31,                2007 |
|-----------------------------------|--------|---------------------------------------------------------------|
|                              |   |                                                          |
| Common                Stock  |   | 3,454,039                shares                               |

----

**MAXCO,      INC.**

**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                                                                                                                      |
|                                                                         |                                                                                                                   |
|  CONDENSED                  CONSOLIDATED STATEMENTS OF OPERATIONS       | 6                                                                                                                      |
|                                                                         |                                                                                                                   |
|  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                  OFOPERATIONS | 14 |
|                                                                         |                                                                                                                   |   |
|  ITEM                  3.                                               |  QUANTITATIVE                  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                      | 16 |
|                                                                         |                                                                                                                   |   |
|  ITEM                  4.                                               |  CONTROLS                  AND PROCEDURES                                                                         | 16 |
|                                                                         |                                                                                                                   |   |
| PART                  II — OTHER INFORMATION                           | 18                                                                                                                     |
|                                                                         |                                                                                                                   |
|  Item                  1.                                               |  Legal                  Proceedings                                                                               | 18 |
|                                                                         |                                                                                                                   |   |
|  Item                  1A                                               |  Risk                  Factors                                                                                    | 18 |
|                                                                         |                                                                                                                   |   |
|  Item                  2.                                               |  Unregistered                  Sales of Equity Securities and Use of Proceeds                                     | 18 |
|                                                                         |                                                                                                                   |   |
|  Item                  3.                                               |  Defaults                  upon Senior Securities                                                                 | 18 |
|                                                                         |                                                                                                                   |   |
|  Item                  4.                                               |  Submission                  of Matters to a Vote of Security Holders                                             | 18 |
|                                                                         |                                                                                                                   |   |
|  Item                  5.                                               |  Other                  Information                                                                               | 18 |
|                                                                         |                                                                                                                   |   |
|  Item                  6.                                               |  Exhibits                                                                                                         | 18 |
|                                                                         |                                                                                                                   |   |
| SIGNATURES                                                                   | 21                                                                                                                     |
|                                                                         |                                                                                                                   |
| CERTIFICATION                                                                | 22                                                                                                                     |

----

**PART      I — FINANCIAL INFORMATION**

**ITEM      1. CONSOLIDATED FINANCIAL STATEMENTS**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

**Maxco,      Inc. and Subsidiaries**

|                                                                                                                                       |   | **December                  31,**     |         | **March                  31,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------------|--------------------------------|--------|
|                                                                                                                                       |   | **2006**                              |         | **2006**                       |   |
|                                                                                                                                       |   | **(Unaudited)**                       |         | **(Restated)**                 |   |
|                                                                                                                                       |   | ***(in                  thousands)*** |         |
| **ASSETS**                                                                                                                                 |   |                                  |         |                           |   |
| **Current                  Assets**                                                                                                        |   |                                  |         |                           |   |
| Cash                  and cash equivalents                                                                                                 |   | $                                     | 290          |                           | $      | 738 |   |
| Restricted                  cash                                                                                                           |   |                                  | -            |                           |   | 750 |   |
| Accounts                  and notes receivable                                                                                             |   |                                  | 133          |                           |   | 132 |   |
| Prepaid                  expenses and other                                                                                                |   |                                  | 39           |                           |   | 38 |   |
| Assets                  of discontinued business                                                                                           |   |                                  | 25,504       |                           |   | 27,325 |   |
| **Total                  Current Assets**                                                                                                  |   |                                  | 25,966       |                           |   | 28,983 |   |
|                                                                                                                                       |   |                                  |         |                           |   |   |   |
| Building                  held for sale                                                                                                    |   |                                  | 7,918        |                           |   | - |   |
| Real                  estate held for sale                                                                                                 |   |                                  | 2,871        |                           |   | 2,900 |   |
| Real                  estate investments held for sale                                                                                     |   |                                  | 1,427        |                           |   | 627 |   |
| Investments                                                                                                                                |   |                                  | 555          |                           |   | 688 |   |
| Notes                  and contracts receivable, including related parties, and other                  (net of                  allowance) |   |                                  | 563          |                           |   | 915 |   |
| Property                  and equipment, net                                                                                               |   |                                  | 8            |                           |   | 13 |   |
|                                                                                                                                       |   |                                  |    |                           |   |     |   |
| **TOTAL                  ASSETS**                                                                                                          |   | $                                     | 39,308       |                           | $      | 34,126 |   |

----

**CONDENSED      CONSOLIDATED BALANCE SHEETS — CONTINUED**

**Maxco,      Inc. and Subsidiaries**

|                                                                 |   | **December                  31,**     |                     | **March                  31,** |   |
|----------------------------------------------------------------------|--------|---------------------------------------|--------------------------|--------------------------------|--------|
|                                                                 |   | **2006**                              |                     | **2006**                       |   |
|                                                                 |   | **(Unaudited)**                       |                     | **(Restated)**                 |   |
|                                                                 |   | ***(in                  thousands)*** |                     |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**            |   |                                  |                     |                           |   |
| **Current                  liabilities**                             |   |                                  |                     |                           |   |
| Notes                  payable                                       |   | $                                     | 1,326                    |                           | $      | 1,414 |   |
| Accounts                  payable                                    |   |                                  | 240                      |                           |   | 280 |   |
| Employee                  compensation                               |   |                                  | 822                      |                           |   | 835 |   |
| Incentive                  compensation                              |   |                                  | 2,026                    |                           |   | 2,026 |   |
| Taxes,                  interest, and other liabilities              |   |                                  | 4,879                    |                           |   | 4,520 |   |
| Current                  maturities of long-term obligations         |   |                                  | 434                      |                           |   | 3,120 |   |
| Liabilities                  of discontinued business                |   |                                  | 14,145                   |                           |   | 11,018 |   |
| **Total                  Current Liabilities**                       |   |                                  | 23,872                   |                           |   | 23,213 |   |
|                                                                 |   |                                  |                     |                           |   |   |   |
| **Long-Term                  Obligations, Less Current Maturities**  |   |                                  | 5,134                    |                           |   | 1,116 |   |
| **Total                  Liabilities**                               |   |                                  | 29,006                   |                           |   | 24,329 |   |
|                                                                 |   |                                  |                     |                           |   |   |   |
| **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                    |                           |   | 1,250 |   |
|                                                                 |   |                                  | 5,116                    |                           |   | 5,116 |   |
| Common                  stock, $1 par value; 10,000,000 shares       |   |                                  |                     |                           |   |   |   |
| authorized,                  3,454,039 shares issued and outstanding |   |                                  | 3,454                    |                           |   | 3,454 |   |
| Retained                  earnings                                   |   |                                  | 1,732                    |                           |   | 1,227 |   |
| **Total                  Stockholders' Equity**                      |   |                                  | 10,302                   |                           |   | 9,797 |   |
|                                                                 |   |                                  |      |                           |   |      |   |
|                                                                 |   | $                                     | 39,308                   |                           | $      | 34,126 |   |

----

**CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS**

**Maxco,      Inc. and Subsidiaries**

**(Unaudited)**

|                                                                                              |   | **Three                  Months Ended December 31,**         |   |
|---------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|
|                                                                                              |   | **2006**                                                     |   | **2005** |   |
|                                                                                              |   |                                                         |   | **(Restated)** |   |
|                                                                                              |   | ***(in                  thousands, except per share data)*** |   |
| **Revenue                  and Gains:**                                                           |   |                                                         |   |   |   |
| Rental                  income                                                                    |   | $                                                            | 262    |   | $ | 37 |   |
| Investment                  and other income (loss), net                                          |   |                                                         | (30    | ) |   | 26 |   |
| Interest                  income                                                                  |   |                                                         | 4      |   |   | 1 |   |
|                                                                                              |   |                                                         | 236    |   |   | 64 |   |
| **Costs                  and Expenses:**                                                          |   |                                                         |   |   |   |   |   |
| Selling,                  general and administrative                                              |   |                                                         | 610    |   |   | 781 |   |
| Interest                  expense                                                                 |   |                                                         | 412    |   |   | 220 |   |
| Depreciation                  and amortization                                                    |   |                                                         | 100    |   |   | 7 |   |
|                                                                                              |   |                                                         | 1,122  |   |   | 1,008 |   |
| **Operating                  Loss**                                                               |   |                                                         | (886   | ) |   | (944 | ) |
|                                                                                              |   |                                                         |   |   |   |   |   |
| **Other                  Income (Expense)**                                                       |   |                                                         |   |   |   |   |   |
| Gain                  on sale of assets                                                           |   |                                                         | -      |   |   | 34 |   |
| **Loss                  From Continuing Operations Before Federal Income                  Taxes** |   |                                                         | (886   | ) |   | (910 | ) |
| Federal                  income tax benefit                                                       |   |                                                         | 171    |   |   | 218 |   |
| **Loss                  From Continuing Operations**                                              |   |                                                         | (715   | ) |   | (692 | ) |
| Income                  from discontinued operations, net of tax                                  |   |                                                         | 357    |   |   | 452 |   |
| **Net                  Loss**                                                                     |   |                                                         | (358   | ) |   | (240 | ) |
| Less                  preferred stock dividends                                                   |   |                                                         | (133   | ) |   | (102 | ) |
| **Net                  Loss Applicable to Common Stock**                                          |   | $                                                            | (491   | ) | $ | (342 | ) |
|                                                                                              |   |                                                         |   |   |   |   |   |
| **Net                  Income (Loss) Per Common Share—Basic and Diluted**                   |   |                                                         |   |   |   |   |   |
| Continuing                  operations                                                            |   | $                                                            | (0.24  | ) | $ | (0.23 | ) |
| Discontinued                  operations                                                          |   |                                                         | 0.10   |   |   | 0.13 |   |
|                                                                                              |   | $                                                            | (0.14  | ) | $ | (0.10 | ) |

----

**CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS**

**Maxco,      Inc. and Subsidiaries**

**(Unaudited)**

|                                                                                              |   | **Nine                  Months Ended December 31,**          |   |
|---------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|
|                                                                                              |   | **2006**                                                     |   | **2005** |   |
|                                                                                              |   |                                                         |   | **(Restated)** |   |
|                                                                                              |   | ***(in                  thousands, except per share data)*** |   |
| **Revenue                  and Gains:**                                                           |   |                                                         |   |   |   |
| Rental                  income                                                                    |   | $                                                            | 306    |   | $ | 94 |   |
| Investment                  and other income                                                      |   |                                                         | 55     |   |   | 49 |   |
| Equity                  in loss of affiliates, net of tax                                         |   |                                                         | (58    | ) |   | - |   |
| Interest                  income                                                                  |   |                                                         | 60     |   |   | 20 |   |
|                                                                                              |   |                                                         | 363    |   |   | 163 |   |
| **Costs                  and Expenses:**                                                          |   |                                                         |   |   |   |   |   |
| Selling,                  general and administrative                                              |   |                                                         | 1,928  |   |   | 2,088 |   |
| Interest                  expense                                                                 |   |                                                         | 818    |   |   | 648 |   |
| Depreciation                  and amortization                                                    |   |                                                         | 105    |   |   | 24 |   |
|                                                                                              |   |                                                         | 2,851  |   |   | 2,760 |   |
| **Operating                  Loss**                                                               |   |                                                         | (2,488 | ) |   | (2,597 | ) |
|                                                                                              |   |                                                         |   |   |   |   |   |
| **Other                  Income (Expense)**                                                       |   |                                                         |   |   |   |   |   |
| Gain                  on sale of assets                                                           |   |                                                         | -      |   |   | 69 |   |
| **Loss                  From Continuing Operations Before Federal Income                  Taxes** |   |                                                         | (2,488 | ) |   | (2,528 | ) |
| Federal                  income tax benefit                                                       |   |                                                         | 1,131  |   |   | 890 |   |
| **Loss                  From Continuing Operations**                                              |   |                                                         | (1,357 | ) |   | (1,638 | ) |
| Income                  from discontinued operations, net of tax                                  |   |                                                         | 2,261  |   |   | 1,791 |   |
| **Net                  Loss**                                                                     |   |                                                         | 904    |   |   | 153 |   |
| Less                  preferred stock dividends                                                   |   |                                                         | (399   | ) |   | (306 | ) |
| **Net                  Loss Applicable to Common Stock**                                          |   | $                                                            | 505    |   | $ | (153 | ) |
|                                                                                              |   |                                                         |   |   |   |   |   |
| **Net                  Income (Loss) Per Common Share—Basic and Diluted**                   |   |                                                         |   |   |   |   |   |
| Continuing                  operations                                                            |   | $                                                            | (0.50  | ) | $ | (0.56 | ) |
| Discontinued                  operations                                                          |   |                                                         | 0.65   |   |   | 0.52 |   |
|                                                                                              |   | $                                                            | 0.15   |   | $ | (0.04 | ) |

----

** **
**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ EQUITY**

**Maxco,      Inc. and Subsidiaries**

**(Unaudited)**

|                                                  |   | **Number                  of Common Shares Outstanding**                                           |               | **Preferred                  Stock** |   | **Common                  Stock** |   | **Retained                  Earnings** |         |   | **Totals** |   |
|-------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------|--------------------|--------------------------------------|--------|-----------------------------------|--------|----------------------------------------|--------------|--------|------------|--------|
|                                                  |   | ***(in                  thousands, except number of common shares                  outstanding)*** |               |
|                                                  |   |                                                                                               |               |                                 |   |                              |   |                                   |         |   |       |   |
| **Balances                  at April 1, 2006**        |   |                                                                                               | 3,454,039          |                                 | $      | 5,116                             |   | $                                      | 3,454        |   | $          | 1,227  |   |   | $ | 9,797 |   |
| Net                  income for the nine month period |   |                                                                                               |               |                                 |   |                              |   |                                   |         |   |       | 904    |   |   |   | 904 |   |
| Preferred                  stock dividends            |   |                                                                                               |     |                                 |   |                         |   |                                   |    |   |       | (399   | ) |   |   | (399 | ) |
| **Balances                  at December 31, 2006**    |   |                                                                                               | 3,454,039          |                                 | $      | 5,116                             |   | $                                      | 3,454        |   | $          | 1,732  |   |   | $ | 10,302 |   |

----

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**Maxco,      Inc. and Subsidiaries**

**(Unaudited)**

|                                                                                                    |   | **Nine                  Months Ended December 31,** |               |
|---------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|--------------------|
|                                                                                                    |   | **2006**                                            |               | **2005** |   |
|                                                                                                    |   |                                                |               | **(Restated)** |   |
|                                                                                                    |   | ***(in                  thousands)***               |               |
| **Operating                  Activites**                                                                |   |                                                |               |   |   |
| Net                  income                                                                             |   | $                                                   | 904                |   | $ | 153 |   |
| Income                  from discontinued operations                                                    |   |                                                | (2,261             | ) |   | (1,791 | ) |
| Loss                  from continuing operations                                                        |   |                                                | (1,357             | ) |   | (1,638 | ) |
| Amounts                  provided by discontinued operation                                             |   |                                                | 7,209              |   |   | 1,242 |   |
| Adjustments                  to reconcile net income to net cash                                        |   |                                                |               |   |   |   |   |
| provided                  by operating activites:                                                       |   |                                                |               |   |   |   |   |
| Equity                  in net loss of affiliate                                                        |   |                                                | 58                 |   |   | - |   |
| Gain                  on sale of assets                                                                 |   |                                                | -                  |   |   | (69 | ) |
| Loss                  on investment                                                                     |   |                                                | -                  |   |   | 30 |   |
| Depreciation                  and other non-cash charges                                                |   |                                                | 105                |   |   | 24 |   |
| Decrease                  (increase) in accounts receivable                                             |   |                                                | 385                |   |   | (32 | ) |
| (Increase)                  decrease in prepaid expenses and other                                      |   |                                                | (1                 | ) |   | (19 | ) |
| Increase                  (decrease) in accounts payable and other current                  liabilities |   |                                                | (1,282             | ) |   | 890 |   |
| **Net                  Cash Provided By Operating Activities**                                          |   |                                                | 5,117              |   |   | 428 |   |
|                                                                                                    |   |                                                |               |   |   |   |   |
| **Investing                  Activities**                                                               |   |                                                |               |   |   |   |   |
| Purchase                  of building                                                                   |   |                                                | (8,500             | ) |   | - |   |
| Purchases                  of equipment and building improvements                                       |   |                                                | (287               | ) |   | (13 | ) |
| Collections                  on notes receivable                                                        |   |                                                | 135                |   |   | 143 |   |
| Purchase                  of subsidiary                                                                 |   |                                                | -                  |   |   | (142 | ) |
| Sale                  of buildings                                                                      |   |                                                | -                  |   |   | 409 |   |
| Other                                                                                                   |   |                                                | (95                | ) |   | (63 | ) |
| **Net                  Cash (Used In) Provided By Investing Activities**                                |   |                                                | (8,747             | ) |   | 334 |   |
|                                                                                                    |   |                                                |               |   |   |   |   |
| **Financing                  Activities**                                                               |   |                                                |               |   |   |   |   |
| Repayments                  on line of credit                                                           |   |                                                | (850               | ) |   | - |   |
| Proceeds                  from long term financing                                                      |   |                                                | 4,375              |   |   | - |   |
| Net                  repayments on other debt obligations                                               |   |                                                | (1,093             | ) |   | (593 | ) |
| **Net                  Cash Provided By (Used In) Financing Activities**                                |   |                                                | 2,432              |   |   | (593 | ) |
|                                                                                                    |   |                                                |     |   |   |     |   |
| **(Decrease)                  Increase in Cash and Cash Equivalents**                                   |   |                                                | (1,198             | ) |   | 169 |   |
| **Cash                  and Cash Equivalents at Beginning of Period**                                   |   |                                                | 1,488              |   |   | 1,638 |   |
| **Cash                  and Cash Equivalents at End of Period**                                         |   | $                                                   | 290                |   | $ | 1,807 |   |
|                                                                                                    |   |                                                |               |   |   |   |   |
| **Supplemental                  cash flows disclosure:**                                                |   |                                                |               |   |   |   |   |
| Interest                  paid                                                                          |   | $                                                   | 380                |   | $ | 649 |   |
| Conversion                  of debt to preferred stock                                                  |   |                                                | -                  |   |   | 1,250 |   |

----

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**Maxco,      Inc. and Subsidiaries**

**December      31, 2006**

**NOTE      1 - BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING      POLICIES**

***Business***

***Summary      of Significant Accounting Policies***

----

**NOTE      2 - EARNINGS PER SHARE**

|                                                                           |   | **Three                  Months Ended**                  |   | **Nine                  Months Ended** |   |
|--------------------------------------------------------------------------------|--------|----------------------------------------------------------|--------|----------------------------------------|--------|
|                                                                           |   | **December                  31,**                        |   | **December                  31,**      |   |
|                                                                           |   |                                                     |   | **2005**                               |   |   |   | **2005** |   |
|                                                                           |   | **2006**                                                 |   | **Restated**                           |   | **2006** |   | **Restated** |   |
|                                                                           |   | *(in                  thousands, except per share data)* |   |
| **NUMERATOR:**                                                                 |   |                                                     |   |                                   |   |   |   |   |   |
| Loss                  from continuing operations                               |   | $                                                        | (715   | )                                      | $      | (692 | ) | $ | (1,357 | ) | $ | (1,638 | ) |
| Income                  from discontinued operation                            |   |                                                     | 357    |                                   |   | 452 |   |   | 2,261 |   |   | 1,791 |   |
| Net                  (loss) income                                             |   |                                                     | (358   | )                                      |   | (240 | ) |   | 904 |   |   | 153 |   |
| Preferred                  stock dividends                                     |   |                                                     | (133   | )                                      |   | (102 | ) |   | (399 | ) |   | (306 | ) |
| **Numerator                  for basic and diluted earnings per share—** |   |                                                     |        |                                   |   |  |   |   |  |   |   |  |   |
| **income                  (loss) available to common stockholders**            |   | $                                                        | (491   | )                                      | $      | (342 | ) | $ | 505 |   | $ | (153 | ) |
|                                                                           |   |                                                     |   |                                   |   |   |   |   |   |   |   |   |   |
| **DENOMINATOR:**                                                               |   |                                                     |   |                                   |   |   |   |   |   |   |   |   |   |
| **Denominator                  for basic and diluted earnings per**            |   |                                                     |   |                                   |   |   |   |   |   |   |   |   |   |
| **share—weighted                  average shares**                       |   |                                                     | 3,454  |                                   |   | 3,454 |   |   | 3,454 |   |   | 3,454 |   |
|                                                                           |   |                                                     |   |                                   |   |   |   |   |   |   |   |   |   |
| **BASIC                  AND DILUTED EARNINGS (LOSS) PER SHARE**               |   |                                                     |   |                                   |   |   |   |   |   |
| Continuing                  operations                                         |   | $                                                        | (0.24  | )                                      | $      | (0.23 | ) | $ | (0.50 | ) | $ | (0.56 | ) |
| Discontinued                  operations                                       |   |                                                     | 0.10   |                                   |   | 0.13 |   |   | 0.65 |   |   | 0.52 |   |
|                                                                           |   | $                                                        | (0.14  | )                                      | $      | (0.10 | ) | $ | 0.15 |   | $ | (0.04 | ) |

**NOTE      3 - RESTRICTED CASH**

**NOTE      4 - DEBT**

----

|                                                                                                                      |   | **December                  31,**     |   | **March                  31,** |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------------------------------|--------|
|                                                                                                                      |   | **2006**                              |   | **2006**                       |   |
|                                                                                                                      |   |                                  |   | **(Restated)**                 |   |
|                                                                                                                      |   | ***(in                  thousands)*** |   |
| **Short                  term obligations:**                                                                              |   |                                  |   |                           |   |
| Notes                  payable (various interest rates)                                                                   |   | $                                     | 226    |                           | $      | 1,414 |   |
| Revolving                  line of credit (prime + 1.25%)                                                                 |   |                                  | 1,100  |                           |   | - |   |
|                                                                                                                      |   | $                                     | 1,326  |                           | $      | 1,414 |   |
|                                                                                                                      |   |                                  |   |                           |   |   |   |
| **Long                  term obligations:**                                                                               |   |                                  |   |                           |   |   |   |
| Mortgage                  notes payable (various variable interest rates)                                                 |   | $                                     | 4,338  |                           | $      | 1,950 |   |
| Equipment                  purchase contracts and capitalized lease                  obligations (various interest rates) |   |                                  | 884    |                           |   | 1,940 |   |
| Subordinated                  debt (fixed rate of 10.00%)                                                                 |   |                                  | 346    |                           |   | 346 |   |
|                                                                                                                      |   |                                  | 5,568  |                           |   | 4,236 |   |
| Less                  current maturities                                                                                  |   |                                  | 434    |                           |   | 3,120 |   |
|                                                                                                                      |   | $                                     | 5,134  |                           | $      | 1,116 |   |

**Settlement      Agreement Resolution**

|   | 1. | On                August 30, 2006, Maxco, Inc. guaranteed a Mortgage Loan Agreement                (the                “Agreement”) for $2,775,000 between The Huntington National Bank (“HNB”)                and CCA. In addition to Maxco, Inc., other guarantors named are L/M                and                Max A. Coon. The Agreement, which is secured by a first mortgage                on a                commercial building in Lansing, Michigan (“CCA Building”), calls for CCA                to make 60 monthly payments of principal and interest of $22,363.76                plus a                final payment of the remaining principal and any accrued interest                on                September 15, 2011 to HNB. Maxco, Inc. and the other guarantors would                be                liable for payment to HNB should CCA                default. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | The                Company’s wholly-owned subsidiary, AAICO, Inc. (formerly known as                Atmosphere Annealing, Inc.), as part of refinancing of its debt with                its                principal lender, provided the Company with $5,761,333.25 as part                of an                intercompany demand note toward fulfilling the commitment to ARE.                The                $5,761,333.25, which was advanced under loan agreements with AAICO,                Inc.’s                principal lender, was collateralized by certain assets of AAICO,                Inc.                including real estate and equipment. As a result of the sale of the                operating assets of Atmosphere Annealing, Inc., this amount was repaid                on                February 2, 2007. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 3. | On                August 30, 2006, CCA, L/M and the Company agreed that the Company                loan the                $5,761,333.25 to CCA to fulfill the commitment to ARE. The loan to                CCA by                the Company is evidenced by a demand note, secured by a second mortgage                on                the CCA Building in favor of the Company, and guaranteed by L/M. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Indemnification      Matters**

** **

**NOTE      5 - FEDERAL INCOME TAXES**

**NOTE      6 - PREFERRED STOCK DIVIDENDS**

**NOTE      7 - REAL ESTATE INVESTMENTS HELD FOR SALE**

----

**NOTE      8 - NOTES AND CONTRACTS RECEIVABLE, INCLUDING RELATED      PARTIES**
**,      AND OTHER**

**NOTE      9 - SUBSEQUENT EVENT**

----

|                                    |   | **Three                  Months Ended** |   | **Nine                  Months Ended** |   |
|-----------------------------------------|--------|-----------------------------------------|--------|----------------------------------------|--------|
|                                    |   | **December                  31,**       |   | **December                  31,**      |   |
|                                    |   | **2006**                                |   | **2005**                               |   | **2006** |   | **2005** |   |
|                                    |   | ***(in                  thousands)***   |   |
| **Net                  sales**          |   | $                                       | 10,031 |                                   | $      | 11,144 |   | $ | 33,611 |   | $ | 33,988 |   |
| **Operating                  earnings** |   | $                                       | 576    |                                   | $      | 833 |   | $ | 3,974 |   | $ | 3,200 |   |

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

**CRITICAL      ACCOUNTING POLICIES**

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

***Revenue      Recognition***

----

**MATERIAL      CHANGES IN FINANCIAL CONDITION**

**RESULTS      OF CONTINUING OPERATIONS**

**Three      Months Ended December 31, 2006 Compared to 2005**

----

**Nine      Months Ended December 31, 2006 Compared to 200**
**5**

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

**ITEM      4. CONTROLS AND PROCEDURES**

----

**PART      II — OTHER INFORMATION**

|   | 1. | To                approve and adopt the sale of substantially all of the assets of                the                Company’s wholly owned subsidiary, Atmosphere Annealing, Inc. (“AAI”), and                AAI’s wholly owned subsidiary, BCGW, Inc. (“BCGW”) to Quanex Technologies,                Inc., the wholly owned subsidiary of Quanex Corporation, pursuant                to the                terms of the Asset Purchase Agreement, dated as of December 13, 2006,                by                and among Maxco, Inc., AAI, BCGW, Quanex Technologies, Inc. and Quanex                Corporation. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| For       |   | Against |   | Abstain |   |
|-----------|--------|---------|--------|---------|--------|
| 3,262,321 |   |    | 897    |    |   | 634 |   |

|   | 2. | Election                of five (5) members to the board of directors of Maxco,                Inc. |
|--------|----|-----------------------------------------------------------------------------------------------------|

|                               |   | For    |      | Withheld |   |
|------------------------------------|--------|--------|-----------|----------|--------|
|                               |   |   |      |     |   |
| Max                  A. Coon       |   |   | 3,676,189 |     |   | 3,421 |   |
| Sanjeev                  Deshpande |   |   | 3,669,909 |     |   | 9,701 |   |
| Joel                  I. Ferguson  |   |   | 3,659,709 |     |   | 19,901 |   |
| David                  R. Layton   |   |   | 3,660,199 |     |   | 19,411 |   |
| Samuel                  O. Mallory |   |   | 3,676,279 |     |   | 3,331 |   |

| 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. |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| 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. |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| 10.34  | 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. |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| 10.36 | 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. |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| 10.39 | Business              Loan Agreement between Capitol National Bank and Maxco, Inc. dated              August              11, 2006 is hereby incorporated by reference from Form 10-Q dated November              20, 2006. |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| 10.40 | Amended and Restated Credit Agreement between Atmosphere              Annealing, Inc. and Huntington National Bank dated August 28, 2006              is              hereby incorporated by reference from Form 10-Q dated November 20,              2006. |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 10.41 | Asset Purchase and Sale Agreement among Maxco, Inc.,              Atmosphere Annealing, Inc. and BCGW (as “Selling Parties”) and Quanex              Corporation and Quanex Technologies, Inc. (as “Purchasing Parties”) dated              December 13, 2006 is hereby incorporated by reference from Form 14A              dated              January 12, 2007. |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|
| 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. |
|------|-----------------------------------------------------------------------------------------------------------------------------|

----

|                                      |                                                     |                                           |
|-------------------------------------------|----------------------------------------------------------|------------------------------------------------|
|                                      | MAXCO,              INC                                  |
|                                 |                                                |                                      |
| Date: February              16, 2007 | By:                                            | /s/ LAWRENCE              O. FIELDS  |
|                                      | Lawrence              O. Fields, Chief Financial Officer |
|                                      | and              Treasurer (Principal Financial and      |
|                                      | Accounting Officer)                                      |

----