SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended June 30, ~~2003~~2004

Commission file number 1-9429

ROTONICS MANUFACTURING INC.

(Exact name of registrant as specified in its charter)

Delaware		36-2467474
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
17022 South Figueroa Street Gardena, California		90248
(Address of principal offices)		(Zip Code)
Registrant’s telephone number, including area code: (310) 538-4932
Securities registered pursuant to Section 12(b) of the Act:
Common Stock ($.01 stated par value)		American Stock Exchange
Titles of each class		Name of each Exchange on which registered

Registrant’s telephone number, including area code: (310) 538-4932

Securities registered pursuant to Section 12(b) of the Act:

Common Stock ($.01 stated par value)		American Stock Exchange
Titles of each class		Name of each Exchange on which registered

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by ~~Section~~ Section 13 or 15(d) for the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such ~~filing~~ filing requirements for the past 90 days. Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý o

The aggregate market value of the voting stock held by non-affiliates of the registrant, as of ~~September~~ 1December 31, 2003, was $86,~~045~~964,~~400~~100 (1).

The number of shares of common stock outstanding at September 1 3, 2004 ~~2003~~ was 1211,~~328~~978,~~891~~258.

(1) Excludes 7,~~070~~038,~~430~~ 208 shares held by directors, officers, and stockholders, whose ownership exceeded 5% of the outstanding shares at ~~September 1~~December 31, 2003. Exclusion of such shares should not be construed to indicate that ~~the~~ the holders thereof possess the power, direct or indirect, to direct the ~~management~~ management or policies of registrant, or that such persons are controlled by or ~~under~~ under common control with the registrant.

DOCUMENTS INCORPORATED BY REFERENCE

Document		Form 10-K Part
Definitive Proxy Statement to be used in connection with the Annual Meeting of Stockholders to be held on December 8, 2003		III
Definitive Proxy Statement to be used in connection with the Annual Meeting of Stockholders to be held on December 6, 2004		III

TABLE OF CONTENTS

PART I
Item 1	Business
Item 2	Properties
Item 3	Legal Proceedings
Item 4	Submission of Matters to a Vote of Security Holders
PART II
Item 5	Market for Registrant’s Common Stock, ~~and~~ Related Stockholder Matters and Issuer Purchases of Common Stock
Item 6	Selected Financial Data
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7a	Quantitative and Qualitative Disclosures About Market Risks
Item 8	Financial Statements and Supplementary Data
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9a	Controls and Procedures
PART III
Item 10	Directors and Executive Officers of the Registrant
Item 11	Executive Compensation
Item 12	Security Ownership of Certain Beneficial Owners and Management
Item 13	Certain Relationships and Related Transactions
Item 14	Principal Accounting Fees and Services
PART IV
Item 15	Exhibits, Financial Statement Schedules, and Reports on Form 8-K
SIGNATURES

PART I

Forward-Looking Statements

To the extent that this 10-K Annual Report discusses matters which are not historical, including statements regarding future financial results, information, or expectation about products or markets, or otherwise makes statements about future events, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These include, among others, fluctuations in costs of raw materials and other expenses, costs associated with plant closures, downturns in the markets served by the Company, the costs associated with new product introductions, as well as other factors described under the heading: Item 1, “Business”, Item 3, “Legal Proceedings”, under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and Footnote 1 to Financial Statements. When used in this report, the words “expects,” “anticipates,” “intends,” “plans,” “ believes,” “seeks,” “estimates” and similar expressions ~~are~~ are generally intended to identify forward-looking statements. You should not place undue reliance on these forward-looking statements, which reflect our opinion only as of the date of the Annual Report. We undertake no obligation to publicly release any revisions to the forward-looking statements after the date of this document. You should carefully review the risk factors described in other documents we file from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q to be filed by us in fiscal year ~~2004~~2005.

Item 1. Business

Introduction

Rotonics Manufacturing Inc. (the “Company”) was founded as an Illinois Corporation, and was reincorporated in Delaware in December 1986. Effective July 1, 1991, the Company merged with Rotonics Molding, Inc.-Chicago (“Rotonics”), with the Company being the surviving entity. In accordance with the 1991 merger agreement, the Company issued 2,666,666 (after giving effect to a 1-for-3 reverse stock split) shares of its common stock and 4,999,997 shares of a newly issued non-voting preferred stock in exchange for all the outstanding voting stock of Rotonics. The preferred stock was completely redeemed prior to the end of fiscal 1996, and the Company’s Articles of Incorporation were subsequently amended to eliminate the authorization of Series A preferred stock.

Rotonics had operations in Itasca, Illinois; Deerfield, Wisconsin; Denver, Colorado; and Bartow, Florida. Three of these operations currently conduct business as divisions of the Company using the trade names RMI-C, RMI-D, and RMI-F, respectively. Rotonics was a privately held California Corporation, which was 52% owned by Mr. Sherman McKinniss. Mr. McKinniss became president and chief executive officer of the Company on August 12, 1991, and currently presides as the Company’s president, CEO and chairman of the board.

In September 1991, the Company’s wholly owned subsidiary, Rotational Molding, Inc. (“RMI”), was merged into the Company and now operates as two divisions using the trade names RMI-G and RMI-I with manufacturing operations in Gardena, California and Caldwell, Idaho, respectively.

Effective January 1, 1992, the Company acquired Plastech Holdings, Inc. (“Plastech”), and its wholly owned subsidiary, Plastech International, Inc., for $1,777,070 in cash. Plastech was headquartered in Warminster, Pennsylvania, with an additional operation in Gainesville, Texas. In July 1992, Plastech was merged with the Company and now operates as a division of the Company using the trade name RMI-T.

Effective April 1, 1995, the Company purchased certain assets and assumed certain liabilities of Custom Rotational Molding, Inc. (“CRM”) for 300,000 shares of the Company’s common stock. The Company assumed CRM’s operations in Arleta, California.

In September 1994, the Company purchased a larger manufacturing facility in Bensenville, Illinois and subsequently relocated its Itasca, Illinois operations into this new facility. In December 1995, the Company discontinued its operations at its Deerfield, Wisconsin location and combined these operations into its newly purchased Bensenville, Illinois operation. The Wisconsin facility is currently being leased to ~~two~~one ~~tenants~~tenant on a month-to-month term basis at $2,500 per month.

In February 1997, the Company purchased a 9.73-acre facility consisting of 63,000 square feet of manufacturing and office building space in Commerce City, Colorado. The Company has since expended significant resources to

refurbish the facility to house its Colorado operations. The facility is also located within an enterprise zone, which continues to provide additional benefits. The Company leases a portion of this facility’s excess office and yard space on a long-term basis at $4,100 per month.

Effective April 1, 1998, the Company merged with Rotocast International, Inc. and its wholly owned subsidiaries (“Rotocast”), with the Company being the surviving entity. In accordance with the Merger Agreement, the Company issued 2,072,539 shares of its common stock and a $2,000,000 note payable secured by a stand-by letter of credit, in exchange for all the outstanding voting stock of Rotocast. In January 2000, the Company repurchased these shares for $2.8 million. Upon consummation of the repurchase, the shares were retired.

Rotocast had operations in Miami, Florida; Knoxville, Tennessee; Brownwood, Texas; Las Vegas, Nevada; and Bossier City, Louisiana. These operations currently conduct business as divisions of the Company using the trade names Nutron, Rotocast of Tennessee, RMI-B and RMI-Nevada. Prior to the merger, the operations in Bossier City, Louisiana were substantially discontinued. Rotocast was a privately held Florida corporation, owned by GSC Industries, Inc. (“GSC”). The Company leases the remaining Rotocast facilities from GSC, and other affiliated parties, under long-term lease arrangements. A portion of the Nutron office building is being sub-leased on a long-term basis at $2,~~300~~500 per month.

In conjunction with the Rotocast merger, the Company initiated the consolidation of its Warminster, Pennsylvania and Arleta, California facilities into its remaining operations. The consolidation of these facilities was completed in fiscal 1999 and enhanced the operations of the Company’s remaining facilities, reduced its overall manufacturing overhead costs, and allowed the Company to take greater advantage of its marketing and distribution channels. Also, in fiscal 1999, the Company consolidated its Miami operations into the remaining operating facilities.

The Corporate office of the Company is located at the same site as the RMI-G (Gardena, California) facility.

Description of Business

The Company currently has ten manufacturing locations and was again listed by a plastics industry periodical as one of the top ten rotational molders in North America. These operating divisions manufacture a variety of plastic products for commercial, agricultural, pharmaceutical, governmental, building, medical waste, refuse, retail, recreation, marine, healthcare and residential use, as well as a vast number of custom plastic products for a variety of industries, utilizing the rotonically molding process and, on a smaller scale; injection molding and dip molding processes. In April 1998, the injection molding process was added to the Company’s manufacturing operations as part of the Rotocast merger. Utilizing this process, the Company markets a variety of parts for commercial, promotional, and residential uses, under the trade names Nutron and AMP. Rotonically molding is a process for molding plastic resin by rotating a mold in a heated environment, while the plastic resin powder placed inside the mold melts and evenly coats the inner wall of the mold. The injection molding process varies in that the plastic resin is first heated to a molten state and then injected under pressure into a mold. The rotonically molding process has been used for many years and continues to be recognized as a growth industry in recent years, as a result of numerous ongoing business consolidations and the development of new resins. These new resins allow rotonically molded items to compete with more traditional materials such as carbon, fiberglass, and stainless steel, especially in the fabrication of large, lightweight, one-piece molded items, such as storage tanks and polysteel light poles. Rotonically molding is a particularly advantageous process for users of molded plastic products who may want to test different prototypes, or who do not require sufficient numbers of such products to justify a more expensive manufacturing process. The Company’s products include various types of storage tanks, bin lids, refuse containers for automated removal, medical waste containers, agricultural/livestock products, kayaks, outdoor polysteel lamp posts, furniture, planters, and other rotonically molded items.

The Company purchases resin from ~~five~~six major suppliers in the U.S. and Canada. There are ~~fourteen~~fifteen additional suppliers of lesser significance. Since the majority of the resin used in the manufacturing process is a polyethylene derived from natural gas, resin price is not directly related to the price for petrochemicals, and until recent years, has not generally been subject to volatile fluctuations that are often experienced by the petroleum industry. The Company also incorporates the use of recycled plastic materials, blended with virgin materials in the manufacturing of products, whenever appropriate.

The Company holds several patents on storage containers used for pharmaceutical, commercial and residential applications that expire through the year 2010. Although the Company has been able to capture its share of these niche markets and expects to see continued growth, no one patent or groups of patents is considered material to the business as a whole.

Competition for the Company’s products is governed by geography and region, since large capacity tanks and bulky hollow products are expensive to ship long distances and, as such, any prospective competitor is constrained by shipping costs. There are numerous single-location, as well as a growing trend to structure multi-location, rotonically molding businesses throughout the United States. However, each of these businesses still competes in a geographic region, which is determined by customer demand within that region, a constraint inherent to the industry. Due to its nationwide presence, the Company has substantially alleviated this constraint. The Company’s sales are usually not subject to large seasonal fluctuations as the business typically operates on significant backlogs with a diverse product mix. Peak season is usually experienced in the period from April through June. Historically, the quarter from January through March is the slowest production period of the year. The Company’s backlog was $53,~~201~~001,~~600~~200 and $25,~~511~~201,~~100~~600 as of June 30, 2004 ~~2003~~ and ~~2002~~2003, respectively. All of the backlog orders as of June 30, ~~2003~~ 2004 are expected to be filled during fiscal ~~2004~~ 2005.

The Company’s products are marketed through the in-house sales and engineering staff, various distributors and outside commission-based sales representatives. The Company continues to build a strong, broad and diverse customer base, which covers a multitude of industries. Since fiscal 1991, no sales to any one single customer represented a material part of the Company’s business.

Research and development expenditures for the Company were insignificant for the last three fiscal years.

Regulation

The Company believes it is in compliance with all applicable federal, state and local laws relating to the protection of the environment, and does not anticipate any such laws will have material effect on its financial position, capital expenditures, or competitive position.

Employees

As of June 30, ~~2003~~2004, the Company employed a total of ~~390~~ 425 individuals. The Company maintains, for its respective employees who are eligible, a medical insurance plan (some of which is contributory), a group life insurance plan, an annual bonus plan and a semi-annual attendance bonus plan.

Item 2. Properties

The Company’s corporate office occupies a separate building that uses approximately 3,600 square feet of the facilities of RMI-G in Gardena, California.

The operating divisions lease warehouse, production and office space as follows:

Property Location	Building Square Footage	Total Facility Square Footage	Annual Base Rent		Expiration Date (2)
Gardena, California (1)	42,800	183,300	$	~~307~~313,~~000~~100	October 2011
Caldwell, Idaho	21,250	71,200	$	105,600	September 2005
Bartow, Florida	46,200	174,600	$	129,400	September ~~2004~~2009
Miami, Florida (3)	50,000	86,000	$	168,~~000~~700	March 2013
Gainesville, Texas (4)	—	108,900	$	1,000	April 2006
Brownwood, Texas	42,800	136,120	$	7475,~~700~~000	March 2013
Las Vegas, Nevada	30,000	90,000	$	~~139~~140,~~700~~200	March 2013
Knoxville, Tennessee	44,000	174,240	$	~~151~~152,~~500~~100	March 2013

(1) The Company has a first right to purchase option on this facility.

(2) Does not give effect to any renewal options.

(3) The Company ~~recently~~is ~~negotiated~~ actively pursuing a sub-lease on one of the Miami buildings (18,000 sq. ft.) ~~for $4,000 per month~~ and is currently sub-leasing a portion of the other building’s office space for $2,~~300~~500 per month.

(4) Represents a 2.5 acre ground lease adjacent to owned, Gainsville, Texas facility.

The Company owns 2.1 acres (including 38,000 square feet of warehouse, production and office space) in Gainesville, Texas. In September 1994, the Company purchased 3.1 acres (including 63,300 square feet of warehouse, production and office space) in Bensenville, Illinois, for the Company’s Illinois manufacturing operations. The Texas and Illinois facilities were encumbered by a combined $1.77 million mortgage, which was paid in full on August 15, 2002. In February 1997, the Company purchased for cash 9.73 acres (including 63,000 square feet of warehouse, production and office space) in Commerce City, Colorado, for the Company’s Colorado manufacturing operations. The Company currently leases a portion of this facility for $4,100 per month. The Company also owns approximately 1.59 unencumbered acres (including 35,100 square feet of warehouse, production, and office space) in Deerfield, Wisconsin, which was vacated in December 1995 by the Company, and its operations were incorporated into the Illinois facility. The Wisconsin facility is currently leased to ~~two~~an unrelated ~~lessees~~lessee for $2,500 per month, and isas ~~currently~~of ~~listed~~September 22, 2004 we are in negotiations for the sale of the property.

Item 3. Legal Proceedings

In the normal course of business, the Company encounters certain litigation matters, which in the opinion of management will not have a significant adverse effect on the financial position or the results of operations of the Company.

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

None.

PART II

Item 5. Market for Registrant’s Common Stock and Related Stockholder Matters

The Company’s Common Stock ($.01 stated value) is traded on the American Stock Exchange (“AMEX”) under the symbol “RMI”. The number of stockholders of record of the Company’s Common Stock was approximately 3,~~750~~400 at ~~September~~ 1September 3, ~~2003~~2004.

Price Range of Common Stock

The following table sets forth the quarterly price ranges of the Company’s Common Stock in Fiscal ~~2003~~ 2004 and ~~2002~~2003, as reported on the composite transactions reporting system for AMEX listed stocks.

Fiscal Period	High		Low
Fiscal 2002.
Fiscal 2003:
First Quarter Ended September 30, 2001	$	1.12	$	0.57
Second Quarter Ended December 31, 2001	0.82		0.57
Third Quarter Ended March 31, 2002	1.00		0.66
Fourth Quarter Ended June 30, 2002	1.19		0.81
Fiscal 2003.
First Quarter Ended September 30, 2002	$	1.42	$	0.95
Second Quarter Ended December 31, 2002	1.17		0.90
Third Quarter Ended March 31, 2003	1.44		0.97
Fourth Quarter Ended June 30, 2003	1.68		1.20
Fiscal 2004:
First Quarter Ended September 30, 2003	$	1.71	$	1.25
Second Quarter Ended December 31, 2003	1.70		1.32
Third Quarter Ended March 31, 2004	1.60		1.27
Fourth Quarter Ended June 30, 2004	1.90		1.38

Since fiscal 1996 the Company has paid ~~six~~seven regular cash dividends on its Common Stock and in fiscal ~~2003~~ 2004, the Company declared a regular cash dividend of $.05 per common share on its Common Stock that was paid in July ~~2003.~~ 2004. Any future cash dividends or other distributions of stock will be determined solely by the Board of Directors (“the Board”) and will be based on the Company’s future financial ability to declare and pay such dividends. Additionally, certain lending agreements restrict the Company from declaring or paying dividends beyond set limits on its Common Stock (see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations: Liquidity and Capital Resources”). According to the lending agreement with its bank, the Company may declare or pay any dividend or distribution in a maximum aggregate of $700,000 and may redeem, retire, repurchase or otherwise acquire ~~shares~~ shares of any class of the Company’s stock in a maximum aggregate or $1,000,000 in any fiscal year. Transactions that ~~would~~ would exceed these limits would require prior bank authorization and the ~~appropriate~~ appropriate waivers.

The table below discloses the following information with respect to the Company’s equity compensation plans that have been approved by stockholders and plans that have not been approved by stockholders as of June 30, 2004.

Equity Compensation Plan Information

Plan category	(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights	(b) Weighted-average exercise price of outstanding options, warrants and rights		(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by stockholders	—	$	—	850,000
Equity compensation plans not approved by stockholders	—	$	—	—
Total	—	$	—	850,000

The table below discloses the following information with respect to purchases of the Company’s common stock during the fourth quarter of fiscal 2004.

Issuer Purchases of Common Stock

Period	(a) Total number of shares (or units) purchased (1)	(b) Average price paid per share (or unit)		(c) Total number of shares (or units) purchased as part of publicly announced plans or programs	(d) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs (2)
Month #1 April 1, 2004 - April 30, 2004	5,500	$	1.52	5,500	$	95,100
Month #2 May 1, 2004 - May 31, 2004	33	$	1.62	—	$	95,100
Month #3 June 1, 2004 - June 30, 2004	—	$	—	—	$	95,100
Total	5,533	$	1.53	5,500	$	95,100

(1) 33 shares were purchased in an open market transaction.

(2) In fiscal 2001, the Board of Directors approved a common stock buyback program to purchase up to $1,000,000 of the Company’s common stock. At June 30, 2004, the Company had approximately $95,100 available for additional purchases under the program. The buyback program does not have an expiration date.

Item 6. Selected Financial Data

	Year ended June 30,
	2003			2002			2001			2000			1999
	2004			2003			2002			2001			2000
Income Statement Data
Net sales	$	3540,~~972~~332,~~100~~900		$	3735,~~973~~972,~~300~~100		$	4037,~~520~~973,~~100~~300		$	4640,~~647~~520,~~700~~100		$	46,~~730~~647,~~900~~700
Cost of goods sold	2631,~~927~~140,~~300~~600			2726,~~765~~927,~~900~~300			3127,~~158~~765,~~700~~900			3431,~~645~~158,~~000~~700			34,~~566~~645,~~500~~000
Gross margin	9,~~044~~192,~~800~~300			109,~~207~~044,~~400~~800			910,~~361~~207,400			129,~~002~~361,~~700~~400			12,~~164~~002,~~400~~700
Selling, general, and administrative expenses (B)	7,068,700			7,540,900			7,635,400			7,888,900			8,841,600
Selling, general, and administrative expenses	6,888,600			7,068,700			7,540,900			7,635,400			7,888,900
Interest expense	~~266~~211,~~000~~800			~~464~~266,~~100~~000			~~743~~464,100			~~955~~743,~~000~~100			~~987~~955,~~700~~000
Net income from operations	$	1,~~156~~304,~~600~~200		$	1,~~408~~156,~~700~~600		$	~~473~~1,408,700		$	2473,~~030,500~~700		$	12,~~326~~030,~~000~~500
Basic/diluted income per common share from operations	$	0.0911		$	0.1109		$	0.0411		$	0.1404		$	0.0914
Avg. common shares outstanding (A)	12,~~486~~155,~~000~~500			12,~~758~~486,~~800~~000			12,~~835~~758,~~200~~800			1312,~~981~~835,~~800~~200			1513,~~379~~981,~~400~~800
Other Financial Data
Net income from operations as a percent of sales	3.2		%	3.72		%	13.27		%	41.42		%	24.94		%

(A) Computed on the basis of the weighted average number of common shares outstanding during each year.

(B) Fiscal 1999 includes $394,400 in plant consolidation expenses.

	At June 30,
	2003		2002		2001		2000		1999
	2004		2003		2002		2001		2000
Balance Sheet Data
Current assets	$	1112,~~440~~980,~~200~~600	$	1211,~~043~~440,~~100~~200	$	1312,~~379~~043,~~700~~100	$	1413,~~866~~379,~~100~~700	$	1514,~~701~~866,~~500~~100
Current liabilities	45,~~710~~224,~~700~~300		4,~~559~~710,~~400~~700		4,~~185~~559,~~600~~400		54,~~408~~185,~~300~~600		5,~~965~~408,~~900~~300
Working capital surplus	67,~~729~~756,~~500~~300		76,~~483~~729,~~700~~500		97,~~194~~483,~~100~~700		9,~~457~~194,~~800~~100		9,~~735~~457,~~600~~800
Total assets	2627,~~450~~351,~~200~~800		2726,~~841~~450,~~800~~200		3427,~~500~~841,800		3734,~~193~~500,~~200~~800		3937,~~300~~193,~~300~~200
Long-term debt	2,~~362~~474,~~100~~000		32,~~937~~362,~~200~~100		73,~~396~~937,200		87,~~569~~396,~~800~~200		98,~~470~~569,~~600~~800
Total liabilities	910,~~500~~174,~~200~~600		119,~~061~~500,~~700~~200		1411,~~193~~061,700		1614,~~629~~193,~~400~~700		1716,~~866~~629,~~000~~400
Current ratio	2.45 to 1		2.64 to 1		3.2.6 to 1		23.72 to 1		2.67 to 1
Net book value per common share (A)	$	1.3743	$	1.3337	$	1.5933	$	1.59	$	1.4259
Dividends (B)	$	0.05	$	0.05	$	0.0405	$	—0.04	$	~~0.04~~—

(A) Computed on the basis of the actual number of common shares outstanding at the end of the fiscal year. Fiscal 2002 net book value includes the write-down of goodwill amounting to $4.1 million in connection with the adoption of SFAS No. 142.

(B) Based on cash dividends declared per common share during the respective periods.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

To the extent that this 10-K Annual Report discusses matters which are not historical, including statements regarding future financial results, information, or expectation about products or markets, or otherwise makes statements about future events, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These include, among others, fluctuations in costs of raw materials and other expenses, costs associated with plant closures, downturns in the markets served by the Company, the costs associated with new product introductions, as well as other factors described under the heading: Item 1, “Business”, Item 3, “Legal Proceedings”, under this Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and Footnote 1 to Financial Statements. When used in this report, the words “expects,” “anticipates,” “intends,” “plans,” “ believes,” “seeks,” “estimates” and similar expressions ~~are~~ are generally intended to identify forward-looking statements. You should not place undue reliance on these forward-looking statements, which reflect our opinion only as of the date of the Annual Report. We undertake no obligation to publicly release any revisions to the forward-looking statements after the date of this document. You should carefully review the risk factors described in other documents we file from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q to be filed by us in fiscal ~~2004~~2005.

Operations

Net sales ~~fell~~improved 5by 12.31% to $3540,~~972~~332,~~100~~900 in fiscal ~~2003~~2004 compared to $3735,~~973~~972,~~300~~100 in fiscal ~~2002~~2003. ~~Fiscal~~The majority ~~2003~~of ~~sales~~our ~~volumes~~product ~~continue~~groups toreflected ~~mirror our~~improvements ~~nation’s~~with ~~lackluster~~the ~~economy. Our~~most ~~industrial~~notable ~~product~~being ~~group~~a ~~reflected~~20.6% ~~the~~increase ~~most~~in ~~resilience~~refuse ~~during~~products, ~~these~~a ~~tough~~16.5% ~~conditions,~~increase in contract ~~reporting~~manufacturing aproducts ~~modest~~and 2a 8.47% increase in ~~sales~~industrial products. Of We ~~the~~were ~~hardest~~pleased ~~hit~~to ~~sectors,~~realize ~~our~~such ~~contract~~a ~~manufacturing~~notable upturn ~~group~~in ~~was~~sales ~~down 6~~volumes.8% inDuring fiscal ~~2003. However~~2004, ~~fiscal 2003~~we ~~was~~spent ~~also~~$1,525,000 aon ~~strong~~new equipment, ~~period~~tooling ~~for~~and ~~contract~~improvements ~~tooling~~to ~~projects~~further ~~that~~our ~~are~~commitment ~~expected~~to increase our sales, improve productivity and continue to ~~help~~improve ~~boost~~the ~~future~~quality ~~contract~~of ~~manufacturing~~our ~~sales~~product offerings. We ~~also~~have met this goal this year and will continue to ~~receive~~benefit ~~positive~~from ~~feedback~~these ~~that~~improvements ~~the~~and ~~U.S.~~new product ~~economy~~offerings isfor ~~slowly~~the ~~moving~~foreseeable ~~forward~~future. If ~~this~~In ~~trend sustains itself~~addition, we ~~anticipate~~have itsimilar ~~will~~capital ~~further~~expenditure ~~support~~plans ~~positive~~slated for fiscal ~~sales~~2005 ~~volume~~that ~~growth~~should ~~for~~further our ~~product~~drive ~~lines~~to improve future sales. We ~~are~~ also inremain ~~the~~optimistic ~~final~~that ~~stages~~our marketplace ofwill ~~placing~~continue ~~our~~to ~~new~~strengthen ~~roto-molding~~and ~~machine into~~in ~~service,~~turn ~~which~~ will ~~improve~~provide ~~our~~additional opportunities ~~competitive~~for ~~edge in the marketplace~~growth.

Net sales ~~dropped~~fell 65.3% to $3735,~~973~~972,~~300~~100 in fiscal ~~2002,~~2003 compared to $4037,~~520~~973,~~100~~300 in fiscal ~~2001~~2002. ~~Even~~Fiscal ~~though~~2003 sales volumes continued to mirror our ~~diverse~~nation’s ~~product~~lackluster ~~offerings helped~~economy. Our ~~minimize~~industrial ~~sales~~product ~~volume~~group ~~deterioration,~~reflected the most ~~country’s~~resilience ~~general~~during ~~economic conditions~~these ~~continued~~tough toconditions, ~~weigh~~reporting ~~heavily~~a onmodest ~~the~~2.4% ~~manufacturing~~increase in ~~sector~~sales. ~~Our~~Of ~~marine~~the ~~and~~hardest ~~consumer~~hit ~~product groups~~sectors, ~~reported~~our ~~the~~contract ~~largest~~manufacturing ~~downturn~~group ~~with~~was ~~decreases~~down ~~of 26~~6.58% ~~and~~in 17fiscal 2003.8% However, ~~respectively, compared~~fiscal to2003 ~~fiscal~~was ~~2001~~also ~~volumes.~~ a strong ~~Despite~~period ~~the~~for ~~overall~~contract ~~drop~~tooling inprojects ~~sales,~~that ~~industrial~~are ~~products~~expected ~~posted~~to ahelp boost future ~~respectable~~contract 6manufacturing sales.0% We ~~increase~~were also ~~over~~in ~~fiscal~~the ~~2001~~final ~~sales~~stages ~~volumes. Industrial~~of ~~products~~placing ~~continue~~our tostate beof athe ~~growth sector~~art ~~for~~new usroto-molding machine asinto weservice, ~~continue~~which towill ~~broaden~~improve our ~~product~~competitive ~~offerings~~edge ~~and~~in ~~target~~the ~~specific niche markets~~marketplace.

Cost of goods sold was $2631,~~927~~140,~~300~~600, or 7477.92% of net sales, in fiscal 2004 ~~2003~~ compared to $2726,~~765~~927,~~900~~300 ~~or 73.1%~~ and $3127,~~158~~765,~~700~~900, or 7674.9% and 73.1% of net sales , in fiscal ~~2002~~2003 and ~~2001~~2002, respectively. ~~We were pleased that~~ ~~targeted~~The ~~gross~~increase ~~margin~~in ~~objectives~~our ~~were~~sales ~~sustained~~volumes asalong wewith ~~continued~~our ~~to battle~~manufacturing ~~rising~~efficiencies ~~raw material, insurance~~ and utility costs. Workers compensation costs continue to escalate in many areas in which we operate reflecting a 33.6% rise over prior years costs. To date, we have contained most of these costs through systematic ~~product~~ price increases, ~~sustaining~~helped ~~workforce reductions~~mitigate ~~and~~the ~~ongoing~~overall ~~efficiency and cost containment efforts~~4. ~~Fiscal 2002 was also pressured by a~~1% ~~lackluster~~increase ~~economy. To~~material ~~maintain acceptable~~costs ~~margins,~~along wewith ~~again~~rising ~~improved~~natural ~~our~~gas ~~manufacturing~~and ~~efficiencies~~workers ~~and~~compensation ~~reduced~~insurance ~~our~~costs ~~workforce~~that byamounted ~~15%~~to ~~during~~approximately ~~the year. This~~$337,000. These costs coupled with ~~favorable resin prices and~~ a $~~600~~200,000 ~~reduction in~~ ~~natural~~inventory ~~gas~~write-down ~~costs that had previously spiked~~ in fiscal ~~2001~~2004, ~~helped~~ultimately ~~counter~~reduced ~~the 36%~~our ~~increase~~gross inmargins ~~workers compensation costs in fiscal 2002~~by 2.3%. AsWe ~~depicted,~~do ~~the~~not ~~cost~~foresee ofany ~~plastic resin,~~significant ~~utility~~relief ~~costs~~from ~~and~~these ~~labor related~~ costs, ~~represent~~but ~~the major portion of the Company’s manufacturing costs. We anticipate that we~~ will ~~continually~~remain bevigilant ~~challenged~~in toour ~~mitigate~~efforts ~~future cost increases related~~ to offset these ~~expenses,~~rising ~~which~~costs in ~~turn could hamper the Company’s goal to maintain~~ future ~~gross margin objectives~~periods.

Selling, general and administrative (“SG&A”) expenses were $76,~~068~~888,~~700~~600, or 1917.71% of net sales, in fiscal ~~2003~~2004 compared to $7,~~540~~068,~~900~~700, or 19.97% of net sales, in fiscal ~~2002~~2003. Overall SG&A costs ~~have~~ decreased $~~472~~180,~~200~~100, which is primarily attributed to ~~our~~the ~~cost containment efforts. These efforts were reflected in reduced marketing costs of~~ $87190,~~600,~~000 ~~travel~~one-time ~~costs~~administrative ofcontractual ~~$43,800~~charge ~~and~~incurred ~~wage/benefit~~in ~~costs of~~fiscal ~~$280,200~~2003. ~~Additional~~We ~~cost~~are ~~savings~~pleased ~~were also~~that ~~reflected~~we inhave ~~commission/royalty~~been able ~~expenses of $172,600 due~~ to ~~royalty agreements~~maintain ~~completed~~overall ~~last~~SG&A ~~fiscal~~costs ~~year~~in ~~and~~line awith ~~dip~~current insales ~~commission-based product~~volume ~~sales,~~levels and ~~finally,~~anticipate aholding ~~reduction~~this trend in ~~bad~~the ~~debt~~ensuing ~~expense of $47,400~~year. ~~These costs savings were partially offset by a $190,000 one-time administrative contractual charge during fiscal 2003.~~

SG&A expenses were $7,068,700, or 19.7% of net sales, in fiscal 2003 compared to $7,540,900, or 19.9% of net sales, in fiscal 2002. Overall SG&A costs have decreased $472,200, which is primarily attributed to our cost containment efforts. These efforts were reflected in reduced marketing costs of $87,600, travel costs of $43,800 and wage/benefit costs of $280,200. Additional cost savings were also reflected in commission/royalty expenses of $172,600 due to royalty agreements completed in fiscal 2002 and a dip in commission-based product sales, and finally, a reduction in bad debt expense of $47,400. These costs savings were reduced by a $190,000 one-time administrative contractual charge during fiscal 2003.

~~SG&A~~Income ~~expenses~~from ~~were~~ operations was $72,~~540~~303,~~900~~700, or 195.97% of net sales, in fiscal year ~~2002~~2004 compared to $71,~~635~~976,~~400~~100 and $2,666,500, or 18 5.85% and 7.0% of net sales, in fiscal ~~2001~~2003 and 2002, respectively. ~~The~~ ~~comparative~~We ~~percentage~~are ~~increase~~pleased that our commitment to improving year-on-year operating results is ~~attributed~~starting to ~~the~~pay-off ~~lower~~in ~~sales~~spite ~~volumes~~of ongoing increases in insurance, utility and raw material costs as previously mentioned and we anticipate future improvements. ~~However~~In addition, fiscal 2004 income from operations also benefited from the overall reduction in SG&A costs ~~decreased~~as byalso outlined above. The 25.9% ~~$94,500,~~reduction ~~which~~in isoperating ~~primarily~~income ~~related~~in tofiscal ~~the~~2003 ~~elimination~~was ofattributed ~~goodwill~~to ~~amortization~~the 5.3% reduction in sales volumes coupled with the ~~amount~~1.8% ofincrease ~~$324,900,~~in ~~net~~cost of ~~planned~~goods ~~increases~~sold again inattributed ~~marketing,~~to ~~wage~~unmitigated ~~and wage-related~~increases ~~costs~~in ofworkers ~~approximately~~compensation ~~$121~~insurance,~~900,~~ utilities and anraw ~~increase~~materials inincurred ~~bad~~during ~~debt expense~~the ~~of $140,800~~period.

~~Income~~Total ~~from~~interest ~~operations was~~expense decreased $154,~~976,100,~~200 orto ~~5.5% of net sales~~$211,800 in fiscal ~~2003~~ 2004, compared to $2266,~~666,500~~000 ~~or 7.0%~~ and $1464,~~726,000~~100 ~~or 4.3% of net sales~~ in fiscal ~~2002~~2003 and ~~2001,~~ 2002 respectively. The ~~25.9%~~decrease ~~reduction~~is ~~in operating~~due ~~income~~to inthe ~~fiscal~~historically ~~2003~~low interest isrates ~~attributed~~that we continued to ~~the~~benefit ~~5.3%~~from ~~reduction~~during inthe ~~sales volumes~~current ~~coupled~~year along with ~~1.8%~~a ~~increase~~more infavorable ~~cost~~debt ofstructure. Although ~~goods~~we ~~sold~~anticipate ~~attributed~~our debt structure to remain fairly consistent in ~~unmitigated~~the ensuing months, recent increases in ~~workers~~the ~~compensation~~bank’s ~~insurance,~~prime ~~utilities~~ and ~~raw~~LIBOR rates may ~~material~~increase future interest costs. The notable ~~54.5%~~decrease ~~increase~~ in ~~fiscal~~ ~~2002~~interest ~~operating~~costs ~~income~~during fiscal 2003 was attributed to the ~~elimination of goodwill~~ ~~amortization (~~$~~324~~2,~~900)~~068,400 ~~due~~reduction toin ~~the~~our ~~adoption~~debt ofstructure ~~Statement~~during offiscal ~~Financial Accounting~~2003 ~~Standards~~coupled ~~(“SFAS”)~~with ~~No. 142, “Goodwill and Other Intangible Assets”~~more asfavorable ~~well~~bank asinterest ~~lower raw material and utility costs~~rates.

~~Total~~Income ~~interest~~taxes ~~expense decreased~~were $~~198~~898,~~100~~500, to$677,400 and $~~266~~947,~~000~~200 in fiscal 2004, 2003 and 2002, respectively. Current federal taxes amounted to $811,500 in fiscal 2004 compared to $~~464~~667,100 and $~~743~~476,~~100~~300 in fiscal ~~2002~~2003 and ~~2001~~2002, respectively. ~~The~~In fiscal ~~decrease~~2002, isa ~~due~~notable toportion ~~the~~of ~~significant~~our ~~reduction~~tax inprovision ~~our~~was ~~debt~~the deferred tax ~~structure~~component, which amounted to $2307,~~068,400~~100. During ~~and~~fiscal ~~$3,045,700~~2002 inthis ~~fiscal~~amount ~~2003~~was ~~and~~primarily ~~2002, respectively. The~~related ~~overall~~to ~~debt~~the federal ~~reduction~~alternative ~~coupled~~minimum ~~with~~tax ~~the~~(“AMT”) ~~low~~credit ~~interest~~carryforward ~~rate~~and ~~environment~~state ~~during~~net ~~the~~operating loss ~~last~~carryforwards. In ~~two~~fiscal 2002, we ~~years~~fully ~~and~~utilized our $412,600 federal AMT credit carry-forward. Following the ~~renegotiation~~utilization of our ~~bank~~AMT ~~interest~~credit carryforward, ~~rate~~we ~~swap~~have ~~agreement contributed~~incurred toan ~~further~~increase ~~reductions~~ in ~~interest~~our ~~costs~~current infederal ~~fiscal~~taxes. Fiscal ~~2003~~2004 ~~and~~increase ~~will~~income tax expense is ~~continue~~also related to ~~have~~the a20% ~~positive~~increase ~~effect~~in onincome ~~reducing~~before ~~future~~taxes ~~interest~~compared ~~costs~~to fiscal 2003.

~~Income~~Net ~~taxes~~income ~~were $677,400,~~before ~~$947,200~~cumulative ~~and~~effect ~~$614,800~~of change in ~~fiscal~~accounting ~~years~~principle for ~~2003,~~goodwill ~~2002~~increased ~~and 2001~~$147, ~~respectively. Prior~~600 to ~~fiscal 2003~~$1,304,200, ~~a significant~~or ~~portion~~$.11 ofper ~~our~~common ~~tax provision was the deferred tax component~~share, ~~which~~for ~~amounted~~fiscal 2004 compared to $~~307~~1,~~100~~156,600, ~~and~~or $~~511,500~~.09 inper ~~fiscal~~common ~~years~~share, ~~2002~~in ~~and 2001,~~fiscal ~~respectively~~2003. ~~During~~The ~~fiscal~~second ~~2002~~half ~~and 2001,~~of ~~these~~fiscal ~~amounts~~2004 offered ~~primarily~~a ~~related~~renewed tovigor in the ~~utilization~~marketplace, ofthat coupled with our ~~federal~~efforts ~~and~~to ~~state~~improve ~~net~~sales ~~operating~~volumes ~~loss~~through ~~(“NOL”)~~enhanced ~~carryforwards~~product offerings and ~~federal alternative minimum~~productivity ~~tax~~resulted ~~(“AMT”)~~in ~~credit~~our ~~carryforward,~~12.1% ~~and~~increase ~~thus~~in ~~did~~fiscal ~~not~~2004 ~~diminish~~sales ~~cash flows~~volumes. InThe ~~fiscal~~significant ~~2001,~~increase wein ~~fully~~sales ~~utilized our~~volumes ~~remaining~~provided ~~federal~~the ~~NOL~~needed ~~carryforward~~base to mitigate the rising raw material, utility and insurance incosts ~~fiscal~~that ~~2002~~continue weto ~~fully~~challenge ~~utilized~~our operations, along with the $~~412~~200,~~600~~000 ~~federal~~fiscal ~~AMT~~2004 ~~credit~~inventory ~~carryforward~~write down. ~~Following~~We ~~the~~successfully ~~utilization~~recouped a portion of these ~~carryforwards~~costs, wewhich ~~have~~coupled ~~incurred an~~with ~~increase~~the reduction in ~~our~~SG&A and interest costs provided the 12.8% increase in current ~~federal~~years ~~taxes~~net income. Even though ~~Current~~it ~~federal~~seems ~~taxes~~evident ~~amounted~~that toraw ~~$667~~materials,~~100~~ innatural ~~fiscal~~gas ~~2003~~and ~~compared~~insurance tocosts will ~~$476,300~~continue ~~and~~to ~~$26~~challenge future periods,~~000~~ inwe ~~fiscal~~remain ~~2002~~optimistic that our strong financial condition and ~~2001,~~business ~~respectively. As~~strategies ~~such,~~will ~~our~~help ~~cash~~us ~~flow~~to ~~requirements~~respond ~~have~~to current ~~significantly~~market ~~increased~~conditions ~~for~~and ~~the~~allow ~~payment~~us to take advantage of ~~current~~growth ~~federal~~opportunities ~~taxes~~as they arise.

Net income before cumulative effect of change in accounting principle for goodwill decreased $252,100 to $1,156,600, or $.09 per common share, for fiscal 2003 compared to $1,408,700, or $.11 per common share, in fiscal 2002. Although we believe that future market conditions are slowly improving, fiscal 2003 was hampered by a sluggish economy, especially in the fourth quarter, which contributed to the 5.3% drop in sales volumes. While our cost containment efforts, as reflected in the $472,200 reduction in SG&A costs, along with lower interest costs, helped to preserve income levels, we still were unable to fully compensate for rising raw material, insurance and utility costs. Even though these trends will continue to challenge future periods, we remain optimistic that our strong financial condition and business strategies will help us to continue to respond to current market conditions and allow us to take advantage of growth opportunities as they become available.

Net income before cumulative effect of change in accounting principle for goodwill increased $935,000 to $1,408,700, or $0.11 per common share, for fiscal 2002 compared to net income of $473,700, or $0.04 per common share, in fiscal 2001. Even though market conditions were challenging in fiscal 2002, we were pleased that we were able to minimize the deterioration of sales volumes in comparison to the prior year results. These efforts, coupled with improved efficiencies, cost containment efforts, workforce reductions and the reductions relating to interest expense and goodwill previously mentioned, helped to successfully minimize the impact of these adverse market conditions, and ultimately resulted in the 197% improvement in net income for fiscal 2002 before the effect of the accounting change.

Cumulative Effect of Change in Accounting Principle for Goodwill

We recorded an adjustment effective July 1, 2001 to reflect the impact of adopting SFAS No.142, amounting to a reduction of intangible assets of $4,105,900. This amount is reflected in net loss for the fiscal year ended June 30, 2002 as a cumulative effect of change in accounting principle for goodwill. The adjustment represents a write down of our net goodwill based on a review of the goodwill for impairment. Under the assessment guidelines of SFAS No. 142 and the SEC’s guidance that our quoted market price is the most efficient mechanism for estimating fair value, it was determined the fair value of our reporting unit was less than its carrying value. Although the assumptions used to estimate fair value may not be indicative of future results, our goodwill has been reduced to zero and will not require future impairment analysis.

Liquidity and Capital Resources

Working capital ~~decreased~~ increased $~~754~~1,~~200~~026,800 to $67,~~729~~756,~~500~~300 at June 30, 2004, ~~2003~~ compared to $76,~~483~~729,~~700~~500 at June 30, ~~2002~~ 2003. The ~~reduction~~increase is related to ~~a decrease~~the ~~in accounts receivable~~$1, ~~which is in-line with current sales volumes~~623, ~~plus~~800 aincrease ~~decrease~~ in ~~our current portion of long-term debt due to the payoff of~~accounts ~~our~~receivable ~~real estate note~~ and ainventories ~~decrease~~consistent inwith ~~income taxes payable net of an increase in accounts payable at year end that included amounts due for~~ the ~~new roto-molding machine and additional resin shipments to take advantage of favorable pricing~~12. ~~Cash~~1% ~~flows~~increase ~~from operations~~in ~~decreased~~sales ~~$173,900 to $4,426,300 for fiscal 2003, compared to~~volumes ~~$4,600,200~~during ~~for~~ the ~~same~~current ~~period last~~ year~~. This~~ ~~reduction~~net isof ~~primarily~~the related toincrease ~~the $252,100 drop~~ in ~~income before~~accounts ~~cumulative~~payable ~~effect~~ of ~~change in accounting principle for goodwill between~~ ~~the~~$659,300 ~~two periods.~~

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) were $4,220,400 in fiscal 2003 compared to $5,014,000 in fiscal 2002. Although EBIDTA is not a substitute for measures of performance prepared in accordance with accounting principles generally accepted in the United States, (“GAAP”), it is a relevant internal measurement of our operations and cash flows. As such, in spite of the on going challenges faced in fiscal 2003, we continue to generate sufficient cash flows from operations enabling us to meet our working capital needs, service and reduce our debt ($2,068,400 in fiscal 2003), pay the $.05 per share common stock dividend declared in June 2003 and continue the common stock buyback program.12

Weprimarily ~~expended~~related ~~$1,532,600~~to the purchase of raw materials again associated ~~for~~with ~~property,~~the ~~plant~~higher sales volumes and ~~equipment~~to ~~(“PP&E”)~~take advantage of favorable resin pricing. Cash flows from operations decreased $1,910,700 to $2,515,600 in fiscal ~~2002~~2004, compared to $14,~~028~~426,~~800~~300 infor the ~~fiscal~~same ~~2002~~period last year. The ~~increase~~decrease ofis ~~$503,800,~~once inagain ~~comparison~~attributed to the ~~amount~~significant ~~expended~~build up in ~~fiscal~~our ~~2002,~~accounts isreceivable balance due to the ~~purchase~~ of$2,466,500 ~~new~~increase ~~technology-based~~in ~~molding~~sales ~~equipment~~volumes ~~that~~in ~~will~~the befourth ~~completed in~~quarter of fiscal 2004~~. We~~ ~~currently~~when ~~anticipate capital~~compared ~~expenditures~~ to ~~total~~the ~~approximately~~same ~~$1.2~~period -last $1year.~~5 million in fiscal 2004.~~

~~Net~~We ~~borrowings~~expended ~~under~~$1,525,000 ~~the line~~for ofproperty, ~~credit~~plant ~~increased~~and ~~$189~~equipment (“PP&E”) in fiscal 2004,~~200~~ compared to $~~381~~1,~~200~~532,600 ~~between~~in ~~June~~fiscal 302003. Costs incurred during the current period are related to the completion of our new state of the art roto-molding machine that was placed in service at our Commerce City, ~~2002~~Colorado facility and ~~June~~the costs 30associated with a new roto-molding machine installed at our Gainesville, ~~2003~~Texas facility. The ~~increase~~remaining iscosts ~~due~~incurred are related to ~~the~~new tooling and tooling modifications that we believe enhanced ~~timing~~our ofcompetitive ~~funding~~edge ~~capital~~in ~~expenditure~~the ~~projects~~market place and ~~the~~in ~~payment~~turn ofhelped ~~federal~~spur the improved ~~income~~sales ~~taxes~~volumes in ~~June~~fiscal ~~2003~~2004. ~~Due~~We anticipate capital expenditures to ~~the timing~~total ofapproximately ~~these~~$1.9 ~~types~~million ofin ~~payments,~~fiscal 2005 wethat ~~can~~will ~~anticipate~~include the ~~line~~instillation of ~~credit~~three ~~to reflect~~new ~~temporary~~roto-molding ~~fluctuations throughout the year~~machines.

~~Effective~~Net ~~October 1,~~borrowings ~~2001,~~under the ~~bank~~line ~~extended~~of ~~the~~credit ~~maturity~~increased ~~date~~$976,100 onto $1,357,300 ~~the~~between ~~line~~June 30, of2003 ~~credit~~and ~~to October 1~~June 30, 2004. In ~~addition,~~The ~~management~~increase ~~did~~is ~~not~~due ~~advance~~to on the $2timing of payments for capital expenditures,~~000,000~~ ~~term~~raw ~~loan~~materials, ~~commitment~~federal income taxes and ~~instead~~common ~~requested~~stock repurchases during the ~~bank~~ year. Due to ~~issue~~the atiming ~~new~~of ~~term~~such ~~loan~~payments, ~~commitment~~as inwell as the ~~same~~current ~~amount~~build ~~that~~up ~~will~~in ~~expire~~accounts onreceivable, it is not unusual to incur ~~October~~fluctuations ~~31,~~in ~~2003~~our line of credit borrowings throughout the year. ~~Effective~~However, ~~August~~since 15June 30, ~~2002~~ 2003, weour ~~also~~total debt ~~amended~~borrowings ~~our~~have ~~interest~~only ~~rate~~risen ~~swap~~$111,900 ~~agreement~~as ~~with~~a ~~the~~result ~~bank,~~of bythese cash outlays. We ~~reducing~~anticipate ~~the~~that ~~notional~~this ~~amount~~trend ~~down~~will tocontinue $4through ~~million,~~fiscal ~~reducing~~2005 ~~the~~as ~~fixed~~we ~~LIBOR~~balance ~~rate~~the ~~and~~timing ~~extending~~of cash flows from operations and the ~~maturity~~funding ~~date~~of tothese ~~August~~type ~~15,~~or ~~2006~~cash outlays.

~~The~~Effective ~~following~~October 1, is2003, athe bank extended the maturity date on ~~summary~~the line of credit to October 1, 2005. In addition, we did not advance on the ~~Company’s~~$2,000,000 ~~contractual~~term ~~commitments~~loan ~~associated~~commitment that ~~with~~subsequently ~~its~~expired ~~debt~~on October 1, 2003 and was not renewed. All other terms and conditions surrounding ~~lease~~our ~~obligations~~credit asfacility ofwith ~~June~~the 30bank remained the same, ~~2003:~~except that the agreement was also modified to expand our ability to issue letters of credit.

	For the year ended June 30,
	2004		2005		2006		2007		2008		Thereafter		Total
Principal payments- term debt	$	864,300	$	864,300	$	864,300	$	252,300	$	—	$	—	$	2,845,200
Operating leases	1,110,000		1,006,100		883,400		841,600		841,000		3,534,200		8,216,300
Total commitments	$	1,974,300	$	1,870,400	$	1,747,700	$	1,093,900	$	841,000	$	3,534,200	$	11,061,500

The following is a summary of the Company’s contractual commitments associated with its debt and lease obligations as of June 30, 2004:

During fiscal 2001, we reinstated our common stock buyback program. In fiscal 2003, we acquired 270,151 shares of common stock at a total cost of $340,500. We plan to continue to actively acquire our common shares. As of June 30, 2003, we had approximately 12,344,800 shares of common stock outstanding.

	For the year ended June 30,
	2005		2006		2007		2008		2009		Thereafter		Total
Principal payments-term debt	$	864,300	$	864,300	$	252,400	$	—	$	—	$	—	$	1,981,000

Line of credit	—		$	1,357,300	$	—	—		—		—		1,357,300

Operating leases	1,124,200		1,036,900		994,700		992,800		989,800		2,774,700		7,913,100

Total commitments	$	1,988,500	$	3,258,500	$	1,247,100	$	992,800	$	989,800	$	2,774,700	$	11,251,400

OnDuring ~~June~~fiscal 242001, ~~2003~~we ~~the Board~~reinstated ~~declared~~our acommon ~~dividend~~stock ~~of $~~buyback program.05 In ~~per~~fiscal ~~share~~2004, we acquired 459,633 shares of common stock ~~payable~~at ona ~~July~~total ~~25, 2003~~cost ~~to stockholders~~ of ~~record on July 14~~$679, ~~2003~~700. ~~This~~As ~~marks the seventh payment~~ of ~~dividends~~June 30, ~~since~~2004, ~~1996~~we onhad ~~our common~~11,981,158 ~~stock. The~~shares ~~Board~~of ~~is committed to annually review a dividend program for our~~ common stock outstanding.

On June 16, 2004, the Board declared a dividend of $.05 per share of common stock payable on July 23, 2004 to stockholders of record on July 9, 2004. This marks the eighth payment of dividends since 1996 on our common stock. The Board is committed to annually review a dividend program for our common stock.

Cash flows from operations in conjunction with our revolving line of credit are expected to meet our needs for working capital, capital expenditures, common stock repurchases and repayment of long term debt for the foreseeable future.

Recent Accounting Pronouncements

In ~~September 2001~~ January 2003, the Financial Accounting Standards Board (“FASB”) ~~approved~~issued FASB ~~SFAS~~Interpretation No. ~~144~~46, “~~Accounting for~~Consolidation ~~the Impairment or Disposal~~ of ~~Long-Lived~~Variable ~~Assets.” SFAS~~Interest ~~No.~~Entities, ~~144~~an Interpretation ~~supersedes~~of ~~SFAS~~ARB No. ~~121~~51” (“~~Accounting~~FIN ~~for Impairment~~46”). ofIn ~~Long-Lived~~December 2003, ~~Assets~~the ~~and~~FASB ~~for~~issued ~~Long-Lived~~a ~~Assets~~revision to beFIN ~~Disposed~~46 ~~of,”~~to ~~as well as~~make ~~Accounting~~certain ~~Principle~~technical ~~Board~~corrections ~~Opinion~~and ~~No.~~address 30certain ~~“Reporting~~implementation ~~the~~issues ~~Results~~that ~~of Operations – Reporting~~had ~~the~~arisen. FIN ~~Effects of Disposal of a Segment of Business~~46, ~~and~~as ~~Extraordinary~~revised, ~~Unusual, and Infrequently Occurring Events and~~ ~~Transactions.” SFAS~~clarifies ~~No.~~existing ~~144~~accounting ~~not~~literature ~~only retains~~regarding the ~~requirements~~consolidation of ~~SFAS No. 121 to recognize an impairment loss if the~~ ~~carrying~~entities ~~amount~~in ofwhich a ~~long-lived~~company ~~asset~~holds isa ~~not~~controlling ~~recoverable~~financial ~~from~~interest. A ~~its~~majority ~~undiscounted cash~~voting ~~flows,~~interest ~~but~~in ~~also~~an ~~establishes~~entity ~~a single accounting method for assets to be~~has ~~disposed~~generally ofbeen ~~and~~considered ~~broadens~~indicative ~~the presentation~~ of ~~discounted~~a ~~operations~~controlling tofinancial ~~include more disposal transactions~~interest. ~~SFAS~~FIN ~~No. 144~~46 ~~was~~specifies ~~effective~~other ~~for~~factors ~~fiscal years beginning after December 15, 2001. The adoption of this pronouncement did not~~(variable ~~have~~interest) awhich ~~significant~~must ~~impact on the Company’s financial statements.~~

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” This pronouncement was effective for exit or disposal activities initiated after December 31, 2002, and requires these costs to be recognized when the liability is incurred and not at project initiation. This statement did not have a material impact on the Company’s financial statements.13

Inbe ~~December~~considered ~~2002,~~when ~~the~~determining ~~FASB~~whether ~~issued~~a ~~SFAS~~company ~~No.~~holds ~~148~~controlling ~~“Accounting~~financial ~~for~~interest ~~Stock-Based Compensation – Transition and Disclosure.” SFAS No. 148 amends the disclosure requirements~~ in ~~SFAS No. 123~~, ~~“Accounting for~~and ~~Stock-Based~~therefore ~~Compensation,”~~must ~~for annual periods ending after December 15~~consolidate, ~~2002 and~~an ~~for~~entity ~~interim~~(variable ~~periods~~interest ~~beginning after December 15, 2002~~entities). ~~Effective~~The ~~for~~adoption ~~financial~~of ~~statements~~FIN ~~for fiscal~~46 ~~years~~had ~~ending~~no ~~after~~impact ~~December~~on ~~15, 2002, SFAS No. 148 also provides three alternative transition methods for companies that choose to adopt~~ the ~~fair~~ ~~value measurement provisions of SFAS No. 123. The~~ Company’s ~~accounts~~overall ~~for~~financial ~~stock~~position ~~options~~and ~~under~~results ~~the~~of ~~intrinsic~~operations method pursuant to Accounting Principles Board (“APB”) Opinion 25, “Accounting for Stock Issued to Employees,” which is permitted under SFAS No. 123. Had compensation cost for the plan been determined in accordance with the fair value method as ~~set~~ ~~forth in SFAS No. 123, as amended by SFAS No. 148,~~ the Company~~’s net income~~ ~~and~~has ~~income~~no ~~per~~variable ~~common~~interest ~~share data would not have been significantly different~~entities.

In April 2003, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 is intended to result in more consistent reporting of contracts as either freestanding derivative instruments subject to SFAS No. 133 in its entirety, or as hybrid ~~instruments~~instrument with debt host contracts and embedded derivative features. In addition, SFAS No. 149 clarifies the definition of a derivative by providing guidance on the meaning of initial net investments related to derivatives. This statement is was effective for contracts entered into or modified after June 30, 2003. The ~~Company does not believe the~~ adoption of SFAS No. 149 ~~will~~did not have a material effect on ~~its~~our consolidated ~~financial~~ financial position, results of ~~operations~~operation or cash flows.

In May 2003, The FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 was adopted by the Company on July 1, 2003 and did not have an impact on the Company’s financial statements.

Off-Balance Sheet Arrangements and Contractual Obligations

The Company has no off-balance sheet arrangements or significant guarantees to third parties not fully recorded in our balance sheets or fully disclosed in our notes to consolidated financial statements. The Company’s significant contractual obligations include our debt agreements. Certain financial and operating restrictions under these agreements are fully disclosed in notes 7 and 8 of the consolidated financial statements.

Critical Accounting Policies

We make various estimates when applying accounting policies in accordance with GAAP that affect our consolidated financial statements. Due to the nature of our business, these estimates generally are not considered highly uncertain at the time of estimation and therefore are not expected to result in a period-to-period change that would materially affect our results of operations or financial condition.

We do apply key accounting principles as required by GAAP. These key accounting policies govern ~~allowance for doubtful~~ accounts receivable, inventory valuation and income taxes.

~~Allowance for~~Accounts ~~doubtful accounts~~receivable

We make judgments as to its ability to collect outstanding receivables and provide allowances for the portion of receivables when collection becomes doubtful. Provisions are based on a percentage of net sales and a specific review of all significant outstanding receivable balances. Percentages applied may vary based on analysis of historical collection experience or current economic trends. If the data we use to calculate the allowance for doubtful accounts does not reflect the future ability to collect outstanding receivables, additional provisions for doubtful accounts may be needed and the results of operations could be affected.

doubtful accounts does not reflect the future ability to collect outstanding receivables, additional provisions for doubtful accounts may be needed and the results of operations could be affected.

Inventory valuation

Finished goods inventory is valued at cost and management uses historical gross margin trends and other estimates to continually update labor and overhead allocations. The gross margin percentage reflects our estimate of the cost of, among other things, material, labor and overhead expenditures during the production process. Such ~~cost~~costs are capitalized to inventory as products are manufactured. Although it is believed that the estimates are reasonable, it is possible that the actual labor and overhead costs will differ over time from the estimated amounts. ~~Such~~Due ~~differences~~to ~~could~~the ~~have~~high volume of transactions and the way raw materials are used in product manufacturing, inventory quantities can change rapidly and are impacted by a ~~material~~variety of factors including, ~~impact~~production onefficiency, obsolescence, scrap, design changes, customer preferences, etc. As such, the Company’s must ~~results~~regularly count inventories to ensure they are up to date. The Company takes a physical count monthly and reconciles the count to the inventory. However, given the number of ~~operations~~transactions, the number of locations and the ~~financial~~large ~~position~~number of inventory items, adjustments to the counts do occur on a regular basis. Although we believe that our inventory counts and values are reasonable the inventory does have some inherit estimates that could impact our balance sheet and results of operations.

Income taxes

Under SFAS No. 109, “Accounting for Income Taxes,” income taxes are recorded based on the current amounts payable or refundable, as well as the consequences of events that give rise to deferred tax assets and liabilities based on differences in how those events are treated for tax purposes. We base our estimates of deferred tax assets and liabilities on current tax laws and rates and in certain cases expectations about future outcomes. Our accounting for deferred tax consequences represents management’s best estimate of future events that can be appropriately reflected in accounting estimates. Our net operating loss carryforwards, which are available to offset taxable income, are also subject to limitations should a “change in ownership” as defined in the Internal Revenue Code occur. Although management believes that its estimates are reasonable, no assurance can be given that the final tax outcome of these matters will not be different than that which is reflected in ~~tour~~our historical income tax provisions and accruals. Such differences could have a material impact on our results of operations and financial position.

In particular, we recorded a valuation allowance to reduce its deferred tax assets to the amount of future tax benefit that is more likely than not to be realized. While management has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, there is no assurance that the valuation allowance would not need to be increased to cover additional deferred tax assets that may not be realized. Any increase in the valuation allowance could have a material adverse impact on our income tax provision and net income for the period in which such determination is made.

Factors That May Affect Our Future Results or the Market Price of Our Stock

We operate in a rapidly changing economic environment that presents numerous risks. Many of these risks are beyond our control and are driven by factors that we cannot predict. The following discussion highlights some of these risks.

Economic, political and market conditions can adversely affect our revenue growth.

Our revenue growth and profitability depends on the overall demand for plastic products for commercial, recreational and residential uses. Because our sales are primarily to corporate and government customers, our business depends on general economic and business conditions. The general weakening of the global economy, the weakening of business conditions in the manufacturing industry, and governmental budgetary constraints have resulted in a decreased demand for our products as we realized during the first half of fiscal 2004. If demand for our products ~~continues~~weakens ~~to be weak~~again, our revenue growth rates will be adversely affected. In addition, our country’s war on terrorism, as well as federal and state budgetary concerns, have contributed to economic, political and other uncertainties that could adversely affect our revenue ~~growth~~ growth and results of operations. If ~~economic~~ economic and market conditions do not ~~improve~~remain ~~as anticipated~~healthy, our business will ~~continue~~ to be adversely affected.

Management has no comparative advantage in forecasting macroeconomic trends and developments relating to general business conditions. Our management is, however, required to make such forecasts in order to develop budgets, plan research and development strategies and perform a wide variety of general management functions. To the extent that our forecasts are in error, because we are either overly optimistic or overly pessimistic about the performance of an economy or of a sector, our performance can suffer because of a failure properly to match corporate strategy with economic conditions.

If we do not successfully manage our operating margins, our business can be negatively impacted.

Our future operating results will depend on our ability to forecast revenues accurately and control expenses. While we can control certain internal factors, our future operating results can be adversely impacted by external factors, such as a slowing in demand for certain of our products. If there is an unexpected decline in revenues, which is not offset by a decrease in expenses, our business and operating results will be adversely affected.

such as a slowing in demand for certain of our products. If there is an unexpected decline in revenues, which is not offset by a decrease in expenses, our business and operating results will be adversely affected.

We may be required to change our business practices if there are changes in accounting regulations and related interpretations and policies.

Policies, guidelines and interpretations related to revenue recognition, income taxes, facilities consolidation, accounting for acquisitions, allowances for doubtful accounts and other financial reporting matters require difficult judgments as to complex matters that are often subject to multiple sources of authoritative guidance. Some of these matters are also among topics currently under re-examination by accounting standards groups and regulators. These standard groups and regulators could promulgate interpretations and guidance that could result in material and potentially adverse, changes to our accounting policies.

Business disruptions could affect our future operating results.

Our operating results and financial condition could be materially and adversely affected in the event of a major earthquake, fire or other catastrophic event, such as terrorist attacks upon the United States. Our corporate headquarters, a significant portion of our research and development activities and certain other critical business operations are located in California, near major earthquake faults. A catastrophic event that results in the destruction of any of our critical business or information technology systems could severely affect our ability to conduct normal business operations and as a result our future operating results could be adversely affected. In 2001, California experienced ongoing power shortages, which resulted in “rolling blackouts.” These blackouts, blackouts in other regions or procedures implemented to avert blackouts could cause disruptions to our operations and the operations of our customers. Such disruptions, particularly at the end of a quarter, could adversely affect quarterly revenues and net income.

Our stock price could remain volatile and your investment could lose value.

Our stock price has fluctuated widely in the past and could continue to do so in the future. Your investment in our stock could lose value. Some of the factors that could significantly affect the market price of our stock include:

• quarterly variations in our results of operations or those of our competitors;

• changes in our or our competitors’ prices;

• changes in our revenue and revenue growth rates as a whole or for specific geographic areas, business units, products or product categories;

• announcements of new products or product enhancements by us or our competitors;

• changes in management;

• changes in our accounting policies;

• changes in recommendations or earnings estimates by financial analysts;

• speculation in the press or analyst community;

• changes in economic and market conditions either generally or specifically to particular industries;

• changes in interest rates; and

• changes in investors beliefs as to the appropriate price-earnings ratios for us and our competitors.

A significant drop in our stock price could expose us to the risk of securities class action lawsuits. Defending against such lawsuits could result in substantial costs and divert management’s attention and resources. Furthermore, any settlement or adverse determination of these lawsuits could adversely affect us.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

We are exposed to certain market risks relating to interest rate volatility on its existing and future issuances of variable rate debt with the bank. Primary exposures include movements in U.S. Treasury rates and LIBOR rates, which in turn affect the bank’s prime and LIBOR option rates.

We had approximately $3.2 3 million of variable rate debt as of June 30, ~~2003~~2004. In efforts to reduce interest rate volatility and mitigate exposure on variable rate debt, we entered into an interest rate swap effective ~~July~~ July 15, 1998, as amended on August 15, 2002. The swap, ~~had~~which has a notional amount of $43 million as of June 30, ~~2003~~2004, ~~and~~ will step down to $~~3 million on August 15, 2004 and then $~~2 million on August 15, 2005, and will remain at this amount until its expiration on August 15, 2006. The swap fixes the bank’s LIBOR option rate at 4.83% over the term of the contract. The fair value of the swap, net of tax, amounted to ($64,400) as of June 30, 2004. If interest rates increased by 1% during fiscal 2005 as compared to fiscal 2004, and additional borrowings are not incurred, we would not expect a significant increase in projected fiscal 2005 interest expense.

contract. The fair value of the swap, net of tax, amounted to ($158,200) as of June 30, 2003. If interest rates increased by 1% during fiscal 2004 as compared to fiscal 2003, and additional borrowings are not incurred, we would not expect a significant increase in projected fiscal 2004 interest expense.

Item 8. Financial Statements and Supplementary Data

See Financial Statements and Financial Statement Schedules listed in Item 14(a)(1) and (2).

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9a. Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, summarized and processed within time periods specified in the SEC’s rules and forms. As of the end of the period covered by this report (the “Evaluation Date”), we carried out an evaluation, under the supervision and with the participation of our management, including our president and chief executive officer and our chief financial officer, of the effectiveness of the design and operation of our disclosure controls procedures pursuant to Rule 13a-14 under the Exchange Act. Based upon this evaluation, our president and chief executive officer and our chief financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective under Rules 13a-14.

There has been no change in our internal controls over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART III

Item 10. Directors and Executive Officers of the Registrant

Directors

The Company incorporates by reference the information set forth under the caption “Election of Directors” in the Proxy Statement to be filed with the Securities and Exchange Commission, and mailed to stockholders in connection with the Company’s Annual Meeting of the Stockholders to be held on December 8 6, ~~2003~~2004 (“the Proxy Statement”)

Executive Officers

As of September 1 3, ~~2003~~2004, the executive officers of the Company were as follows:

Name	Age	Position
Sherman McKinniss	6768	Chairman of the Board, President, Chief Executive Officer
E. Paul Tonkovich	6566	Secretary, Director
Douglas W. Russell	4243	Chief Financial Officer, Assistant Secretary/Treasurer

Sherman McKinniss. Mr. McKinniss served as President and Chief Executive Officer from August 1991 to December 2001 and again was appointed ~~President~~ President and Chief Executive Officer in June 2003 following the resignation of Robert E. Gawlik. Mr. McKinniss has also served as Director of the Company since 1991, and was appointed as Chairman of the Board in December 1994. He was President and a Director of Rotonics from 1987-1991. Previously, he owned and operated RMI, which he sold to the Company in 1986~~, and was a partial owner of Rotational Molding, Inc~~.~~-Florida, which was merged into Rotonics in 1988.~~ Mr. McKinniss is also a 50% owner of Atlantic Meeco, Inc., a marina dock building company, and has served as a board member of that company since 1993.

E. Paul Tonkovich. Mr. Tonkovich has served as Secretary and a Director of the Company since August 1991. He has been a practicing attorney since January 1966. He was legal counsel to Mr. McKinniss and predecessors of the Company and is now legal counsel for the Company.

Douglas W. Russell. Mr. Russell has served as Chief Financial Officer and Assistant Secretary/Treasurer of the Company since 1991. Prior to that, he was a Senior Auditor for the accounting firm Hallstein & Warner from 1988 until 1991, and was Assistant Controller of RMI from September 1985 to September 1987.

Item 11. Executive Compensation

The Company incorporates by reference the information set forth under the captions “Compensation of Executive Officers”, the “Summary Compensation Table” and related disclosure information, “Certain Transactions”, and “Compensation of Directors” in the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The Company incorporates by reference the information set forth under the caption “Security Ownership by Certain Beneficial Holders” in the Proxy Statement.

Item 13. Certain Relationships and Related Transactions

The Company incorporates by reference the information set forth under the headings “Information Concerning the Board of Directors” under the caption “Election of Directors”, “Executive Officers”, and “Certain Transactions” in the Proxy Statement.

Item 14. Principal Accounting Fees and Services

The information required by this item is incorporated herein by reference to the caption “Ratification of Appointment of Independent Auditors” in the definitive Proxy Statement for our ~~2003~~2004 Annual Meeting of Stockholders that will be filed with the SEC within 120 days after the end of the fiscal year covered by this report.

PART IV

Item 15. Exhibits, Financial Statements, Schedules, and Reports on form 8-K

(a)		The following documents are filed as part of this report:
		(1)	Financial Statements:
			Report of Independent Public Accountants
			Consolidated Balance Sheets, June 30, 2003 and 2002
			Consolidated Statements of Operations and Comprehensive Income/(Loss), Years Ended June 30, 2003, 2002, and 2001
			Consolidated Statements of Changes in Stockholders’ Equity, Years Ended June 30, 2003, 2002, and 2001
			Consolidated Statements of Cash Flows, Years Ended June 30, 2003, 2002, and 2001
			Notes to Consolidated Financial Statements
		(2)	Financial Statement Schedules:
			II	Valuation and Qualifying Accounts, Years Ended June 30, 2003, 2002, and 2001
		All other schedules are omitted because they are not applicable, or the required information is shown in the financial statements or notes thereto.
	(b)	Reports on Form 8-K
		None
	(c)	The following exhibits are filed or furnished as part of this report:

(a) The following documents are filed as part of this report:

Exhibit Number		Exhibit Title
(1) Financial Statements:
23.1		Consent of Independent Public Accountants – Windes & McClaughry Accountancy Corporation
Report of Independent Registered Public Accounting Firm
23.2		Statement Regarding Consent of Arthur Andersen LLP
Consolidated Balance Sheets, June 30, 2004 and 2003
31.1		Certification Pursuant to Rule 13a-14 Under the Securities Exchange Act of 1934
Consolidated Statements of Operations and Comprehensive Income/(Loss), Years Ended June 30, 2004, 2003, and 2002
31.2		Certification Pursuant to Rule 13a-14 Under the Securities Exchange Act of 1934
Consolidated Statements of Changes in Stockholders’ Equity, Years Ended June 30, 2004, 2003, and 2002
32.1		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
Consolidated Statements of Cash Flows, Years Ended June 30, 2004, 2003, and 2002
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules:
II	Valuation and Qualifying Accounts, Years Ended June 30, 2004, 2003, and 2002

All other schedules are omitted because they are not applicable, or the required information is shown in the financial statements or notes thereto.

(b) Reports on Form 8-K

On April 13, 2004, we filed a current report of Form 8-K reporting under item 12, Results of Operations and Financial Condition, announcing our press release dated April 13, 2004 outlining our unaudited financial results for the nine months and three months ended March 31, 2004.

Exhibit Number		Exhibit Title

23.1		Consent of Independent Registered Public Accounting Firm – Windes & McClaughry Accountancy Corporation

31.1		Certification Pursuant to Rule 13a-14 Under the Securities Exchange Act of 1934

31.2		Certification Pursuant to Rule 13a-14 Under the Securities Exchange Act of 1934

32.1		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~ROTONICS MANUFACTURING INC.~~	ROTONICS MANUFACTURING INC.
	By	~~/s/~~By	/s/ SHERMAN McKINNISS
			~~Sherman McKinniss~~	Sherman McKinniss
			~~President, Chief Executive Officer~~	President, Chief Executive Officer
			~~Chairman of the Board~~	Chairman of the Board
			Date 09/24/2003
				Date 09/23/2004
	By	~~/s/~~By	/s/ DOUGLAS W. RUSSELL
			~~Douglas W. Russell~~	Douglas W. Russell
			~~Chief Financial Officer~~	Chief Financial Officer
			~~Assistant Secretary/Treasurer~~	Assistant Secretary/Treasurer
			Date 09/24/2003
				Date 09/23/2004

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ E. PAUL TONKOVICH	Secretary, Director	09/2423/~~2003~~2004
E. Paul Tonkovich
/s/ DAVID C. POLITE	Director	09/24/2003
/s/ BRENT A. BROWN	Director	09/23/2004
David C. Polite
Brent A. Brown
/s/ LARRY M. DEDONATO	Director	09/2423/~~2003~~2004
Larry M. DeDonato
/s/ LARRY L. SNYDER	Director	09/2423/~~2003~~2004
Larry L. Snyder
/s/ MARC L. BERMAN	Director	09/2423/~~2003~~2004
Marc L. Berman
/s/ JULES SANDFORD	Director	09/2423/~~2003~~2004
Jules Sandford
/s/ BILL ALLEN	Director	09/23/2004
Bill Allen

REPORT OF INDEPENDENT REGISTERED PUBLIC ~~ACCOUNTANTS~~ACCOUNTING FIRM

To the Board of Directors
and Stockholders of Rotonics Manufacturing Inc.:

We have audited the accompanying consolidated balance sheets of ROTONICS MANUFACTURING INC. (a Delaware corporation) as of June 30, ~~2003~~ 2004 and ~~2002~~2003 and the related consolidated statements of operations and comprehensive income/(loss), changes in stockholders’ equity and cash flows for each of the three years ~~then~~in the period ended June 30, 2004. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with ~~auditing~~the standards ~~generally~~of ~~accepted~~the inPublic Company ~~the~~Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Rotonics Manufacturing Inc. as of June 30, ~~2003~~2004 and ~~2002~~2003, and the results of its operations and its cash flows for each of the three years ~~then~~in the period ended June 30, 2004 in conformity with accounting principles generally accepted in the United States.

Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in the index appearing under Item 14(a)(2) is presented for purposes of complying with the Securities and Exchange Commission’s rules and is not a required part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

As/s/ ~~discussed~~WINDES in& ~~Notes~~McCLAUGHRY ~~1 and~~ACCOUNTANCY 6CORPORATION toLong ~~the consolidated financial statements~~Beach, ~~effective~~California ~~July 1,~~August ~~2001~~12, ~~the~~ Company changed its method of accounting for goodwill and other intangible assets to conform with the provisions of Statement of Financial Accounting Standards No. 142, “Goodwill and other Intangible Assets.”2004

~~/s/~~F ~~WINDES~~- ~~& McCLAUGHRY ACCOUNTANCY CORPORATION Long Beach, California August 14, 2003~~1

F-1

This is a copy of the audit report previously issued by Arthur Andersen LLP in connection with Rotonics Manufacturing Inc.’s filing on Form 10-K for the year ended June 30, 2001. Arthur Andersen LLP has not reissued this audit report in connection with this filing on Form 10-K. See exhibit 23.2 for further discussion. The consolidated balance sheets as of June 30, 2001 and 2000, the consolidated statements of operations and comprehensive income, changes in stockholders’ equity and cash flows for the years ended June 30, 2000 and 1999 and the information in the schedule for 2000 and 1999 referred to in this report are not required to be and have not been included in the accompanying financial statements or schedules.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of Rotonics Manufacturing Inc.:

We have audited the accompanying consolidated balance sheets of ROTONICS MANUFACTURING INC. (a Delaware corporation) as of June 30, 2001 and 2000, and the related consolidated statements of income and comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended June 30, 2001. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Rotonics Manufacturing Inc. as of June 30, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2001 in conformity with accounting principles generally accepted in the United States.

As explained in Note 1 to the Financial Statements, effective July 1, 2000, the Company changed its method of accounting for derivatives.

/s/ ARTHUR ANDERSEN LLP Orange County, California August 22, 2001

F-2

ROTONICS MANUFACTURING INC.

CONSOLIDATED BALANCE SHEETS

	June 30,
	2003			2002
	2004			2003
ASSETS
Current assets:
Cash	$	4456,~~700~~500		$	6644,~~900~~700
Accounts receivable, net of allowance for doubtful accounts of $231,100 and $175,000, respectively	4,419,700			5,122,000
Accounts receivable, net of allowance for doubtful accounts of $256,100 and $231,100, respectively	5,784,900			4,419,700
Current portion of notes receivable	~~92,100~~—			1092,~~300~~100
Inventories	6,~~370~~629,~~400~~000			6,~~308~~370,~~500~~400
Deferred income taxes, net	~~256~~243,~~900~~700			~~272~~256,~~800~~900
Prepaid expenses and other current assets	~~256~~266,~~400~~500			~~262~~256,~~600~~400
Total current assets	1112,~~440~~980,~~200~~600			1211,~~043~~440,~~100~~200
Notes receivable, less current portion	138,600			~~336~~138,~~800~~600
Investment in partnership	~~104~~100,~~300~~900			~~108~~104,~~700~~300
Property, plant and equipment, net	1413,~~462~~849,~~000~~700			1514,~~004~~462,000
Intangible assets, net	~~262~~216,~~600~~700			~~308~~262,~~700~~600
Other assets	4265,~~500~~300			4042,500
	$	2627,~~450~~351,~~200~~800		$	2726,~~841~~450,~~800~~200
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	864,300		$	1864,~~357,600~~300
Accounts payable	23,~~791~~450,~~600~~900			2,~~090~~791,~~700~~600
Accrued liabilities	1909,~~054,800~~100			~~982~~1,~~300~~054,800
Income taxes payable	—			128,800
Total current liabilities	5,224,300			4,710,700
Total current liabilities	4,710,700			4,559,400
Bank line of credit	1,357,300			381,200
Bank line of credit	381,200			192,000
Long-term debt, less current portion	1,116,700			1,980,900
Long-term debt, less current portion	1,980,900			3,745,200
Deferred income taxes, net	2,393,300			2,427,400
Deferred income taxes, net	2,427,400			2,565,100
Other liabilites	83,000			—
Total liabilities	910,~~500~~174,~~200~~600			119,~~061~~500,~~700~~200
Commitments and contingencies (Note 14)
Stockholders’ equity:
Common stock, stated par value $.01: authorized 20,000,000 shares; issued and outstanding 12,344,791 and 12,614,942 shares, respectively, net of treasury shares	22,699,600			23,040,100
Common stock, stated par value $.01: authorized 20,000,000 shares; issued and outstanding 11,981,158 and 12,344,791 shares, respectively	22,127,900			22,699,600
Accumulated other comprehensive loss	(~~158~~64,~~200~~400		)	(~~128~~158,~~000~~200		)
Accumulated deficit	(54,~~591~~886,~~400~~300		)	(65,~~132~~591,~~000~~400		)
Total stockholders’ equity	1617,~~950~~177,~~000~~200			16,~~780~~950,~~100~~000
	$	2627,~~450~~351,~~200~~800		$	2726,~~841~~450,~~800~~200

The accompanying notes are an integral part of these financial statements.

F -3 2

ROTONICS MANUFACTURING INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)

	For the year ended June 30,
	2003			2002			2001
	2004			2003			2002
Net sales	$	3540,~~972~~332,~~100~~900		$	3735,~~973~~972,~~300~~100		$	4037,~~520~~973,~~100~~300
Costs and expenses:
Cost of goods sold	2631,~~927~~140,~~300~~600			2726,~~765~~927,~~900~~300			3127,~~158~~765,~~700~~900
Gross profit	9,~~044~~192,~~800~~300			109,~~207~~044,~~400~~800			910,~~361~~207,400
Selling, general, and administrative expenses	76,~~068~~888,~~700~~600			7,~~540~~068,~~900~~700			7,~~635~~540,~~400~~900
Income from operations	12,~~976~~303,~~100~~700			21,~~666~~976,~~500~~100			12,~~726~~666,~~000~~500
Other (expense)/income:
Interest expense	(~~266~~211,~~000~~800		)	(~~464~~266,~~100~~000		)	(~~743~~464,100		)
Other income, net	~~123~~110,~~900~~800			~~153~~123,~~500~~900			~~105~~153,~~600~~500
Total other expense, net	(~~142~~101,~~100~~000		)	(~~310~~142,~~600~~100		)	(~~637~~310,~~500~~600		)
Income before income taxes and cumulative effect of change in accounting principle for goodwill	12,~~834~~202,~~000~~700			21,~~355~~834,~~900~~000			12,~~088~~355,~~500~~900
Income tax provision	(~~677~~898,~~400~~500		)	(~~947~~677,~~200~~400		)	(~~614~~947,~~800~~200		)
Income before cumulative effect of change in accounting principle for goodwill	1,~~156~~304,~~600~~200			1,~~408~~156,~~700~~600			~~473~~1,408,700
Cumulative effect of change in accounting principle for goodwill	—			~~(4,105,900~~—		)	—(4,105,900		)
Net income/(loss)	1,~~156~~304,~~600~~200			(21,~~697~~156,~~200~~600		)	~~473~~(2,~~700~~697,200		)
Other comprehensive loss, before tax:
Other comprehensive income/(loss), before tax:
Cumulative effect of adoption of SFAS 133	—			—			109,400
Unrealized holding gain/(loss) arising during the period	36,800			(199,200		)	(247,500		)
Unrealized holding loss arising during the period	(199,200		)	(247,500		)	(270,000		)
Less: Reclassification adjustments for losses included in net income	119,400			149,000			186,400
Less: Reclassification adjustments for losses included in net income	149,000			186,400			8,300
Total other comprehensive income/(loss) before tax	156,200			(50,200		)	(61,100		)
Total other comprehensive loss before tax	(50,200		)	(61,100		)	(152,300		)
Income tax (provision)/benefit related to items of other comprehensive income/(loss)	(62,400		)	20,000			24,500
Income tax benefit related to items of other comprehensive loss	20,000			24,500			60,900
Total other comprehensive income/(loss), net of tax	93,800			(30,200		)	(36,600		)
Total other comprehensive loss, net of tax	(30,200		)	(36,600		)	(91,400		)
Comprehensive income/(loss)	$	1,398,000		$	1,126,400		$	(2,733,800	)
Comprehensive income/(loss)	$	1,126,400		$	(2,733,800	)	$	382,300
Net income/(loss) per common share:
Basic and diluted
Income before accounting change	$	0.0911		$	0.1109		$	0.0411
Cumulative effect of change in accounting principle for goodwill	—			~~(0.32~~—		)	—(0.32		)
Net income/(loss)	$	0.0911		$	(0.2109	)	$	(0.0421	)

The accompanying notes are an integral part of these financial statements.

F -4 3

ROTONICS MANUFACTURING INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	Common Stock					Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
						Accumulated
	Shares		Amount
						Other
Balances, June 30, 2000	12,905,721		$	23,331,500		$	—		$	(2,767,700	)	$	20,563,800
	Common Stock					Comprehensive			Accumulated
Exercise of stock options	2,500		2,000			—			—			2,000
	Shares		Amount			Income/(Loss)			Deficit			Total
Repurchase of common stock	(146,823	)	(130,400		)	—			—			(130,400		)
Balances, June 30, 2001	12,761,398		$	23,203,100		$	(91,400	)	$	(2,804,600	)	$	20,307,100
Common stock dividends	—		—			—			(510,600		)	(510,600		)
Other comprehensive loss, net of tax	—		—			(91,400		)	—			(91,400		)
Net income	—		—			—			473,700			473,700
Balances, June 30, 2001	12,761,398		23,203,100			(91,400		)	(2,804,600		)	20,307,100
Exercise of stock options	57,500		49,800			—			—			49,800
Repurchase of common stock	(203,956	)	(212,800		)	—			—			(212,800		)
Common stock dividends	—		—			—			(630,200		)	(630,200		)
Other comprehensive loss, net of tax	—		—			(36,600		)	—			(36,600		)
Net loss	—		—			—			(2,697,200		)	(2,697,200		)
Balances, June 30, 2002	12,614,942		23,040,100			(128,000		)	(6,132,000		)	16,780,100
Repurchase of common stock	(270,151	)	(340,500		)	—			—			(340,500		)
Common stock dividends	—		—			—			(616,000		)	(616,000		)
Other comprehensive loss, net of tax	—		—			(30,200		)	—			(30,200		)
Net income	—		—			—			1,156,600			1,156,600
Balances, June 30, 2003	12,344,791		$22,699,600	~~22,699,600~~		$(158,200	~~(158,200~~	)	$(5,591,400	~~(5,591,400~~	)	$16,950,000	~~16,950,000~~
Exercise of stock options	96,000		108,000			—			—			108,000
Repurchase of common stock	(459,633	)	(679,700		)	—			—			(679,700		)
Common stock dividends	—		—			—			(599,100		)	(599,100		)
Other comprehensive income, net of tax	—		—			93,800			—			93,800
Net income	—		—			—			1,304,200			1,304,200
Balances, June 30, 2004	11,981,158		$	22,127,900		$	(64,400	)	$	(4,886,300	)	$	17,177,200

The accompanying notes are an integral part of these financial statements.

F -5 4

ROTONICS MANUFACTURING INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

	For the year ended June 30,
	2003			2002			2001
	2004			2003			2002
Cash flows from operating activities:
Net income/(loss)	$	1,~~156~~304,~~600~~200		$	(21,~~697~~156,~~200~~600	)	$	~~473~~(2,~~700~~697,200	)
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Cumulative effect of change in accounting principle for goodwill	—			~~4,105,900~~—			—4,105,900
Depreciation and amortization	2,~~120~~182,~~400~~700			2,~~194~~120,~~000~~400			2,~~672~~194,~~300~~000
Gain on sales of equipment	(21,~~100~~000		)	(82,~~600~~100		)	(488,~~000~~600		)
Deferred income tax (benefit)/expense	(~~101~~83,~~800~~300		)	~~307~~(101,~~100~~800		)	~~511~~307,~~500~~100
Provision for doubtful accounts	~~125~~100,~~000~~400			~~170~~125,~~700~~000			31170,~~000~~700
Changes in assets and liabilities:
Decrease/(increase) in accounts receivable	577,300			(182,000		)	859,800
(Increase)/decrease in accounts receivable	(1,465,600		)	577,300			(182,000		)
(Increase)/decrease in inventories	(61258,~~900~~600		)	~~829~~(61,~~800~~900		)	~~223~~829,~~300~~800
Decrease/(increase) in prepaid expenses and other current assets	6,200			86,500			(126,800		)
(Increase)/decrease in prepaid expenses and other current assets	(10,100		)	6,200			86,500
(Increase)/decrease in other assets	(222,~~000~~800		)	64(2,~~800~~000		)	~~(242~~64,~~500~~800		)
Increase/(decrease) in accounts payable	~~715~~676,~~100~~200			~~(448~~715,~~500~~100		)	(~~578~~448,~~100~~500		)
Increase/(decrease) in accrued liabilities	22,300			48,900			(229,000		)
Increase in accrued liabilities	10,500			22,300			48,900
(Decrease)/increase in income taxes payable	~~(128,800~~—		)	(128,800		)	—128,800
Net cash provided by operating activities	4,426,300			4,600,200			3,547,200
Increase in other liabilities	83,000			—			—
Net cash provided by operating activities	2,515,600			4,426,300			4,600,200
Cash flows from investing activities:
Repayments on notes receivable	~~116~~92,~~400~~100			~~177~~116,~~000~~400			61177,~~600~~000
Capital expenditures	(1,~~532~~525,~~600~~000		)	(1,~~028~~532,~~800~~600		)	(1,~~348~~028,~~100~~800		)
Proceeds from sales of equipment	21,~~400~~500			152,~~000~~400			5915,~~600~~000
Distribution from investment in partnership	43,400			54,~~100~~400			65,~~500~~100
Net cash used in investing activities	(1,~~409~~428,~~400~~000		)	(~~831~~1,~~700~~409,400		)	(1831,~~220,400~~700		)
Cash flows from financing activities:
Borrowings under line of credit	710,~~253~~502,~~900~~100			57,~~579~~253,~~800~~900			95,~~336~~579,~~300~~800
Repayments under line of credit	(79,~~064~~526,~~700~~000		)	(67,~~487~~064,~~800~~700		)	(106,~~551~~487,~~400~~800		)
Proceeds from issuance of long-term debt	—			—			6,050,000
Repayments of long-term debt	(864,200		)	(2,257,600		)	(2,137,700		)
Repayments of long-term debt	(2,257,600		)	(2,137,700		)	(7,025,900		)
Payment of common stock dividends	(616,000		)	(630,200		)	(520,900		)
Payment of common stock dividends	(630,200		)	(520,900		)	(200		)
Proceeds from exercise of stock options	108,000			—			49,800
Proceeds from exercise of stock options	—			49,800			2,000
Repurchases of common stock	(679,700		)	(340,500		)	(212,800		)
Repurchases of common stock	(340,500		)	(212,800		)	(130,400		)
Net cash used in financing activities	(1,075,800		)	(3,039,100		)	(3,729,600		)
Net cash used in financing activities	(3,039,100		)	(3,729,600		)	(2,319,600		)
Net increase/(decrease) in cash	11,800			(22,200		)	38,900
Net (decrease)/increase in cash	(22,200		)	38,900			7,200
Cash at beginning of year	44,700			66,900			28,000
Cash at beginning of year	66,900			28,000			20,800
Cash at end of year	$	56,500		$	44,700		$	66,900
Cash at end of year	$	44,700		$	66,900		$	28,000

The accompanying notes are an integral part of these financial statements

F -6 5

ROTONICS MANUFACTURING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1- ORGANIZATION, OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:

Organization and operations

Rotonics Manufacturing Inc. (the “Company”), a Delaware corporation, manufactures and markets plastic products for commercial, agricultural, refuse, pharmaceutical, marine, recreation, medical waste, healthcare, retail, recreation and residential use, as well as an array of custom molded plastic products to customers in a variety of industries, located in diverse geographic markets. The Company’s operations are conducted under one operating segment. No single customer accounted for more than 10% of the Company’s net sales in fiscal ~~2003~~2004, ~~2002~~2003, or ~~2001~~2002. In fiscal ~~2003~~2004, the Company purchased in aggregate approximately 9798% of its plastic resin from ~~five~~six vendors. Plastic resin represents a significant portion of the Company’s manufacturing costs. As such, economic factors that affect the Company’s plastic resin vendors will have a potential impact on the Company’s future operations.

The Company’s significant accounting policies are as follows:

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Rotocast Plastic Products of Tennessee, Inc. All intercompany accounts and transactions have been eliminated in consolidation.

Revenue recognition

Revenues are recognized upon shipment to the customer ~~or when title passes to the customer based on the terms of the sales,~~ and are recorded net of sales discounts, returns and allowances.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The carrying value of accounts receivable and trade payables approximates the fair value due to their short-term maturities. The carrying value of the Company’s line of credit and notes payable is considered to approximate fair market value, because the interest rates of these instruments are based predominately on variable reference rates.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined on the first-in, first-out method.

Property, plant and equipment

Depreciation is computed using the straight-line method and the estimated useful lives of the assets range from three to thirty-nine years. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is included in income for the period. The cost of maintenance and repairs is charged to income as incurred; costs relating to significant renewals and betterments are capitalized.

Intangible assets

Patents are amortized on the straight-line basis over their useful lives of seventeen years, or at their remaining useful life from date of acquisition. Legal costs associated with defending existing patents are capitalized as additional costs of the patent, when successful defense is probable.

F -7 6

Impairment of long-lived assets

The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives at each balance sheet date. Should events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed, the Company records an impairment charge or changes the useful life.

Stock-based compensation

Stock-based compensation is accounted for using the intrinsic value method under which no compensation expense is recognized when the exercise price of the employee’s stock option equals or exceeds the market price of the underlying stock on the date of grant. Required pro forma information has been presented under the fair value method using a Black-Scholes option-pricing model.

Income taxes

The Company accounts for income taxes pursuant to an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. In estimating future tax consequences, expected future events other than enactments of changes in tax laws or rates, are considered.

Derivative instruments

The Company accounts for its derivative instruments and hedging activities in accordance with Statement of Financial Accounting ~~Standards~~ Standards (“SFAS”) No. 133, “Accounting ~~for~~ for Derivative Instruments and Hedging Activities,” as amended by SFAS No. ~~138~~149, “~~Accounting~~Amendment ~~for~~of ~~Certain~~Statement 133 on Derivative ~~Instruments~~Instrument and ~~Certain~~ Hedging Activities,” which established methods of accounting and reporting for derivative instruments and hedging activities related to those instruments as well as other hedging activities.

Earnings per share

Basic earnings per share (“EPS”) is computed by dividing reported earnings by weighted average shares outstanding. Diluted EPS include the effect of the potential shares outstanding, including dilutive securities using the treasury stock method. Potential dilutive securities for the Company include outstanding stock options. The table below details the components of the basic and diluted EPS calculations:

	Net Income/(Loss)			Weighted Average Shares Outstanding	EPS
June 30, 2004
Basic EPS
Net income	$	1,304,200		12,155,548	$	0.11
Effect of dilutive stock options	—			1,115	—
Diluted EPS	$	1,304,200		12,156,663	$	0.11
June 30, 2003
Basic EPS
Net income	$	1,156,600		12,486,038	$	0.09
Effect of dilutive stock options	—			10,633	—
Diluted EPS	$	1,156,600		12,496,671	$	0.09
June 30, 2002
Basic EPS
Net income before accounting change	$	1,408,700		12,758,828	$	0.11
Cumulative effect of change in accounting principle for goodwill	(4,105,900		)	—	(0.32		)
Net loss	(2,697,200		)	12,758,828	(0.21		)
Effect of dilutive stock options (1)	—			—	—
Diluted EPS	$	(2,697,200	)	12,758,828	$	(0.21	)
June 30, 2001
Basic EPS
Net income	$	473,700		12,835,200	$	0.04
Effect of dilutive stock options	—			10,800	—
Diluted EPS	$	473,700		12,486,000	$	0.04

(1) Common stock equivalents are omitted in the earnings per share calculations due to their anti-dilutive effect.

F -8 7

Geographic and Product Information

All of the Company’s manufacturing operations are located within the United States. The Company’s revenues were almost exclusively generated in North America for the years ended June 30, ~~2003~~2004, ~~2002~~2003, and ~~2001~~2002. The Company categorizes its products into five main groups. Net sales for these products are summarized as follows:

	For Year Ended June 30,
	2003		2002		2001
	2004		2003		2002
Product Group:
Contract Manufacturing	$	1417,~~915~~379,~~100~~600	$	1614,~~000~~915,~~300~~100	$	1716,~~177~~000,~~900~~300
Industrial	1112,~~058~~017,~~500~~600		1011,~~802~~058,~~000~~500		10,~~190~~802,~~300~~000
Marine	2,~~774~~975,~~700~~600		2,~~796~~774,~~100~~700		32,~~806~~796,~~000~~100
Refuse	4,~~029~~858,~~100~~400		4,~~876~~029,~~700~~100		54,~~091~~876,~~300~~700
Consumer	3,~~194~~101,700		3,~~498~~194,~~200~~700		43,~~254~~498,~~600~~200
Total net sales	$	3540,~~972~~332,~~100~~900	$	3735,~~973~~972,~~300~~100	$	4037,~~520~~973,~~100~~300

Impact of Recent Accounting Pronouncements

In ~~September~~January ~~2001~~2003, the Financial Accounting Standards Board (“FASB”) ~~approved~~issued ~~SFAS~~FASB Interpretation No. ~~144~~46, “~~Accounting~~Consolidation ~~for~~of ~~the~~Variable ~~Impairment~~Interest orEntities, ~~Disposal~~an Interpretation of ~~Long-Lived Assets.” SFAS~~ARB No. ~~144~~51” ~~supersedes~~(“FIN ~~SFAS No~~46”). In ~~121~~December 2003, ~~“Accounting~~the ~~for~~FASB ~~Impairment~~issued ofa ~~Long-Lived~~revision ~~assets~~to ~~and~~FIN ~~for~~46 ~~Long~~to ~~Lived~~make ~~Assets~~certain totechnical becorrections ~~Disposed~~and ~~of”~~address ascertain ~~well~~implementation asissues ~~Accounting~~that had ~~Principle~~arisen. FIN ~~Board~~46, ~~Opinion~~as ~~No. 30~~revised, ~~“Reporting~~clarifies ~~the~~existing ~~Results~~accounting ofliterature ~~Operations~~regarding ~~– Reporting~~ the ~~Effects~~consolidation of ~~Disposal of a~~entities ~~Segment~~in ofwhich a ~~Business,~~company ~~and~~holds ~~Extraordinary,~~a ~~Unusual,~~controlling ~~and~~financial ~~Infrequently Occurring Events and Transactions~~interest.” ~~SFAS~~A ~~No.~~majority ~~144 not~~voting ~~only~~interest ~~retains~~in ~~the requirements of SFAS No. 121 to recognize~~ an ~~impairment~~entity has ~~loss~~generally ifbeen ~~the~~considered ~~carrying~~indicative ~~amount~~ of a ~~long-lived~~controlling ~~asset~~financial isinterest. FIN ~~not~~46 ~~recoverable~~specifies ~~from~~other ~~its~~factors (variable ~~undiscounted~~interest) ~~cash~~which ~~flows,~~must ~~but~~be ~~also~~considered ~~establishes~~when adetermining ~~single~~whether ~~accounting~~a ~~method~~company ~~for~~holds ~~assets~~controlling tofinancial beinterest ~~disposed~~in, of and ~~broadens~~therefore ~~the~~must ~~presentation~~consolidate, ofan ~~discounted operations~~entity to(variable ~~include~~interest ~~more disposal transactions~~entities). ~~SFAS No. 144 was effective for fiscal years beginning after December 15, 2001.~~ The adoption of ~~this~~FIN ~~pronouncement did~~46 ~~not~~had ~~have~~no an impact on the Company’s overall financial position and or results of operations as the Company has no variable interest entities.

In ~~June~~ April ~~2002~~2003, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. ~~146~~149, “~~Accounting~~Amendment ~~for~~of ~~Costs~~Statement ~~Associated~~133 ~~with~~on ~~Exit~~Derivative orInstruments and ~~Disposal~~Hedging Activities.” ~~This~~SFAS No. 149 is ~~pronouncement~~intended ~~was~~to ~~effective~~result ~~for~~in ~~exit~~more orconsistent ~~disposal~~reporting ~~activities~~of ~~initiated~~contracts ~~after~~as either ~~December 31,~~freestanding ~~2002~~derivative instruments subject to SFAS No. 133 in its entirety, or as hybrid instrument with debt host contracts and ~~requires~~embedded ~~these~~derivative features. In ~~costs~~addition, toSFAS beNo. ~~recognized~~149 clarifies ~~when~~the definition of a derivative by providing guidance on the meaning ~~liability~~of isinitial ~~incurred~~net ~~and~~investments ~~not~~related atto ~~project initiation~~derivatives. This statement was effective for contracts entered into or modified after June 30, 2003. The adoption of SFAS No. 149 did not have a material ~~impact~~effect on ~~the~~our ~~Company’s~~consolidated financial ~~statements~~position, results of operation or cash flows.

In ~~December 2002,~~ ~~the~~May 2003, The FASB issued SFAS No. ~~148~~150, “Accounting for ~~Stock-Based Compensation~~Certain –Financial ~~Transition~~Instruments ~~and Disclosure”.~~ with ~~SFAS~~Characteristics ~~No.~~of ~~148~~Both ~~amends~~Liabilities ~~the~~and ~~disclosure requirements in~~ Equity.” SFAS No. ~~123, “Accounting~~150 ~~for~~establishes ~~Stock-Based~~standards ~~Compensation”~~ for ~~annual~~how ~~periods~~an ~~ending~~issuer ~~after~~classifies ~~December 15, 2002~~ and ~~for~~measures ~~interim~~certain ~~periods beginning after December 15, 2002. Effective for~~ financial ~~statements~~instruments ~~for~~with ~~fiscal~~characteristics ~~years~~of ~~ending~~both liabilities ~~after~~and ~~December 15, 2002,~~ equity. SFAS No. ~~148 also provides three alternative transition methods for companies that~~150 ~~choose~~was toadopted ~~adopt~~by the ~~fair value measurement provisions of SFAS No. 123. The~~ Company ~~accounts~~on ~~for stock options under the intrinsic method pursuant to Accounting Principles Board (“APB”) Opinion 25~~July 1, ~~“Accounting~~2003 ~~for~~and ~~Stock~~did ~~Issued~~not tohave ~~Employees”,~~an ~~which~~impact ~~is permitted under SFAS~~on ~~No. 123. Had compensation cost for~~ the ~~plan~~ ~~been determined in accordance with the fair value method as set out in SFAS No. 123, as amended by SFAS No. 148, the~~ Company’s ~~net~~financial ~~income and income per common share data would not have been significantly different.~~statements

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 is intended to result in more consistent reporting of contracts as either freestanding derivative instruments subject to SFAS No. 133 in its entirety, or as hybrid instruments with debt host contracts and embedded derivative features. In addition, SFAS No. 149 clarifies the definition of a derivative by providing guidance on the meaning of initial net investments related to derivatives. This statement is effective for contracts entered into or modified after June 30, 2003. The Company does not believe the adoption of SFAS No. 149 will have a material effect on its consolidated financial position, results of operations or cash flows.

NOTE 2 – NOTES RECEIVABLE:

OnIn ~~March~~July 312001, ~~1995,~~ the Company and a former customer ~~entered~~agreed ~~into~~to convert an ~~agreement~~open ~~under~~trade ~~which~~receivable ~~the~~balance ~~Company acquired~~due from ~~this~~the customer ~~certain~~in ~~assets~~the amount of $150,000 ~~including~~to ~~molds~~a note receivable bearing interest at 8% per annum and ~~trade~~maturing ~~accounts~~on ~~receivable~~June 15, at2004. As ~~their~~of ~~total~~June 30, 2004 ~~estimated~~and ~~fair~~2003, ~~value~~the total balance of this note amounted to $~~357~~138,~~800,~~600. The ~~which~~customer ~~was~~continues ~~applied~~to dispute the ~~against~~balance of this note. At this juncture, we are proceeding through the ~~principal~~discovery phase of the litigation process and anticipate a ~~1993~~resolution ~~promissory~~during ~~note~~fiscal ~~owed~~2005. We byhave ~~this~~taken ~~customer~~a conservation approach to the ultimate outcome and have increased our allowance for doubtful accounts accordingly.

~~F-9~~At the end of fiscal 2003, the Company was owed $92,100 on notes receivable for the sale of various molds and other assets. These notes were repaid in full during fiscal 2004.

~~Company. The~~F ~~remaining~~- unpaid principal, together with accrued interest and open trade receivable from this customer as of March 31, 1995, was exchanged for a new note with a principal balance of $455,000, bearing interest at 8~~% per annum and maturing on March 31, 2005.~~

Effective March 31, 1995, the Company sold products manufactured using these molds directly to end-users. The Company pays this former customer royalty at the initial rate of 10% (increased to 20% beginning fiscal 2000) of the Company’s net sales of these products. Half of the royalty payments are being applied to reduce principal and interest, until the former customer has received a total of $300,000 in royalty payments or March 31, 1998, whichever is earlier. Subsequently, all royalty payments shall be applied to principal and interest until such principal and interest are paid in full, at which time the royalty rate will be reduced to 5% through March 31, 2005. As of June 30, 2003 and 2002, the total balance of this note amounted to $86,100 and $186,100. The Company intends to hold this note until maturity.

In July 2001, the Company and a former customer agreed to convert an open trade receivable balance due from the customer in the amount of $150,000 to a note receivable bearing interest at 8% per annum and maturing on June 15, 2004. As of June 30, 2003, the total balance of this note amounted to $138,600. The customer is currently disputing the balance of this note. The Company expects a resolution prior to maturity of the note.

At the end of fiscal 2003, the Company was owed $6,000 on a note receivable for the sale of various molds.

NOTE 3 - INVENTORIES:

Inventories consist of:

	June 30,
	2004		2003
Inventories consist of:
Raw materials	$	2,525,900	$	2,279,800
Finished goods	4,103,100		4,090,600
	$	6,629,000	$	6,370,400

	June 30,
	2003		2002
Raw materials	$	2,279,800	$	2,006,900
Finished goods	4,090,600		4,301,600
	$	6,370,400	$	6,308,500

NOTE 4 - INVESTMENT IN PARTNERSHIP:

The Company owns a 33-1/3% interest in a real estate venture that was acquired in 1998 and is being accounted for using the equity method. The investment consists principally of a note receivable which is payable in monthly installments, including interest at 7%, to 2008, with annual principal reductions as provided.

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consist of:

	For Year Ended June 30,
	2004			2003
Property, plant and equipment consist of:
Land	$	1,039,500		$	1,039,500
Buildings and building improvements	5,291,000			5,114,500
Machinery, equipment, furniture and fixtures	28,938,400			27,382,500
Construction in progress	164,200			548,200
	35,433,100			34,084,700
Less - accumulated depreciation and amortization	(21,583,400		)	(19,622,700		)
	$	13,849,700		$	14,462,000

	For Year Ended June 30,
	2003			2002
Land	$	1,039,500		$	1,039,500
Buildings and building improvements	5,114,500			5,047,100
Machinery, equipment, furniture and fixtures	27,382,500			26,797,100
Construction in progress	548,200			17,900
	34,084,700			32,901,600
Less - accumulated depreciation and amortization	(19,622,700		)	(17,897,600		)
	$	14,462,000		$	15,004,000

NOTE 6 - INTANGIBLE ASSETS:

Intangible assets consist of:

	For Year Ended June 30,
	2004			2003
Intangible assets consist of:
Patents	$	475,700		$	475,700
Less accumulated amortization	(259,000		)	(213,100		)
Net patents	$	216,700		$	262,600

	For Year Ended June 30,
	2003			2002
Patents	$	475,700		$	475,700
Less accumulated amortization, patents	(213,100		)	(167,000		)
Net patents	$	262,600		$	308,700

Aggregate amortization expense for each of the fiscal years ended June 30, 2004, 2003, and 2002 was $46,000. Future estimated amortization expense will be approximately $45,000 for each of the next four years and $34,000 in fiscal 2009.

F-10

The changes in the carrying amount of goodwill is as follows:

	For Year Ended June 30,
	2003		2002
Balance at beginning of year	$	—	$	4,105,900
Cumulative effect of change in accounting principle for goodwill	—		(4,105,900		)
Balance at end of each year	$	—	$	—

Aggregate amortization expense for the fiscal years ended June 30, 2003, 2002, and 2001 was $46,000, $46,000 and 333,300, respectively. Future estimated amortization expense will be $46,000 for each of the next five years and $32,600 thereafter through 2010.

In fiscal 2002, the Company’s reporting unit was reviewed for goodwill impairment in conjunction with the adoption of SFAS No. 142 “Goodwill and Other Intangible Assets.” Due to the disparity between the Company’s estimated fair value and its carrying value, a goodwill impairment loss of $4,105,900 was recognized as a cumulative effect of change in accounting principle as of July 1, 2001. The fair value of the reporting unit was estimated using conservative valuation models involving guideline public companies, acquisition analysis and discounted cash flows as well as the Company’s market capitalization.

Goodwill amortization expense was $324,900 for the year ended June 30, 2001.

For illustrative purposes the following unaudited proforma information gives the effect of the adoption of SFAS No. 142 on prior periods.

	For the Year Ended June 30,
	2002			2001
Reported net income before accounting change	$	1,408,700		$	473,700
Cumulative effect of change in accounting principle for goodwill	(4,105,900		)	—
Net (loss)/income	(2,697,200		)	$	473,700
Add back goodwill amortization	—			324,900
Proforma net (loss)/income	$	(2,697,200	)	$	798,600
Basic and diluted earning per share:
Reported net income before accounting change	$	.11		$	.04
Cumulative effect of change in accounting principle for goodwill	$	(.32	)	—
Net (loss)/income	$	(.21	)	$	.04
Goodwill amortization	—			$	.02
Proforma net (loss)/income	$	(.21	)	$	.06

NOTE 7 - BANK LINE OF CREDIT:

The Company has a $5,000,000 revolving line of credit with Wells Fargo Bank, which matures on October 1, ~~2004~~2005. The line is secured by the Company’s machinery and equipment, accounts receivable and inventories. Interest is ~~payable~~ payable monthly at the respective bank’s prime rate minus .25% (34.750% per annum at at June 30, ~~2003~~2004). In addition, ~~the~~ the loan agreement allows the Company to convert the outstanding principal ~~balance~~ balance in amounts no less than $250,000 to a LIBOR-based loan for up to 90-day periods. At June 30, ~~2003~~2004, total borrowings under the Company’s line of credit were $~~381~~1,~~200~~357,300 of which $1,000,000 ~~none~~ was borrowed under the LIBOR option bearing a LIBOR interest of 2.27875% per annum and maturing July 15, 2004. Proceeds from the loan were used for working capital purposes. At June 30, ~~2003~~ 2004, the Company had approximately $43,~~618~~642,~~800~~700 available for future borrowings under the revolving line of credit. The loan agreement contains various covenants pertaining to tangible net worth, net income and liquidity ratios, capital expenditures, payments of dividends, payment of subordinated debt as well as various other restrictions. The Company was in compliance with these covenants during fiscal ~~2003~~2004.

F -11 9

NOTE 8 - LONG-TERM DEBT:

Long-term debt consists of:

	For Year Ended June 30,
	2004			2003
Long-term debt consists of:
Note payable - Bank (A)	$	1,981,000		$	2,845,200
Less current portion	(864,300		)	(864,300		)
	$	1,116,700		$	1,980,900

	For Year Ended June 30,
	2003			2002
Note payable - Bank (A)	$	2,845,200		$	4,609,500
Note payable - Bank (B)	—			493,300
	2,845,200			5,102,800
Less current portion	(864,300		)	(1,357,600		)
	$	1,980,900		$	3,745,200

(A) On October 1, 2000, the bank issued a $6,050,000 seven year note due in monthly principal installments of $72,000 plus interest at the bank’s prime rate minus .25% (4.0% per annum at June 30, 2004). In addition, the loan agreement allows the Company to convert all or a portion of the outstanding principal to a LIBOR-based loan for periods up to one year. At June 30, 2004, the total outstanding principal balance was under the LIBOR option at 2.52875% per annum maturing July 15, 2004. The note is secured by the Company’s machinery and equipment, accounts receivable and inventories and matures October 15, 2007.

~~(A) On October 1,~~The ~~2000,~~Company ~~the~~has ~~bank~~an interest ~~issued~~rate aswap ~~$6,050,000~~agreement ~~seven~~with ~~year~~the ~~note due in~~bank. ~~monthly~~The ~~principal~~agreement ~~installments~~allows ofthe ~~$72,000~~Company ~~plus~~to ~~interest~~fix ata ~~the~~portion ~~bank’s~~of ~~prime~~its outstanding ~~rate~~term ~~minus~~and ~~.25%~~line of credit debt ($3~~.75%~~ ~~per~~million ~~annum~~as atof June 30, ~~2003~~2004). Infrom ~~addition, the loan~~a ~~agreement~~variable ~~allows~~floating ~~the~~LIBOR ~~Company~~rate to ~~convert~~a ~~all~~fixed orLIBOR arate ~~portion~~in ofefforts ~~the~~to ~~outstanding~~protect ~~principal~~against tofuture aincreases ~~LIBOR-based~~in ~~loan~~the ~~for~~banks ~~periods~~LIBOR ~~up to one year~~rate. AtThe ~~June 30,~~notional ~~2003,~~amount of the ~~total~~swap ~~outstanding principal~~agreement ~~balance~~will ~~was~~remain ~~under~~at ~~the~~$3 million ~~LIBOR~~until ~~option~~August 15, 2005 at ~~2.3575%~~which ~~per~~time ~~annum~~it ~~maturing July 15,~~will ~~2003. The~~be ~~note~~reduced isto ~~secured~~$2 bymillion ~~the~~and ~~Company’s~~will ~~machinery~~remain ~~and~~at ~~equipment,~~this ~~accounts~~amount ~~receivable~~through ~~and~~to ~~inventories and~~the ~~matures~~swap’s ~~October~~maturity on August 15, ~~2007~~2006.

At June 30, 2003 the Company had available a term-loan commitment in the amount of $2,000,000 for future machinery and equipment purchases. Advances under the line will be subject to monthly interest only payments at the bank’s prime or LIBOR interest rate options until October 1, 2003 at which time amounts borrowed will convert to a sixty-month fully amortizable loan.

(B) In July 1998, a $2,000,000 real estate loan secured by the Company’s Bensenville, Illinois and Gainesville, Texas properties was issued to Wells Fargo bank. This note replaced a 1994 real estate loan issued in connection with the purchase of the Bensenville, Illinois property. The note was due in monthly principal installments of approximately $6,700 plus interest at the bank’s prime rate minus .25% or LIBOR interest rate option on a twenty-five year amortization with the outstanding principal due on July 1, 2008. This note was repaid in full on August 15, 2002 and as a result, the Company’s Bensenville, Illinois and Gainesville, Texas properties are currently unencumbered.

On August 15, 2002, the Company amended its interest rate swap agreement with the bank. The agreement allows the Company to fix a portion of its outstanding term and line of credit debt ($4 million as of June 30, 2003) from a variable floating LIBOR rate to a fixed LIBOR rate in efforts to protect against future increases in the banks LIBOR rate. The amended agreement also reduced the fixed LIBOR rate and extended the maturity date to August 15, 2006.

Aggregate annual maturities of long-term debt are summarized as follows:

Year Ending June 30

Year Ending June 30
2005	$	864,300
2006	864,300
2007	252,400
	$	1,981,000

2004	$	864,300
2005	864,300
2006	864,300
2007	252,300
	$	2,845,200

NOTE 9 – RELATED PARTY TRANSACTIONS:

The Company sold molded plastic products and molds under arms—–length terms to Atlantic Meeco, Inc. (“AMI”) a company in which the President/CEO/Chairman of the Board of the Company has a 50% equity interest. Sales to AMI amounted to $~~101~~75,~~600~~000, $59101,~~100~~600 and $59,~~500~~100 in fiscal years ~~2003~~ 2004, ~~2002~~2003 and ~~2001~~2002, respectively. Amounts due on sales to AMI were $328,~~000~~100 and $232,~~100~~000 at June 30, ~~2003~~2004 and ~~2002~~2003, respectively, ~~and~~ and are included in accounts receivable in the accompanying consolidated ~~balance~~ balance sheet. In fiscal 2004, the Company also purchased $16,700 of fabricated products and resin from AMI. No amounts were due AMI as of June 30, 2004.

InThe ~~fiscal~~Company ~~years~~purchased ~~2003,~~injection molded products under arms-length terms ~~2002~~from ~~and~~Custom ~~2001,~~Plastics (“Custom”) a company in which the ~~Company~~owner ~~incurred~~has ~~legal~~a ~~fees~~8.5% ~~and~~equity interest ~~costs~~in ~~amounting~~the Company. Purchases from Custom amounted to $21172,000, $23141,~~900~~000 and $42152,~~500~~900 in fiscal 2004, 2003 and 2002, respectively. Amounts due on purchases from Custom were $8,600 ~~for~~and ~~services~~$5,200 byat E.June 30, ~~Paul~~2004 ~~Tonkovich Professional~~and ~~Corporation~~2003, respectively, ofand ~~which~~are anincluded ~~officer/director~~in ofaccounts ~~the~~payable ~~Company~~in isthe anaccompanying ~~employee~~consolidated balance sheets.

~~F-12~~In fiscal years 2004, 2003 and 2002, the Company incurred legal fees and costs amounting to $60,100, $21,000 and $23,900, respectively, for services by E. Paul Tonkovich Professional Corporation, of which an officer/director of the Company is an employee.

NOTE 10 - ACCRUED LIABILITIES:

Accrued liabilities consist of:

	June 30,
	2004		2003
Accrued liabilities consist of:
Salaries, wages, commissions and related payables	$	572,500	$	572,900
Other	336,600		481,900
	$	909,100	$	1,054,800

	June 30,
	2003		2002
Salaries, wages, commissions and related payables	$	572,900	$	554,200
Other	481,900		428,100
	$	1,054,800	$	982,300

F - 10

NOTE 11 - STOCK OPTION PLAN:

InThe ~~December 1994, at the Annual Meeting of Stockholders of the~~ Company, ~~the~~has ~~stockholders voted by majority decision to ratify and approve~~ a new stock option plan asthat was adopted by the Board of Directors ~~(“the~~on ~~Board”)~~October 7, in2003 ~~June~~and approved by shareholder vote on December ~~1994~~8, 2003. This plan ~~The~~automatically replaces the prior stock option plan and allows, at the discretion of the Board, ~~for~~of ~~the~~Directors, ~~granting~~option ~~of options~~grants to key employees, officers, directors, and consultants of the Company to purchase 1850,000~~,000~~ shares of the Company’s common stock. Under the terms and conditions set forth in the plan, the ~~exercise~~purchase price of the stock options will be aat least 85% of the fair market value of the Company’s common stock on ~~the~~ grant date. The Maximum term for options granted under the plan is ten years. The plan expires ~~June~~on October 126, ~~2004~~2013.

Stock Option Activity

	Outstanding Shares		Exercisable Shares	Weighted Average Price Per Share
Balance outstanding at June 30, 2000	150,000		145,000	$	0.8901
Granted	193,000			$	1.1146
Exercised	(2,500	)		$	0.8125
Cancelled	(33,000	)		$	0.9886
Balance outstanding at June 30, 2001	307,500		277,500	$	1.0084
Exercised	(57,500	)		$	0.8668
Cancelled	(50,000	)		$	0.8750
Balance outstanding at June 30, 2002	200,000		185,000	$	1.1000
Cancelled	(95,000	)		$	1.0724
Balance outstanding at June 30, 2003	105,000		105,000	$	1.1250
Exercised	(96,000	)		$	1.1250
Cancelled	(9,000	)		$	1.1250
Balance outstanding at June 30, 2004	—		—

The Company did not grant any options in fiscal ~~2003~~2004. At June 30, ~~2003~~2004, the Company had ~~832~~ 850,~~500~~000 shares available for future grants. The Company accounts for stock options under the intrinsic value method. Had compensation cost for the plan been determined in accordance with the fair value method as set out in SFAS No. 123, as amended by SFAS No. 148, the Company’s net income and income per common share data would not have been significantly different.

NOTE 12 - COMMON STOCK:

~~Treasury stock is recorded at cost. At June 30, 2002, treasury stock consisted of 316 shares of common stock at a cost of $900.~~ In fiscal ~~2003~~2004 and ~~2002~~2003, the Company acquired ~~270~~459,~~151~~633 and ~~203~~270,~~956~~ 151 shares of its common stock at a total cost of $~~340~~679,~~500~~700 and $~~212~~340,~~800~~500, respectively. All shares acquired were subsequently cancelled. At June 30, 2004 and 2003, there was no outstanding treasury stock.

On June 2416, ~~2003~~2004 the Board declared a dividend of $.05 per share of common stock payable on July 2523, ~~2003~~2004 to stockholders of record on July 149, ~~2003~~2004.

F-13

NOTE 13 - INCOME TAXES:

The components of the income tax provision were:

	For Year Ended June 30,
	2003			2002			2001
	2004			2003			2002
Current:
Federal	$	(~~667~~811,~~100~~500	)	$	(~~476~~667,~~300~~100	)	$	(26476,~~000~~300	)
State	(~~112~~170,~~100~~300		)	(~~163~~112,~~800~~100		)	(77163,~~300~~800		)
	(779,200		)	(640,100		)	(103,300		)
	(981,800		)	(779,200		)	(640,100		)
Deferred:
Federal	6974,~~900~~700			~~(302~~69,~~800~~900		)	(~~473~~302,~~700~~800		)
State	318,~~900~~600			(431,~~300~~900		)	(374,~~800~~300		)
	101,800			(307,100		)	(511,500		)
	83,300			101,800			(307,100		)
	$	(~~677~~898,~~400~~500	)	$	(~~947~~677,~~200~~400	)	$	(~~614~~947,~~800~~200	)

At June 30, ~~2003,~~ 2004, the Company has net operating loss (NOL) carry-forwards of approximately $67,~~511~~112,~~300~~600 for state income tax purposes. The NOL carry-forwards, which are available to offset future taxable income of the Company and are subject to limitations should a “change in ownership” as defined in the Internal Revenue Code occur, will begin to expire in ~~2004~~2005 if not utilized. The state NOL carry-forwards expire as follows:

Amount of Unused State Operating Loss Carryforwards		Expiration During Year Ended June 30,
$	272,800	2004
444,400		2005
89,000		2006
582,600		2007
603,100		2008
840,200		2009
286,400		2010
555,300		2011
476,700		2012
395,300		2013
850,400		2014
262,500		2015
482,800		2016
179,800		2017
190,000		2018
$	6,511,300

F - 11

In fiscal 2001, the Company utilized the remaining balance of its federal NOL carry-forwards, and then in fiscal 2002, the Company utilized its remaining alternative minimum tax credit, which reduced its current federal tax liability by $412,600 in fiscal 2002. In connection with the Rotocast merger, the Company recorded a deferred tax asset of $394,400, net of a valuation allowance of $192,400 as of June 30, 1998, for the future benefit related to state NOL carry-forwards. The current state valuation allowance, amounting to $307,200, represents the estimated amount of state NOL’s that will expire prior to their utilization. Realization of the future tax benefits of the NOL carry-forwards is dependent on the Company’s ability to generate taxable income within the carry-forward period. Management will continue to assess the likelihood of utilizing its state NOL’s by taking into consideration historical results and current economic conditions in which the Company operates. Management does not consider any non-routine transactions in assessing the likelihood of realization of the recorded deferred tax asset. Any future adjustments to the valuation allowance will be reflected as a component of the current years tax provision.

Amount of Unused State Operating Loss Carryforwards		Expiration During Year Ended June 30,
$	717,200	2005
89,000		2006
582,600		2007
603,100		2008
840,200		2009
242,300		2010
471,100		2011
476,700		2012
395,300		2013
850,400		2014
262,500		2015
482,800		2016
179,800		2017
235,200		2018
684,400		2019
$	7,112,600

FIn fiscal 2002, the Company utilized its remaining alternative minimum tax credit, which reduced its current federal tax liability by $412,600 in fiscal 2002. In connection with the Rotocast merger, the Company recorded a deferred tax asset of $394,400, net of a valuation allowance of $192,400 as of June 30, 1998, for the future benefit related to state NOL carry-14forwards. The current state valuation allowance, amounting to $358,400, represents the estimated amount of state NOL’s that will expire prior to their utilization. Realization of the future tax benefits of the NOL carry-forwards is dependent on the Company’s ability to generate taxable income within the carry-forward period. Management will continue to assess the likelihood of utilizing its state NOL’s by taking into consideration historical results and current economic conditions in which the Company operates. Management does not consider any non-routine transactions in assessing the likelihood of realization of the recorded deferred tax asset. Any future adjustments to the valuation allowance will be reflected as a component of the current years tax provision.

The following reconciles the federal statutory income tax rate to the effective rate of the provision for income taxes:

	For Year Ended June 30,
	2003		2002		2001
	2004		2003		2002
Federal statutory rate	34.0	%	34.0	%	34.0	%
State income taxes (net of federal benefit)	34.80		3.8		3.68
Goodwill amortization	—		—		10.2
Other items, net	2.8		(0.9	)	2.4
Other items, net	(0.9	)	2.4		8.7
Effective income tax rate	40.8	%	36.9	%	40.2	%
Effective income tax rate	36.9	%	40.2	%	56.5	%

Deferred tax assets and liabilities are summarized as follows:

	June 30,		~~June 30,~~
			2003			2002
	2004			2003
Deferred tax assets:
State NOL (net of federal benefit)	$	408,300	$	~~388,300~~$	388,300	$	~~392,100~~
Employment-related reserves	102,400		~~55,200~~	55,200		~~103,300~~
Allowance for doubtful accounts	102,400		~~91,800~~	91,800		~~69,600~~
Interest rate swap derivative	43,000		~~105,400~~	105,400		~~85,400~~
			640,700			650,400
Other liabilities	33,200			—
Deferred tax liabilities:
	689,300			640,700
Depreciation and amortization			(2,504,000		)	(2,635,500		)
Deferred tax liabilities:
Net deferred tax liability before valuation allowance			(1,863,300		)	(1,985,100		)
Depreciation and amortization	(2,480,500		)	(2,504,000		)
Deferred tax assets valuation allowance			(307,200		)	(307,200		)
Net deferred tax liability before valuation allowance	(1,791,200		)	(1,863,300		)
Net deferred tax liability			$	(2,170,500	)	$	(2,292,300	)
Deferred tax assets valuation allowance	(358,400		)	(307,200		)
Net deferred tax liability	$	(2,149,600	)	$	(2,170,500	)

~~NOTE~~F 14 - ~~COMMITMENTS AND CONTINGENCIES:~~12

~~Commitments~~NOTE 14 - COMMITMENTS AND CONTINGENCIES:

The Company leases various office and warehouse facilities, and equipment under long-term operating leases expiring through March 2013. Certain of the leases provide for five-year renewal options and rental increases based on the Consumer Price Index. Operating lease expense for fiscal 2003, 2002, and 2001 amounted to $1,122,400, $1,114,200 and $1,055,100, respectively.Commitments

AtThe ~~June 30,~~Company ~~2003~~leases various office and warehouse facilities, and equipment under long-term operating leases expiring through March 2013. Certain of the ~~future~~leases ~~minimum~~provide ~~lease~~for ~~commitments,~~five-year ~~excluding~~renewal ~~insurance~~options and rental ~~taxes~~increases based on the Consumer Price Index. Operating lease expense for fiscal 2004, ~~are~~2003, asand 2002 amounted ~~follows:~~to $1,119,800, $1,122,400 and $1,114,200, respectively.

~~Year~~At ~~Ending~~ June 30, 2004, the future minimum lease commitments, excluding insurance and taxes, are as follows:

2004			$	1,110,000
Year Ending June 30,
2005	$	1,124,200	~~1,006,100~~
2006	1,036,900		~~883,400~~
2007	994,700		~~841,600~~
2008	992,800		~~841,000~~
Thereafter			3,534,200
2009	989,800
			$	8,216,300
Thereafter	2,774,700
	$	7,913,100

Contingencies

F-NOTE 15 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

~~NOTE~~Supplemental 15disclosures -of ~~SUPPLEMENTAL DISCLOSURES~~cash OFflow ~~CASH~~information ~~FLOW~~are ~~INFORMATION~~as follows:

Supplemental disclosures of cash flows information are as follows:

	For the Year Ended June 30,
	2004			2003		2002
Cash paid during the year for:
Interest	$	213,300		$	272,200	$	477,300
Income taxes	$	943,500		$	925,400	$	424,600
Non-cash investing activities:
Conversion of accounts receivable to notes receivable	$	—		$	—	$	150,000
Non-cash financing activities:
Common dividends declared but not paid	$	599,100		$	616,000	$	630,200
Change in fair value of interest rate swap	$	(93,800	)	$	30,200	$	36,600

	For the Year Ended June 30,
	2003		2002		2001
Cash paid during the year for:
Interest	$	272,200	$	477,300	$	770,100
Income taxes	$	925,400	$	424,600	$	180,200
Non-cash investing activities:
Conversion of accounts receivable to notes receivable	$	—	$	150,000	$	—
Non-cash financing activities:
Common dividends declared but not paid	$	616,000	$	630,200	$	510,600
Change in fair value of interest rate swap	$	30,200	$	36,600	$	91,400

NOTE 16 - UNAUDITED QUARTERLY RESULTS:

	Quarter Ended
	September		December			March		June
Fiscal Year 2004:
Net sales	$	8,874,900	$	9,129,400		$	10,036,100	$	12,292,500
Gross profit	2,081,700		1,673,400			2,382,000		3,055,200
Net income/(loss)	198,400		(94,200		)	375,700		824,300
Per share:
Net income/(loss)-basic and diluted	$	.02	$	(.01	)	$	.03	$	.07

Fiscal Year 2003:
Net sales	$	8,894,800	$	8,530,500		$	8,720,800	$	9,826,000
Gross profit	2,347,500		2,067,000			2,121,300		2,509,000
Net income	361,700		198,900			102,800		493,200
Per share:
Net income basic and diluted	$	.03	$	.01		$	.01	$	.04

	Quarter Ended
	September			December		March		June
Fiscal Year 2003:
Net sales	$	8,894,800		$	8,530,500	$	8,720,800	$	9,826,000
Gross profit	2,347,500			2,067,000		2,121,300		2,509,000
Net income	361,700			198,900		102,800		493,200
Per share:
Net income-basic and diluted	$	.03		$	.01	$	.01	$	.04
Fiscal Year 2002:
Net sales	$	9,588,300		$	7,927,600	$	9,368,100	$	11,089,300
Gross profit	2,275,500			1,928,500		2,645,600		3,357,800
Net income before cumulative effect of change in accounting principle of goodwill	157,700			40,200		394,100		816,700
Net (loss)/income)	(3,948,200		)	40,200		394,100		816,700
Per share:
Net income before cumulative effect of change in accounting principle for goodwill	.01			—		.03		.07
Net (loss)/income	$	(.31	)	$	—	$	.03	$	.07

F - 13

~~F-16~~ROTONICS MANUFACTURING INC.

~~ROTONICS MANUFACTURING INC.~~ SCHEDULE II

~~SCHEDULE II~~VALUATION AND QUALIFYING ACCOUNTS

~~VALUATION~~Years ~~AND~~Ended ~~QUALIFYING~~June 30, ~~ACCOUNTS~~2004, 2003 and 2002

Years Ended June 30, 2003, 2002 and 2001

Column A	Colum B		Column C					Column D			Column E
			Additions
Description	Balance at Beginning of Period		Charged to Costs and Expenses		Other			Deductions			Balance at End of Period
June 30, 2004:
Allowance for doubtful accounts	$	231,100	$	98,700	$	—		$	(73,700	)(1)	$	256,100

Deferred tax asset valuation allowance	$	307,200	$	—	$	51,200	(2)	$	—		$	358,400

June 30, 2003:
Allowance for doubtful accounts	$	175,000	$	123,000	$	—		$	(66,900	)(1)	$	231,100

Deferred tax asset valuation allowance	$	307,200	$	—	$	—		$	—		$	307,200

June 30, 2002:
Allowance for doubtful accounts	$	99,200	$	170,400	$	—		$	(94,600	)(1)	$	175,000

Deferred tax asset valuation allowance	$	307,200	$	—	$	—		$	—		$	307,200

Column A	Colum B		Column C					Column D			Column E
			Additions
Description	Balance at Beginning of Period		Charged to Costs and Expenses		Other			Deductions			Balance at End of Period
June 30, 2003:
Allowance for doubtful accounts	$	175,000	$	123,000	$	—		$	(66,900	) (1)	$	231,100
Deferred tax asset valuation allowance	$	307,200	$	—	$	—		$	—		$	307,200
June 30, 2002:
Allowance for doubtful accounts	$	99,200	$	170,400	$	—		$	(94,600	) (1)	$	175,000
Deferred tax asset valuation allowance	$	307,200	$	—	$	—		$	—		$	307,200
June 30, 2001:
Allowance for doubtful accounts	$	142,000	$	29,600	$	—		$	(72,400	) (1)	$	99,200
Deferred tax asset valuation allowance	$	301,700	$	—	$	5,500	(2)	$	—		$	307,200

(1) Doubtful accounts written off during the year, net of recoveries.

(12) ~~Doubtful~~ ~~accounts~~Represents ~~written~~valuation ~~off~~allowance ~~during~~for ~~the~~potential state ~~year~~NOL’s, ~~net~~which ofmay ~~recoveries~~expire prior to utilization.

~~(2) Represents~~F ~~valuation~~- ~~allowance for potential state NOL’s, which may expire prior to utilization.~~14

F-17

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