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**FORM      10-Q/A**

**Amendment      No. 1**

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**For      the Quarter Ended June 30, 2005**

**MAXCO,      INC.**

*(Exact      Name of Registrant as Specified in its Charter)*

| Michigan                                                                                       |   | 38-1792842                                                              |
|------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|
| *(State                or other Jurisdiction of Incorporation or                Organization)* |   | *(I.R.S.                Employer Identification                Number)* |

| 1118                Centennial Way                        |   |                        |
|-----------------------------------------------------------|--------|-----------------------------|
| Lansing,                Michigan                          |   | 48917                       |
| *(Address                of principal executive offices)* |   | *(Zip                Code)* |

| Class                       |   | Outstanding                at July 31, 2005 |
|-----------------------------|--------|---------------------------------------------|
| 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                                                                                     |     |
| Item                1. Financial Statements                                                                                       |     |
| Condensed                Consolidated Balance Sheets                                                                              | 3        |
| Condensed                Consolidated Statements of                Operations                                                     | 5        |
| Consolidated                Statement of Stockholders’                Equity                                                | 6        |
| Condensed                Consolidated Statements of Cash                Flows                                                     | 7        |
| Notes                to Consolidated Financial                Statements                                                          | 8        |
|                                                                                                                              |     |
| Item                2. Management’s Discussion and Analysis of Financial                Condition and Results of Operations | 14       |
| Item                3. Quantitative and Qualitative Disclosures about                Market Risk                                  | 18       |
| Item                4. Controls and Procedures                                                                                    | 18       |
|                                                                                                                              |     |
| Part                II - Other Information                                                                                        |     |
| Item                1. Legal Proceedings                                                                                          | 19       |
| Item                2. Unregistered Sales of Equity Securities and Use of                Proceeds                                 | 19       |
| Item                3. Defaults Upon Senior Securities                                                                            | 19       |
| Item                4. Submission of Matters to a Vote of Security                Holders                                         | 19       |
| Item                5. Other Information                                                                                          | 19       |
| Item                6. Exhibits                                                                                                   | 20       |
| Signatures                                                                                                                        | 21       |
| Certifications                                                                                                                    | 22       |

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**PART      I**

**FINANCIAL      INFORMATION**

**ITEM      1. FINANCIAL STATEMENTS**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

**Maxco,      Inc. and Subsidiaries**

|                                                                                                                                |   |                                |    |                         |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------|------------------------------|--------|
|                                                                                                                                |   | **June                30,**         |    | **March                31,** |   |
|                                                                                                                                |   | **2005**                            |    | **2005**                     |   |
|                                                                                                                                |   | **(Unaudited)**                     |    |                         |   |
|                                                                                                                                |   | ***(in                thousands)*** |    |
| **ASSETS**                                                                                                                          |   |                                |    |                         |   |
| **Current                Assets**                                                                                                   |   |                                |    |                         |   |
| Cash                and cash equivalents                                                                                            |   | $                                   | 1,401   |                         | $      | 1,781 |   |
| Restricted                cash—Note 3                                                                                         |   |                                | 750     |                         |   | — |   |
| Accounts                and notes receivable, less allowance of $150,000 ($128,000 at March                31,                2005) |   |                                | 6,458   |                         |   | 6,605 |   |
| Inventories—Note                9                                                                                             |   |                                | 646     |                         |   | 534 |   |
| Prepaid                expenses and other                                                                                           |   |                                | 405     |                         |   | 223 |   |
| **Total                Current Assets**                                                                                             |   |                                | 9,660   |                         |   | 9,143 |   |
|                                                                                                                                |   |                                |    |                         |   |   |   |
| **Property                and Equipment—Note 1**                                                                              |   |                                |    |                         |   |   |   |
| Land                                                                                                                                |   |                                | 564     |                         |   | 437 |   |
| Buildings                                                                                                                           |   |                                | 8,192   |                         |   | 5,997 |   |
| Machinery,                equipment, and fixtures                                                                                   |   |                                | 30,634  |                         |   | 30,052 |   |
|                                                                                                                                |   |                                | 39,390  |                         |   | 36,486 |   |
| Allowances                for depreciation                                                                                          |   |                                | (19,880 | )                            |   | (18,018 | ) |
|                                                                                                                                |   |                                | 19,510  |                         |   | 18,468 |   |
| **Other                Assets**                                                                                                     |   |                                |    |                         |   |   |   |
| Investments                                                                                                                         |   |                                | 1,014   |                         |   | 878 |   |
| Notes                and contracts receivable and other                                                                             |   |                                | 761     |                         |   | 996 |   |
| Real                estate investments held for sale                                                                                |   |                                | 1,427   |                         |   | 1,850 |   |
| Real                estate held for sale                                                                                            |   |                                | 3,275   |                         |   | — |   |
| Accounts                receivable, related parties—Note 11                                                                   |   |                                | 407     |                         |   | 407 |   |
| Intangibles                                                                                                                         |   |                                | 1,424   |                         |   | 1,424 |   |
|                                                                                                                                |   |                                | 8,308   |                         |   | 5,555 |   |
|                                                                                                                                |   | $                                   | 37,478  |                         | $      | 33,166 |   |

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**CONDENSED      CONSOLIDATED BALANCE SHEETS — CONTINUED**

**Maxco,      Inc. and Subsidiaries**

|                                                                                                                                           |   |                                |    |                         |   |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------|------------------------------|--------|
|                                                                                                                                           |   | **June                30,**         |    | **March                31,** |   |
|                                                                                                                                           |   | **2005**                            |    | **2005**                     |   |
|                                                                                                                                           |   | **(Unaudited)**                     |    |                         |   |
|                                                                                                                                           |   | ***(in                thousands)*** |    |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                        |   |                                |    |                         |   |
| **Current                liabilities**                                                                                                         |   |                                |    |                         |   |
| Notes                payable—Note 6                                                                                                      |   | $                                   | 4,067   |                         | $      | 2,091 |   |
| Accounts                payable                                                                                                                |   |                                | 4,816   |                         |   | 3,870 |   |
| Employee                compensation                                                                                                           |   |                                | 1,666   |                         |   | 1,711 |   |
| Incentive                compensation                                                                                                          |   |                                | 825     |                         |   | 650 |   |
| Taxes,                interest, and other liabilities                                                                                          |   |                                | 3,899   |                         |   | 3,850 |   |
| Current                maturities of long-term obligations                                                                                     |   |                                | 5,142   |                         |   | 4,959 |   |
| **Total                Current Liabilities**                                                                                                   |   |                                | 20,415  |                         |   | 17,131 |   |
|                                                                                                                                           |   |                                |    |                         |   |   |   |
| **Long-Term                Obligations, Less Current Maturities—Notes 1 and                6**                                           |   |                                | 7,856   |                         |   | 7,070 |   |
| **Total                Liabilities**                                                                                                           |   |                                | 28,271  |                         |   | 24,201 |   |
|                                                                                                                                           |   |                                |    |                         |   |   |   |
| **Stockholders'                Equity**                                                                                                        |   |                                |    |                         |   |   |   |
| Preferred                stock:                                                                                                                |   |                                |    |                         |   |   |   |
| Series                Three: 10% cumulative redeemable, $60 face value; 14,784 shares issues                and                outstanding     |   |                                | 678     |                         |   | 678 |   |
| Series                Four: 10% cumulative redeemable, $51.50 face value; 46,414 shares                issues                and outstanding   |   |                                | 2,390   |                         |   | 2,390 |   |
| Series                Five: 10% cumulative redeemable, $120 face value; 6,648 shares issues                and                outstanding      |   |                                | 798     |                         |   | 798 |   |
| Series                Six: 10% cumulative callable, $160 face value; 20,000 shares authorized,                issued - none                    |   |                                | — |                         |   | — |   |
|                                                                                                                                           |   |                                | 3,866   |                         |   | 3,866 |   |
|                                                                                                                                           |   |                                |    |                         |   |   |   |
| Common                stock, $1 par value; 10,000,000 shares authorized, 3,446,995 shares                issued                and outstanding |   |                                | 3,447   |                         |   | 3,447 |   |
| Accumulated                other comprehensive loss                                                                                            |   |                                | (23     | )                            |   | (38 | ) |
| Retained                earnings                                                                                                               |   |                                | 1,917   |                         |   | 1,690 |   |
| **Total                Stockholders' Equity**                                                                                                  |   |                                | 9,207   |                         |   | 8,965 |   |
|                                                                                                                                           |   | $                                   | 37,478  |                         | $      | 33,166 |   |
|                                                                                                                                           |   |                                |    |                         |   |   |   |
|                                                                                                                                           |   |                                |    |                         |   |   |   |
| See                notes to condensed consolidated financial statements.                                                                       |   |                                |    |                         |   |   |   |

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**CONDENSED      CONSOLIDATED STATEMENTS OF      OPERATIONS**

**Maxco,      Inc. and Subsidiaries**

**(Unaudited)**

|                                                                     |   |                                                       |   |
|--------------------------------------------------------------------------|--------|------------------------------------------------------------|--------|
|                                                                     |   | **Three                Months Ended June 30,**             |   |
|                                                                     |   | **2005**                                                   |   | **2004** |   |
|                                                                     |   | ***(in                thousands, except per share data)*** |   |
|                                                                     |   |                                                       |   |   |   |   |   |
| **Net                Sales**                                             |   | $                                                          | 11,448 |   | $ | 11,367 |   |
| **Costs                and Expenses:**                                   |   |                                                       |   |   |   |   |   |
| Cost                of sales and operating expenses                      |   |                                                       | 7,114  |   |   | 7,370 |   |
| Selling,                general and administrative                       |   |                                                       | 2,900  |   |   | 2,778 |   |
| Depreciation                and amortization                             |   |                                                       | 752    |   |   | 744 |   |
|                                                                     |   |                                                       | 10,766 |   |   | 10,892 |   |
| **Operating                Earnings**                                    |   |                                                       | 682    |   |   | 475 |   |
| **Other                Income (Expense)**                                |   |                                                       |   |   |   |   |   |
| Investment,                interest, and other income (loss), net        |   |                                                       | (2     | ) |   | 135 |   |
| Gain                on sale of assets                                    |   |                                                       | 2      |   |   | 1 |   |
| Interest                expense                                          |   |                                                       | (353   | ) |   | (407 | ) |
| **Net                Income**                                            |   |                                                       | 329    |   |   | 204 |   |
| Less                preferred stock dividends                            |   |                                                       | (102   | ) |   | (102 | ) |
| **Net                Income Applicable to Common Stock**                 |   | $                                                          | 227    |   | $ | 102 |   |
| **Net                Income Per Common Share—Basic and Diluted**   |   | $                                                          | 0.07   |   | $ | 0.03 |   |
|                                                                     |   |                                                       |   |   |   |   |   |
|                                                                     |   |                                                       |   |   |   |   |   |
| See                notes to condensed consolidated financial statements. |   |                                                       |   |   |   |   |   |

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**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 |   | $ | 7,721 |   |
| Net                income for the period                                 |   |                                                                                           |               |                   |   |                |   |                                              |         |                                 |   |         |   |   | 329 |   |   | 329 |   |
| Unrealized                gain on swap agreement                         |   |                                                                                           |               |                   |   |                |   |                                              |         |                                 |   | 15           |   |   |   |   |   | 15 |   |
| Total                Comprehensive income                                |   |                                                                                           |               |                   |   |                |   |                                              |         |                                 |   |         |   |   |   |   |   | 344 |   |
| Preferred                stock dividends                                 |   |                                                                                           |     |                   |   |           |   |                                              |    |                                 |   |    |   |   | (102 | ) |   | (102 | ) |
| **Balances                at June 30, 2005**                             |   |                                                                                           | 3,446,995          |                   | $      | 3,866               |   | $                                                 | 3,447        |                                 | $      | (23          | )      | $ | 1,917 |   | $ | 9,207 |   |
|                                                                     |   |                                                                                           |               |                   |   |                |   |                                              |         |                                 |   |         |   |   |   |   |   |   |   |
|                                                                     |   |                                                                                           |               |                   |   |                |   |                                              |         |                                 |   |         |   |   |   |   |   |   |   |
| See                notes to condensed consolidated financial statements. |   |                                                                                           |               |                   |   |                |   |                                              |         |                                 |   |         |

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**CONDENSED      CONSOLIDATED STATEMENTS OF CASH      FLOWS**

**Maxco,      Inc. and Subsidiaries**

**(Unaudited)**

|                                                                                                           |   |                                           |    |
|----------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                                                                           |   | **Three                Months Ended June 30,** |    |
|                                                                                                           |   | **2005**                                       |    | **2004** |   |
|                                                                                                           |   | ***(in                thousands)***            |    |
| **Operating                Activites**                                                                         |   |                                           |    |   |   |
| Net                income                                                                                      |   | $                                              | 329     |   | $ | 204 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activites: |   |                                           |    |   |   |   |   |
| Loss                on investment                                                                              |   |                                           | 30      |   |   | — |   |
| Net                gains                                                                                       |   |                                           | (2      | ) |   | (1 | ) |
| Depreciation                and amortization                                                                   |   |                                           | 752     |   |   | 744 |   |
| Changes                in operating assets and liabilities                                                     |   |                                           | 734     |   |   | 948 |   |
| **Net                Cash Provided By Operating Activities**                                                   |   |                                           | 1,843   |   |   | 1,895 |   |
|                                                                                                           |   |                                           |    |   |   |   |   |
| **Investing                Activities**                                                                        |   |                                           |    |   |   |   |   |
| Collections                on notes receivable                                                                 |   |                                           | 116     |   |   | 993 |   |
| Purchases                of property and equipment                                                             |   |                                           | (582    | ) |   | (131 | ) |
| Purchase                of subsidiaries                                                                        |   |                                           | (342    | ) |   | — |   |
| Other                                                                                                          |   |                                           | 42      |   |   | 16 |   |
| **Net                Cash (Used In) Provided By Investing Activities**                                         |   |                                           | (766    | ) |   | 878 |   |
|                                                                                                           |   |                                           |    |   |   |   |   |
| **Financing                Activities**                                                                        |   |                                           |    |   |   |   |   |
| Proceeds                from new debt obligation                                                               |   |                                           | — |   |   | 2,700 |   |
| Net                proceeds from (repayments on) line of credit                                                |   |                                           | 379     |   |   | (941 | ) |
| Net                repayments on other debt obligations                                                        |   |                                           | (1,086  | ) |   | (3,751 | ) |
| **Net                Cash Used In Financing Activities**                                                       |   |                                           | (707    | ) |   | (1,992 | ) |
|                                                                                                           |   |                                           |    |   |   |   |   |
| **Increase                in Cash and Cash Equivalents**                                                       |   |                                           | 370     |   |   | 781 |   |
| **Cash                and Cash Equivalents at Beginning of Period**                                            |   |                                           | 1,781   |   |   | 78 |   |
| **Cash                and Cash Equivalents at End of Period**                                                  |   | $                                              | 2,151   |   | $ | 859 |   |
|                                                                                                           |   |                                           |    |   |   |   |   |
| **Supplemental                cash flows disclosure:**                                                         |   |                                           |    |   |   |   |   |
| Interest                paid                                                                                   |   | $                                              | 310     |   | $ | 183 |   |
|                                                                                                           |   |                                           |    |   |   |   |   |
|                                                                                                           |   |                                           |    |   |   |   |   |
| See                notes to condensed consolidated financial statements.                                       |   |                                           |    |   |   |   |   |

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**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**Maxco,      Inc. and Subsidiaries**

**June      30, 2005**

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

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**NOTE      2 - EARNINGS PER SHARE**

|                                                                                                                               |   | **Three                Months Ended June 30,**             |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------|--------|
|                                                                                                                               |   | **2005**                                                   |   | **2004** |   |
| **NUMERATOR:**                                                                                                                     |   | ***(in                thousands, except per share data)*** |   |
| Net                income                                                                                                          |   |                                                       | 329    |   |   | 204 |   |
| Preferred                stock dividends                                                                                           |   |                                                       | (102   | ) |   | (102 | ) |
| **Numerator                for basic and diluted earnings per share—income available to common                stockholders** |   | $                                                          | 227    |   | $ | 102 |   |
|                                                                                                                               |   |                                                       |   |   |   |   |   |
| **DENOMINATOR:**                                                                                                                   |   |                                                       |   |   |   |   |   |
|                                                                                                                               |   |                                                       |   |   |   |   |   |
| **Denominator                for basic and diluted earnings per share—weighted average                shares**               |   |                                                       | 3,447  |   |   | 3,101 |   |
| **BASIC                AND DILUTED EARNINGS PER SHARE**                                                                            |   | $                                                          | 0.07   |   | $ | 0.03 |   |

**NOTE      3 - RESTRICTED CASH**

**NOTE      4 - COMPREHENSIVE INCOME**

|                                             |   | **Three                Months Ended** |   |
|--------------------------------------------------|--------|---------------------------------------|--------|
|                                             |   | **June                30,**           |   |
|                                             |   | **2005**                              |   | **2004** |   |
|                                             |   | ***(in                thousands)***   |   |
| Net                income                        |   | $                                     | 329    |   | $ | 204 |   |
| Unrealized                gain on swap agreement |   |                                  | 15     |   |   | 64 |   |
| Comprehensive                income              |   | $                                     | 344    |   | $ | 268 |   |

**NOTE      5 - INDUSTRY SEGMENT INFORMATION**

|                                         |   | **June                30,**         |   | **March                31,** |   |
|----------------------------------------------|--------|-------------------------------------|--------|------------------------------|--------|
|                                         |   | **2005**                            |   | **2005**                     |   |
|                                         |   | ***(in                thousands)*** |   |
| **Identifiable                Assets:**      |   |                                |   |                         |   |
| Heat                treating                 |   | $                                   | 28,201 |                         | $      | 27,081 |   |
| Corporate                and other           |   |                                | 6,836  |                         |   | 3,357 |   |
| Investments                and advances      |   |                                | 2,441  |                         |   | 2,728 |   |
| **Total                Identifiable Assets** |   | $                                   | 37,478 |                         | $      | 33,166 |   |

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|                                                           |   | **Three                Months Ended** |    |
|----------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                           |   | **June                30,**           |    |
|                                                           |   | **2005**                              |    | **2004** |   |
|                                                           |   | ***(in                thousands)***   |    |
| **Net                Sales:**                                  |   |                                  |    |   |   |
| Heat                treating                                   |   | $                                     | 11,448  |   | $ | 11,367 |   |
| Corporate                and other                             |   |                                  | — |   |   | — |   |
| **Total                Net Sales**                             |   | $                                     | 11,448  |   | $ | 11,367 |   |
|                                                           |   |                                  |    |   |   |   |   |
| **Operating                Earnings (Loss):**                  |   |                                  |    |   |   |   |   |
| Heat                treating                                   |   | $                                     | 1,306   |   | $ | 963 |   |
| Corporate                and other                             |   |                                  | (624    | ) |   | (488 | ) |
| **Total                Operating Earnings (Loss)**             |   | $                                     | 682     |   | $ | 475 |   |
|                                                           |   |                                  |    |   |   |   |   |
| **Depreciation                and Amortization Expense:**      |   |                                  |    |   |   |   |   |
| Heat                treating                                   |   | $                                     | 745     |   | $ | 736 |   |
| Corporate                and other                             |   |                                  | 7       |   |   | 8 |   |
| **Total                Depreciation and Amortization Expense** |   | $                                     | 752     |   | $ | 744 |   |
|                                                           |   |                                  |    |   |   |   |   |
| **Capital                Expenditures:**                       |   |                                  |    |   |   |   |   |
| Heat                treating                                   |   | $                                     | 575     |   | $ | 131 |   |
| Corporate                and other                             |   |                                  | 7       |   |   | — |   |
| **Total                Capital Expenditures**                  |   | $                                     | 582     |   | $ | 131 |   |

**NOTE      6 - DEBT**

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|                                                                                                                  |   | **June                30,**         |   | **March                31,** |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|------------------------------|--------|
|                                                                                                                  |   | **2005**                            |   | **2005**                     |   |
|                                                                                                                  |   | ***(in                thousands)*** |   |
| **Short                term obligations:**                                                                            |   |                                |   |                         |   |
| Notes                payable (various interest rates)                                                                 |   | $                                   | 1,516  |                         | $      | 1,554 |   |
| Mortgage                notes payable (prime +3%)                                                                     |   |                                | 1,634  |                         |   | — |   |
| Revolving                line of credit (LIBOR + 2.0%)                                                                |   |                                | 917    |                         |   | 537 |   |
|                                                                                                                  |   | $                                   | 4,067  |                         | $      | 2,091 |   |
|                                                                                                                  |   |                                |   |                         |   |   |   |
| **Long                term obligations:**                                                                             |   |                                |   |                         |   |   |   |
| Term                notes (various variable interest rates)                                                           |   | $                                   | 4,252  |                         | $      | 4,930 |   |
| Mortgage                notes payable (various variable interest rates)                                               |   |                                | 5,907  |                         |   | 4,962 |   |
| Equipment                purchase contracts and capitalized lease obligations (various interest                rates) |   |                                | 1,451  |                         |   | 1,791 |   |
| Subordinated                debt (fixed rate of 10.00%)                                                               |   |                                | 346    |                         |   | 346 |   |
| Other                amounts due on real estate held for sale                                                         |   |                                | 1,042  |                         |   | — |   |
|                                                                                                                  |   |                                | 12,998 |                         |   | 12,029 |   |
| Less                current maturities                                                                                |   |                                | 5,142  |                         |   | 4,959 |   |
|                                                                                                                  |   | $                                   | 7,856  |                         | $      | 7,070 |   |

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**NOTE      7 - FEDERAL INCOME TAXES**

**NOTE      8 - PREFERRED STOCK DIVIDENDS**

**NOTE      9 - INVENTORIES**

|                            |   | **June                30,**         |   | **March                31,** |   |
|---------------------------------|--------|-------------------------------------|--------|------------------------------|--------|
|                            |   | **2005**                            |   | **2005**                     |   |
|                            |   | ***(in                thousands)*** |   |
| Raw                materials    |   | $                                   | 498    |                         | $      | 329 |   |
| Work                in progress |   |                                | 100    |                         |   | 157 |   |
| Finished                goods   |   |                                | 48     |                         |   | 48 |   |
|                            |   | $                                   | 646    |                         | $      | 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 - RECENT ACCOUNTING PRONOUNCEMENTS**

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

**CRITICAL      ACCOUNTING POLICIES**

***Material      Trends and Uncertainties***

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

|   | · | ***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. |
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|   | · | ***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. |
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|   | · | ***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. |
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|   | · | ***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. |
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|   | · | ***Increases                in Healthcare Costs***—                Increases in our healthcare costs could negatively affect our financial                health and results. |
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|   | · | ***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. |
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|   | · | ***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. |
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|   | · | ***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. |
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|   | · | ***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. |
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|   | · | ***Labor                  Stoppages***—                  Our customers or suppliers may be subject to work stoppages at                  their                  facilities, which could materially and adversely harm                  us. |
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|   | · | ***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. |
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|   | · | ***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. |
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**Market      Opportunities and Growth Strategies**

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|   | · | Companies                  are focusing on core competencies and outsourcing non-core processes                  such                  as heat treating and coating. |
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|   | · | In                some cases, our customers are consolidating their supply                base. |
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|   | · | Foreign                  automakers are locating manufacturing facilities in the United                  States. |
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|   | · | ***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. |
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|   | · | ***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. |
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|   | · | ***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. |
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|   | · | ***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. |
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***Principles      of Consolidation and Transactions With Affiliates***

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***Investments      and Marketable Securities***

***Revenue      Recognition***

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

***Derivative      Financial Instruments***

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**MATERIAL      CHANGES IN FINANCIAL CONDITION**

**RESULTS      OF OPERATIONS**

**Three      Months Ended June 30, 2005 Compared to 2004**

|                               |   | **Three                Months Ended** |    | **Three                Months Ended** |   |
|------------------------------------|--------|---------------------------------------|---------|---------------------------------------|--------|
|                               |   | **June                30, 2005**      |    | **June                30, 2004**      |   |
|                               |   |                                  |    | **Operating**                         |   |   |   | **Operating** |   |
|                               |   | **Net                Sales**          |    | **Earnings                (Loss)**    |   | **Net                Sales** |   | **Earnings                (Loss)** |   |
|                               |   | ***(in                thousands)***   |    |
| Heat                treating       |   | $                                     | 11,448  |                                  | $      | 1,306 |   | $ | 11,367 |   | $ | 963 |   |
| Corporate                and other |   |                                  | — |                                  |   | (624 | ) |   | — |   |   | (488 | ) |
|                               |   | $                                     | 11,448  |                                  | $      | 682 |   | $ | 11,367 |   | $ | 475 |   |

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

**ITEM      4. CONTROLS AND PROCEDURES**

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**PART      II**

**OTHER      INFORMATION**

Item      1. Legal      Proceedings

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

Item      3. Defaults      Upon Senior Securities

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

Item      5. Other      Information

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Item      6. Exhibits

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3      | Restated                Articles of Incorporation are hereby incorporated from Form 10-Q                dated                February 13, 1998.                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.1    | By-laws                are hereby incorporated by reference from Form S-4 dated November                4, 1991                (File No. 33-43855).                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.2    | Resolution                establishing Series Three Preferred Shares is hereby incorporated                by                reference from Form S-4 dated November 4, 1991 (File No.                33-43855).                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.3    | Resolution                authorizing the redemption of Series Two Preferred Stock and establishing                Series Four Preferred Stock and the terms of the subordinated notes                is                hereby incorporated by reference from Form 10-Q dated February 14,                1997.                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.4    | Resolution                establishing Series Five Preferred Shares is hereby incorporated                by                reference from Form 10-K dated June 5, 1997.                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.5    | Resolution                establishing Series Six Preferred Shares is hereby incorporated by                reference from Form 10-K dated June 23, 1999.                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.1   | Incentive                stock option plan adopted August 15, 1983, including the amendment                (approved by shareholders August 25, 1987) to increase the authorized                shares on which options may be granted by two hundred fifty thousand                (250,000), up to five hundred thousand (500,000) shares of the common                stock of the company is hereby incorporated by reference from the                registrant's annual report on Form 10-K for the fiscal year ended                March                31, 1988. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.11  | Asset                purchase agreement for the purchase of Atmosphere Annealing, Inc.                is                hereby incorporated by reference from Form 8-K dated January 17,                1997.                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.12  | Asset                Purchase Agreement - Axson North America Inc. is hereby incorporated                by                reference from registrants Form 10-Q dated February 14,                1997.                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.18  | Maxco,                Inc. 1998 Employee Stock Option Plan is hereby incorporated by reference                from Form 10-Q dated November 12, 1998.                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.29  | Obligor                assignment agreement among Contractor Supply Incorporated, Maxco,                Inc.,                and Ersco Corporation dated November 14, 2002 is hereby incorporated                by                reference from Form 10-Q dated November 25, 2002.                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.30  | Stock                purchase agreement between Ersco Corporation, Maxco, Inc., and Contractor                Supply Incorporated dated November 14, 2002 is hereby incorporated                by                reference from Form 10-Q dated November 25, 2002.                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.31  | Asset                Purchase Agreement between Pak Sak Industries, Inc., Maxco, Inc.,                P-S                Business Acquisition, Inc., and P&D Real Estate, LLC and Packaging                Personified, Inc. dated September 27, 2002 is hereby incorporated                by                reference from Form 10-Q dated February 14, 2003.                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.32  | First                Amendment to Asset Purchase Agreement between Pak Sak Industries,                Inc.,                Maxco, Inc., P-S Business Acquisition, Inc., and P&D Real Estate, LLC                and Packaging Personified, Inc. dated October 30, 2002 is hereby                incorporated by reference from Form 10-Q dated February 14,                2003.                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.33  | Second                Amendment to Asset Purchase Agreement between Pak Sak Industries,                Inc.,                Maxco, Inc., P-S Business Acquisition, Inc., and P&D Real Estate, LLC                and Packaging Personified, Inc. dated November 25, 2002 is hereby                incorporated by reference from Form 10-Q dated February 14,                2003.                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.34  | Credit                Agreement between Atmosphere Annealing, Inc. and Huntington National                Bank                dated November 18, 2003 is hereby incorporated by reference from                Form 10-Q                dated November 19, 2003.                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.35  | Subordination                Agreement between Maxco, Inc., Atmosphere Annealing, Inc. and Comerica                Bank and Huntington National Bank dated November 18, 2003 is hereby                incorporated by reference from Form 10-Q dated November 19,                2003.                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.36  | Incentive                agreement between Sanjeev Deshpande and Maxco, Inc. dated April 20,                2004                is hereby incorporated by reference from Form 10-K dated July 13,                2004.                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.37  | Business                Loan Agreement between Capitol National Bank and Maxco, Inc. dated                May 28,                2004 is hereby incorporated by reference from Form 10-K dated July                13,                2004.                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 31.1   | Certification                of Chief Executive Officer of                periodic report pursuant to Rule 13a-15(e) or Rule                15d-15(e).                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 31.2   | Certification                of Chief Financial Officer of                periodic report pursuant to Rule 13a-15(e) or Rule                15d-15(e).                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 32.1   | Certification                of Chief Executive Officer of                periodic report pursuant to 18 U.S.C. §1350.                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 32.2   | Certification                of Chief Financial Officer of                periodic report pursuant to 18 U.S.C.§1350.                                                                                                                                                                                                                                                                                                                                                                                                                                                |

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**SIGNATURES**

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

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