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: March 31, ~~2005~~2006

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)
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		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)

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.

~~Yes~~ ý ~~No o~~ Yes oNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, ~~(as~~or ~~defined~~a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of ~~the~~ the Exchange Act). (Check one):

~~Yes~~ Large accelerated filer o No Accelerated filer o Non-accelerated filer ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

oYes ýNo

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 March 31, ~~2005~~2006
Common Shares ($.01 stated value)		11,964,692 Shares
Common Shares		11,788,865 Shares
($.01 stated value)

ROTONICS MANUFACTURING INC.

INDEX

PART I. FINANCIAL INFORMATION
PART I.	FINANCIAL INFORMATION
	Item 1 - Financial Statements
	Item 1 -	Financial Statements
	Consolidated Balance Sheets - March 31, 2005 (Unaudited) and June 30, 2004
		Consolidated Balance Sheets -
	Consolidated Statements of Operations, Comprehensive Income and Accumulated Deficit - Three Months and Nine Months Ended March 31, 2005 and 2004 (Unaudited)
			March 31, 2006 (Unaudited) and June 30, 2005
	Consolidated Statements of Cash Flows - Nine Months Ended March 31, 2005 and 2004 (Unaudited)
		Consolidated Statements of Operations, Comprehensive Income
	Notes to Consolidated Financial Statements
		and Accumulated Deficit -
	Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
			Three Months and Nine Months Ended March 31, 2006 and 2005 (Unaudited)
	Item 3 - Quantitative and Qualitative Disclosures about Market Risk
		Consolidated Statements of Cash Flows -
	Item 4 - Control and Procedures
			Nine Months Ended March 31, 2006 and 2005 (Unaudited)
PART II. OTHER INFORMATION
		Notes to Consolidated Financial Statements
	Item 6 - Exhibits and Reports on Form 8-K
	Item 2 -	Management’s Discussion and Analysis of
SIGNATURES
			Financial Condition and Results of Operations
	Item 3 -	Quantitative and Qualitative Disclosures about Market Risk
	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

	March 31, 2005			June 30, 2004
	March 31,			June 30,
	2006			2005
	(Unaudited)
ASSETS
Current assets:
Cash	$	1353,~~200~~000		$	56310,500
Accounts receivable, net of allowance for doubtful accounts of $266,800 and $256,100, respectively	5,096,100			5,784,900
Accounts receivable, net of allowance for doubtful accounts of $200,000 and $291,500, respectively	5,167,400			5,430,800
Current portion of notes receivable	56,700			—
Inventories	8,181,200			6,974,000
Inventories	7,508,400			6,629,000
Deferred income taxes, net	216,000			226,900
Deferred income taxes, net	214,600			243,700
Prepaid expenses and other current assets	378,700			215,700
Prepaid expenses and other current assets	456,500			266,500
Total current assets	13,996,300			13,157,900
Total current assets	13,345,500			12,980,600
Property, plant and equipment, net	13,012,600			13,196,700
Notes receivable, less current portion				138,600
Intangible assets, net	136,900			171,100
Investment in partnership	99,100			100,900
Other assets	67,600			64,500
Property, plant and equipment, net	13,495,900			13,849,700
	$	27,213,400		$	26,590,200
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~~468,~~300~~500		$	864,300
Accounts payable	2,~~761~~402,200			32,~~450~~819,~~900~~300
Accrued liabilities	~~682~~647,700			~~909~~901,~~100~~300
Total current liabilities	43,~~308~~518,~~200~~400			54,~~224~~584,~~300~~900
Bank line of credit	12,~~617~~165,~~100~~400			1,~~357~~029,~~300~~400
Long-term debt, less current portion	~~468,400~~—			1252,~~116,700~~400
Deferred income taxes, net	2,~~344~~161,~~100~~200			2,~~393~~304,~~300~~200
Other liabilities	83,000			83119,000
Total liabilities	87,~~820~~928,~~800~~000			108,~~174~~289,~~600~~900
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
Common stock, stated value $.01: authorized 20,000,000 shares; issued and outstanding 11,788,865 and 11,940,598 shares, respectively	21,624,500			22,029,500
Accumulated other comprehensive loss, net of tax	(20,900		)	(64,400		)
Accumulated other comprehensive income/(loss), net of tax	700			(15,800		)
Accumulated deficit	(32,~~707~~339,~~300~~800		)	(43,~~886~~713,~~300~~400		)
Total stockholders’ equity	1819,~~366~~285,~~700~~400			1718,~~177~~300,~~200~~300
	$	27,~~187~~213,~~500~~400		$	2726,~~351~~590,~~800~~200

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

ROTONICS MANUFACTURING INC.

CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE INCOME AND ACCUMULATED DEFICIT

(Unaudited)

	Three Months Ended March 31,						Nine Months Ended March 31,
	Three Months Ended						Nine Months Ended
	2005			2004			2005			2004
	March 31,						March 31,
Net sales	$	10,873,200		$	10,036,100		$	32,778,000		$	28,040,400
	2006			2005			2006			2005
Net sales	$	11,034,600		$	10,873,200		$	35,130,800		$	32,778,000
Costs and expenses:
Cost of goods sold	89,~~450~~071,~~600~~000			78,~~654~~450,~~100~~600			2527,~~344~~715,~~600~~900			2125,~~903~~344,~~300~~600
Gross profit	21,~~422~~963,600			2,~~382~~422,~~000~~600			7,~~433~~414,~~400~~900			67,~~137~~433,~~100~~400
Selling, general and administrative expenses	1,~~817~~430,700			1,~~733~~817,~~100~~700			54,~~503~~993,000			5,~~267~~503,000
Income from operations	604,900			648,900			1,930,400			870,100
Plant consolidation expenses (see note)	285,500			—			285,500			—
Other (expense)/income:
Income from operations	247,400			604,900			2,136,400			1,930,400
Interest expense	(50,600		)	(51,900		)	(154,300		)	(161,100		)
Other income/(expense):
Other income, net	22,000			28,800			190,000			86,300
Interest expense	(38,600		)	(50,600		)	(102,800		)	(154,300		)
Total other (expense)/income	(28,600		)	(23,100		)	35,700			(74,800		)
Other income, net	61,300			22,000			198,800			190,000
Income before income taxes	576,300			625,800			1,966,100			795,300
Total other income/(expense)	22,700			(28,600		)	96,000			35,700
Income tax provision	(236,500		)	(250,100		)	(787,100		)	(315,500		)
Income before income taxes	270,100			576,300			2,232,400			1,966,100
Net income	339,800			375,700			1,179,000			479,800
Income tax provision	(109,100		)	(236,500		)	(858,800		)	(787,100		)
Other comprehensive gain/(loss), before tax:
Net income	161,000			339,800			1,373,600			1,179,000
Unrealized holding gain/(loss) arising during the period	14,400			(30,300		)	6,900			(12,800		)
Other comprehensive gain, before tax:
Less: Reclassification adjustments for losses included in net income	17,500			28,200			65,600			90,800
Unrealized holding gain arising during the period	1,700			14,400			11,600			6,900
Total other comprehensive gain/(loss) before tax	31,900			(2,100		)	72,500			78,000
Less: Reclassification adjustments for losses included in net income	1,800			17,500			15,900			65,600
Income tax (provision)/benefit related to items of other comprehensive gain/(loss)	(12,800		)	800			(29,000		)	(31,200		)
Total other comprehensive gain before tax	3,500			31,900			27,500			72,500
Total other comprehensive gain/(loss), net of tax	19,100			(1,300		)	43,500			46,800
Income tax expense related to items of other comprehensive gain	(1,400		)	(12,800		)	(11,000		)	(29,000		)
Comprehensive income	$	358,900		$	374,400		$	1,222,500		$	526,600
Total other comprehensive gain, net of tax	2,100			19,100			16,500			43,500
Accumulated deficit, beginning of period	$	(4,047,100	)	$	(5,487,300	)	$	(4,886,300	)	$	(5,591,400	)
Comprehensive income	$	163,100		$	358,900		$	1,390,100		$	1,222,500
Net income	339,800			375,700			1,179,000			479,800
Accumulated deficit, beginning of period	$	(2,500,800	)	$	(4,047,100	)	$	(3,713,400	)	$	(4,886,300	)
Accumulated deficit, end of period	$	(3,707,300	)	$	(5,111,600	)	$	(3,707,300	)	$	(5,111,600	)
Net income	161,000			339,800			1,373,600			1,179,000
Accumulated deficit, end of period	$	(2,339,800	)	$	(3,707,300	)	$	(2,339,800	)	$	(3,707,300	)
Net income per common share:
Basic and diluted
Net income	$	.0302		$	.03		$	.1012		$	.0410
Weighted average number of common and common equivalent shares outstanding:
Basic	11,~~964~~791,~~747~~403			1211,~~002~~964,~~530~~747			11,~~970~~850,~~356~~720			1211,~~213~~970,~~197~~356
Diluted	11,~~964~~791,~~747~~403			1211,~~002~~964,~~530~~747			11,~~970~~850,~~356~~720			1211,~~214~~970,~~683~~356

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

ROTONICS MANUFACTURING INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended March 31,
	Nine Months Ended
	2005				2004
	March 31,
Cash flows from operating activities:
	2006			2005
Net income	$	1,179,000			$		479,800
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Net income	$	1,373,600		$	1,179,000
Depreciation and amortization	1,638,400				1,632,800
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of equipment	(109,600			)	(1,100			)
Depreciation and amortization	1,619,300			1,638,400
Deferred income tax benefit	(49,200			)	(45,300			)
Gain on sale of equipment	(42,300		)	(109,600		)
Provision for doubtful accounts	116,000				68,900
Deferred income tax benefit	(143,000		)	(49,200		)
Changes in operating assets and liabilities:
Provision for doubtful accounts	(61,400		)	116,000
Accounts receivable, net	626,400				(1,240,900			)
Changes in assets and liabilities:
Inventories	(879,400			)	17,200
Accounts receivable, net	324,800			626,400
Prepaid expenses and other current assets	(190,000			)	(424,000			)
Inventories	(1,207,200		)	(879,400		)
Other assets	800				(11,300			)
Prepaid expenses and other current assets	(163,000		)	(190,000		)
Accounts payable	(90,600			)	754,500
Other assets	(2,000		)	800
Accrued liabilities	(153,800			)	(160,300			)
Accounts payable	179,900			(90,600		)
Net cash provided by operating activities	2,088,000				1,070,300
Accrued liabilities	(227,300		)	(153,800		)
Cash flows from investing activities:
Other liabilities	(36,000		)	—
Repayments on notes receivable	28,300				92,200
Net cash provided by operating activities	1,615,400			2,088,000
Capital expenditures	(1,573,100			)	(1,196,000			)
Cash flows from investing activities:
Distribution from investment in partnership	1,800				2,600
Repayments on notes receivable	—			28,300
Proceeds from sale of equipment	432,300				1,100
Capital expenditures	(1,418,400		)	(1,573,100		)
Net cash used in investing activities	(1,110,700			)	(1,100,100			)
Distribution from investment in partnership	—			1,800
Cash flows from financing activities:
Proceeds from sale of property and equipment	59,700			432,300
Borrowings under line of credit	9,379,300				8,122,600
Net cash used in investing activities	(1,358,700		)	(1,110,700		)
Repayments under line of credit	(9,119,500			)	(6,219,100			)
Cash flows from financing activities:
Repayment of long-term debt	(648,300			)	(648,200			)
Borrowings under line of credit	7,828,200			9,379,300
Payment of common stock dividend	(599,100			)	(616,000			)
Repayments under line of credit	(6,692,200		)	(9,119,500		)
Repurchases of common stock	(33,000			)	(671,300			)
Repayment of long-term debt	(648,200		)	(648,300		)
Proceeds from issuance of common stock	—				108,000
Payment of common stock dividend	(597,000		)	(599,100		)
Net cash (used in)/provided by financing activities	(1,020,600			)	76,000
Repurchases of common stock	(405,000		)	(33,000		)
Net (decrease)/increase in cash	(43,300			)	46,200
Net cash used in financing activities	(514,200		)	(1,020,600		)
Cash at beginning of period	56,500				44,700
Net decrease in cash	(257,500		)	(43,300		)
Cash at end of period	$		13,200		$		90,900
Cash at beginning of period	310,500			56,500
Supplemental disclosures of cash flow information:
Cash at end of period	$	53,000		$	13,200
Cash paid during the period for:
Supplemental disclosures of cash flow information:
Interest	$		155,600		$		158,900
Cash paid during the period for:
Income taxes	$		956,900		$		563,100
Interest	$	95,500		$	155,600
Non-cash financing activity:
Income taxes	$	1,039,500		$	956,900
Change in fair value of interest rate swap	$		(43,500	)	$	(46,800		)
Non-cash financing activity:
Change in fair value of interest rate swap	$	(16,500	)	$	(43,500	)

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

ROTONICS MANUFACTURING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1-INTERIM REPORTING:

~~The~~Basis ~~interim financial information included herein is unaudited. This information reflects all adjustments (consisting 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, 2004.Presentation

~~Principles~~The interim financial information included herein is unaudited. This information reflects all adjustments (consisting solely of ~~Consolidation~~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, 2005.

~~The~~Principles ~~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.~~Consolidation

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

InImpact ~~December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement~~ of ~~Financial~~Recent Accounting Standard (“SFAS”) No. 123R (“Share-Based 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.Pronouncements

In ~~November 2004~~February 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. ~~151~~155, “~~Inventory~~Accounting ~~Costs”~~for ~~(“SFAS~~Certain ~~151”)~~Hybrid Financial Instruments,” an amendment of ~~ARB~~ SFAS No. ~~43,~~133 ~~Chapter~~and 4SFAS No. 140. SFAS ~~151~~No. 155 ~~clarifies~~simplifies ~~the~~ accounting for ~~abnormal~~certain ~~amounts~~hybrid ofinstruments ~~idle~~under ~~facility~~SFAS ~~expense~~No. 133 permitting fair value remeasurement for financial instruments that otherwise would require bifurcation and eliminating SFAS No. 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized ~~freight~~Financial Assets,” ~~handling~~which ~~costs~~proves ~~and~~that ~~wasted~~beneficial ~~material~~interests are not subject to the provisions of SFAS No. 133. SFAS No. 155 also eliminates the previous restrictions under SFAS ~~151~~No. 140 on passive derivative instruments that a qualifying special-purpose entity may hold. SFAS NO. 155 is effective for ~~inventory~~all financial ~~costs~~instruments ~~incurred~~acquired, ~~during~~issued, ~~fiscal~~or ~~years~~subject to a remeasurement event occurring after the beginning of an entity’s fiscal year that begins after September ~~June~~ 15, ~~2005~~2006. The Company ~~does~~will ~~not~~adopt ~~believe~~this statement as required, and adoption ofis ~~SFAS~~not ~~151~~expected ~~will~~to have aan ~~material~~impact ~~effect~~ on ~~its~~ ~~consolidated~~the ~~financial~~Company’s ~~position,~~ results of operations, orfinancial ~~cash~~condition ~~flows~~or liquidity.

~~NOTE~~In 2March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets,” an amendment of FASB Statement No. 140. SFAS No. 156 permits entities to choose to either subsequently measure servicing rights at fair value and report changes in fair value in earnings or amortize servicing rights in proportion to and over the estimated net servicing income or loss and assess to rights for impairment or the need for an increased obligation. SFAS No. 156 also clarifies when a servicer should separately recognize servicing assets and liabilities, requires all separately recognized assets and liabilities to be initially measured at fair value, if practicable, permits a one-time ~~NOTES~~reclassification of ~~RECEIVABLE:~~available-for-sale securities to trading securities by an entity with recognized servicing rights and requires additional disclosure for all separately recognized servicing assets and liabilities. SFAS No. 156 is effective as of the beginning of an entity’s fiscal year that begins after September 15, 2006. The Company will adopt this statement as required, and adoption is not expected to have an effect on the Company’s results of operations, financial condition or liquidity.

InNOTE ~~July 2001,~~2 ~~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. 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, respectivelyINVENTORIES:

~~NOTE~~Inventories 3consist ~~- INVENTORIES~~of:

Inventories consist of:

	March 31,		June 30,
	2006		2005

Raw materials	$	3,245,300	$	2,470,700
Finished goods	4,935,900		4,503,300
	$	8,181,200	$	6,974,000

	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 43 - PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consist of:

	March 31, 2005			June 30, 2004
	March 31,			June 30,
Land	$	1,027,300		$	1,039,500
	2006			2005
Buildings and building improvements	4,896,300			5,291,000
Land	$	1,027,300		$	1,027,300
Machinery, equipment, furniture and fixtures	29,694,800			28,938,400
Buildings and building improvements	5,033,700			4,941,500
Construction in progress	28,000			164,200
Machinery, equipment, furniture and fixtures	30,770,200			29,877,100
	35,646,400			35,433,100
Construction in progress	113,900			28,500
Less - accumulated depreciation	(22,150,500		)	(21,583,400		)
	36,945,100			35,874,400
	$	13,495,900		$	13,849,700
Less - accumulated depreciation	(23,932,500		)	(22,677,700		)
	$	13,012,600		$	13,196,700

6NOTE 4 - INTANGIBLE ASSETS:

~~NOTE~~Intangible 5assets -consist ~~INTANGIBLE ASSETS~~of:

Intangible assets consist of:

	March 31,			June 30,
	2006			2005
Patents	$	475,700		$	475,700
Less - accumulated amortization, patents	(338,800		)	(304,600		)

	$	136,900		$	171,100

	March 31, 2005			June 30, 2004
Patents	$	475,700		$	475,700
Less - accumulated amortization, patents	(293,200		)	(259,000		)
	$	182,500		$	216,700

Aggregate amortization expense for the nine months ended March 31, 2006 and 2005 was $34,200. Future estimated amortization expense will be $11,400 for the fourth quarter of fiscal 2006, $45,200 for fiscal years 2007-2008 and $35,100 in fiscal 2009.

~~Aggregate~~NOTE ~~amortization~~5 ~~expense~~- ~~for~~BANK ~~the nine months~~LINE ~~ended~~OF ~~March 31, 2005 and 2004 was $34,200 and $34,400, respectively.~~CREDIT:

~~NOTE~~The 6Company has a $5,000,000 revolving line of credit with Wells Fargo Bank. The line matures October 1, 2007 and 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% (7.5% per annum at March 31, 2006). The loan agreement allows the Company to convert the outstanding principal balance in amounts no less than $250,000 to a LIBOR-based ~~BANK~~loan ~~LINE~~for periods up to 90 days. At March OF31, ~~CREDIT:~~2006, total borrowings under the Company’s line of credit was $2,165,400 of which $2,000,000 was borrowed under the LIBOR option bearing a LIBOR interest rate of 5.7525% per annum and maturing April 17, 2006. Proceeds from the loan were used for working capital purposes. At March 31, 2006, the Company had approximately $2,834,600 available for future borrowings under the revolving line of credit.

~~The~~NOTE ~~Company~~6 has a $5,000,000 revolving line of credit with Wells Fargo Bank. The line matures October 1, 2006 and 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% (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 LIBOR-~~based~~ ~~loan for periods up to 90 days. At March 31, 2005, total borrowings~~LONG-TERM under the Company’s line of credit was $1,617,100 of which $1,500,000 was borrowed under the LIBOR option bearing a LIBOR interest rate of 3.83% per annum and maturing April 15, 2005. Proceeds from the loan were used for working capital purposes. At March 31, 2005, the Company had approximately $3,382,900 available for future borrowings under the revolving line of credit.DEBT:

~~NOTE 7~~ Long-term ~~LONG-TERM~~debt consists ~~DEBT~~of:

Long-term debt consists of:

	March 31,			June 30,
	2006			2005
Note payable – Bank (A)	$	468,500		$	1,116,700
Less – current portion	(468,500		)	(864,300		)

	$	—		$	252,400

	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

(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% (7.5% per annum at March 31, 2006). 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, 2006, the total outstanding principal balance was under the LIBOR option at 6.0025% per annum maturing April 17, 2006. 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 ~~issued~~interest ~~a $6,050,000 seven year note due in~~rate ~~monthly~~swap ~~principal~~agreement ~~installments~~with ~~of $72,000 plus interest at~~ the bank~~’s prime rate minus~~ .~~25%~~ ~~(5.5%~~The ~~per annum at March 31, 2005). In addition, the loan~~ agreement allows the Company to ~~convert~~fix ~~all or~~ a portion of ~~the~~its outstanding ~~principal~~term toand ~~a LIBOR-based~~line ~~loan~~of ~~for~~credit ~~periods~~debt up($2 tomillion ~~one~~as ~~year. At~~of March 31, 2006) ~~2005,~~from ~~the~~a ~~total~~variable ~~outstanding~~floating ~~principal~~LIBOR ~~balance~~rate ~~was under~~to ~~the~~a fixed LIBOR ~~option~~rate atin ~~4.08%~~efforts ~~per~~to protect ~~annum~~against ~~maturing~~future ~~April 15,~~increases ~~2005~~in the bank’s LIBOR rate. The ~~note~~notational amount isof ~~secured~~the byswap ~~the~~agreement ~~Company’s machinery~~will ~~and~~remain ~~equipment,~~at ~~accounts~~$2 ~~receivable~~million ~~and~~until ~~inventories~~its ~~and~~maturity ~~matures~~on August ~~October~~ 15, ~~2007~~ 2006.

The 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, 2006.7

NOTE 87 – ACCRUED LIABILITIES:

Accrued liabilities consists of:

	March 31, 2005		June 30, 2004
	March 31,		June 30,
Salaries, wages, commissions and related payables	$	431,200	$	572,500
	2006		2005
Other	251,500		336,600
Salaries, wages, commissions and related payables	$	413,300	$	604,900
	$	682,700	$	909,100
Other	234,400		296,400
	$	647,700	$	901,300

7NOTE 8- STOCK OPTION PLAN:

~~NOTE~~The 9Company -has ~~STOCK~~a stock ~~OPTION~~option ~~PLAN:~~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 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.

The Company has ~~a stock~~not ~~option~~granted ~~plan~~any ~~that~~options ~~was~~under ~~adopted~~this ~~by the Board of Directors on October 7~~plan, ~~2003~~ and ~~approved~~therefore byas ~~shareholder vote on December 8, 2003. This plan allows, at the discretion~~ of ~~the Board~~March ~~of Directors~~31, ~~to grant stock options to key employees~~2006, ~~officers, directors and consultants of~~ the Company tostill ~~purchase~~has 850,000 shares ofavailable 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~~future ~~under the plan is ten years, and the plan expires on October 6, 2013~~grants.

~~The~~NOTE ~~Company~~9 ~~has~~- ~~not~~COMMON granted any options under this plan, and therefore as of March 31, 2005, the Company still has 850,000 shares available for future grants. The Company accounts for its stock options under the intrinsic value method.STOCK:

~~NOTE~~At 10March -31, ~~COMMON~~2006 and ~~STOCK:~~June 30, 2005 there was no outstanding treasury stock. The Company’s current buyback program was effective June 28, 2005 and allows the Company to acquire up to $1 million of its outstanding common 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, 2006 the Company acquired 151,700 shares of common stock at a total cost of $405,000.

AtOn ~~March 31~~June 28, 2005 ~~and June 30~~, ~~2004~~the ~~there~~Board ~~was~~of noDirectors ~~outstanding~~declared ~~treasury~~a common stock~~. The~~ ~~Company~~dividend ~~continues~~of to$.05 ~~support its buyback whenever the market value~~ per common share, iswhich ~~under~~was ~~recognized~~paid byon ~~the~~July ~~stock market. During the nine months ended March 31~~29, 2005 to ~~the~~stockholders ~~Company acquired 16,500 shares~~ of ~~common~~record ~~stock~~on atJuly ~~a total cost of $33~~18,~~000~~ 2005.

OnNOTE ~~June 16,~~10 ~~2004,~~- ~~the Board of Directors~~INCOME ~~declared a common stock dividend of $.05 per common share, which was paid on July 23, 2004 to stockholders of record on July 9, 2004.~~TAXES:

~~NOTE~~The 11components -of ~~INCOME TAXES~~the income tax provision were:

The components of the income tax provision were:

	For the three months ended						For the nine months ended
	March 31,						March 31,
	2006			2005			2006			2005
Current
Federal	$	106,100		$	202,700		$	856,900		$	702,800
State	15,700			25,200			144,900			133,500
	121,800			227,900			1,001,800			836,300

Deferred
Federal	(14,300		)	10,500			(133,600		)	(35,200		)
State	1,600			(1,900		)	(9,400		)	(14,000		)
	(12,700		)	8,600			(143,000		)	(49,200		)
	$	109,100		$	236,500		$	858,800		$	787,100

	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

At March 31, 2006, the Company had combined Florida and Tennessee state net operating loss (NOL) carryforwards, with expiration dates ranging from 2006-2020, of approximately $7,372,400. Of this amount, a valuation allowance of $5,866,600 has been reserved for the estimated amount of Tennessee state NOL’s that will expire prior to their utilization. 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 2006 if not utilized.

AtNOTE ~~March 31,~~11 ~~2005,~~– ~~the~~OPERATING Company had combined Florida 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.LEASES:

~~NOTE~~The 12Company leases certain facilities and equipment under long-term operating leases that expire at various dates through March ~~OPERATING~~2013. ~~LEASES~~During the nine months ended March 31, 2006, rent expense under these leases, including month-to-month rentals, was approximately $897,300. The following table summarizes the obligations under these commitments on an annual basis:

The Company leases certain facilities and equipment under long-term operating leases that expire at various dates through March 2013. During the nine months ended March 31, 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:8

Year Ending June 30,
2005	$	1,124,200
2006	$	1,071,200
2006	1,036,900
2007	1,029,900
2007	994,700
2008	1,027,300
2008	992,800
2009	1,024,000
2009	989,800
2010	921,400
Thereafter	21,~~774~~948,~~700~~900
	$	7,~~913~~022,~~100~~700

The 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 $56,~~500~~100 per month, through March 2013. The building is sub-leased at $4,800 per month for three years ending on April 1, 2008. Management believes that any additional exposure related to this sublease will not be significant. The Company is also in the process of completing the relocation of its injection molding operation that will leave the second leased building in Miami, Florida partially unoccupied. The current rent expense on this building is approximately $9,600 per month through March 2013 and is currently being partially leased at $2,600 per month. Once the relocation process is fully completed, the Company anticipates that the balance of this building will be leased at a rate that will cover our remaining exposure, however there is no assurance as to when a tenant will occupy the building. Although the outcome of this matter is not readily determinable, management believes that any exposure related to the remaining sub-lease of this building will not be significant.

8NOTE 12- EXIT OR DISPOSAL ACTIVITIES:

~~The~~In ~~building~~January is2006, the Company initiated the ~~sub~~consolidation of its Miami, Florida injection molding operations into its Bartow, Florida facility in its efforts to improve operating efficiencies and lower overhead costs. As of March 31, 2006, the relocation process has been substantially completed and the Company anticipates finalizing the process by the end of Fiscal 2006. To date the Company has incurred other qualified non-~~leased~~recurring atplant consolidation costs of $4285,500. ~~per~~These ~~month~~costs ~~for~~are ~~three~~identified by ~~years~~the ~~ending~~line item “Plant consolidation expenses” on ~~April 1,~~the Company’s consolidated ~~2008~~statement of operations. ~~Management~~ ~~believes~~The ~~that~~Company ~~any~~ has also expended an additional ~~exposure~~$546,800 on ~~related~~capital toexpenditure ~~this~~projects ~~sublease~~in ~~will~~connection ~~not~~with bethis ~~significant~~plant consolidation.

NOTE 13 - COMPUTATION OF 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 tables below detail the components of the basic and diluted EPS calculations:

Three months ended March 31, 2005

Three months ended March 31, 2004

Three months ended

Income

EPS Amount

Income

EPS Amount

March 31, 2006

March 31, 2005

EPS

Income

Amount

Income

Amount

Basic EPS

Net income

~~339~~161,~~800~~000

11,~~964~~791,~~747~~403

.0302

~~375~~339,~~700~~800

1211,~~002~~964,~~530~~747

.03

Effect of dilutive stock options

—

Diluted EPS

~~339~~161,~~800~~000

11,~~964~~791,~~747~~403

.0302

~~375~~339,~~700~~800

1211,~~002~~964,~~530~~747

.03

Nine months ended March 31, 2005

Nine months ended March 31, 2004

Nine months ended

Income

EPS Amount

Income

EPS Amount

March 31, 2006

March 31, 2005

EPS

Income

Amount

Income

Amount

Basic EPS

Net income

1,~~179~~373,~~000~~600

11,~~970~~850,~~356~~720

.1012

~~479~~1,~~800~~179,000

1211,~~213~~970,~~197~~356

.0410

Effect of dilutive stock options

—

~~1,486~~—

—

Diluted EPS

1,~~179~~373,~~000~~600

11,~~970~~850,~~356~~720

.1012

~~479~~1,~~800~~179,000

1211,~~214~~970,~~683~~356

.0410

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

Introduction

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~~ 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.

Results of Operations - Three Months Ended March 31, ~~2005~~2006 and ~~2004~~2005

Net sales for the three months ended March 31, ~~2005~~ 2006 increased 81.35% to $1011,~~873~~034,~~200~~600 compared to $10,~~036~~873,~~100~~200 for the same period ~~last~~ last year. We ~~are~~Even ~~extremely~~though ~~pleased~~we ~~that our~~experienced ~~sales~~a ~~are~~sluggish ~~still~~marketplace ~~trending~~during ~~upward~~the inbeginning ~~spite~~ of the ~~signs~~current ~~that~~quarter, the ~~U.S.~~tempo ~~economy might~~ultimately bepicked-up ~~cooling~~in ~~down. Four~~the ~~out~~latter part of ~~five~~the ofquarter. ~~our~~As ~~product~~a ~~groups~~result, ~~posted~~management ~~gains~~was ~~this~~pleased ~~quarter. Our~~with ~~largest~~the ~~gains~~growth ~~were realized~~ in ~~marine products~~some ~~that~~of ~~posted~~our aproduct groups, ~~41%~~which ~~increase~~include inour ~~quarterly~~refuse ~~sales~~container, ~~followed~~tank, bylinen ~~industrial~~and laundry and material handling products. atThe ~~11%,~~growth ~~and~~in ~~contract~~these ~~manufacturing~~particular atproduct ~~5%. We~~groups totaled ~~still~~$1,546,300 ~~feel~~and ~~that~~reflects ~~there~~the ispositive aresults ~~lot~~we ofhave obtained from ~~opportunities~~ongoing inproduct ~~our~~line ~~marketplace~~enhancements, ~~and~~our ~~will~~focused ~~continue~~efforts to ~~position~~expand ~~ourselves~~our tomarket ~~take~~share ~~advantage~~for ofour ~~them. During~~proprietary ~~this fiscal~~product ~~year~~groups weand ~~spent~~the ~~approximately~~additions ~~$1.4~~we ~~million~~have onmade ~~new~~to our manufacturing equipment, ~~and~~which ~~tooling~~ in ~~efforts~~ toturn ~~better~~has ~~serve~~improved our ~~customers~~competitive ~~and~~edge ~~attract~~within our ~~new~~regional ~~business~~markets. We ~~remain~~have ~~confident~~continued ~~that~~our ~~these~~investment ~~efforts, coupled~~trend ~~with~~this ~~prior~~ year ~~capital~~with various ~~improvements~~tooling projects, ~~has~~the ~~allowed~~installation usof toa ~~become~~new aroto-moldng ~~leader~~machine in Gardena, California and a new injection-molding machine in ~~our~~Bartow, ~~industry~~Florida. ~~and~~We remain confident that our efforts will continue to ~~foster~~promote ~~positive~~expansion ~~results~~of many of our proprietary products.

Cost of goods sold increased ~~rose~~4.5% ~~slightly~~ to 7782.72% of net sales for the three months ended March 31, ~~2005~~ 2006 compared to 7677.37% for the same period last year. To ~~put~~During ~~this~~the incurrent quarter we ~~perspective,~~continued ~~our~~to work through the exorbitant increases in natural gas and raw material costs ~~are~~that upbegan 3%last assummer. aThe ~~percentage~~unit ofcosts ~~net~~related ~~sales;~~to these two ~~however~~items have begun to recede during the current quarter, webut ~~are~~ultimately ~~pleased~~weighed heavy ~~with~~on our ~~efforts~~ability to ~~minimize~~pass ~~the~~on ~~effects~~these ofcosts ~~rising~~and maintain target gross margins. During ~~material~~the ~~and~~current quarter natural gas costs were up $109,200 compared to the same period last year coupled with last quarter’s 18% increase in raw material costs that continued to flow through ~~increasing~~this ~~our~~quarter’s ~~sales~~operations. ~~volumes,~~Throughout ~~passing~~the onyear we have instituted product price increases to offset these rising costs, ~~and~~but due ~~realizing~~to last quarter’s rapid cost ~~savings~~escalations, ~~through~~we ~~installation~~found ofit ~~energy~~difficult to ~~efficient~~effectively ~~machinery~~pass on these costs. It isWe ~~our~~do ~~hope~~anticipate ~~that~~relief during the last ~~current~~quarter ~~economic~~of ~~conditions~~fiscal ~~will~~2006 ~~also~~as ~~temporarily~~long ~~stifle~~as ~~additional~~these ~~cost~~costs ~~escalations~~hold at their current price levels.

Selling, general and administrative (“SG&A”) expenses were $1,~~817~~430,700, or ~~16.7~~13% of net sales, for the three months ended March 31, ~~2005~~2006 compared with $1,~~733~~817,~~100~~700, or 17 16.37% of net sales, for the same period last year. As aThe ~~percentage~~reduction toin ~~net~~the ~~sales,~~current wequarter’s ~~are pleased with our efforts to maintain~~ SG&A ~~levels~~expenses inare attributed ~~line~~to ~~with~~management’s ~~revenue~~re-evaluation ~~levels. The~~of ~~$84,600~~its ~~increase~~allowance ~~between~~for ~~the~~doubtful ~~two periods~~accounts isand ~~primarily~~estimated ~~attributed~~prepaid toexpense anallocation ~~increase~~for inadvertising ~~wage costs that is linked to our sales/marketing~~ and ~~cost~~tradeshow ~~efficiency efforts~~costs. We ~~believe~~ Combined, the ~~benefits~~re-evaluation ~~obtained~~of bythese ~~the~~account ~~increase~~balances resulted in ~~our~~a ~~net~~reduction ~~sales~~of ~~and~~SG&A ~~operating~~costs ~~efficiencies~~of ~~has~~approximately ~~more~~$286,000 ~~than justified any minimal increase~~ in ~~overall SG&A~~the ~~costs~~current quarter.

~~Total~~During ~~interest~~the ~~expense~~third quarter ~~remained~~of ~~static~~fiscal ~~at $50~~2006,~~600~~ ~~for~~ the ~~three~~Company ~~months~~substantially ~~ended~~completed ~~March 31,~~the ~~2005 compared~~relocation toof ~~$51~~its Miami,~~900~~ ~~for~~Florida ~~the~~injection ~~same~~molding ~~period~~operations ~~last~~to ~~year. Although~~the ~~our~~Company’s ~~debt~~Bartow, ~~level is down $1~~Florida facility.5 ~~million compared~~To todate ~~amounts~~the ~~outstanding~~Company athas ~~March 31,~~incurred ~~2004~~$285,500 ~~any~~in ~~potential~~non-recurring ~~savings~~plant inclosure ~~interest~~and relocation costs ~~for~~and ~~borrowings~~also ~~not~~has ~~covered~~spent ~~under~~an ~~our~~additional ~~interest~~$546,800 ~~rate swap~~on ~~agreement~~capital ~~have~~improvements ~~been~~related ~~diminished~~to bythis anmove. ~~increase~~The incapital ~~the~~improvements ~~bank’s~~include $128,500 ~~prime~~to ~~interest~~refurbish ~~rate of~~existing ~~1.75%~~injection ~~over~~molding ~~the~~equipment ~~last~~and ~~nine~~$418,300 ~~months.~~ for the ~~Because~~installation of ~~our~~a ~~interest~~new ~~rate~~350-ton ~~swap~~injection-molding ~~agreement;~~machine weincluding dothe ~~not~~necessary ancillary ~~foresee~~equipment. ~~any significant~~We ~~increases~~expect inthe ~~future~~consolidation ~~interest~~of ~~costs~~this ~~even~~facility ifwill ~~additional~~have ~~interest~~a ~~rates~~lasting ~~hikes~~favorable ~~are~~affect ~~instituted.~~on the

Our income tax provision was $236,500 for the three months ended March 31, 2005. This is comparable to last years provision of $250,100 and is consistent with the similar levels of taxable income between the periods.10

~~Net~~Company’s ~~income remained~~future ~~fairly~~operating ~~static~~results. atAs ~~$339,800,~~we ormove ~~$.03~~into ~~per~~the ~~common~~fourth ~~share~~quarter, ~~for~~ the ~~three~~Company ~~months~~will ~~ended~~begin ~~March 31, 2005 compared~~ to ~~$375,700,~~benefit orfrom ~~$.03~~a ~~per~~pooling ~~common~~of ~~share,~~its ~~for~~labor ~~the same~~resources ~~period~~as ~~last~~well ~~year. Again,~~as weoverall ~~are~~lower ~~pleased~~overhead ~~with the growth in sales during the current~~costs.

10Total interest expense was $38,600 for the three months ended March 31, 2006 compared to $50,600 for the same period last year. The cost savings are attributed to an overall reduction in our debt structure of approximately $300,000 compared to the same period last year coupled with a $1 million reduction in the notional amount of our interest rate swap agreement. The latter has allowed debt borrowings in excess of the notional amount to bear more favorable LIBOR interest rates in comparison to our interest rate swap agreement’s fixed rate. Even though the bank’s prime rate has increased by 1.75% over the last nine months, we do not foresee any increases in our future interest costs.

~~period~~Our ~~that~~income ~~has~~tax ~~been~~provision ~~instrumental~~was in$109,100 ~~offsetting~~for ~~increases in our operating costs driven primarily by climbing resin and natural gas costs. The increase in net sales along with~~ the ~~installation~~three ofmonths ~~energy efficient~~ended ~~machinery~~March ~~has~~31, ~~had~~2006 acompared ~~very positive influence on our overall cost structure and as such helped minimize any erosion~~ to ~~our~~$236,500 ~~bottom line. We will continue to benefit from these~~for ~~capital~~the ~~improvement~~same ~~projects~~period ~~through~~last ~~higher efficiencies and lower utility consumption~~year. We ~~will~~The ~~also~~reduction ~~benefit~~is ~~from our~~consistent ~~drive~~with tothe ~~bolster~~current ~~sales through our focused marketing efforts and plans to~~period’s ~~institute~~level ~~additional~~of ~~price~~taxable ~~increases~~income.

~~Results~~Net ofincome ~~Operations~~dropped –to $161,000, ~~Nine~~or ~~Months~~two ~~Ended~~cents per common share, for the three months ended March 31, 2006 ~~2005~~compared to $339,800, or three cents per common share, for the same period last year. Again, management is pleased with its proprietary product sales growth, which in turn helped mitigate the notable increases in natural gas and raw ~~2004~~material costs we encountered during the period. Even though our gross margins were hampered by these costs during the current period, we anticipate improved results in the near-term due to recent price reductions for both natural gas and resin. In addition, our operating results were also diluted by the non-recurring plant consolidation costs of approximately $285,500, or an after tax net of $.015 per common share. As such, income excluding these non-recurring costs would have been approximately $.03 per common share for the current quarter. Now that the plant consolidation has been substantially completed, we look forward to more efficient and streamlined operations and for now at least, a less hostile natural gas and raw material environment that will also promote improved operating results.

~~Net~~Results 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~~Operations ~~and~~- ~~various~~Nine ~~price increases~~Months ~~instituted~~Ended ~~during the period.~~ March 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 result31, ~~all~~2006 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.~~

~~Cost~~Net ~~of goods sold decreased by 0.8% to 77.3% of net~~ sales for the nine months ended March 31, ~~2005~~ ~~compared~~2006 toincreased 787.12% to $35,130,800 compared to $32,778,000 for the same period last year. ~~Even~~ ~~after~~Once ~~taking~~again, ~~into~~our ~~account~~fiscal ~~prior~~2006 ~~year’s~~growth ~~inventory~~is ~~write-down~~attributed ~~($200,000),~~to weour ~~are~~refuse ~~pleased~~container, ~~with~~tank, ~~the~~linen ~~preservation~~and oflaundry, ~~gross~~material ~~margin~~handling inand ~~spite~~also ofagricultural ~~the~~products. ~~challenges~~The togrowth ~~mitigate increases~~ in ~~resin~~these ~~and~~product ~~natural~~groups ~~gas~~totaled ~~costs~~$3,673,100. We ~~have~~Our ~~been successful in our~~ efforts to ~~mitigate~~expand ~~these~~our ~~costs~~market byshare ~~increasing~~for our ~~sales~~proprietary products ~~volumes~~through asour ~~noted above~~sales/marketing efforts, ~~passing~~tooling onenhancements ~~price increases~~ and ~~from~~the addition of the ~~cost~~necessary ~~savings~~manufacturing ~~obtained~~equipment bycontinue to reflect ~~recently~~positively ~~installed~~on ~~energy~~our ~~efficient~~net ~~machinery~~sales growth. We ~~believe~~Management ~~the~~remains ~~latter~~committed ~~will~~to ~~continue~~these strategies to ~~minimize~~promote ~~the~~ongoing ~~effect~~sales ofgrowth ~~rising natural~~and ~~gas~~looks ~~costs. It~~forward isto ~~our~~a ~~hope~~promising fourth quarter that ~~current~~ ~~economic~~started ~~conditions~~with ~~will~~a ~~also~~strong ~~temporarily~~backlog ~~stifle~~of ~~additional~~approximately ~~cost~~$4.6 ~~escalations~~million.

~~Selling,~~Cost ~~general~~of ~~and administrative~~goods ~~(“SG&A”)~~sold ~~expenses~~rose by ~~were~~1.6% ~~$5,503,000,~~to ~~or 16~~78.89% of net sales, for the nine months ended March 31, ~~2005~~2006 compared to ~~$5,267,000, or 18~~77.83% of ~~net sales,~~ for the same period last year. As aThe ~~percentage~~rise is again attributed to increases ~~net~~in ~~sales,~~natural wegas ~~are~~and ~~very~~raw ~~pleased~~material ~~with~~costs ~~the~~that ~~improved coverage~~as of ~~these~~March ~~costs~~31, ~~and~~2006 ~~our~~were still ~~ability~~30% tohigher ~~maintain~~than ~~SG&A~~they ~~levels~~were inat ~~line~~the ~~with revenue~~beginning ~~levels~~of fiscal 2006. ~~The~~ ~~$236,000~~We ~~increase~~are ~~between~~pleased ~~the~~with ~~periods~~our isefforts ~~primarily attributed~~ to anmitigate ~~increase~~these ~~in wage~~ costs ~~that~~and ismaintain ~~linked~~ reasonable year-to-date margins through our increased sales~~/marketing~~ ~~and~~revenues ~~cost~~noted ~~efficiency~~above, ~~efforts. We~~systematic ~~believe~~product price ~~that~~increases, the ~~benefits~~use ~~obtained~~of byenergy efficient equipment and the cost savings ~~increase~~obtained infrom ~~our~~lower ~~net~~wage ~~sales~~($108,000) and ~~operating~~workers ~~efficiencies~~compensation ~~has~~insurance ($192,800) ~~more~~costs. ~~than~~As ~~justified any~~previously ~~increase~~mentioned, innatural ~~our~~gas ~~overall~~and ~~SG&A~~raw material costs. Inhave ~~addition,~~recently wereceded ~~have~~from ~~also~~their ~~benefited~~respective ~~from~~prior period highs and should have a ~~reduction~~positive ineffect ~~product~~on ~~royalty~~our fiscal 2006 fourth quarter gross margins. However, as these costs ofstill ~~$86~~remain potentially volatile,~~100,~~ ~~which~~we will ~~also~~be ~~benefit~~resolute ~~operating~~in ~~results~~our efforts ~~through~~to ~~the remaining~~monitor ~~portion~~and ofmitigate ~~fiscal~~their ~~year~~effect ~~2005~~on future operations.

~~Total~~Selling, ~~interest~~general ~~remained~~and ~~fairly~~administrative ~~static~~(“SG&A”) atexpenses were $~~154~~4,~~300~~993,000, or 14.2% of net sales, for the nine months ended March 31, ~~2005~~ 2006 compared to $~~161~~5,~~100~~503,000, or 16.8% of net sales, for the same period last year. ~~Although~~ ~~our~~Overall ~~debt~~SG&A ~~level~~costs iswere down $1510,000.5 ~~million compared~~Of tothis ~~amounts outstanding at March 31~~amount, ~~2004~~$336,000 ~~any~~pertains ~~potential~~to ~~savings in~~management’s ~~interest~~re-evaluation ~~costs~~of its allowance for ~~borrowings~~doubtful ~~not~~accounts ~~covered~~and ~~under~~its ~~our~~estimated ~~interest~~prepaid ~~rate swap~~expense ~~agreement~~allocation ~~have~~for ~~been~~advertising ~~diminished~~and bytradeshow ancosts. ~~increase~~The inbalance ~~the bank’s prime rate~~ of ~~1.75% over~~ the ~~last~~savings ~~nine months. Because of our interest rate swap agreement; we do~~were ~~not~~primarily ~~foresee~~derived ~~any~~from ~~significant~~lower ~~increases~~SG&A inwage ~~future interest~~ costs ~~even~~of ~~if additional~~approximately ~~rate hikes are instituted~~$99,500.

WeDuring ~~reported~~the anthird ~~income tax~~quarter ~~provision~~ of ~~$787~~fiscal 2006,~~100~~ ~~for~~ the ~~nine~~Company ~~months~~substantially ~~ended~~completed ~~March 13~~the relocation of its Miami, ~~2005~~Florida ~~compared~~injection molding operations to the Company’s Bartow, Florida facility. To date the Company has incurred $~~315~~285,500 ~~for~~in ~~the~~non-recurring ~~same~~plant ~~period~~closure ~~last year.~~ and ~~The~~relocation ~~fluctuation~~costs isand ~~consistent~~also ~~with~~has ~~our~~spent an additional $1546,~~170,~~800 ~~increase~~on ~~in income~~capital ~~before~~improvements ~~tax~~related to this move. The capital improvements

Net income increased to $699,200 to $1,179,000, 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 enhancements to our product offerings and the ability to pass along increases in our 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 as such, provided the necessary catalyst to improve our bottom line by 146%. We will continue to benefit 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 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.11

11include $128,500 to refurbish existing injection molding equipment and $418,300 for the installation of a new 350-ton injection-molding machine including the necessary ancillary equipment. We expect the consolidation of this facility will have a lasting favorable affect on the Company’s future operating results. As we move into the fourth quarter, the Company will begin to benefit from a pooling of its labor resources as well as overall lower overhead costs.

~~Financial~~Total ~~Conditions~~interest expense was $102,800 for the nine months ended March 31, 2006 compared to $154,300 for the same period last year. The cost savings are attributed to an overall reduction in our debt structure of approximately $300,000 compared to the same period last year coupled with a $1 million reduction in the notional amount of our interest rate swap agreement. The latter has allowed debt borrowings in excess of the notional amount to bear more favorable LIBOR interest rates in comparison to our interest rate swap agreement’s fixed rate.

~~Working~~Even ~~capital~~though ~~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’s ~~line~~prime ~~of credit~~rate ~~during~~has ~~the~~increased ~~current period. These~~by ~~influxes of capital were used for the purchase of resin, payment of our $~~1.~~05 common~~75% ~~stock~~over ~~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~~we ~~compared~~do tonot ~~$1,070,300~~foresee ~~for~~any ~~the~~increases ~~same period last year. The increase is again primarily related to the $699,200 increase~~ in our ~~net income and the cash flows~~future ~~obtained~~interest ~~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~~costs.

WeOur ~~expended~~income tax provision was $1858,~~573,100~~800 for ~~property, plant and equipment (“PP&E”) during~~ the nine months ended March 31, ~~2005,~~ 2006 compared to $1787,~~196,000~~100 for the same period last year. ~~During~~ ~~fiscal~~The ~~2005,~~increase weis ~~placed~~consistent ~~into service three new energy efficient rotational molding machines at a combined cost of $817,300~~ with the ~~balance~~current ~~of our expenditures primarily going to new tooling~~period’s ~~and~~level ~~various~~of ~~tooling~~taxable ~~and machinery enhancement projects~~income. These expenditures are a testament to our commitment to allocate funding for capital expenditure projects that have provided us with the foundation to improve our operating efficiencies and promote increases in sales revenue. We anticipate expending $1.9 million on capital expenditures in fiscal 2005.

Net ~~borrowings~~income ~~under~~increased $194,600 to $1,373,600, or twelve cents per common share, for the ~~line~~ ofnine ~~credit~~months ended ~~increased~~March ~~$259~~31,~~800~~ 2006 compared to $1,~~617~~179,~~100~~000, ~~between~~or ~~June 30,~~ten ~~2004~~cents ~~and~~per ~~March 31~~common share, for ~~2005~~the same period last year. ~~The~~ ~~increase~~Management is ~~due~~very topleased with the ~~timing~~7.2% increase in ofnet ~~payments~~sales ~~related~~that towas ~~raw~~primarily ~~materials~~realized ~~purchases,~~in ~~federal~~its ~~income~~proprietary ~~taxes,~~product ~~and~~groups ~~our~~as ~~annual~~previously ~~bonus plan~~outlined. ~~Due~~ toThis sales growth helped mitigate the ~~timing~~30% ofincrease in natural ~~such~~gas ~~payments,~~and itraw ismaterial ~~not~~costs ~~unusual~~we toencountered ~~incur~~during ~~temporary~~fiscal ~~fluctuations~~2006. inThis coupled with our ~~line~~cost ofsavings in wage and workers compensation insurance costs were ~~credit~~instrumental ~~borrowings~~in ~~throughout~~maintaining ~~the~~reasonable ~~year~~gross margin results. Our net income was ~~Since~~further ~~June 30,~~boosted ~~2004,~~by ~~our~~overall ~~total~~SG&A ~~debt~~savings ~~borrowings~~net ~~have~~of ~~decreased~~our bynon-recurring plant consolidation costs of approximately $~~388~~285,500, or an after tax net of $. ~~During~~015 cents per common share. Now that the ~~balance~~plant ofconsolidation ~~fiscal~~has been substantially ~~2005~~completed, we ~~anticipate~~look ~~out~~forward ~~total~~to ~~debt~~more ~~borrowings~~efficient toand ~~remain~~streamlined ~~fairly~~operations ~~consistent. At~~and ~~March 31,~~for now ~~2005~~at least, wea ~~had~~less ~~$3,382,900 available~~hostile ~~for~~natural ~~future~~gas ~~borrowings~~and ~~under~~raw ~~the~~material ~~line~~environment ofthat ~~credit~~will also promote improved operating results.

~~Effective~~Financial October 1, 2004, the bank extended the maturity date on the line of credit to October 1, 2006. In addition, the maturity date for the letter of credit subfeature of our credit facility was extended to February 1, 2007. All other terms and conditions surrounding our credit facility with the bank remained the same.Conditions

~~During~~Working ~~the~~capital ~~nine months~~increased ~~ended~~$1,904,900 to $10,477,900 at March 31, ~~2005~~2006 compared to $8,573,000 weat ~~acquired~~June 1630,~~500~~ 2005. ~~shares~~The increase is derived from our current period’s net income and the increase in our line of ~~common~~credit ~~stock~~borrowings atthat ahas ~~total~~helped fund the roughly ~~cost~~$775,000 increase in our raw material inventory, net of the payment for our annual bonus plan ($33329,500) and our fiscal 2006 dividend payment of $597,000. We ~~plan~~Cash flows from operations decreased $472,600 to ~~continue~~$1,615,400 for the nine months ~~this~~ended ~~program~~March ~~throughout~~31, ~~fiscal~~2006 compared to $2,088,000 for the same period last year. ~~2005~~Current period cash flows also benefited from the $194,600 increase in our net income, which was offset by increases in our inventory and accounts payable balances for the purchase of raw materials.

OnWe ~~June 16,~~expended ~~2004~~$1, ~~the~~418,400 ~~Board~~for ofproperty, ~~Directors~~plant and equipment (“~~The Board~~PP&E”) ~~declared~~during athe ~~common~~nine ~~stock~~months ~~dividend~~ended ofMarch ~~$.05 per~~31, ~~common~~2006 ~~share~~compared (to $~~599~~1,573,100) ~~that~~for ~~was~~the ~~paid~~same onperiod ~~July 23~~last year. As illustrated last year, ~~2004~~we are committed to ~~stockholders~~improve our operations through various capital expenditure projects. To date in fiscal 2006, we have installed one roto-molding machine at a cost of ~~record~~$202,700 and expended $546,800 on ~~July 9~~capital expenditure projects in connection with our Miami, ~~2004~~Florida plant consolidation. ~~This~~ Of this amount, ~~marked~~$128,500 ~~the~~has ~~eighth~~been ~~payment~~spent to refurbish existing injection molding equipment and $418,300 for the installation of ~~dividends~~a ~~since~~new ~~1996~~350-ton oninjection-molding machine including the ~~Company’s~~necessary ~~common~~ancillary equipment. As an added plus, the new machines ~~stock~~are both energy efficient and will foster manufacturing efficiencies not previously obtainable. The ~~Board~~balance isof ~~committed~~our tofiscal ~~review~~2006 expenditures has gone to anew ~~dividend~~tooling ~~program~~and ~~for~~existing ~~our~~machinery ~~common~~enhancements. ~~stock~~We anticipate expending $1.6 million on ancapital ~~annual~~expenditures ~~basis~~in fiscal 2006.

~~Cash~~Net ~~flows~~borrowings ~~from~~under the ~~operations~~line inof ~~conjunction~~credit ~~with~~increased ~~our~~$1,136,000 ~~revolving~~to ~~line~~$2,165,400 ofbetween ~~credit~~June ~~are~~30, ~~expected~~2005 and March 31, 2006. The increase is primarily attributed to the additional ~~meet~~purchases of raw materials to take advantage of preferred pricing, our ~~needs~~March 2006 ~~for~~bonus ~~working~~plan ~~capital~~pay-out of $329,500 ~~capital~~and ~~expenditures~~third quarter income tax installment payments of approximately $100,000. ~~common~~Due ~~stock~~to the timing of these payments as well ~~repurchasing~~as payments for capital expenditure projects and ~~repayment~~our current plant consolidation project, we anticipate our line of ~~long-term~~credit ~~debit~~borrowings ~~for~~to reflect temporary increases throughout the ~~foreseeable~~year, but overall will likely see our total debt borrowings trend down during the balance of fiscal 2006. At March 31, 2006, our overall debt structure increased by $487,800 to $2,633,900 and we had $2,834,600 available for future borrowings under our line of credit.

~~Recent Accounting Pronouncements~~12

InEffective ~~December 2004~~October 1, 2005, the ~~Financial~~bank ~~Accounting~~extended ~~Standards~~the ~~Board~~maturity ~~(“FASB”)~~date ~~issued~~on ~~Statement~~the line of ~~Financial Accounting~~credit ~~Standard~~to ~~(“SFAS”)~~October No1, 2007. ~~123R~~In ~~(“Share-Based~~addition, ~~Payment”). SFAS 123R requires~~ the ~~Company~~maturity todate ~~recognize compensation expense~~ for ~~equity~~the ~~instruments awarded~~letter toof ~~employees. SFAS~~credit ~~123R~~subfeature ~~is effective for the Company as~~ of ~~the~~our ~~beginning~~credit offacility ~~the~~was ~~first~~extended ~~interim~~to ~~period~~February ~~that begins after June 15~~1, ~~2005~~2008. ~~The~~ ~~Company~~All ~~does~~other ~~not~~terms ~~expect~~and conditions ~~the~~surrounding ~~adoption~~our ofcredit ~~this~~facility ~~standard~~with tobank ~~have~~remained ~~a significant~~the ~~impact on its consolidated financial statements~~same.

InDuring ~~November 2004,~~ the ~~FASB~~nine ~~issued~~months ended ~~SFAS~~March ~~No.~~31, ~~151~~2006, ~~“Inventory~~we ~~Costs”~~acquired ~~(“SFAS~~ 151”),700 anshares ~~amendment~~ of ~~ARB~~ ~~No.~~common ~~43,~~stock ~~Chapter~~at ~~4. SFAS~~a ~~151~~total ~~clarifies~~cost ~~the accounting for abnormal amounts~~ of ~~idle facility expense~~$405, ~~freight, handling costs and wasted material~~000. ~~SFAS~~ ~~151~~We isplan ~~effective~~to ~~for~~continue ~~inventory~~this ~~costs~~program ~~incurred~~throughout ~~during~~ fiscal ~~years beginning~~year ~~after June 15, 2005~~2006. ~~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~~On ~~Sheet~~June ~~Arrangements~~28, ~~and~~2005, ~~Contractual~~the Board ~~Obligations~~of Directors (“the Board”) declared a common stock dividend of $.05 per common share ($597,000) that was paid on July 29, 2005 to stockholders of record on July 18, 2005. This marked the ninth payment of dividends since 1996 on the Company’s common stock. The Board is committed to review a dividend program for our common stock on an annual basis.

~~The~~Cash ~~Company~~flows ~~has~~from operations noin ~~off-balance~~conjunction ~~sheet~~with ~~arrangements~~our ~~or significant~~revolving ~~guarantees~~line toof ~~third~~credit ~~parties~~are ~~not~~expected ~~fully~~to meet ~~recorded in~~ our ~~balance sheets~~needs orfor ~~fully~~working ~~disclosed~~capital, incapital ~~our~~expenditures, ~~notes~~common ~~to consolidated financial~~stock ~~statements. The~~repurchases ~~Company’s~~and ~~significant contractual~~repayment ~~obligations~~of ~~include~~long ~~our~~term debt ~~agreements~~for the foreseeable future.

12Recent Accounting Pronouncements

~~Critical~~In February 2006, the Financial Accounting ~~Policies~~Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 155, “Accounting for Certain Hybrid Financial Instruments,” an amendment of SFAS No. 133 and SFAS No. 140. SFAS No. 155 simplifies accounting for certain hybrid instruments under SFAS No. 133 permitting fair value remeasurement for financial instruments that otherwise would require bifurcation and eliminating SFAS No. 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets,” which proves that beneficial interests are not subject to the provisions of SFAS No. 133. SFAS No. 155 also eliminates the previous restrictions under SFAS No. 140 on passive derivative instruments that a qualifying special-purpose entity may hold. SFAS NO. 155 is effective for all financial instruments acquired, issued, or subject to a remeasurement event occurring after the beginning of an entity’s fiscal year that begins after September 15, 2006. The Company will adopt this statement as required, and adoption is not expected to have an impact on the Company’s results of operations, financial condition or liquidity.

~~Our~~In ~~consolidated~~March 2006, ~~financial statements are prepared~~the inFASB ~~accordance~~issued ~~with~~SFAS ~~accounting~~No. ~~principles~~156, ~~generally~~“Accounting ~~accepted~~for inServicing ~~the~~of ~~United States~~Financial ~~(“GAAP~~Assets,”~~). These~~ ~~accounting~~an ~~principles~~amendment ~~require~~of usFASB toStatement ~~make~~No. ~~certain~~140. ~~estimates,~~SFAS ~~judgments and assumptions~~No. We ~~believe~~156 ~~that~~permits ~~the estimates,~~entities ~~judgments~~to ~~and~~choose ~~assumptions upon which we rely are reasonable based~~to ~~upon~~either ~~information~~subsequently ~~available~~measure toservicing usrights at ~~the~~fair ~~time~~value ~~that~~and ~~these~~report ~~estimates, judgments~~changes ~~and~~in ~~assumptions~~fair ~~are~~value ~~made. These estimates,~~in ~~judgments~~earnings ~~and~~or ~~assumptions~~amortize ~~can~~servicing ~~affect~~rights ~~the~~in ~~reported~~proportion ~~amounts~~to ~~of assets~~ and over ~~liabilities~~the asestimated ofnet ~~the~~servicing ~~date~~income ofor ~~the~~loss ~~financial~~and ~~statements,~~assess asto ~~well~~rights ~~as the~~for ~~reported~~impairment ~~amounts~~or ofthe ~~revenues~~need ~~and~~for ~~expenses~~an ~~during~~increased ~~the~~obligation. ~~periods~~SFAS ~~presented~~No. To156 ~~the~~also clarifies ~~extent~~when ~~there~~a ~~are~~servicer ~~material~~should ~~differences~~separately ~~between~~recognize ~~these~~servicing ~~estimates,~~assets ~~judgments~~and orliabilities, ~~assumptions~~requires ~~and~~all ~~actual~~separately ~~results,~~recognized ~~our~~assets ~~financial~~and ~~statements~~liabilities ~~will~~to be ~~affected. In~~initially measured ~~many~~at ~~cases~~fair value, ~~the~~if ~~accounting~~practicable, ~~treatment~~permits of a one-time reclassification of ~~particular~~available-for-sale ~~transaction~~securities isto ~~specifically~~trading ~~dictated~~securities by ~~GAAP~~an ~~and~~entity ~~does~~with recognized ~~not~~servicing ~~require management’s~~rights ~~judgment~~and inrequires ~~its~~additional ~~application. There~~disclosure ~~are~~for ~~also~~all separately ~~areas~~recognized inservicing ~~which~~assets ~~management’s~~and ~~judgment~~liabilities. inSFAS ~~selecting~~No. ~~among~~156 is ~~available~~effective ~~alternatives~~as ~~would~~of ~~not~~the ~~produce~~beginning aof ~~materially~~an ~~different~~entity’s ~~result. Our~~fiscal ~~senior~~year ~~management~~that ~~has~~begins ~~reviewed these~~after ~~critical~~September ~~accounting~~15, ~~policies~~2006. ~~and~~The ~~related~~Company ~~disclosures~~will ~~with~~adopt ~~our~~this ~~Audit Committee. See~~statement ~~notes~~as torequired, ~~Consolidated~~and ~~Financial~~adoption ~~Statement~~is innot ~~our~~expected ~~Form~~to ~~10-K~~have ~~for~~an ~~fiscal~~effect ~~2004,~~on ~~which~~the ~~contain~~Company’s ~~additional~~results of ~~information~~operations, ~~regarding~~financial ~~our~~condition ~~accounting~~or ~~policies and other disclosures by GAAP~~liquidity.

TheOff-Balance significantSheet accountingArrangements policies that we believe are the most critical to aid in fully understanding and evaluatingContractual our reported financial results include the following:Obligations

~~Accounts~~The ~~Receivable~~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 and lease agreements.

WeCritical ~~make~~Accounting 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.Policies

~~Inventory~~Our ~~Valuation~~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 2005, which contain additional information regarding our accounting policies and other disclosures by GAAP.

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.13

~~Impairments~~The ofsignificant ~~Long-Lived~~accounting ~~Assets~~policies that we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

InAccounts 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.Receivable

13We 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 specific review of all significant outstanding receivable balances and 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.

~~Revenue~~Inventory ~~Recognition~~Valuation

~~Revenue~~Finished ~~from~~goods ~~sales~~inventory is valued at the lower of cost or market 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 ~~recognized~~that atthe estimates are reasonable, it is possible that the actual labor and overhead costs will differ over time ~~product~~from isthe ~~shipped~~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 atpreferences, ~~which~~etc. ~~time~~As ~~title~~such, the Company must regularly count inventories to ensure they are up to date. The Company takes a physical count monthly and ~~risk~~reconciles the count to the inventory. However, given the number of transactions, the number of locations and the large number of ~~ownership~~inventory ~~transfer~~items, adjustments to the ~~purchaser~~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~~Impairments ~~Taxes~~of Long-Lived Assets

~~Under~~In ~~SFAS~~accordance ~~No.~~with ~~109,~~the ~~“Accounting~~methodology ~~for~~described ~~Income~~in ~~Taxes,” income~~FASB ~~taxes~~Statement ~~are~~No. ~~recorded~~144, ~~based~~“Accounting onfor the ~~current~~Impairment ~~amounts payable~~ or ~~refundable, as~~Disposal ~~well as the consequences~~ of ~~events~~Long-Lived ~~that~~Assets,” ~~give~~we ~~rise~~review tolong-lived ~~deferred tax~~ assets ~~and liabilities~~for ~~based~~impairment onwhenever ~~differences in how those~~ events ~~are~~or ~~treated~~changes ~~for~~in ~~tax purposes. We~~circumstances ~~base~~indicate ~~our~~the ~~estimate~~carrying amount of ~~deferred~~ ~~tax~~such assets ~~and~~may ~~liabilities~~not onbe ~~current tax laws and rates and in certain cases expectations about future outcomes~~recoverable. ~~Our~~ ~~accounting~~Impairment ~~for~~losses ~~deferred~~are ~~tax~~recorded ~~consequences represents~~on ~~management’s~~long-lived ~~best~~assets ~~estimate~~used ~~of future events that can be appropriately reflected~~ in ~~accounting~~operations ~~estimates. Our~~when ~~net~~indicators ~~operating~~of ~~loss~~impairment ~~carryforwards, which~~ are ~~available~~present toand ~~offset~~the ~~taxable~~undiscounted ~~income,~~cash ~~are~~flows ~~also~~estimated ~~subject~~ to ~~limitations~~be ~~should a~~generated ~~“change~~by inthose ~~ownership”~~assets asare ~~defined~~less inthan the ~~Internal~~assets’ ~~Revenue~~carrying ~~Code occur~~amounts. ~~Although~~ ~~management~~The ~~believes~~impairment ~~that~~loss ~~its estimates~~is ~~are~~measured ~~reasonable,~~by nocomparing ~~assurance can be given that~~ the ~~final~~fair ~~tax~~value ~~outcome~~ of ~~these~~the ~~matters~~asset ~~will~~to ~~not~~its becarrying ~~different~~amount. ~~than~~No ~~that~~impairments ~~which~~were isrecorded ~~reflected~~ in ~~our historical~~the ~~income~~financial ~~tax~~statements ~~provisions~~included ~~and~~in ~~accruals. Such~~this ~~differences~~Form ~~could have a material impact on our results of operations and financial position~~10-Q.

InRevenue 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.Recognition

~~Item~~Revenues are 3recognized from the sale of our products upon shipment, provided that persuasive evidence of a sales arrangement exists, the price is fixed or determinable, title has transferred, and collectibility of the resulting receivable is reasonably assured. ~~Quantitative~~Title and risk of loss transfer to the ~~Qualitative~~customer ~~Disclosures~~when ~~About~~the ~~Market~~product ~~Risk~~leaves the Company’s facility.

~~Interest~~Income ~~Rate Risk~~Taxes

~~Information~~Under ~~regarding~~SFAS No. 109, “Accounting for Income Taxes,” income taxes are recorded based on the current amounts payable or refundable, ~~Company’s~~as ~~market~~well ~~risk~~as ~~relating~~the consequences of events that give rise to ~~interest~~deferred ~~rate~~tax ~~volatility~~assets ~~was~~and liabilities ~~disclosed~~based on differences in ~~the Company’s~~how ~~Form~~those ~~10-K~~events are treated for ~~the~~tax purposes. ~~fiscal~~We ~~year~~base ~~ended~~our ~~June 30,~~estimate ~~2004~~of deferred tax assets and ~~should~~liabilities beon ~~read~~current tax laws and rates and in ~~conjunction~~certain ~~with~~cases ~~this~~expectations ~~interim~~about ~~financial~~future outcomes. ~~information~~Our accounting for deferred tax consequences represents management’s best estimate of future events that can be appropriately reflected in accounting estimates. ~~Since~~ ~~June 30~~Our net operating loss carryforwards, ~~2004~~which are available to offset taxable income, ~~there~~are ~~have~~also ~~been~~subject noto limitations should a “change in ~~significant~~ownership” ~~changes~~as defined in the ~~Company’s~~Internal ~~exposure~~Revenue toCode ~~market~~occur. ~~risk~~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, 2005 and should be read in conjunction with this interim financial information. Since June 30, 2005, 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.

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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 January 19 17, ~~2005~~ 2006, we filed a current report of Form 8-K reporting under item 2.02, Results of Operations and Financial Condition, announcing our press release dated January 19 17, ~~2005~~ 2006 outlining our unaudited financial results for the three months and six months ended December 31, ~~2004~~2005.

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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
Date: April 29, 2005	/s/	SHERMAN McKINNISS
Date: May 1, 2006	/s/ SHERMAN McKINNISS
	Sherman McKinniss
	President, Chief Executive Officer,
	Chairman of the Board
	/s/	DOUGLAS W. RUSSELL
	/s/ DOUGLAS W. RUSSELL
	Douglas W. Russell
	Chief Financial Officer,
	Assistant Secretary/Treasurer

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Filing Compare · ROTONICS MANUFACTURING INC/DE