SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For quarterly period ended: ~~September 30~~March 31, ~~2003~~ 2005

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 Number)
17022 South Figueroa Street, Gardena, California 90248
(Address of principal executive offices) (Zip Code)
(310) 538-4932
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

17022 South Figueroa Street, Gardena, California 90248

(Address of principal executive offices) (Zip Code)

(310) 538-4932

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of 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 requirements for the past 90 days.

ý Yes o ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

o Yes ý o No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at ~~September~~March 3031, ~~2003~~2005
Common Shares		12,325,191 Shares
Common Shares ($.01 stated value)		11,964,692 Shares
($.01 stated par value)
		Total Pages 15

ROTONICS MANUFACTURING INC.

INDEX

PART I.	FINANCIAL INFORMATION
PART I. FINANCIAL INFORMATION
	Item 1 - Financial Statements
		Consolidated Balance Sheets - September 30, 2003 (Unaudited) and June 30, 2003
	Consolidated Balance Sheets - March 31, 2005 (Unaudited) and June 30, 2004
		Consolidated Statements of Operations, Comprehensive Income and Accumulated Deficit - Three Months Ended September 30, 2003 and 2002 (Unaudited)
	Consolidated Statements of Operations, Comprehensive Income and Accumulated Deficit - Three Months and Nine Months Ended March 31, 2005 and 2004 (Unaudited)
		Consolidated Statements of Cash Flows - Three Months Ended September 30, 2003 and 2002 (Unaudited)
	Consolidated Statements of Cash Flows - Nine Months Ended March 31, 2005 and 2004 (Unaudited)
	Notes to Consolidated Financial Statements	~~Notes to Consolidated Financial Statements~~
	Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3 - Quantitative and Qualitative Disclosures About Market Risk
	Item 3 - Quantitative and Qualitative Disclosures about Market Risk
	Item 4 - Controls and Procedures
	Item 4 - Control and Procedures
PART II. OTHER INFORMATION
	Item 6 - Exhibits and Reports on Form 8-K
SIGNATURES

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ROTONICS MANUFACTURING INC. ~~CONSOLIDATED BALANCE SHEETS~~

	September 30, 2003			June 30, 2003
	(Unaudited)
ASSETS
Current assets:
Cash	$	48,100		$	44,700
Accounts receivable, net of allowance for doubtful accounts of $253,100 and $231,100, respectively	4,075,000			4,419,700
Current portion of notes receivable	68,200			92,100
Inventories	6,083,900			6,370,400
Deferred income taxes, net	239,900			256,900
Prepaid expenses and other current assets	350,700			256,400
Total current assets	10,865,800			11,440,200
Notes receivable, less current portion	138,600			138,600
Investment in partnership	104,300			104,300
Property, plant and equipment, net	14,397,600			14,462,000
Intangible assets, net	251,200			262,600
Other assets	42,300			42,500
	$	25,799,800		$	26,450,200
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	864,300		$	864,300
Accounts payable	1,975,400			2,791,600
Accrued liabilities	944,600			1,054,800
Total current liabilities	3,784,300			4,710,700
Bank line of credit	727,100			381,200
Long-term debt, less current portion	1,764,900			1,980,900
Deferred income taxes, net	2,405,300			2,427,400
Total liabilities	8,681,600			9,500,200
Stockholders’ equity:
Common stock, stated par value $.01: authorized 20,000,000 shares; issued and outstanding 12,325,191 and 12,344,791 shares, respectively, net of treasury shares	22,643,700			22,699,600
Accumulated other comprehensive loss, net of tax	(132,500		)	(158,200		)
Accumulated deficit	(5,393,000		)	(5,591,400		)
Total stockholders’ equity	17,118,200			16,950,000
	$	25,799,800		$	26,450,200

CONSOLIDATED BALANCE SHEETS

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

	March 31, 2005			June 30, 2004
	(Unaudited)

ASSETS

Current assets:
Cash	$	13,200		$	56,500
Accounts receivable, net of allowance for doubtful accounts of $266,800 and $256,100, respectively	5,096,100			5,784,900
Current portion of notes receivable	56,700			—
Inventories	7,508,400			6,629,000
Deferred income taxes, net	214,600			243,700
Prepaid expenses and other current assets	456,500			266,500

Total current assets	13,345,500			12,980,600

Notes receivable, less current portion				138,600
Investment in partnership	99,100			100,900
Property, plant and equipment, net	13,495,900			13,849,700
Intangible assets, net	182,500			216,700
Other assets	64,500			65,300

	$	27,187,500		$	27,351,800

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Current portion of long-term debt	$	864,300		$	864,300
Accounts payable	2,761,200			3,450,900
Accrued liabilities	682,700			909,100

Total current liabilities	4,308,200			5,224,300

Bank line of credit	1,617,100			1,357,300
Long-term debt, less current portion	468,400			1,116,700
Deferred income taxes, net	2,344,100			2,393,300
Other liabilities	83,000			83,000

Total liabilities	8,820,800			10,174,600

Stockholders’ equity:
Common stock, stated value $.01: authorized 20,000,000 shares; issued and outstanding 11,964,692 and 11,981,158 shares, respectively	22,094,900			22,127,900
Accumulated other comprehensive loss, net of tax	(20,900		)	(64,400		)
Accumulated deficit	(3,707,300		)	(4,886,300		)

Total stockholders’ equity	18,366,700			17,177,200

	$	27,187,500		$	27,351,800

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

ROTONICS MANUFACTURING INC. ~~CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE INCOME AND ACCUMULATED DEFICIT~~

(Unaudited)CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE INCOME AND ACCUMULATED DEFICIT

	Three Months Ended September 30,
	2003			2002
Net sales	$	8,874,900		$	8,894,800
Costs and expenses:
Cost of goods sold	6,793,200			6,547,300
Gross profit	2,081,700			2,347,500
Selling, general and administrative expenses	1,722,500			1,720,300
Income from operations	359,200			627,200
Other (expense)/income:
Interest expense	(54,900		)	(82,000		)
Other income, net	26,700			32,000
Total other expense, net	(28,200		)	(50,000		)
Income before income taxes	331,000			577,200
Income tax provision	(132,600		)	(215,500		)
Net Income	198,400			361,700
Other comprehensive gain/(loss) before tax:
Unrealized holding gain/(loss) arising during the period	8,300			(111,100		)
Less: Reclassification adjustments for losses included in net income	34,400			46,500
Total other comprehensive gain/(loss) before tax	42,700			(64,600		)
Income tax (expense)/benefit related to items of other comprehensive gain/(loss)	(17,000		)	25,800
Total other comprehensive gain/(loss), net of tax	25,700			(38,800		)
Comprehensive income	$	224,100		$	322,900
Accumulated deficit, beginning period	$	(5,591,400	)	$	(6,132,000	)
Net income	198,400			361,700
Accumulated deficit, end of period	$	(5,393,000	)	$	(5,770,300	)
Net income per common share:
Basic and diluted
Net income	$	.02		$	.03
Weighted average number of common and Common equivalent shares outstanding:
Basic	$	12,317,762		$	12,573,450
Diluted	$	12,322,221		$	12,575,034

(Unaudited)

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

	Three Months Ended March 31,						Nine Months Ended March 31,
	2005			2004			2005			2004

Net sales	$	10,873,200		$	10,036,100		$	32,778,000		$	28,040,400
Costs and expenses:
Cost of goods sold	8,450,600			7,654,100			25,344,600			21,903,300
Gross profit	2,422,600			2,382,000			7,433,400			6,137,100

Selling, general and administrative expenses	1,817,700			1,733,100			5,503,000			5,267,000

Income from operations	604,900			648,900			1,930,400			870,100

Other (expense)/income:
Interest expense	(50,600		)	(51,900		)	(154,300		)	(161,100		)
Other income, net	22,000			28,800			190,000			86,300
Total other (expense)/income	(28,600		)	(23,100		)	35,700			(74,800		)

Income before income taxes	576,300			625,800			1,966,100			795,300
Income tax provision	(236,500		)	(250,100		)	(787,100		)	(315,500		)
Net income	339,800			375,700			1,179,000			479,800

Other comprehensive gain/(loss), before tax:
Unrealized holding gain/(loss) arising during the period	14,400			(30,300		)	6,900			(12,800		)
Less: Reclassification adjustments for losses included in net income	17,500			28,200			65,600			90,800
Total other comprehensive gain/(loss) before tax	31,900			(2,100		)	72,500			78,000
Income tax (provision)/benefit related to items of other comprehensive gain/(loss)	(12,800		)	800			(29,000		)	(31,200		)
Total other comprehensive gain/(loss), net of tax	19,100			(1,300		)	43,500			46,800
Comprehensive income	$	358,900		$	374,400		$	1,222,500		$	526,600

Accumulated deficit, beginning of period	$	(4,047,100	)	$	(5,487,300	)	$	(4,886,300	)	$	(5,591,400	)
Net income	339,800			375,700			1,179,000			479,800
Accumulated deficit, end of period	$	(3,707,300	)	$	(5,111,600	)	$	(3,707,300	)	$	(5,111,600	)

Net income per common share:
Basic and diluted
Net income	$	.03		$	.03		$	.10		$	.04

Weighted average number of common and common equivalent shares outstanding:
Basic	11,964,747			12,002,530			11,970,356			12,213,197
Diluted	11,964,747			12,002,530			11,970,356			12,214,683

4The accompanying notes are an integral part of these financial statements.

~~ROTONICS MANUFACTURING INC. CONSOLIDATED STATEMENTS OF CASH FLOWS~~4

~~(Unaudited)~~ROTONICS MANUFACTURING INC.

	Three Months Ended September 30,
	2003			2002
Cash flows from operating activities:
Net income	$	198,400		$	361,700
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	538,200			526,300
Gain on sales of equipment	—			(1,100		)
Deferred income tax provision	(22,100		)	(18,900		)
Provision for doubtful accounts	22,100			24,600
Changes in assets and liabilities:
Decrease in accounts receivable	322,600			971,800
Decrease/(increase) in inventories	286,500			(47,200		)
Increase in prepaid expenses and other current assets	(94,300		)	(95,600		)
Decrease/(increase) in other assets	200			(3,800		)
(Decrease)/increase in accounts payable	(200,200		)	1,069,400
(Decrease)/increase in accrued liabilities	(67,500		)	30,400
Decrease in income taxes payable	—			(78,700		)
Net cash provided by operating activities	983,900			2,738,900
Cash flows from investing activities:
Repayments on notes receivable	23,900			21,900
Capital expenditures	(462,400		)	(696,100		)
Distribution from investment in partnership	—			800
Proceeds from sales of equipment	—			1,200
Net cash used in investing activities	(438,500		)	(672,200		)
Cash flows from financing activities:
Borrowings under line of credit	2,753,400			1,050,300
Repayments under line of credit	(2,407,500		)	(1,153,400		)
Repayment of long-term debt	(216,000		)	(1,259,300		)
Payment of common stock dividends	(616,000		)	(630,200		)
Proceeds from exercise of stock options	108,000			—
Repurchases of common stock	(163,900		)	(70,300		)
Net cash used in financing activities	(542,000		)	(2,062,900		)
Net increase in cash	3,400			3,800
Cash at beginning of period	44,700			66,900
Cash at end of period	$	48,100		$	70,700
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	56,000		$	87,700
Income taxes	$	209,100		$	311,000
Non-cash financing activity:
Change in fair value of interest rate swap	$	(25,700	)	$	38,800

CONSOLIDATED STATEMENTS OF CASH FLOWS

~~The accompanying notes are an integral part of these consolidated financial statements.~~(Unaudited)

	Nine Months Ended March 31,
	2005				2004

Cash flows from operating activities:
Net income	$	1,179,000			$		479,800
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,638,400				1,632,800
Gain on sale of equipment	(109,600			)	(1,100			)
Deferred income tax benefit	(49,200			)	(45,300			)
Provision for doubtful accounts	116,000				68,900
Changes in operating assets and liabilities:
Accounts receivable, net	626,400				(1,240,900			)
Inventories	(879,400			)	17,200
Prepaid expenses and other current assets	(190,000			)	(424,000			)
Other assets	800				(11,300			)
Accounts payable	(90,600			)	754,500
Accrued liabilities	(153,800			)	(160,300			)

Net cash provided by operating activities	2,088,000				1,070,300

Cash flows from investing activities:
Repayments on notes receivable	28,300				92,200
Capital expenditures	(1,573,100			)	(1,196,000			)
Distribution from investment in partnership	1,800				2,600
Proceeds from sale of equipment	432,300				1,100

Net cash used in investing activities	(1,110,700			)	(1,100,100			)

Cash flows from financing activities:
Borrowings under line of credit	9,379,300				8,122,600
Repayments under line of credit	(9,119,500			)	(6,219,100			)
Repayment of long-term debt	(648,300			)	(648,200			)
Payment of common stock dividend	(599,100			)	(616,000			)
Repurchases of common stock	(33,000			)	(671,300			)
Proceeds from issuance of common stock	—				108,000

Net cash (used in)/provided by financing activities	(1,020,600			)	76,000

Net (decrease)/increase in cash	(43,300			)	46,200

Cash at beginning of period	56,500				44,700

Cash at end of period	$		13,200		$		90,900

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$		155,600		$		158,900
Income taxes	$		956,900		$		563,100

Non-cash financing activity:
Change in fair value of interest rate swap	$		(43,500	)	$	(46,800		)

~~ROTONICS MANUFACTURING~~The ~~INC. NOTES~~accompanying TOnotes ~~CONSOLIDATED~~are ~~FINANCIAL~~an integral part of these financial ~~STATEMENTS~~statements.

~~NOTE 1-INTERIM REPORTING:~~5

~~Basis~~ROTONICS ofMANUFACTURING ~~Presentation~~INC.

~~The~~NOTES ~~interim~~TO ~~financial information included herein is unaudited. This information reflects all adjustments~~CONSOLIDATED ~~(consisting~~FINANCIAL solely of normal recurring adjustments), which are, in the opinion of management, necessary for a fair statement of operating results for the interim periods. This interim financial information should be read in conjunction with the Rotonics Manufacturing Inc. (“the Company”) Annual Report as filed on Form 10-K for the fiscal year ended June 30, 2003.STATEMENTS

~~Principles~~NOTE of1-INTERIM ~~Consolidation~~REPORTING:

The ~~consolidated~~interim financial information ~~statements~~included ~~include~~herein ~~the~~is ~~accounts~~unaudited. This information reflects all adjustments (consisting solely of ~~the~~normal ~~Company~~recurring ~~and~~adjustments) ~~its~~which ~~wholly~~are, ~~owned~~in ~~subsidiary~~the opinion of management, ~~Rotocast~~necessary ~~Plastic~~for ~~Products~~a fair statement of operating results for the interim periods. This interim ~~Tennessee,~~financial information should be read in conjunction with the Rotonics Manufacturing Inc. ~~All~~ ~~intercompany accounts~~(“the ~~and~~Company”) ~~transactions~~Annual ~~have~~Report ~~been~~as ~~eliminated~~filed inon ~~consolidation~~Form 10-K for the fiscal year ended June 30, 2004.

ImpactPrinciples of Recent Accounting PronouncementsConsolidation

InThe ~~April~~consolidated ~~2003,~~financial ~~the~~statements ~~Financial~~include ~~Accounting Standards Board (“FASB”) issued~~the ~~Statement~~accounts of ~~Financial~~the ~~Accounting~~Company ~~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,~~wholly orowned ~~as hybrid instrument with debt host contracts and embedded derivative features. In addition~~subsidiary, ~~SFAS~~Rotocast ~~No. 149 clarifies the definition of a derivative by~~Plastic ~~providing~~Products ~~guidance on the meaning~~ of ~~initial~~Tennessee, ~~net investments related to derivatives~~Inc. ~~This statement was~~All ~~effective~~intercompany ~~for~~accounts ~~contracts~~and ~~entered~~transactions ~~into or modified after June 30, 2003. The adoption of SFAS No. 149 did not~~ have ~~a material~~been ~~effect~~eliminated onin ~~our consolidated financial position, results of operation or cash flows~~consolidation.

InImpact Mayof 2003,Recent 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.Pronouncements

~~NOTE~~In 2December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 123R (“Share-Based ~~INVENTORIES:~~Payment”). SFAS 123R requires the Company to recognize compensation expense for equity instruments awarded to employees. SFAS 123R is effective for the Company as of the beginning of the first interim period that begins after June 15, 2005. The Company does not expect the adoption of this standard to have a significant impact on its consolidated financial statements.

~~Inventories~~In ~~consist~~November 2004, the FASB issued SFAS No. 151, “Inventory Costs” (“SFAS 151”), an amendment of: ARB No. 43, Chapter 4. SFAS 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material. SFAS 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company does not believe adoption of SFAS 151 will have a material effect on its consolidated financial position, results of operations or cash flows.

	September 30, 2003		June 30, 2003
Raw materials	$	2,070,200	$	2,279,800
Finished goods	4,013,700		4,090,600
	$	6,083,900	$	6,370,400

NOTE 2 - NOTES RECEIVABLE:

~~NOTE~~In 3July 2001, -the Company ~~PROPERTY~~and a former customer agreed to convert an open trade receivable balance due from the customer in the amount of $150,000 ~~PLANT~~to ~~AND~~a ~~EQUIPMENT:~~note receivable bearing interest at 8% per annum and maturing on June 15, 2004. In March 2005, the Company reached an out of court settlement with the former customer that resulted in a write down of the remaining note balance from $138,600 to $85,000. The remaining balance of the note is due in three installments of $28,333 beginning in March 2005 with the final installment due in May 2005. As of March 31, 2005 and June 30, 2004, the balance of this note amounted to $56,700 and $138,600, respectively

~~Property,~~NOTE ~~plant~~3 ~~and equipment consist of~~- INVENTORIES:

	September 30, 2003			June 30, 2003
Land	$	1,039,500		$	1,039,500
Buildings and building improvements	5,213,000			5,114,500
Machinery, equipment, furniture and fixtures	27,662,200			27,382,500
Construction in progress	627,100			548,200
	34,541,800			34,084,700
Less - accumulated depreciation and amortization	(20,144,200		)	(19,622,700		)
	$	14,397,600		$	14,462,000

Inventories consist of:

	March 31, 2005		June 30, 2004
Raw materials	$	2,971,100	$	2,525,900
Finished goods	4,537,300		4,103,100
	$	7,508,400	$	6,629,000

NOTE 4 - ~~INTANGIBLE~~PROPERTY, PLANT ~~ASSETS~~AND EQUIPMENT:

~~Intangible~~Property, ~~assets~~plant and equipment consist of:

	September 30, 2003			June 30, 2003
	March 31, 2005			June 30, 2004
Patents	$	475,700		$	475,700
Land	$	1,027,300		$	1,039,500
Less accumulated amortization	(224,500		)	(213,100		)
Buildings and building improvements	4,896,300			5,291,000
Net patents	$	251,200		$	262,600
Machinery, equipment, furniture and fixtures	29,694,800			28,938,400
Construction in progress	28,000			164,200
	35,646,400			35,433,100
Less - accumulated depreciation	(22,150,500		)	(21,583,400		)
	$	13,495,900		$	13,849,700

~~NOTE 5 - BANK LINE OF CREDIT:~~6

~~The~~NOTE ~~Company has a $~~5~~,000,000~~ revolving line of credit with Wells Fargo Bank, which was originally set to mature on October 1, 2004. The line is secured by the Company’s machinery and equipment, accounts receivable and inventories. Interest is payable monthly at the bank’s prime rate minus .25% (3.75% per annum at September 30, 2003). The loan agreement allows the Company to convert the outstanding principal balance in amounts no less than $250,000 to a LIBOR-~~based loan for periods up to 90 days.~~ AtINTANGIBLE September 30, 2003, total borrowings under the Company’s line of credit was $727,100 of which $500,000 was borrowed under the LIBOR option at a LIBOR rate of 2.12% maturing October 15, 2003. Proceeds from the loan were used for working capital purposes. On October 1, 2003 the bank extended the maturity date on the line of credit to October 1, 2005. At September 30, 2003, the Company had approximately $4,272,900 available for future borrowings under the revolving line of credit.ASSETS:

~~NOTE~~Intangible 6assets ~~- LONG-TERM DEBT~~consist of:

Long-term debt consists of:

	March 31, 2005			June 30, 2004

Patents	$	475,700		$	475,700
Less - accumulated amortization, patents	(293,200		)	(259,000		)

	$	182,500		$	216,700

	September 30, 2003			June 30, 2003
Note payable - Bank (A)	$	2,629,200		$	2,845,200
Less current portion	(864,300		)	(864,300		)
	$	1,764,900		$	1,980,900

Aggregate amortization expense for the nine months ended March 31, 2005 and 2004 was $34,200 and $34,400, respectively.

~~(A) On~~NOTE ~~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% (3.75% per annum at September 30, 2003). In addition, the loan agreement allows the Company to convert all or a portion of the outstanding principal to a LIBOR-~~based~~ ~~loan~~BANK ~~for periods up to one year.~~ LINE AtOF September 30, 2003, the total outstanding principal balance was under the LIBOR option at 2.37% per annum maturing October 15, 2003. The note is secured by the Company’s machinery and equipment, accounts receivable and inventories and matures October 15, 2007.CREDIT:

AtThe ~~September~~Company 30has a $5,000,000 ~~2003~~revolving line of credit with Wells Fargo Bank. The line matures October 1, 2006 and is secured by the Company’s ~~had~~machinery ~~available~~and equipment, accounts receivable and inventories. Interest is payable monthly at the bank’s prime rate minus .25% (5.5% per annum at March 31, 2005). The loan agreement allows the Company to convert the outstanding principal balance in amounts no less than $250,000 to a ~~term~~LIBOR-based loan ~~commitment~~for periods up to 90 days. At March 31, 2005, total borrowings inunder the ~~amount~~Company’s line of credit was $21,~~000~~617,100 of which $1,500,000 ~~for~~was borrowed ~~future~~under ~~machinery~~the LIBOR option bearing a LIBOR interest rate of 3.83% per annum and ~~equipment~~maturing ~~purchases~~April 15, 2005. On Proceeds ~~October~~from 1the loan were used for working capital purposes. At March 31, ~~2003~~2005, ~~this~~the ~~term-loan~~Company had ~~commitment~~approximately ~~expired~~$3,382,900 ~~and~~available ~~was~~for ~~not~~future ~~replaced~~borrowings under the revolving line of credit.

OnNOTE ~~August~~7 ~~15,~~- ~~2002, the Company amended its interest rate swap~~LONG-TERM agreement with the bank. The agreement allows the Company to fix a portion of its outstanding term and line of credit debt ($3 million as of September 30, 2003) from a variable floating LIBOR rate to a fixed LIBOR rate in efforts to protect against future increases in the bank’s LIBOR rate. The interest rate swap agreement matures August 15, 2006.DEBT:

~~NOTE 7~~Long-term ~~ACCRUED~~debt ~~LIABILITIES~~consists of:

Accrued liabilities consist of:

	March 31, 2005			June 30, 2004

Note payable – Bank (A)	$	1,332,700		$	1,981,000
Less – current portion	(864,300		)	(864,300		)

	$	468,400		$	1,116,700

	September 30, 2003		June 30, 2003
Salaries, wages, commissions and related payables	$	413,900	$	572,900
Other	530,700		481,900
	$	944,600	$	1,054,800

(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% (5.5% per annum at March 31, 2005). 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 March 31, 2005, the total outstanding principal balance was under the LIBOR option at 4.08% per annum maturing April 15, 2005. The note is secured by the Company’s machinery and equipment, accounts receivable and inventories and matures October 15, 2007.

7The Company has an 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 ($3 million as of March 31, 2005) from a variable floating LIBOR rate to a fixed LIBOR rate in efforts to protect against future increases in the bank’s LIBOR rate. The notional amount of the swap agreement will remain at $3 million until August 15, 2005 at which time it will be reduced to $2 million and will remain at this amount through to the swap’s maturity on August 15, 2006.

NOTE 8 -– ~~STOCK OPTION PLAN~~ACCRUED LIABILITIES:

~~The~~Accrued ~~Company~~liabilities ~~has~~consists ~~a stock option plan, which allows, at the discretion~~ of the Board of Directors (“the Board”), for the granting of options to key employees, officers, directors, and consultants of the Company to purchase 1,000,000 shares of the Company’s common stock. Under the terms and conditions set forth in the plan, the exercise price of the stock options will be a 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 five years. The plan expires June 12, 2004.:

There were no options outstanding as of September 30, 2003 and the Company had 841,500 shares available for future grants. On October 7, 2003, the Board adopted a new stock option plan for the granting of options to key employees, officers, directors and consultants of the Company to purchase 850,000 shares of the Company’s common stock. This new plan will be put to shareholder vote in conjunction with our December 2003 Shareholder’s meeting. If the plan is approved it automatically replace the existing plan.

	March 31, 2005		June 30, 2004

Salaries, wages, commissions and related payables	$	431,200	$	572,500
Other	251,500		336,600
	$	682,700	$	909,100

~~Stock Option Activity:~~7

	Outstanding Shares		Weighted Average Price Per Share
Balance outstanding at June 30, 2003	105,000		$	1.125
Exercised	(96,000	)	$	1.125
Cancelled	(9,000	)	$	1.125
Balance outstanding at September 30, 2003	—

NOTE 9 - STOCK OPTION PLAN:

~~NOTE~~The 9Company -has ~~COMMON~~a ~~STOCK:~~stock option plan that was adopted by the Board of Directors on October 7, 2003 and approved by shareholder vote on December 8, 2003. This plan allows, at the discretion of the Board of Directors, to grant stock options to key employees, officers, directors and consultants of the Company to purchase 850,000 shares of the Company’s common stock. Under the terms and conditions set forth in the plan, the purchase price of the stock options will be at least 85% of the fair market value of the Company’s common stock on grant date. The maximum term for options granted under the plan is ten years, and the plan expires on October 6, 2013.

~~Treasury~~The ~~stock~~Company ishas ~~recorded at cost.~~ not Atgranted ~~September~~any ~~30,~~options ~~2003~~under ~~and~~this ~~June 30~~plan, ~~2003~~and ~~there~~therefore ~~was no outstanding treasury stock. The Company continues to support its buyback~~ as ~~long~~of asMarch 31, 2005, the ~~market~~Company ~~value~~still ~~per~~has ~~share~~850,000 ~~continues~~shares toavailable ~~be under~~for ~~recognized~~future ~~by the stock market~~grants. ~~During~~ ~~the~~The ~~three month ended September 30, 2003 the~~ Company ~~acquired~~ ~~115,600~~accounts ~~shares~~for ofits ~~common~~ stock atoptions aunder ~~total~~the ~~cost~~intrinsic ofvalue ~~$163,900~~method.

OnNOTE ~~June~~10 ~~24,~~- ~~2003, the Board of Directors declared a common stock~~COMMON ~~dividend of $.05 per common share, which was paid on July 25, 2003 to stockholders of record on July 14, 2003.~~STOCK:

~~NOTE~~At 10March 31, -2005 and ~~INCOME~~June 30, ~~TAXES:~~2004 there was no outstanding treasury stock. The Company continues to support its buyback whenever the market value per share is under recognized by the stock market. During the nine months ended March 31, 2005 the Company acquired 16,500 shares of common stock at a total cost of $33,000.

~~The~~On ~~components~~June 16, of2004, the ~~income~~Board ~~tax~~of ~~provision~~Directors declared ~~were:~~a common stock dividend of $.05 per common share, which was paid on July 23, 2004 to stockholders of record on July 9, 2004.

	For the three months ended September 30,
	2003			2002
Current:
Federal	$	130,000		$	200,000
State	24,700			34,400
	154,700			234,400
Deferred:
Federal	(18,700		)	(16,600		)
State	(3,400		)	(2,300		)
	(22,100		)	(18,900		)
	$	132,600		$	215,500

NOTE 11 - INCOME TAXES:

AtThe ~~September~~components ~~30,~~of ~~2003,~~ the ~~Company had net operating loss (NOL) carryforwards of approximately $6,511,300 for state~~ income tax ~~purposes. The~~provision NOL carryforwards, which are available to offset 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 if not utilized.were:

	For the three months ended March 31,							For the nine months ended March 31,
	2005				2004			2005			2004
Current
Federal	$		202,700		$	228,500		$	702,800		$	291,800
State	25,200				45,500			133,500			69,000
	227,900				274,000			836,300			360,800

Deferred
Federal	10,500				(20,800		)	(35,200		)	(37,000		)
State	(1,900			)	(3,100		)	(14,000		)	(8,300		)
	8,600				(23,900		)	(49,200		)	(45,300		)

	$	236,500			$	250,100		$	787,100		$	315,500

~~NOTE~~At 11March 31, -2005, the ~~COMPUTATION~~Company OFhad ~~EARNINGS~~combined ~~PER~~Florida ~~SHARE:~~and Tennessee state net operating loss (NOL) carryforwards of approximately $7,144,900. The NOL carryforwards, which are available to offset 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 2005 if not utilized.

~~Basic~~NOTE ~~earnings~~12 ~~per share (“EPS”) is computed by dividing reported~~- ~~earnings~~OPERATING 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.LEASES:

The ~~tables~~Company ~~below~~leases ~~detail~~certain ~~the~~facilities ~~components~~and ofequipment under long-term operating leases that expire at various dates through March 2013. During the ~~basic~~nine ~~and~~months ~~diluted~~ended ~~EPS~~March 31, ~~calculations~~2005, rent expense under these leases, including month-to-month rentals, was approximately $878,500. The following table summarizes the obligations under these commitments on an annual basis:

	Three months ended September 30, 2003					Three months ended September 30, 2002
Year Ending June 30,
	Income		Shares	EPS Amount		Income		Shares	EPS Amount
2005	$	1,124,200
Basic EPS
2006	1,036,900
Net income	$	198,400	12,317,762	$	.02	$	361,700	12,573,450	$	.03
2007	994,700
Effect of dilutive stock options	—		4,459	—		—		1,584	—
2008	992,800
Diluted EPS	$	198,400	12,322,221	$	.02	$	361,700	12,575,034	$	.03
2009	989,800
Thereafter	2,774,700
	$	7,913,100

9The Company receives sub-lease income on certain properties that it rents from others. In February 2005, the Company consummated a sub-lease for one of its buildings at its Miami facility with a current rent expense of approximately $5,500 per month, through March 2013.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~8

~~Introduction~~The building is sub-leased at $4,500 per month for three years ending on April 1, 2008. Management believes that any additional exposure related to this sublease will not be significant.

ToNOTE ~~the~~13 ~~extent that this 10~~-~~Q Quarterly Report discusses matters which~~ ~~are~~COMPUTATION ~~not~~OF ~~historical,~~EARNINGS ~~including~~PER 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 and other 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 this Item 2, “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 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 Quarterly 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 including our Form 10-K, that we file from time to time with the Securities and Exchange Commission.SHARE:

~~Results~~Basic ofearnings ~~Operations~~per -share (“EPS”) ~~Three~~is ~~Months~~computed ~~Ended~~by ~~September~~dividing 30reported earnings by weighted average shares outstanding. Diluted EPS include the effect of the potential shares outstanding, ~~2003~~including ~~and~~dilutive ~~2002~~securities using the treasury stock method. Potential dilutive securities for the Company include outstanding stock options.

~~Net~~The ~~sales~~tables ~~for~~below ~~the three months ended September 30, 2003 remained~~detail ~~consistent at $8,874,900 as compared to $8,894,800 for~~ the ~~same~~components ~~period last year. We were pleased that following a slow marketplace during the first two months~~ of the ~~current~~basic quarter, we experienced a significant increase in sales volumes in the last month that continues to show promising momentum into the next quarter. In particular, we realized notable growth in our contractor manufacturing, refuse and ~~marine~~diluted ~~product~~EPS groups of 3.8%, 22.2% and 19.2%, respectively. The growth in these product groups is attributed to prior period contract tooling projects that are new generating current period sales, our new line or refuse containers, the “Solution Series,” and our enhanced website that has improved the exposure of our multitude of products. These gains helped offset a drop in our industrial product group that continues to be burdened by a highly competitive and lackluster marketplace. We continue to closely follow these industry trends and remain optimistic that our marketing efforts coupled with our new technology-based roto molding machine at our Colorado facility will improve our competitive edge in the marketplace.calculations:

Cost of goods sold increased 2.9% to 76.5% of net sales for the three months ended September 30, 2003 compared to 73.6% for the same period last year. The increase continues to stem from higher raw material, natural gas and insurance costs in comparison to last year. We continue to incur higher workers compensation and general liability premiums year after year reflecting rates that are two to five times more than they were three years ago. Natural gas costs also remain inflated resulting in increased costs of $77,900 in the current period in addition to contributing to inflated resin costs in spite of lower demand. Because we do not anticipate these trends to change in the near future, we continue to implement various manufacturing efficiency and cost savings technologies, which includes the addition of our new roto molding machine, to minimize future dilution to our operating margins.

	Three months ended March 31, 2005					Three months ended March 31, 2004
	Income		Shares	EPS Amount		Income		Shares	EPS Amount
Basic EPS
Net income	$	339,800	11,964,747	$	.03	$	375,700	12,002,530	$	.03

Effect of dilutive stock options	—		—	—		—		—	—

Diluted EPS	$	339,800	11,964,747	$	.03	$	375,700	12,002,530	$	.03

Selling general and administrative (“SG&A”) expenses were consistent at $1,722,500, or 19.4% of net sales, for the three months ended September 30, 2003 compared with $1,720,300, or 19.3% of net sales, for the same period last year. We were extremely pleased in our efforts to keep SG&A costs in line with current sales volume levels.

	Nine months ended March 31, 2005					Nine months ended March 31, 2004
	Income		Shares	EPS Amount		Income		Shares	EPS Amount
Basic EPS
Net income	$	1,179,000	11,970,356	$	.10	$	479,800	12,213,197	$	.04

Effect of dilutive stock options	—		—	—		—		1,486	—

Diluted EPS	$	1,179,000	11,970,356	$	.10	$	479,800	12,214,683	$	.04

Total interest expense decreased $27,100 to $54,900 for the three months ended September 30, 2003 compared to $82,000 for the same period last year. The decrease is due to the $576,100 reduction in the company’s debt structure in comparison to amounts outstanding twelve months ago coupled with lower interest rates during the period. We anticipate these factors will continue to have a positive effect on reducing future interest rate costs.9

~~Net~~Item ~~income decreased $163,300 to $198,400, or $~~2.02 per common share, for the three months ended September 30, 2003 compared to $361,700, or $.03 per common share, for the same period last year. As previously mentioned, we realized improved sales volumes during the last month of the current quarter that was instrumental in maintaining comparable sales volumes between the two periods. However, the other obstacle that we did not completely overcome was to fully mitigate escalating resin, natural gas and insurance costs. ~~Although~~Management’s weDiscussion ~~anticipate these costs to~~and ~~continue~~Analysis ~~to challenge operating results in the near future, we also recognize factors pointing to our nations economy hanging on the cusp~~ of aFinancial ~~strong recovery. We~~Condition ~~believe that our cost cutting initiatives, investments in equipment~~ and ~~marketing~~Results ~~efforts have positioned us to capitalize on these potential positive trends. In the short-term, we remain committed to continue to expand exposure~~ of ~~our core product groups, maintain customer satisfaction, monitor industry trends and efficiently produce high quality products.~~Operations

10Introduction

~~Financial~~To the extent that this 10-Q Quarterly 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 this Item 2, “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 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 quarterly 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, critical accounting policies and other disclosures described in other documents, including our Form 10-K, that we file from time to time with the Securities and Exchange Commission.

WorkingResults capital increased $352,000 to $7,081,500 at September 30, 2003 compared to $6,729,500 at June 30, 2003. The increase is related to the payment of capitalOperations expenditures- andThree resin acquiredMonths inEnded fiscalMarch 2003 net of current period related reductions in inventory as well as reductions in accounts receivables. Cash flows from operations decreased $131,755,000 to2005 $983,900 for the three months ended September 30, 2003 compared to $2,783,900 for the same period last year. The decrease is related to the current period’s $163,300 reduction in net income, plus a considerable reduction in the current accounts payable balance in contrast to the prior period balance that included higher than usual resin and capital expenditure purchases, and the additional cash flows generated in the fiscal 2003 period from higher fourth quarter fiscal 2002 sales volumes.2004

WeNet ~~expended~~sales ~~$462,400~~ for ~~property, plant and equipment (“PP&E”) during~~ the three months ended ~~September 30~~March 31, 2005 ~~2003~~increased 8.3% to $10,873,200 compared to $~~696~~10,036,100 for the same period last year. ~~The~~We ~~difference is~~are ~~attributed~~extremely topleased ~~costs~~that our ~~related~~sales toare ~~our~~still ~~new~~trending ~~technology-based~~upward ~~roto~~in ~~molding~~spite ~~machine expended~~of ~~during~~signs that the ~~prior~~U.S. ~~year~~economy might be cooling down. ~~The~~Four ~~new~~out of five ~~machine~~of isour ~~substantially~~product ~~completed~~groups ~~and~~posted ~~will~~gains bethis ~~fully~~quarter. Our ~~operational~~largest gains were realized in ~~the~~marine products ~~next~~that posted a 41% increase in quarterly sales, followed by industrial ~~quarter~~products at 11%, and contract manufacturing at 5%. We ~~are~~still ~~pleased~~feel ~~with~~that ~~the~~there ~~design and~~is ~~efficiency~~a lot of opportunities ~~this~~in ~~new~~our ~~machine~~marketplace ~~that~~and ~~should~~will ~~enhance~~continue ~~our~~to ~~competitive~~position ~~edge~~ourselves into ~~the~~take ~~marketplace~~advantage of them. ~~Fiscal~~During ~~2004~~this ~~expenditures~~fiscal ~~will~~year bewe ~~primarily~~spent ~~focused~~approximately $1.4 million on ~~smaller~~new ~~machinery~~equipment and ~~equipment~~tooling in ~~projects~~efforts to better serve our customers and attract new ~~mold acquisitions~~business. We ~~anticipate~~ ~~expending~~remain ~~$1.2~~confident -that ~~$1.5~~these ~~million~~efforts, coupled onwith prior year capital ~~expenditures~~improvements, inhas ~~fiscal~~allowed us to become a leader ~~2004~~in our industry and will continue to foster positive results.

~~Net~~Cost ~~borrowing~~of ~~under~~goods ~~the~~sold ~~line~~rose ofslightly ~~credit~~to ~~increased~~77.7% ~~$345,900~~of ~~to $727,100~~net ~~between~~sales ~~June~~for ~~30,~~the ~~2003~~three ~~and~~months ~~September~~ended 30March 31, ~~2003. The~~2005 ~~increase~~compared isto ~~due~~76.3% tofor the same ~~timing~~period oflast ~~payments~~year. To ~~for~~put ~~capital~~this ~~expenditure~~in ~~projects~~perspective, ~~federal~~our ~~income~~material ~~taxes~~costs ~~and~~are ~~our~~up ~~$.05~~3% ~~common~~as ~~stock~~a ~~dividend~~percentage ~~during~~of ~~the~~net sales; ~~current~~however, ~~period. Due~~we are pleased with our efforts to minimize the ~~timing~~effects of rising ~~these~~material ~~types~~and ofnatural ~~payments,~~gas wecosts ~~can~~through ~~anticipate~~increasing ~~the~~our ~~line~~sales ofvolumes, ~~credit~~passing ~~to reflect~~on ~~temporary~~price ~~fluctuations~~increases, ~~throughout~~and ~~the~~realizing ~~year. Overall,~~cost ~~our~~savings ~~debt~~through ~~structure~~installation ~~only~~of ~~increased~~energy efficient bymachinery. It ~~$129,900~~is toour ~~$3,356,300~~hope ~~due~~that tocurrent ~~these~~economic ~~temporary~~conditions ~~line~~will ofalso ~~credit~~temporarily ~~borrowings~~stifle additional cost escalations.

~~Effective~~Selling, ~~October~~general and administrative (“SG&A”) expenses were $1,817,700, ~~2003~~or 16.7% of net sales, for the ~~bank~~three ~~extended~~months ~~the~~ended ~~maturity~~March 31, ~~date~~2005 oncompared ~~the~~with $1,733,100, or ~~line~~17.3% of ~~credit~~net ~~to October1~~sales, ~~2005~~for the same period last year. ~~In addition~~As a percentage to net sales, we ~~did~~are ~~not~~pleased with ~~advance~~our onefforts ~~the~~to maintain SG&A levels in line with revenue levels. The $284,~~000,000~~600 ~~term~~increase ~~loan~~between ~~commitment~~the ~~that~~two periods ~~subsequently~~is ~~expired~~primarily onattributed ~~October~~to 1,an ~~2003~~increase ~~and~~in ~~was~~wage ~~not~~costs ~~renewed.~~that ~~All~~is ~~other~~linked ~~terms~~to our sales/marketing and ~~conditions~~cost ~~surrounding~~efficiency ~~our~~efforts. We ~~credit~~believe ~~facility~~the ~~with~~benefits ~~bank~~obtained ~~remained~~by the ~~same~~increase in our net sales and operating efficiencies has more than justified any minimal increase in overall SG&A costs.

~~During~~Total interest expense remained static at $50,600 for the three months ended ~~September 30~~March 31, ~~2003~~2005 compared to $51,900 wefor ~~acquired~~the ~~115,600 shares~~same ofperiod ~~common~~last ~~stock~~year. Although atour adebt ~~total~~level ~~cost~~is ofdown $~~163,900~~1. We5 ~~plan~~million compared to ~~continue~~amounts ~~this~~outstanding ~~program~~at ~~throughout~~March 31, ~~fiscal~~ 2004~~. In addition~~, weany ~~received~~potential ~~$108,000~~savings in ~~from~~interest ~~the~~costs for borrowings not covered under our interest rate swap ~~exercise~~agreement ofhave ~~stock~~been ~~options~~diminished ~~resulting~~by an increase in the ~~issuance~~bank’s prime interest rate of ~~96,000~~1.75% ~~shares~~over the last nine months. Because of ~~common~~our ~~stock~~interest rate swap agreement; we do not foresee any significant increases in future interest costs even if additional interest rates hikes are instituted.

OnOur ~~June~~income ~~24,~~tax ~~2003, the Board of Directors (“the Board”) declared a~~provision ~~common~~was ~~stock dividend of~~ $~~.05 per common share ($616~~236,~~000)~~500 ~~that~~for ~~was~~the ~~paid~~three onmonths ~~July 25,~~ended ~~2003 to stockholders of record on July 14~~March 31, ~~2003~~2005. This ~~marked~~is ~~the~~comparable ~~seventh~~to ~~payment~~last ofyears ~~dividends~~provision ~~since 1996 on the~~of ~~Company’s~~$250,100 ~~stock. The~~and ~~Board~~ is ~~committed to~~consistent ~~review~~with athe ~~dividend~~similar ~~program~~levels ~~for~~of ~~our~~taxable ~~common~~income ~~stock~~between the ~~on an annual basis~~periods.

~~Cash~~Net ~~flows~~income ~~from~~remained fairly ~~operations~~static inat ~~conjunction~~$339,800, ~~with~~or ~~our~~$.03 ~~revolving~~per ~~line~~common ofshare, for the three months ended ~~credit~~March 31, ~~are~~2005 ~~expected~~compared to ~~meet~~$375,700, ~~our~~or ~~needs~~$.03 ~~for~~per ~~working~~common ~~capital~~share, ~~capital~~for the ~~expenditures,~~same ~~common~~period ~~stock~~last ~~repurchases~~year. Again, ~~and~~we ~~repayment~~are pleased ofwith ~~long~~the ~~term~~growth ~~debt~~in ~~for~~sales during the ~~foreseeable~~ ~~future.~~current

~~Recent Accounting Pronouncements~~10

Inperiod ~~April~~that ~~2003,~~has ~~the Financial Accounting Standards Board (“FASB”) issued~~been ~~Statement~~instrumental ofin ~~Financial~~offsetting ~~Accounting~~increases ~~Standards~~in ~~(“SFAS”)~~our ~~No.~~operating ~~149,~~costs ~~“Amendment~~driven ofprimarily by ~~Statement~~climbing ~~133~~resin ~~on Derivative Instruments~~ and ~~Hedging~~natural ~~Activities.” SFAS~~gas Nocosts. The ~~149~~increase isin ~~intended~~net tosales ~~result~~along inwith ~~more consistent~~the ~~reporting~~installation of ~~contracts~~energy efficient asmachinery ~~either~~has ~~freestanding~~had ~~derivative~~a ~~instruments subject~~very topositive ~~SFAS~~influence ~~No.~~on ~~133~~our inoverall ~~its~~cost structure ~~entirety,~~and oras ~~has~~such ~~hybrid~~helped ~~instruments~~minimize ~~with~~any ~~debt host~~erosion ~~contracts~~to ~~and~~our ~~embedded~~bottom ~~derivative features~~line. InWe ~~addition,~~will ~~SFAS~~continue ~~No.~~to ~~149~~benefit ~~clarifies~~from ~~the definition of a~~these ~~derivative~~capital byimprovement ~~providing~~projects ~~guidance~~through onhigher ~~the~~efficiencies ~~meaning~~and oflower ~~initial net investments~~utility ~~related to derivatives~~consumption. ~~This~~We ~~statement was~~will ~~effective~~also ~~for~~benefit ~~contracts~~from our ~~entered~~drive ~~into~~to orbolster ~~modified~~sales ~~after~~through ~~June 30, 2003. The adoption of SFAS No. 149 did not have a material effect on~~ our ~~consolidated~~focused ~~financial~~marketing ~~position,~~efforts ~~results~~and ofplans ~~operations~~to orinstitute ~~cash~~additional ~~flows~~price increases.

InResults May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of BothOperations Liabilities– and Equity.” SFASNine No.Months 150Ended establishes standardsMarch 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 131, 20032005 and did not have an impact on the Company’s financial statements.2004

11Net sales for the nine months ended March 31, 2005 increased 16.9% to $32,778,000 compared to $28,040,400 for the same period last year. We are very pleased with the 16.9% increase in net sales during the current period. We attribute the growth to our focused marketing efforts that have allowed us to expand our presence in our marketplace, as well as an additional week of operations and various price increases instituted during the period. During the last nine months we have expended approximately $1.4 million on new equipment and new or redesigned molds to effectively capture our target markets. We believe that this is a key element that has driven our organization to the forefront of our industry and allowed us to better serve our customers with exceptional and functional products. As a result, all five of our product groups contributed to the $4.7 million increase in net sales during the period. Our marine products reflected a 34.9% increase over prior period results, followed by contract manufacturing at 17.5%, industrial products at 16.2%, and refuse products at 14.4%. As we move into the balance of fiscal 2005, we plan to continue to expand and capitalize on these efforts.

~~Off~~Cost of goods sold decreased by 0.8% to 77.3% of net sales for the nine months ended March 31, 2005 compared to 78.1% for the same period last year. Even after taking into account prior year’s inventory write-~~Balance~~down ~~Sheet~~($200,000), ~~Arrangements~~we are pleased with the preservation of gross margin in spite of the challenges to mitigate increases in resin and ~~Contractual~~natural gas ~~Obligations~~costs. We have been successful in our efforts to mitigate these costs by increasing our sales volumes as noted above, passing on price increases and from the cost savings obtained by recently installed energy efficient machinery. We believe the latter will continue to minimize the effect of rising natural gas costs. It is our hope that current economic conditions will also temporarily stifle additional cost escalations.

~~The~~Selling, ~~Company~~general ~~has~~and administrative no(“SG&A”) ~~off-balance~~expenses ~~sheet~~were ~~arrangements~~$5,503,000, or ~~significant~~16.8% of net sales, ~~guarantees~~for the nine months ended March 31, 2005 compared to ~~third~~$5,267,000, ~~parties~~or ~~not~~18.8% of ~~fully~~net ~~recorded~~sales, infor ~~our~~the ~~balance~~same ~~sheets~~period orlast ~~fully~~year. ~~disclosed~~As ina percentage to net sales, we are very pleased with the improved coverage of these costs and our ~~notes~~ability to ~~consolidated~~maintain ~~financial~~SG&A ~~statements~~levels in line with revenue levels. The ~~Company’s~~$236,000 ~~significant~~increase ~~contractual~~between ~~obligations~~the ~~include~~periods is primarily attributed to an increase in wage costs that is linked to our ~~debt~~sales/marketing ~~agreements~~and cost efficiency efforts. We believe that the benefits obtained by the increase in our net sales and operating efficiencies has more than justified any increase in our overall SG&A costs. In addition, we have also benefited from a reduction in product royalty costs of $86,100, which will also benefit operating results through the remaining portion of fiscal year 2005.

~~Critical~~Total ~~Accounting~~interest ~~Policies~~remained fairly static at $154,300 for the nine months ended March 31, 2005 compared to $161,100 for the same period last year. Although our debt level is down $1.5 million compared to amounts outstanding at March 31, 2004, any potential savings in interest costs for borrowings not covered under our interest rate swap agreement have been diminished by an increase in the bank’s prime rate of 1.75% over the last nine months. Because of our interest rate swap agreement; we do not foresee any significant increases in future interest costs even if additional rate hikes are instituted.

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We ~~believe~~reported ~~that~~an ~~the~~income ~~estimates, judgments and assumptions upon~~tax ~~which~~provision we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of ~~assets and liabilities as of the date of the financial statements~~$787,100 asfor ~~well as~~ the ~~reported~~nine ~~amounts~~months ofended ~~revenues and expenses during the periods presented. To the extent there are material differences between these estimates~~March 13, ~~judgments~~2005 orcompared ~~assumptions and actual results, our financial~~to ~~statements will be affected. In many cases~~$315,500 for the ~~accounting~~same ~~treatment~~period oflast ~~a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application~~year. ~~There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result.~~ ~~Our~~The ~~senior~~fluctuation ~~management~~is ~~has~~consistent ~~reviewed these critical accounting policies and related disclosures~~ with our ~~Audit~~$1,170,800 ~~Committee. See~~increase ~~notes to Consolidated Financial Statement~~ in ~~our Form 10-K~~income ~~for~~before ~~fiscal 2003, which contain additional information regarding our accounting policies and other disclosures by GAAP~~tax.

~~The~~Net ~~significant~~income ~~accounting~~increased ~~policies~~to $699,200 ~~that~~to we$1,179,000, ~~believe~~or $.10 cents per common share, for the nine months ended March 31, 2005 compared to $479,800, or $.04 cents per common share, for the same period last year. We are again pleased with our marketing efforts, the ~~most~~enhancements to our product ~~critical~~offerings and the ability to ~~aid~~pass along increases in ~~fully~~our ~~understanding~~operating costs that have ultimately promoted the 16.9% increase in net sales. This coupled with our installation of energy efficient machinery has had a very positive influence on our overall cost structure and ~~evaluating~~as such, provided the necessary catalyst to improve our ~~reported~~bottom line ~~financial~~by 146%. We will continue to ~~results~~benefit ~~include~~from our capital improvement projects through higher efficiencies and lower utility consumption as well as our hopes that current economic conditions will tame future cost escalations. As we move into the ~~following:~~final quarter of our fiscal year, we remain energized and fully optimistic that our past achievements coupled with ongoing marketing efforts will continue to foster positive results.

~~Allowance For Doubtful Accounts~~11

WeFinancial make judgments as to our 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.Conditions

~~Inventory~~Working ~~Valuation~~capital increased $1,281,000 to $9,037,300 at March 31, 2005 compared to $7,756,300 at June 30, 2004. Working capital benefited from the $699,200 increase in our net income, proceeds from the sale of our Wisconsin real property and the $259,800 increase in net borrowings on our bank line of credit during the current period. These influxes of capital were used for the purchase of resin, payment of our $.05 common stock dividend and annual bonus plan. Cash flows from operations increased $1,017,700 to $2,008,000 for the last nine months ended March 31, 2005 compared to $1,070,300 for the same period last year. The increase is again primarily related to the $699,200 increase in our net income and the cash flows obtained from accounts receivable reductions that were offset by an increase in inventories consistent with current production requirements and to take advantage of preferred resin pricing.

~~Finished~~We ~~goods~~expended ~~inventory~~$1,573,100 isfor ~~valued~~property, atplant ~~cost~~ and equipment ~~management~~(“PP&E”) ~~uses historical~~during ~~gross~~the ~~margin~~nine ~~trends~~months ~~and~~ended ~~other~~March 31, ~~estimates~~2005, compared to ~~continually~~$1,196,000 ~~update~~for ~~labor and~~the ~~overhead~~same ~~allocations~~period last year. ~~The~~During ~~gross margin~~fiscal ~~percentage~~2005, ~~reflects~~we ~~our~~placed ~~estimate~~into ofservice three ~~the~~new ~~cost~~energy ~~of,~~efficient ~~among~~rotational ~~other~~molding ~~things, material,~~machines ~~labor~~at ~~and~~a ~~overhead~~combined ~~expenditures~~cost ~~during~~of $817,300 with the ~~production~~balance ~~process. Such~~of ~~cost~~our ~~are~~expenditures ~~capitalized~~primarily going to ~~inventory~~new astooling ~~products~~and ~~are~~various ~~manufactured. Although~~tooling ~~it is~~and ~~believed~~machinery ~~that~~enhancement ~~the~~projects. These ~~estimates~~expenditures are ~~reasonable,~~a ittestament isto ~~possible~~our commitment ~~that~~to ~~the~~allocate ~~actual labor~~funding ~~and~~for ~~overhead~~capital ~~costs~~expenditure ~~will~~projects ~~differ~~that ~~over~~have provided ~~time~~us ~~from~~with the ~~estimated~~foundation ~~amounts. Such~~to ~~differences~~improve ~~could~~our ~~have~~operating aefficiencies ~~material~~and ~~impact~~promote onincreases ~~our~~in ~~results~~sales ofrevenue. We anticipate ~~operations~~expending ~~and~~$1.9 ~~financial~~million ~~position~~on capital expenditures in fiscal 2005.

~~Income~~Net ~~Taxes~~borrowings under the line of credit increased $259,800 to $1,617,100 between June 30, 2004 and March 31, 2005. The increase is due to the timing of payments related to raw materials purchases, federal income taxes, and our annual bonus plan. Due to the timing of such payments, it is not unusual to incur temporary fluctuations in our line of credit borrowings throughout the year. Since June 30, 2004, our total debt borrowings have decreased by $388,500. During the balance of fiscal 2005, we anticipate out total debt borrowings to remain fairly consistent. At March 31, 2005, we had $3,382,900 available for future borrowings under the line of credit.

~~Under~~Effective ~~SFAS No. 109~~October 1, ~~“Accounting for Income Taxes~~ 2004,” ~~income~~the ~~taxes~~bank ~~are recorded~~extended ~~based on~~ the ~~current~~maturity ~~amounts~~date ~~payable~~on ~~or refundable, as well as~~ the ~~consequences~~ line of ~~events~~credit ~~that give rise~~ to ~~deferred tax assets and liabilities~~October 1, ~~based on differences in how those events are treated for tax purposes~~2006. WeIn ~~base~~addition, ~~our~~the ~~estimate~~maturity ofdate ~~deferred tax assets and liabilities on current tax laws and rates and in certain cases expectations about future outcomes. Our accounting~~ for ~~deferred~~the ~~tax~~letter ~~consequences~~of ~~represents~~credit ~~management’s~~subfeature ~~best estimate~~ of ~~future~~our ~~events that~~credit ~~can~~facility bewas ~~appropriately~~extended ~~reflected~~to ~~in accounting estimates~~February 1, 2007. ~~Although~~All ~~management~~other ~~believes~~terms ~~that~~and ~~its~~conditions ~~estimates~~surrounding ~~are~~our ~~reasonable,~~credit nofacility ~~assurance~~with ~~can~~the bebank ~~given~~remained ~~that~~ the ~~final tax outcome of these matters will not be different than that which is reflected in our historical income tax provisions and accruals~~same. ~~Such differences could have a material impact on our results of operations and financial position.~~

12During the nine months ended March 31, 2005, we acquired 16,500 shares of common stock at a total cost of $33,000. We plan to continue this program throughout fiscal year 2005.

InOn ~~particular~~June 16, ~~we recorded a valuation allowance to reduce the deferred~~2004, ~~tax assets to~~ the ~~amount~~Board of ~~future~~Directors ~~tax~~(“The ~~benefit~~Board”) ~~that~~declared isa ~~more~~common ~~likely~~stock ~~than~~dividend ~~not~~of ~~to be realized~~$. ~~While management has~~05 ~~considered~~per ~~future~~common ~~taxable~~share ~~income~~($599,100) ~~and~~that ~~ongoing~~was ~~prudent~~paid ~~and~~on ~~feasible~~July 23, ~~tax~~2004 ~~planning~~to stockholders ~~strategies~~of inrecord ~~assessing~~on ~~the need for the valuation allowance~~July 9, ~~there is no~~2004. This ~~assurance~~marked ~~that~~ the ~~valuation~~eighth ~~allowance~~payment ~~would~~of ~~not~~dividends ~~need~~since to1996 beon ~~increased~~the toCompany’s ~~cover~~common ~~additional deferred tax assets that may not be realized~~stock. ~~Any~~The ~~increase~~Board inis ~~the~~committed ~~valuation~~to ~~allowance~~review ~~could have~~ a ~~material~~dividend ~~adverse~~program ~~impact~~for on our ~~income~~common ~~tax~~stock ~~provision~~on ~~and~~an ~~net~~annual ~~income for the period in which such determination is made~~basis.

~~Item~~Cash 3.flows from ~~Quantitative~~operations in conjunction with our revolving line of credit are expected to meet our needs for working capital, capital expenditures, common stock repurchasing and ~~Qualitative~~repayment ~~Disclosures~~of ~~About~~long-term ~~Market~~debit ~~Risk~~for the foreseeable future.

InterestRecent RateAccounting RiskPronouncements

~~Information~~In ~~regarding~~ December 2004, the ~~Company’s~~Financial ~~market~~Accounting ~~risk~~Standards ~~relating~~Board to(“FASB”) ~~interest~~issued Statement of Financial ~~rate~~Accounting ~~volatility~~Standard ~~was~~(“SFAS”) ~~disclosed~~No. in123R (“Share-Based Payment”). SFAS 123R requires the Company’s ~~Form~~to ~~10-K~~recognize ~~for~~compensation ~~the~~expense ~~fiscal~~for ~~year~~equity instruments ~~ended~~awarded ~~June~~to ~~30,~~employees. SFAS ~~2003~~123R ~~and~~is ~~should~~effective befor ~~read~~the inCompany ~~conjunction~~as ~~with~~of ~~this~~the beginning of the first interim ~~financial~~ ~~information. Since~~period ~~June~~that ~~30, 2003,~~begins ~~there~~after ~~have~~June 15, ~~been~~2005. The noCompany ~~significant~~does ~~changes~~not inexpect the ~~Company’s~~adoption ~~exposure~~of this standard to have a ~~market~~significant ~~risk~~impact on its consolidated financial statements.

In November 2004, the FASB issued SFAS No. 151, “Inventory Costs” (“SFAS 151”), an amendment of ARB No. 43, Chapter 4. SFAS 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material. SFAS 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company does not believe adoption of SFAS 151 will have a material effect on its consolidated financial position, results of operations or cash flows.

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.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result. Our senior management has reviewed these critical accounting policies and related disclosures with our Audit Committee. See notes to Consolidated Financial Statement in our Form 10-K for fiscal 2004, which contain additional information regarding our accounting policies and other disclosures by GAAP.

The significant accounting policies that we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

Accounts Receivable

We make judgments as to our 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.

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 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. Due to the high volume of transactions and the way raw materials are used in product manufacturing, inventory quantities can change rapidly and are impacted by a variety of factors including, production efficiency, obsolescence, scrap, design changes, customer preferences, etc. As such, the Company must 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 transactions, the number of locations and the large 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.

Impairments of Long-Lived Assets

In accordance with the methodology described in FASB Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” we review long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. Impairment losses are recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. No impairments were recorded in the financial statements included in this Form 10-Q.

Revenue Recognition

Revenue from sales of products is recognized at the time product is shipped to the customer at which time title and risk of ownership transfer to the purchaser.

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 estimate 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 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 the 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Information regarding the Company’s market risk relating to interest rate volatility was disclosed in the Company’s Form 10-K for the fiscal year ended June 30, 2004 and should be read in conjunction with this interim financial information. Since June 30, 2004, there have been no significant changes in the Company’s exposure to market risk.

Item 4. 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 Rules13a-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 reasonable likely to materially affect, our internal controls over financial reporting.

1314

ROTONICS MANUFACTURING INC.

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

Exhibit No.		Exhibit Title

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

(b) Reports on Form 8-K

On ~~July 23~~January 19, ~~2003~~ 2005, we filed a current report of Form 8-K reporting under item 122.02, Results of Operations and Financial Condition, announcing our press release dated ~~July 23~~January 19, 2005 ~~2003~~ outlining our unaudited ~~fiscal~~financial ~~year~~results ~~June~~for ~~30,~~the ~~2003~~three months and six ~~earnings~~months ended December 31, 2004.

On September 24, 2003, we filed a current report of Form 8-K reporting under item 12, Results of Operations and Financial Condition, announcing our press release dated September 24, 2003 outlining our audited fiscal year June 30, 2003 earnings.15

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on behalf by the undersigned thereunto duly authorized.

		Rotonics Manufacturing Inc. Registrant
	Rotonics Manufacturing Inc.
Date: October 24, 2003		/s/ SHERMAN McKINNISS
	Registrant
		Sherman McKinniss
Date: April 29, 2005	/s/	SHERMAN McKINNISS
		President and Chief Executive Officer,
	Sherman McKinniss
		Chairman of the Board
	President, Chief Executive Officer,
		/s/ DOUGLAS W. RUSSELL
	Chairman of the Board
		Chief Financial Officer,
	/s/	DOUGLAS W. RUSSELL
		Assistant Secretary/Treasurer
	Douglas W. Russell
	Chief Financial Officer,
	Assistant Secretary/Treasurer

1516

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