Maxco DEF 14A Definitive proxy

SCHEDULE 14A
(Rule 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )

      Filed by the registrant   

      Filed by a party other than the registrant   

      Check the appropriate box:

Preliminary proxy statement	Confidential, for use of the
	Commission only (as permitted by
	Rule 14a-6(e)(2).

         Definitive proxy statement.

         Definitive additional materials.

         Soliciting material pursuant to Rule 14a-12.

MAXCO, INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

      Payment of filing fee (check the appropriate box):

         No fee required.

         Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

      (1) Title of each class of securities to which transaction applies:

      (2) Aggregate number of securities to which transaction applies:

      (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

      (4) Proposed maximum aggregate value of transaction:

      (5) Total fee paid:

         Fee paid previously with preliminary materials.

         Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

      (1) Amount Previously Paid:

      (2) Form, Schedule or Registration Statement No.:

      (3) Filing Party:

      (4) Date Filed:

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To the Shareholders of Maxco, Inc.:

     Notice is hereby given that the Annual Meeting of Shareholders of Maxco, Inc., a Michigan corporation, will be held at the corporate office, 1118 Centennial Way, Lansing, Michigan on March 15, 2005, at 3:30 p.m. local time for the following purposes, all of which are more completely set forth in the accompanying proxy statement.

1.	To elect five Directors; and
2.	To transact such other business as may properly come before the meeting.

     In accordance with the Bylaws of the Company and a resolution of the Board of Directors, the record date for the meeting has been fixed at February 4, 2005. Only Shareholders of record at the close of business on that date will be entitled to vote at the meeting.

By Order of the Board of Directors

Eric L. Cross

Secretary

Lansing, Michigan

February 22, 2005

YOUR VOTE IS IMPORTANT

YOU ARE URGED TO DATE AND SIGN THE ENCLOSED PROXY FORM, INDICATE YOUR CHOICE WITH RESPECT TO THE MATTERS TO BE VOTED UPON, AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED. THE PROMPT RETURN OF YOUR SIGNED PROXY, REGARDLESS OF THE NUMBER OF SHARES YOU HOLD WILL AID THE COMPANY IN REDUCING THE EXPENSE OF ADDITIONAL PROXY SOLICITATION. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE MEETING.

TABLE OF CONTENTS

MAXCO, INC.

1118 Centennial Way

Lansing, Michigan 48917

PROXY STATEMENT

     This statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Maxco, Inc. (the Company), 1118 Centennial Way, Lansing, Michigan 48917, for use at the Annual Meeting of Shareholders of the Company to be held on March 15, 2005, at 3:30 p.m., or any adjournments thereof. This Proxy Statement is being mailed to Maxco Shareholders on or about February 22, 2005, to all holders of record of common stock of the Company as of the close of business on February 4, 2005.

PURPOSE OF THE MEETING

     The purpose of this Annual Meeting of Shareholders shall be to elect Directors and to transact such other business as may properly come before the meeting.

VOTING

     Common Stock and Series Three Preferred Shares are the only voting stock of the Company. Holders of record at the close of business on February 4, 2005, are entitled to one (1) vote for each share of Common Stock held and twenty (20) votes for each share of Series Three Preferred Stock held. As of February 4, 2005, the Company had 3,101,195 shares of Common Stock and 14,784 shares of Series Three Preferred Stock outstanding. Holders of stock entitled to vote at the meeting do not have cumulative voting rights with respect to the election of Directors.

     All shares represented by proxies shall be voted “FOR” each of the matters recommended by management unless the shareholder, or his duly authorized representative, specifies otherwise or unless the proxy is revoked. Any shareholder who executes the proxy referred to in this statement may revoke it before it is exercised, provided written notice of such revocation is received at the office of the Company in Lansing, Michigan at least twenty-four (24) hours before the commencement of the meeting, or provided the grantor of the proxy is present at the meeting and, having been recognized by the Chairman, announces such revocation in open meeting. All shareholders are encouraged to date and sign the enclosed proxy form, indicate your choice with respect to the matters to be voted upon and return it to the Company.

     Directors are elected by plurality vote, meaning that the five persons receiving the most votes at the meeting, assuming a quorum is present, are elected as directors of the Company. Most other corporate governance actions, other than elections of directors, are authorized by a majority of the votes cast. Although state law and the articles of incorporation and bylaws of the Company are silent on the issue, it is the intent of the Company that proxies received which contain abstentions or broker non-votes as to any matter will be included in the calculation as to the presence of a quorum, but will not be counted as votes cast in such matter in the calculation as to the needed vote.

ELECTION OF DIRECTORS

     It is the intention of the persons named in the proxy to vote for election of the following nominees to the Board of Directors to hold office until the next Annual Meeting or until their successors are elected. In the event any nominee should be unavailable, which is not anticipated, the shares may, in the discretion of the proxy holders, be voted for the election of such persons as the Board of Directors may submit. Directors are elected for a term of one (1) year and until their successors are elected and qualified. Proxies will be voted only to the extent of the number of nominees named.

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     The following information is furnished concerning the nominees, all of whom have been nominated by the Board of Directors and are presently Directors of the Company.

	Present Position with the			Served as Director
Name	Company and Principal Occupation	Age		of Maxco Since
Max A. Coon	Director, President and Chairman of the Board of MAXCO, INC.		70		1969
Sanjeev Deshpande	Director of MAXCO, INC., President of Atmosphere Annealing, Inc., a Lansing, Michigan based provider of heat treating services which was acquired by Maxco, Inc. in January 1997.		47		2003
Joel I. Ferguson	Director of MAXCO, INC., President of F&S Development Company, a Lansing, Michigan based company which develops, contracts and/or owns and manages real estate properties		66		1985
David R. Layton	Director of MAXCO, INC. and President of Layton & Richardson, P.C., a Lansing, Michigan based accounting firm.		64		2001
Samuel O. Mallory	Director of MAXCO, INC.; Investor		72		2002

     All of the foregoing Directors and nominees have been engaged in the principal occupation specified for the previous five (5) years except as follows:

     Sanjeev Deshpande was appointed as President of Atmosphere Annealing, Inc. in January 2000. Prior to that time, Mr. Deshpande served as Vice President of Atmosphere Annealing, Inc.

     The address and telephone number for each person named in the table is in care of Maxco, Inc., 1118 Centennial Way, Lansing, MI 48917, telephone number (517) 321-3130.

     During the past five years, none of the above named persons has been convicted in a criminal proceeding or has been a party to any judicial or administrative proceeding that resulted in a judgment, decree or final order enjoining him from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal of state securities laws.

     Mr. Coon, is also a Director of Integral Vision, Inc. (formerly, Medar, Inc.), a 15% owned investment of Maxco, Inc. whose stock is quoted on the OTCBB.

     The Board of Directors has established a Compensation Committee whose members during the year ended March 31, 2004 were Max A. Coon and David R. Layton. Effective October 21, 2004 the composition of the Compensation Committee was changed and now consists of the three independent directors, Mssrs. Ferguson, Layton, and Mallory. The Compensation Committee is also responsible for administering the Company’s Stock Option Plan, including designating the recipients and terms of specific option grants. The Compensation Committee met one time during the fiscal year to establish compensation levels for the Executive Officers, and to authorize the levels and timing of bonuses. The Company has established a Nominating Committee whose members are Mssrs. Ferguson, Layton, and Mallory.

Director Nominations

     The Company has established a standing Nominating Committee to assist the Board by identifying individuals qualified to become Board members and recommend to the Board the director nominees for the next annual meeting of shareholders. The Nominating Committee met one time during the fiscal year. A charter has been adopted for the Nominating Committee, and it is available through the Company’s website at www.maxc.com.

     The Nominating Committee will consider director nominees recommended by shareholders. A shareholder who wishes to recommend a person or persons for consideration as a nominee for election to the board of directors must send a written notice by mail, c/o Investor Relations, Maxco, Inc., 1118 Centennial Way,

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Lansing, Michigan 48917 that sets forth: (1) the name, address (business and residence), date of birth and principal occupation or employment (present and for the past five years) of each person whom the shareholder proposes to be considered as a nominee; (2) the number of shares of the common stock of the Company beneficially owned (as defined by section 13(d) of the Securities Exchange Act of 1934) by each such proposed nominee; (3) any other information regarding such proposed nominee that would be required to be disclosed in a definitive proxy statement to shareholders pursuant to section 14(a) of the Securities Exchange Act of 1934; and (4) the name and address (business and residence) of the shareholder making the recommendation and the number of shares of the common stock of the Company beneficially owned (as defined by section 13(d) of the Securities Exchange Act of 1934) by the shareholder making the recommendation. The Company may require any proposed nominee to furnish additional information as may be reasonably required to determine the qualifications of such proposed nominee to serve as a director of the Company. Shareholder recommendations will be considered only if received no less than 120 days before the date of the proxy statement sent to shareholders in connection with the previous year’s annual meeting of shareholders. The Company did not receive, by June 14, 2004, any recommended nominee from any shareholder.

     The Nominating Committee will consider any nominee recommended by a shareholder in accordance with the preceding paragraph under the same criteria as any other potential nominee. The board of directors and the Nominating Committee believe that a nominee recommended for a position on the Company’s board of directors must have an appropriate mix of director characteristics, experience, diverse perspectives and skills. For a new potential board member, the board of directors and the Nominating Committee will in the first instance consider the independence of the potential member and the appropriate size of the board and then the qualifications of the proposed member. Qualifications of a prospective nominee that are considered by the board of directors and the Nominating Committee include:

•  Personal integrity, wisdom, and high ethical character;

•  Ability to make independent analytical inquiries;

•  Professional excellence;

•  Accountability and responsiveness;

•  Absence of conflicts of interest;

•  Fresh intellectual perspectives and ideas; and

•  Relevant expertise and experience, understanding of the Company’s business environment, and the ability to offer advice and guidance to management based on that expertise, understanding and experience.

Audit Committee and Committee Report

     The board of directors has adopted a Charter to govern the operations of its Audit Committee. A copy of this Charter was included as an exhibit to the Company’s proxy statement for the year ended March 31, 2001. The Charter requires that the Audit Committee shall comprise at least three directors, each of whom are independent of management and the Company, which is defined to mean that they have no relationship that may interfere with the exercise of their independence from management and the Company.

     For the year ended March 31, 2004, the board of directors appointed Joel I. Ferguson, David R. Layton and Samuel O. Mallory to the Audit Committee. It is the opinion of the board of directors that the members of the Audit Committee are each independent under the above definition. In addition, the board of directors has determined that David R. Layton is an “audit committee financial expert” as defined by the Securities and Exchange Commission. The Audit Committee oversees the Company’s financial reporting process on behalf of the board of directors. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the committee reviewed the audited financial statements to be included in the Company’s Annual Report with

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management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.

     The committee reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the committee under generally accepted auditing standards. In addition, the committee has discussed with the independent auditors the auditors’ independence from management and the Company including the matters in the written disclosures required by the Independence Standards Board.

     The committee discussed with the Company’s independent auditors the overall scope and plans for their respective audits. The committee meets with the independent auditors, with and without management present, to discuss the results of the examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The committee held 4 meetings during the year ended March 31, 2004.

     In reliance on the reviews and discussions referred to above, the committee recommended to the board of directors (and the board has approved) that the audited financial statements be included in the Annual Report on Form 10-K for the year ended March 31, 2004 for filing with the Securities and Exchange Commission.

Joel I. Ferguson

David R. Layton

Samuel O. Mallory

     During the last fiscal year there were a total of three meetings of the Board of Directors. Messrs. Ferguson, Layton and Mallory attended less than 75% of the meetings.

Director Compensation

     The Directors of the Company are paid $100 per meeting attended. Fees are not paid to Directors for attendance at committee meetings.

Communication With the Board of Directors

     Shareholders and other interested parties may communicate with the Board of Directors, including the independent directors, by sending written communication to the directors c/o the Chairman of the Board, Maxco, Inc., 1118 Centennial Way, Lansing, Michigan 48917. All such communications will be reviewed by the Chairman, or his designate, to determine which communications will be forwarded to the directors. All communications will be forwarded except those that are related to Company products and services, are solicitations, or otherwise relate to improper or irrelevant topics, as determined in the sole discretion of the Chairman, or his designate.

     The Chairman shall maintain and provide copies of all such communications received and determined to be forwarded, to the Board of Directors in advance of each of its meetings. In addition, the Chairman will indicate to the board the general nature of communications that were not determined to be forwarded and such communications will be held until each board meeting to be reviewed by any interested director.

     The Company has a policy and practice of all directors standing for election at an annual meeting of Shareholders to attend such meeting if available. All of the Company’s directors attended the Company’s annual meeting of its Shareholders held on January 13, 2004.

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EXECUTIVE OFFICERS

     The following table sets forth information concerning the Executive Officers of the Company.

	Present Position With the
Name	Company and Principal Occupation	Age
Max A. Coon	President, Director and Chairman of the Board of MAXCO, INC.		70
Eric L. Cross	Executive Vice President, Secretary of MAXCO, INC.		61
Vincent Shunsky	Vice President of Finance, Treasurer of MAXCO, INC.		55

     All of the foregoing Officers of the Company have been engaged in the principal occupations specified above for the previous five years.

     Mr. Coon and Mr. Cross are brothers-in-law. There are no other family relationships between any Directors or Executive Officers.

Code of Ethics

     The Company has adopted a code of ethics that applies to its directors, officers, and employees. A paper copy of our code of ethics may be obtained free of charge by writing to the Company at our principal executive office located at 1118 Centennial Way, Lansing, MI 48917.

EXECUTIVE COMPENSATION

Compensation Committee Report on Executive Compensation

Compensation Committee Interlocks and Insider Participation

     The Compensation Committee of the Board of Directors (the “Committee”) consisted of Max A. Coon and David R. Layton for the year ended March 31, 2004. Although the presence of Mr. Coon on the Committee, as Chief Executive Officer of the Company, could have been considered to present a conflict of interest, Mr. Coon’s input was considered very important and he has agreed to abstain from voting on any matter related to his own compensation. Effective October 21, 2004 the composition of the Compensation Committee was changed and now consists of the three independent directors, Mssrs. Ferguson, Layton, and Mallory.

Overview and Philosophy

     The Committee is responsible for developing and making recommendations to the Board with respect to the Company’s executive compensation policies. In addition, the Compensation Committee, pursuant to authority delegated by the Board, determines on an annual basis the compensation to be paid to the Chief Executive Officer and each of the other executive officers of the Company.

     The objectives of the Company’s executive compensation program are to:

•  Support the achievement of desired Company performance.

•  Provide compensation that will attract and retain superior talent and reward performance.

•  Align the executive officers’ interests with the success of the Company by placing a portion of pay at risk, with payout dependent upon corporate performance.

     The executive compensation program provides an overall level of compensation opportunity that is competitive with companies of comparable size and complexity. The Compensation Committee will use its discretion to set executive compensation where in its judgment external, internal or an individual’s circumstances warrant it.

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Executive Officer Compensation Program

     The Company’s executive officer compensation program is comprised of base salary, annual cash incentive compensation, long-term incentive compensation in the form of stock options, and various benefits, including medical and deferred compensation plans, generally available to employees of the Company.

Base Salary

     Base salary levels for the Company’s executive officers are competitively set relative to other comparable companies. In determining salaries the Committee also takes into account individual experience and performance.

Annual Incentive Compensation

     The Company’s annual incentive program for executive officers and key managers provides direct financial incentives in the form of an annual cash bonus to executives to achieve the Company’s annual goals. Goals for Company performance are set at the beginning of each fiscal year. In the year ended March 31, 2004, the following measures of Company performance were selected: net sales, consolidated net income, market penetration, and customer satisfaction.

     Specific individual performance was also taken into account in determining bonuses, including meeting department goals, attitude, dependability, cooperation with co-workers, and creativity or ideas that benefit the Company.

Stock Option Program

     The stock option program is the Company’s long-term incentive plan for executive officers and key employees. The objectives of the program are to align executive and shareholder long-term interests by creating a strong and direct link between executive pay and shareholder return, and to enable executives to develop and maintain a significant, long-term stock ownership position in the Company’s Common Stock.

     On August 25, 1998, the Shareholders ratified an Employee Stock Option Plan to grant options on up to 500,000 shares of the Company’s common stock to officers and key employees of the Company and its subsidiaries. The options which may be granted under this plan may either qualify as “incentive stock options” within the meaning of Section 422A of the Internal Revenue Code, as amended, or may be nonqualified options.

     The stock option plan authorizes a committee of directors to award stock options to key employees, directors or agents of the Company. Stock options are granted at an option price equal to the fair market value of the Company’s Common Stock on the date of grant, have ten year terms and can have exercise restrictions established by the Option Committee. Awards are made at a level calculated to be competitive with companies of comparable size and complexity.

Deferred Compensation

     Through December 31, 2004, the Company had two 401(k) Employee Savings Plans with similar provisions that covered substantially all employees of the Company. The Maxco, Inc. 401(k) plan merged with the Atmosphere Annealing, Inc. 401(k) plan effective January 1, 2005. The Atmosphere Annealing plan is a “cash or deferred” plan under which employees may elect to contribute a certain portion of their annual compensation which they would otherwise be eligible to receive in cash. The Company has agreed to make a matching contribution in the percentages specified in the plan documents. In addition, a separate employer contribution may be made at the discretion of the Board. The Atmosphere Annealing plan does not contain an established termination date and it is not anticipated that it will be terminated at any time in the foreseeable future.

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Benefits

     The Company provides medical benefits to the executive officers that are generally available to Company employees. The amount of perquisites, as determined in accordance with the rules of the Securities and Exchange Commission relating to executive compensation, did not exceed 10% of salary for the year ended March 31, 2004.

Chief Executive Officer

     Max A. Coon has served as the Company’s Chief Executive Officer since 1969. His base salary for the year ended March 31, 2004 was $200,000, of which approximately $167,000 was deferred. No bonus was paid to Mr. Coon for 2004.

     Significant factors in establishing Mr. Coon’s compensation were his strategic and overall management direction of the Company and his position and long service to the Company.

The Compensation Committee

Max A. Coon

David R. Layton

Summary Compensation Table

     The following table sets forth the cash and noncash compensation for each of the last three fiscal years awarded to or earned by the Chief Executive Officer of the Company and to the three other executive officers whose compensation exceeded $100,000:

								Long Term Compensation
	Annual Compensation							Other
Name and								Annual				All Other
Principal Position	Year		Salary			Bonus		Comp(1)		Options		Comp(2)
Max A. Coon		2004		200,000	(3)		0		200		0		1,000
Chief Executive Officer		2003		200,000			0		300		0		3,600
		2002		200,000			0		400		0		3,500
Eric L. Cross		2004		150,000			0		200		0		1,947
Executive Vice President		2003		150,000			0		300		0		3,300
		2002		150,000			0		400		0		3,300
Vincent Shunsky		2004		150,000			0		200		0		3,788
Vice President of Finance		2003		150,000			25,000		300		0		3,550
		2002		150,000			0		400		0		3,300

(1)	Represents annual director fees
(2)	Represents the Company’s match of employee deferrals of currently earned income into the 401(k) Employee Savings Plan and a profit sharing contribution made by the Company for all of its eligible employees to the 401(k) Employee Savings Plan at the rate of 1% of eligible compensation.
(3)	Max A. Coon deferred payment of his salary beginning June 1, 2003.

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     In October, 2004 the Company entered into a Retention Agreement with Vincent Shunsky, Vice President to provide him with a bonus of $200,000 to retain his services until at least March 31, 2006. Should he leave the employ of the Company prior to that date the bonus must be repaid.

     In April, 2004 the Company entered into an Incentive Agreement with Sanjeev Deshpande, President of Atmosphere Annealing and Director of the Company. The agreement provides for payment based on the increased value of Atmosphere Annealing by March 31, 2006. The incentive is equal to 1% of the first $25 million of value plus 10% of any excess above the threshold of $25 million. Any incentive so earned is payable in cash assuming a sale by March 31, 2006. If no such sale occurs by that date, at the option of the Company the incentive is payable in cash or its equivalent in stock of Atmosphere Annealing.

Options

     The following table summarizes the value of the options held by the above named individuals at the year end. No options were granted to or exercised by the named individuals during the year ended March 31, 2004. All of the options held by the named individuals are presently exercisable.

Year End Option Values

	Number of		Value of
	Unexercised		Unexercised
Name and	Options at		Options at
Principal Position	Fiscal Year End		Fiscal Year End
Max A. Coon		0		0
Chief Executive Officer
Eric L. Cross		42,500		0
Executive Vice President
Vincent Shunsky		42,500		0
Vice President of Finance

Equity Compensation Plan Information

     The following table summarizes information as of March 31, 2004 regarding the Company’s common stock reserved for issuance under the Company’s Employee Stock Option Plan. The Company’s Employee Stock Option Plan is its only equity compensation plan and was approved by the shareholders in 1998.

						Number of Securities
						Remaining Available for
	Number of Securities					Future Issuance Under
	to be Issued			Weighted-Average		the Stock Option Plan
	Upon Exercise of			Exercise Price of		(Excluding Securities
Plan Category	Outstanding Options			Outstanding Options		Reflected in Column a)
Equity Compensation Plans Approved by Security Holders		132,500	(1)	$	7.74		470,000

(1)  Includes 102,500 issued under a prior stock option plan.

Compliance with Reporting Requirements

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s Directors and Executive Officers or beneficial owners of over 10% of any class of the Company’s equity securities to file certain reports regarding their ownership of the Company’s securities or any changes in such ownership. All such reports were filed on a timely basis during the fiscal year ended March 31, 2004.

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COMPARATIVE STOCK PERFORMANCE

     The graph below compares the cumulative total shareholder return on the Common Stock of the Company for the last five years with the cumulative total return on the CRSP Total Return Index for the NASDAQ Stock Market (US Companies) (1) and a peer group of companies (2) over the same period, assuming the investment of $100 in the Company’s Common Stock, the NASDAQ Index and the peer group on March 31, 1999, and reinvestment of all dividends.

	3/99		3/00		3/01		3/02		3/03		3/04
MAXCO, INC		100.00		144.09		113.98		113.38		77.42		50.75
NASDAQ STOCK MARKET (U.S.)		100.00		198.50		76.58		59.96		49.22		76.27
PEER GROUP		100.00		71.07		9.66		7.06		3.91		3.81

(1)

The CRSP Total Return Index for the NASDAQ Stock Market (US Companies) is composed of all domestic common shares traded on the NASDAQ National Market and the NASDAQ Small-Cap Market.

(2)

The peer group consists of ten companies whose stock is publicly traded and whose market capitalizations are slightly above and below the Company’s capitalization in a range from $6.86 million to $9.96 million. Because of the diversified nature of the businesses represented by its subsidiary companies, the Company is unable to identify a published industry or line of business index or a group of peer issuers in comparable businesses which are sufficiently similar to allow meaningful comparison. Therefore, the Company has elected to compare its performance with a group of issuers having similar market capitalizations as allowed by SEC rules.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following Table sets forth certain information as of January 31, 2005, as to the equity securities of the Company owned beneficially by beneficial owners of 5% or more of the Company’s securities, by each Director and Nominee, each of the Company’s Executive Officers listed in the Summary Compensation Table, and by all Directors and Officers of the Company as a group.

	Amount and Nature of Beneficial Ownership
		Sole Voting			Shared Voting
		and Investment			and Investment			% of
Name of Beneficial Owner	Title of Class	Power			Power			Class
Max A. Coon(1)	Common Stock		878,456			107,070	(2)		31.8%
	Series Three Preferred Stock		114			3,240	(3)		22.7%
	Series Four Preferred Stock(4)		7,000						15.1%
	Series Five Preferred Stock(4)		3,816						57.4%
Eric L. Cross	Common Stock		168,775	(5)		88,583	(6)		8.2%
Sanjeev Deshpande	Common Stock		40,000	(7)					1.3%
Joel I. Ferguson	Common Stock		5,000						*
David R. Layton	Common Stock		0						*
Samuel O. Mallory	Common Stock		22,200						*
Vincent Shunsky	Common Stock		118,392	(8)		88,583	(9)		6.6%
	Series Three Preferred Stock		30						*
All Directors and Officers as a group, including the above seven people	Common Stock		1,232,823	(10)		173,736	(11)		43.6%
	Series Three Preferred Stock		144			3,240			22.9%
	Series Four Preferred Stock(4)		7,000						15.1%
	Series Five Preferred Stock(4)		3,816						57.4%
Andrew S. Zynda(12)	Common Stock		327,740			15,000			11.1%
	Series Four Preferred Stock(4)		10,000						21.5%
ROI Capital Management, Inc.(13)	Common Stock		845,998						27.3%
Dimensional Fund Advisors, Inc.(14)	Common Stock		145,200						4.7%

* Beneficial ownership does not exceed one percent (1%)

(1)	Mr. Coon’s address is 1118 Centennial Way, Lansing, Michigan 49817.
(2)	Represents 18,487 shares owned by Mr. Coon’s immediate family, 55,250 shares held jointly with Mr. Cross and Mr. Shunsky, and a proportionate share of 100,000 shares held by a general partnership in which Mr. Coon is a 1/3 partner.
(3)	Represents shares owned by a charitable foundation of which Mr. Coon is one of the trustees.
(4)	Series Four and Series Five Preferred Stock are both nonvoting.
(5)	Includes options to purchase 42,500 shares.
(6)	Includes 55,250 shares held jointly with Mr. Coon and Mr. Shunsky and a proportionate share of 100,000 shares held by a general partnership in which Mr. Cross is a 1/3 partner.
(7)	Represents options to purchase 40,000 shares.
(8)	Includes options to purchase 42,500 shares.
(9)	Represents 55,250 shares held jointly with Mr. Coon and Mr. Cross and a proportionate share of 100,000 shares held by a general partnership in which Mr. Shunsky is a 1/3 partner.

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(10)	Includes options to purchase 125,000 shares
(11)	Includes 5,089 shares owned by Maxco, Inc. 401(k) Employees Savings Plan of which Messrs. Coon, Shunsky, and Cross are Trustees.
(12)	Mr. Zynda’s address is Box 113, Corwin Road, Williamston, MI 48895
(13)	Information obtained from Schedule 13D dated June 25, 2003 and subsequent Form 4 filings, filed with the Securities and Exchange Commission and sent to the Company pursuant to Section 13(d) of the Securities Exchange Act of 1934. The address of ROI Capital Management, Inc. is 17 E. Sir Francis Drake Blvd., Suite 225, Larkspur, CA 94939.
(14)	Information obtained from Schedule 13G dated February 6, 2004, filed with the Securities and Exchange Commission and sent to the Company pursuant to Section 13(d) of the Securities Exchange Act of 1934. The address of Dimensional Fund Advisors, Inc. is 1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In June 2003, the Company assumed a lease with CJC Leasing, a limited liability company in which Mr. Coon is a member, from Contractor Supply Incorporated, the purchaser of the Company’s formerly wholly owned subsidiary, Ersco Corporation. As a result, the parties agreed to reduce the amount the Company owes Contractor Supply Incorporated by $2.3 million.

     Vincent Shunsky, Vice President is indebted to the Company in the principal amount of approximately $127,000. The indebtedness was incurred at various times prior to April, 2002 for the purchase of affiliate company stock and personal use. This debt carries interest rates up to 8%. As of January 31, 2005 the amount outstanding was approximately $171,000 including accrued interest.

RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

     The firm of Ernst & Young LLP served as auditors for the Company for the fiscal year ended March 31, 2003. Effective May 7, 2004, the Company dismissed Ernst & Young LLP and engaged the accounting firm of Rehmann Robson as its new independent public accountants.

     Rehmann Robson served as auditors for the Company for the fiscal year ended March 31, 2004. The decision to change Maxco’s accounting firm was approved by the audit committee of the board of directors on May 6, 2004 and reported on Form 8-K/A dated May 7, 2004.

     A representative of Rehmann Robson is expected to be present at the Annual Meeting of Shareholders, will be available to respond to appropriate questions, and will have the opportunity to make a statement if he desires to do so.

     The reports of Ernst and Young LLP on the consolidated financial statements of Maxco for the past two fiscal years ended March 31, 2003 and March 31, 2002 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that the reports of Ernst & Young LLP on Maxco’s financial statements for the past two fiscal years ended March 31, 2003 and 2002 contained a paragraph as to Maxco’s ability to continue as a going concern.

     In connection with the audits of Maxco’s financial statements for each of the two fiscal years ended March 31, 2003 and 2002 and in the subsequent interim periods from March 31, 2003 through and including May 7, 2004, there were no disagreements between Maxco and its auditors, Ernst & Young LLP on any matter of accounting principles or practices, consolidated financial statement disclosure, or auditing scope and procedures, which, if not resolved to the satisfaction of Ernst & Young LLP, would have caused Ernst & Young LLP to make reference to the matter in its reports.

     Maxco provided Ernst & Young LLP with a copy of the disclosure made in the 8-K/ A and requested Ernst & Young LLP to furnish Maxco with a letter addressed to the Securities and Exchange Commission

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stating whether Ernst & Young LLP agrees with the statements made by Maxco in this disclosure. A copy of that letter, dated May 14, 2004, which stated they were in agreement was filed as Exhibit 16 to the 8-K/A.

Principal Accountant Fees and Services

     For the two years ended March 31, 2003 and 2004, the Company’s auditors billed the Company for its services as follows:

Audit Fees.	2004 $54,000 for aggregate fees billed for professional services rendered by Rehmann Robson for the audit of the Company’s annual financial statements for the year ended March 31, 2004
	2004 $25,500 for aggregate fees billed for professional services rendered by Ernst & Young, LLP for the reviews of the financial statements included in the Company’s quarterly reports filed with the Securities and Exchange Commission during the year.
	2003 $81,575 for aggregate fees billed for professional services rendered for the audit of the Company’s annual financial statements for the year ended March 31, 2003 and the reviews of the financial statements included in the Company’s quarterly reports filed with the Securities and Exchange Commission during the year.

     Audit-Related Fees. There were no such fees.

     Tax Fees. There were no such fees.

     All Other Fees. There were no such fees.

     There were no additional fees billed for services to the Company other than the above.

     The Audit Committee of the Company’s Board of Directors is of the opinion that the provision of services described above was compatible with maintaining the independence of Rehmann Robson and Ernst & Young LLP. The Company did not have pre-approval policies and procedures in 2003. In 2004, the Audit Committee revised its charter to comply with the mandates of the Sarbanes-Oxley Act of 2002 and related rules and regulations of the Securities and Exchange Commission, including pre-approval policies and procedures. All services rendered to the Company by Rehmann Robson and Ernst & Young for the year ended March 31, 2004 are permissible under applicable laws and regulations, and were pre-approved by the Audit Committee.

SHAREHOLDER PROPOSALS

     Any proposals which shareholders of the Company intend to present at the next annual meeting of the Company must be received by the Company by April 1, 2005, for inclusion in the Company’s proxy statement and proxy form for that meeting. In cases where a shareholder does not seek to have their proposal included in the Company’s proxy materials, no proposal will be considered timely for submission at the next Annual meeting unless it is received by the Company by June 14, 2005 and, in such case, the Company’s Proxy will provide the management proxies with discretionary authority to vote on such proposal without any discussion of the matter in the Proxy Statement. Proposals should be directed to the attention of Investor Relations at the offices of the Company, 1118 Centennial Way, Lansing, Michigan 48917.

DELIVERY TO SHAREHOLDERS SHARING AN ADDRESS

     Only one of this proxy statement is being delivered to two or more shareholders who share an address, unless the Company has received contrary instructions from one or more of such shareholders. A separate copy of this proxy statement will be promptly delivered upon written or oral request of a shareholder at a shared address directed to the attention of Investor Relations at the offices of the Company, 1118 Centennial Way, P.O. Box 80737, Lansing, MI 48917, telephone 517-321-3130. Shareholders at a shared address who wish to receive multiple copies of the Company’s proxy statement in the future, or alternatively who are

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receiving multiple copies and wish to receive only a single copy, may direct their request to the forgoing address.

OTHER BUSINESS

     The management knows of no other matters that will come before the meeting. However, if other matters do come before the meeting, the proxy holders will vote in accordance with their best judgment. The cost of solicitation of proxies will be borne by the Company. In addition to solicitations by use of the mails, Officers and regular employees of the Company may solicit proxies by telephone or in person.

By Order of the Board of Directors

Eric L. Cross

Secretary

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MAXCO, INC.
Proxy solicited on behalf of the Board of Directors
for Annual Meeting of Shareholders to be held March 15, 2005.

     The undersigned hereby constitutes and appoints Max A. Coon and Eric L. Cross, and each or any of them, attorney and proxy for and in the names and stead of the undersigned, to vote all stock of Maxco, Inc. (Maxco) on all matters, unless the contrary is indicated herein, at the Annual Meeting of Shareholders to be held at the corporate office, 1118 Centennial Way, Lansing, Michigan, on March 15, 2005 at 3:30 p.m. local time or at any adjournments thereof, according to the number of votes that the undersigned could vote if personally present at said meeting. The undersigned directs that this proxy be voted as follows:

     ELECTION OF DIRECTORS

     FOR all nominees listed below (except
     as marked to the contrary below).

M. Coon

S. Deshpande

J. Ferguson

D. Layton

S. Mallory

     WITHHOLD AUTHORITY to vote for all
     nominees listed below                    

     INSTRUCTION: To WITHHOLD AUTHORITY to vote for any individual nominee write that nominee’s name in the space provided below:

     In their discretion, the Proxies are authorized to vote upon such other business as may come before the meeting.

     This proxy, when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted for Proposal 1.

SIGNED:                                                  DATED:                                                  

     NOTE: When shares are held by joint tenants, both should sign. When signing as attorney, as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person.

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.

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