##### Table of Contents











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 THE QUARTER ENDED SEPTEMBER 30, 1999

Commission File Number 0-2762

MAXCO, INC.

(Exact Name of Registrant as Specified in its
Charter)


|                                                                               |  |                                                   
|------------------------------------------------------------------------------ |  | --------------------------------------------------
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Michigan(State or other Jurisdiction of
	Incorporation or Organization)        |  | 38-1792842(I.R.S. Employer
	Identification Number)
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|1118 Centennial Way
	Lansing, Michigan(Address of principal executive offices) |  | 48917(Zip Code)                                   

Registrants Telephone Number, including area code: 
(517) 321-3130

Indicate by check mark whether the registrant (1) has filed
all annual, quarterly and other reports required to be filed by
Section 12 or 15 (d) of the Securities Exchange Act of
1934 during the preceding twelve months and (2) has been
subject to the filing requirements for at least the past
90 days. Yes  [X]     No 
 [   ]

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

| |  |              |  |                                 |  |  |  | 
| |  | ------------ |  | ------------------------------- |  |  |  | 
| |  | Class        |  | Outstanding at October 31, 1999 |  |  |  | 
| |  |              |  |                                 |  |  |  | 
| |  | Common Stock |  | 3,151,195 shares                |  |  |  | 



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TABLE OF CONTENTS



|                                                                                                                                      |  |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I                                                                                                                               
|CONSOLIDATED STATEMENTS OF OPERATIONS (Condensed) MAXCO, INC. AND SUBSIDIARIES                                                       
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAXCO, INC. AND SUBSIDIARIES SEPTEMBER 30, 1999 (Unaudited)                               
|MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MAXCO, INC. AND SUBSIDIARIES SEPTEMBER 30, 1999
|PART II OTHER INFORMATION                                                                                                            
|SIGNATURES                                                                                                                           
|MAXCO, INC.                                                                                                                          



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PART I


FINANCIAL INFORMATION

CONSOLIDATED BALANCE SHEETS

MAXCO, INC. AND SUBSIDIARIES


|                                  |                                                                                         |                      |         |           |        |   |        |         |        | 
|--------------------------------- | --------------------------------------------------------------------------------------- | -------------------- | ------- | --------- | ------ | - | ------ | ------- | ------ | 
|                                  |                                                                                         | September 30,        |         |          
|                                  |                                                                                         | 1999                 |         | March 31,
|                                  |                                                                                         | (Unaudited)          |         | 1999     
|                                  |                                                                                         |                      |         |          
|                                  |                                                                                         |                     
|                                  |                                                                                         | (in thousands)      
|                                 
|                                 
|                                 
|                                 
|Assets                            |                                                                                         |                      |         |           |        |   |        |        
|                                 
|                                 
|                                 
|                                 
|Current Assets                    |                                                                                         |                      |         |           |        |   |        |        
|                                 
|                                 
|                                 
|                                 
|                                  | Cash and cash equivalents                                                               |                      | $       | 1,359     |        |   | $      | 1,122   |       
|                                 
|                                 
|                                 
|                                 
|                                  | Accounts and notes receivable, less allowance of $424,000
	($558,000 at March 31, 1999) |                      |         | 32,161    |        |   |        | 19,814  |       
|                                 
|                                 
|                                 
|                                 
|                                  | Inventories                                                                             |                      |         | 9,138     |        |   |        | 5,010   |       
|                                 
|                                 
|                                 
|                                 
|                                  | Prepaid expenses and other                                                              |                      |         | 601       |        |   |        | 608     |       
|                                  |                                                                                         |                      |         |           |        |   |        |        
|                                  |                                                                                         | Total Current Assets |         |           | 43,259 |   |        |         | 26,554 | 
|                                 
|                                 
|                                 
|                                 
|Marketable Securities  Long Term |                                                                                         |                      | 2,422   |           |        |   | 2,501  |        
|                                 
|                                 
|                                 
|                                 
|Property and Equipment            |                                                                                         |                      |         |           |        |   |        |        
|                                 
|                                 
|                                 
|                                 
|                                  | Land                                                                                    |                      |         | 732       |        |   |        | 732     |       
|                                 
|                                 
|                                 
|                                 
|                                  | Buildings                                                                               |                      |         | 14,248    |        |   |        | 11,152  |       
|                                 
|                                 
|                                 
|                                 
|                                  | Machinery, equipment, and fixtures                                                      |                      |         | 34,020    |        |   |        | 30,814  |       
|                                  |                                                                                         |                      |         |           |        |   |        |        
|                                  |                                                                                         |                      | 49,000  |           |        |   | 42,698 |        
|                                 
|                                 
|                                 
|                                 
|                                  | Allowances for depreciation                                                             |                      |         | (12,830   | )      |   |        | (10,799 | )     
|                                  |                                                                                         |                      |         |           |        |   |        |        
|                                  |                                                                                         |                      | 36,170  |           |        |   | 31,899 |        
|                                 
|                                 
|                                 
|                                 
|Other Assets                      |                                                                                         |                      |         |           |        |   |        |        
|                                 
|                                 
|                                 
|                                 
|                                  | Investments                                                                             |                      |         | 17,846    |        |   |        | 16,144  |       
|                                 
|                                 
|                                 
|                                 
|                                  | Notes and contracts receivable and other                                                |                      |         | 3,479     |        |   |        | 3,996   |       
|                                 
|                                 
|                                 
|                                 
|                                  | Intangibles                                                                             |                      |         | 4,187     |        |   |        | 4,336   |       
|                                  |                                                                                         |                      |         |           |        |   |        |        
|                                  |                                                                                         |                      | 25,512  |           |        |   | 24,476 |        
|                                  |                                                                                         |                      |         |           |        |   |        |        
|                                  |                                                                                         | $                    | 107,363 |           |        | $ | 85,430 |        
|                                  |                                                                                         |                      |         |           |        |   |        |        

2



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##### Table of Contents



|                                               |                                                                                                                  |                                                                                                                            |         |           |        |   |        |        |        | 
|---------------------------------------------- | ---------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------- | ------- | --------- | ------ | - | ------ | ------ | ------ | 
|                                               |                                                                                                                  | September 30,                                                                                                              |         |          
|                                               |                                                                                                                  | 1999                                                                                                                       |         | March 31,
|                                               |                                                                                                                  | (Unaudited)                                                                                                                |         | 1999     
|                                               |                                                                                                                  |                                                                                                                            |         |          
|                                               |                                                                                                                  |                                                                                                                           
|                                               |                                                                                                                  | (in thousands)                                                                                                            
|                                              
|                                              
|                                              
|                                              
|Liabilities and Stockholders Equity           |                                                                                                                  |                                                                                                                            |         |           |        |   |        |       
|                                              
|                                              
|                                              
|                                              
|Current Liabilities                            |                                                                                                                  |                                                                                                                            |         |           |        |   |        |       
|                                              
|                                              
|                                              
|                                              
|                                               | Notes payable                                                                                                    |                                                                                                                            | $       | 226       |        |   | $      | 226    |       
|                                              
|                                              
|                                              
|                                              
|                                               | Accounts payable                                                                                                 |                                                                                                                            |         | 18,378    |        |   |        | 10,489 |       
|                                              
|                                              
|                                              
|                                              
|                                               | Employee compensation                                                                                            |                                                                                                                            |         | 2,661     |        |   |        | 2,192  |       
|                                              
|                                              
|                                              
|                                              
|                                               | Taxes, interest, and other liabilities                                                                           |                                                                                                                            |         | 3,682     |        |   |        | 1,726  |       
|                                              
|                                              
|                                              
|                                              
|                                               | Current maturities of long-term obligations                                                                      |                                                                                                                            |         | 3,681     |        |   |        | 2,063  |       
|                                               |                                                                                                                  |                                                                                                                            |         |           |        |   |        |       
|                                               |                                                                                                                  | Total Current Liabilities                                                                                                  |         |           | 28,628 |   |        |        | 16,696 | 
|                                              
|                                              
|                                              
|                                              
|Long-Term Obligations, less current maturities |                                                                                                                  |                                                                                                                            | 39,983  |           |        |   | 32,856 |       
|                                              
|                                              
|                                              
|                                              
|Deferred Income Taxes                          |                                                                                                                  |                                                                                                                            | 2,150   |           |        |   | 1,734  |       
|                                              
|                                              
|                                              
|                                              
|Stockholders Equity                           |                                                                                                                  |                                                                                                                            |         |           |        |   |        |       
|                                              
|                                              
|                                              
|                                              
|                                               | Preferred stock:                                                                                                 |                                                                                                                            |         |           |        |   |        |        |       
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                                                  | Series Three: 10% cumulative redeemable, $60 face value;
	14,801 shares issued and outstanding (14,876 at March 31,
	1999) |         |           | 679    |   |        |        | 683    | 
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                                                  | Series Four: 10% cumulative redeemable, $51.50 face value;
	46,414 shares issued and outstanding                           |         |           | 2,390  |   |        |        | 2,390  | 
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                                                  | Series Five: 10% cumulative redeemable, $120 face value;
	6,648 shares issued and outstanding                              |         |           | 798    |   |        |        | 798    | 
|                                               |                                                                                                                  | Series Six: 10% cumulative callable, $160 face value; 20,000
	 shares authorized, issued  none                            |         |           |        |   |        |        |        | 
|                                              
|                                              
|                                              
|                                              
|                                               | Common stock, $1 par value; 10,000,000 shares authorized,
	3,151,195 issued shares (3,219,995 at March 31, 1999) |                                                                                                                            |         | 3,151     |        |   |        | 3,220  |       
|                                              
|                                              
|                                              
|                                              
|                                               | Net unrealized gain (loss) on marketable securities                                                              |                                                                                                                            |         | (39       | )      |   |        | 9      |       
|                                              
|                                              
|                                              
|                                              
|                                               | Retained earnings                                                                                                |                                                                                                                            |         | 29,623    |        |   |        | 27,044 |       
|                                               |                                                                                                                  |                                                                                                                            |         |           |        |   |        |       
|                                               |                                                                                                                  |                                                                                                                            | 36,602  |           |        |   | 34,144 |       
|                                               |                                                                                                                  |                                                                                                                            |         |           |        |   |        |       
|                                               |                                                                                                                  | $                                                                                                                          | 107,363 |           |        | $ | 85,430 |       
|                                               |                                                                                                                  |                                                                                                                            |         |           |        |   |        |       

See notes to consolidated financial statements

3



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##### Table of Contents








CONSOLIDATED STATEMENTS OF OPERATIONS (Condensed)


MAXCO, INC. AND SUBSIDIARIES


|                                                                         |                                      |                       |        |             |   |   |        |        |  
|------------------------------------------------------------------------ | ------------------------------------ | --------------------- | ------ | ----------- | - | - | ------ | ------ | -
|                                                                         |                                      |                      
|                                                                         |                                      | Three Months Ended   
|                                                                         |                                      | September 30,        
|                                                                         |                                      |                      
|                                                                         |                                      | 1999                  |        | 1998       
|                                                                         |                                      | (Unaudited)           |        | (Unaudited)
|                                                                         |                                      |                       |        |            
|                                                                         |                                      |                      
|                                                                         |                                      | (in thousands, except
|                                                                         |                                      | per share data)      
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Net sales                                                                |                                      | $                     | 47,227 |             |   | $ | 35,553 |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Costs and expenses:                                                      |                                      |                       |        |             |   |   |        |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Cost of sales and operating expenses |                       |        | 36,569      |   |   |        | 28,146 |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Selling, general and administrative  |                       |        | 6,982       |   |   |        | 5,233  |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Depreciation and amortization        |                       |        | 1,199       |   |   |        | 728    |  
|                                                                         |                                      |                       |        |             |   |   |        |       
|                                                                         |                                      |                       | 44,750 |             |   |   | 34,107 |       
|                                                                         |                                      |                       |        |             |   |   |        |       
|Operating Earnings                                                       |                                      |                       | 2,477  |             |   |   | 1,446  |       
|Other income (expense)                                                   |                                      |                       |        |             |   |   |        |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Investment and interest income       |                       |        | 134         |   |   |        | 256    |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Interest expense                     |                       |        | (838        | ) |   |        | (629   | )
|                                                                         |                                      |                       |        |             |   |   |        |       
|Income Before Federal Income Taxes and Equity in Earnings of
	Affiliates |                                      |                       | 1,773  |             |   |   | 1,073  |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Federal income tax expense                                               |                                      |                       | 626    |             |   |   | 376    |       
|                                                                         |                                      |                       |        |             |   |   |        |       
|Income Before Equity in Earnings of Affiliates                           |                                      |                       | 1,147  |             |   |   | 697    |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Equity in earnings (loss) of affiliates, net of tax                      |                                      |                       | 130    |             |   |   | (88    | )     
|                                                                         |                                      |                       |        |             |   |   |        |       
|Net Income                                                               |                                      |                       | 1,277  |             |   |   | 609    |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Less preferred stock dividends                                           |                                      |                       | (102   | )           |   |   | (102   | )     
|                                                                         |                                      |                       |        |             |   |   |        |       
|Net Income Applicable to Common Stock                                    |                                      |                       | 1,175  |             |   |   | 507    |       
|                                                                         |                                      |                       |        |             |   |   |        |       
|Net Income Per Common Share  Basic                                      |                                      | $                     | .37    |             |   | $ | .16    |       
|                                                                         |                                      |                       |        |             |   |   |        |       
|Net Income Per Common Share  Assuming Dilution                          |                                      | $                     | .37    |             |   | $ | .15    |       
|                                                                         |                                      |                       |        |             |   |   |        |       

See notes to consolidated financial statements

4



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##### Table of Contents



CONSOLIDATED STATEMENTS OF OPERATIONS (Condensed)

MAXCO, INC. AND SUBSIDIARIES


|                                                                         |                                      |                        |        |             |   |   |        |        |  
|------------------------------------------------------------------------ | ------------------------------------ | ---------------------- | ------ | ----------- | - | - | ------ | ------ | -
|                                                                         |                                      |                       
|                                                                         |                                      | Six Months Ended      
|                                                                         |                                      | September 30,         
|                                                                         |                                      |                       
|                                                                         |                                      | 1999                   |        | 1998       
|                                                                         |                                      | (Unaudited)            |        | (Unaudited)
|                                                                         |                                      |                        |        |            
|                                                                         |                                      |                       
|                                                                         |                                      | (in thousands,        
|                                                                         |                                      | except per share data)
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Net sales                                                                |                                      | $                      | 91,203 |             |   | $ | 71,249 |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Costs and expenses:                                                      |                                      |                        |        |             |   |   |        |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Cost of sales and operating expenses |                        |        | 70,045      |   |   |        | 56,354 |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Selling, general and administrative  |                        |        | 13,459      |   |   |        | 10,103 |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Depreciation and amortization        |                        |        | 2,368       |   |   |        | 1,425  |  
|                                                                         |                                      |                        |        |             |   |   |        |       
|                                                                         |                                      |                        | 85,872 |             |   |   | 67,882 |       
|                                                                         |                                      |                        |        |             |   |   |        |       
|Operating Earnings                                                       |                                      |                        | 5,331  |             |   |   | 3,367  |       
|Other income (expense)                                                   |                                      |                        |        |             |   |   |        |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Investment and interest income       |                        |        | 289         |   |   |        | 472    |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Interest expense                     |                        |        | (1,583      | ) |   |        | (1,231 | )
|                                                                         |                                      |                        |        |             |   |   |        |       
|Income Before Federal Income Taxes and Equity in Earnings of
	Affiliates |                                      |                        | 4,037  |             |   |   | 2,608  |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Federal income tax expense                                               |                                      |                        | 1,407  |             |   |   | 913    |       
|                                                                         |                                      |                        |        |             |   |   |        |       
|Income Before Equity in Earnings of Affiliates                           |                                      |                        | 2,630  |             |   |   | 1,695  |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Equity in earnings of affiliates, net of tax                             |                                      |                        | 555    |             |   |   | 42     |       
|                                                                         |                                      |                        |        |             |   |   |        |       
|Net Income                                                               |                                      |                        | 3,185  |             |   |   | 1,737  |       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Less preferred stock dividends                                           |                                      |                        | (204   | )           |   |   | (204   | )     
|                                                                         |                                      |                        |        |             |   |   |        |       
|Net Income Applicable to Common Stock                                    |                                      |                        | 2,981  |             |   |   | 1,533  |       
|                                                                         |                                      |                        |        |             |   |   |        |       
|Net Income per Common Share  Basic                                      |                                      | $                      | .94    |             |   | $ | .47    |       
|                                                                         |                                      |                        |        |             |   |   |        |       
|Net Income per Common Share  Assuming Dilution                          |                                      | $                      | .94    |             |   | $ | .46    |       
|                                                                         |                                      |                        |        |             |   |   |        |       

See notes to consolidated financial statements

5



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##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed)

MAXCO, INC. AND SUBSIDIARIES


|                                                 |                                                                                    |                                             |        |             |        |   |        |        |        |  
|------------------------------------------------ | ---------------------------------------------------------------------------------- | ------------------------------------------- | ------ | ----------- | ------ | - | ------ | ------ | ------ | -
|                                                 |                                                                                    |                                            
|                                                 |                                                                                    | Six Months Ended                           
|                                                 |                                                                                    | September 30,                              
|                                                 |                                                                                    |                                            
|                                                 |                                                                                    | 1999                                        |        | 1998       
|                                                 |                                                                                    | (Unaudited)                                 |        | (Unaudited)
|                                                 |                                                                                    |                                             |        |            
|                                                 |                                                                                    |                                            
|                                                 |                                                                                    | (in thousands)                             
|                                                
|                                                
|                                                
|                                                
|Operating Activities                             |                                                                                    |                                             |        |             |        |   |        |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Net Income                                                                         |                                             | $      | 3,185       |        |   | $      | 1,737  |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Adjustments to reconcile net income to net cash provided by
	operating activities: |                                             |        |             |        |   |        |        |       
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                    | Depreciation and other non-cash items       |        |             | 2,014  |   |        |        | 1,497  |  
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                    | Changes in operating assets and liabilities |        |             | (4,199 | ) |        |        | (2,867 | )
|                                                 |                                                                                    |                                             |        |             |        |   |        |       
|Net Cash Provided by Operating Activities        |                                                                                    |                                             | 1,000  |             |        |   | 367    |       
|                                                
|                                                
|                                                
|                                                
|Investing Activities                             |                                                                                    |                                             |        |             |        |   |        |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchase of business                                                               |                                             |        | (3,103      | )      |   |        |        |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Payment received on note receivable                                                |                                             |        | 750         |        |   |        |        |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Redemption of (investment in) marketable securities                                |                                             |        | 8           |        |   |        | 5,812  |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Investment in affiliates                                                           |                                             |        | (484        | )      |   |        | (2,261 | )     
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchases of property and equipment                                                |                                             |        | (5,952      | )      |   |        | (4,764 | )     
|                                                
|                                                
|                                                
|                                                
|                                                 | Other                                                                              |                                             |        | (47         | )      |   |        | (114   | )     
|                                                 |                                                                                    |                                             |        |             |        |   |        |       
|Net Cash Used in Investing Activities            |                                                                                    |                                             | (8,828 | )           |        |   | (1,327 | )     
|                                                
|                                                
|                                                
|                                                
|Financing Activities                             |                                                                                    |                                             |        |             |        |   |        |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from long-term obligations                                                |                                             |        | 10,689      |        |   |        | 2,829  |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from restricted cash for acquisitions of equipment                        |                                             |        |             |        |   |        | 641    |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Repayments on long-term obligations and notes payable                              |                                             |        | (1,944      | )      |   |        | (1,629 | )     
|                                                
|                                                
|                                                
|                                                
|                                                 | Changes in capital stock                                                           |                                             |        | (476        | )      |   |        | (392   | )     
|                                                
|                                                
|                                                
|                                                
|                                                 | Dividends paid on preferred stock                                                  |                                             |        | (204        | )      |   |        | (204   | )     
|                                                 |                                                                                    |                                             |        |             |        |   |        |       
|Net Cash Provided by Financing Activities        |                                                                                    |                                             | 8,065  |             |        |   | 1,245  |       
|                                                 |                                                                                    |                                             |        |             |        |   |        |       
|Increase in cash and Cash Equivalents            |                                                                                    |                                             | 237    |             |        |   | 285    |       
|                                                
|                                                
|                                                
|                                                
|Cash and Cash Equivalents at Beginning of period |                                                                                    |                                             | 1,122  |             |        |   | 1,040  |       
|                                                 |                                                                                    |                                             |        |             |        |   |        |       
|Cash and Cash Equivalents at End of Period       |                                                                                    | $                                           | 1,359  |             |        | $ | 1,325  |       
|                                                 |                                                                                    |                                             |        |             |        |   |        |       

See notes to consolidated financial statements

6



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##### Table of Contents








NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


MAXCO, INC. AND SUBSIDIARIES


SEPTEMBER 30, 1999


(Unaudited)


NOTE 1  Basis of Presentation and Significant
Accounting Policies

The accompanying unaudited, condensed, consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of
the information and notes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
of the results of the interim periods covered have been included.
 For further information, refer to the consolidated financial
statements and notes thereto included in Maxcos annual
report on Form 10-K for the year ended March 31, 1999.

The results of operations for the interim periods presented are
not necessarily indicative of the results for the full year.
Certain other amounts in the consolidated financial statements
have been reclassified to conform to the current presentation.

NOTE 2  Inventories

The major classes of inventories, at the dates indicated were as
follows:

|                                    |  |                |       |           |  |   |       | 
|----------------------------------- |  | -------------- | ----- | --------- |  | - | ----- | 
|                                    |  | September 30,  |       | March 31,
|                                    |  | 1999           |       | 1999     
|                                    |  |                |       |          
|                                    |  | (unaudited)    |       |          
|                                    |  |               
|                                    |  | (in thousands)
|                                   
|                                   
|                                   
|                                   
|Raw materials                       |  | $              | 463   |           |  | $ | 732   | 
|                                   
|                                   
|                                   
|                                   
|Finished goods and work in progress |  |                | 1,333 |           |  |   | 1,283 | 
|                                   
|                                   
|                                   
|                                   
|Purchased products for resale       |  |                | 7,342 |           |  |   | 2,995 | 
|                                    |  |                |       |           |  |   |       | 
|                                    |  | $              | 9,138 |           |  | $ | 5,010 | 
|                                    |  |                |       |           |  |   |       | 

NOTE 3  Marketable Securities

The Company classifies its marketable securities as securities
available for sale under FASB 115, Accounting for Certain
Investments in Debt and Equity Securities. Available-for-sale
securities are carried at fair value, with the unrealized gains
and losses, net of tax, reported as a separate component of
stockholders equity. Application of this method resulted in
 an unrealized loss, net of deferred tax, of approximately
$39,000 being reported as part of stockholders equity at
September 30, 1999.

7



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)


MAXCO, INC. AND SUBSIDIARIES


NOTE 4  Investment in Integral Vision, Inc.

On June 30, 1999, Integral Vision, Inc. (formerly Medar,
Inc.), Maxcos 24% owned affiliated company sold its welding
 division for cash and debt. The gain recognized through
September 30, 1999 on this transaction was
$6.6 million. Also, as a result of this transaction, Maxco
received payment on June 30, 1999 of the full balance due on
 subordinated debentures of $750,000. Integral Visions
sales for the three and six months ended September 30, 1999
was $4.0 million and $6.4 million respectively,
compared to sales of $2.5 million and $6.1 million for
the three and six months ended September 30, 1998. Its net
income for the three and six months ended September 30, 1999
 was $1.1 million and $4.7 million respectively,
compared to net loss of $1.1 million and $953,000 for the
three and six months ended September 30, 1998.

NOTE 5  Long Term Debt

At September 30, 1999 Maxco could borrow up to
$33 million under its three revolving lines of credit of
which $10.6 million was available at September 30,
1999.

NOTE 6  Earnings Per Share

The following table sets forth the computation of basic and
diluted earnings per share:

|                                                                                                       |                                                                     |                                       |       |                  |   |      |       |       |   |   |       |       |   |   |       |       |  
|------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------- | ------------------------------------- | ----- | ---------------- | - | ---- | ----- | ----- | - | - | ----- | ----- | - | - | ----- | ----- | -
|                                                                                                       |                                                                     |                                       |       |                  |   |     
|                                                                                                       |                                                                     | Three Months                          |       |                 
|                                                                                                       |                                                                     | Ended                                 |       | Six Months Ended
|                                                                                                       |                                                                     | September 30,                         |       | September 30,   
|                                                                                                       |                                                                     |                                       |       |                 
|                                                                                                       |                                                                     | 1999                                  |       | 1998             |   | 1999 |       | 1998 
|                                                                                                       |                                                                     |                                       |       |                  |   |      |       |      
|                                                                                                       |                                                                     |                                      
|                                                                                                       |                                                                     | (in thousands, except per share data)
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|NUMERATOR:                                                                                             |                                                                     |                                       |       |                  |   |      |       |       |   |   |       |       |   |   |       |      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       | Net income                                                          |                                       | $     | 1,277            |   |      | $     | 609   |   |   | $     | 3,185 |   |   | $     | 1,737 |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       | Preferred stock dividends                                           |                                       |       | (102             | ) |      |       | (102  | ) |   |       | (204  | ) |   |       | (204  | )
|                                                                                                       |                                                                     |                                       |       |                  |   |      |       |       |   |   |       |       |   |   |       |      
|Numerator for Basic Earning Per Share  Income Available
	to Common Stockholders                       |                                                                     |                                       | 1,175 |                  |   |      | 507   |       |   |   | 2,981 |       |   |   | 1,533 |      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Effect of dilutive securities:                                                                         |                                                                     |                                       |       |                  |   |      |       |       |   |   |       |       |   |   |       |      
|                                                                                                       |                                                                     |                                       |       |                  |   |      |       |       |   |   |       |       |   |   |       |      
|Numerator for Diluted Earnings Per Share  Income to
	Common Stockholders after Assumed Conversions    |                                                                     |                                       | 1,175 |                  |   |      | 507   |       |   |   | 2,981 |       |   |   | 1,533 |      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Denominator:                                                                                           |                                                                     |                                       |       |                  |   |      |       |       |   |   |       |       |   |   |       |      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       | Denominator for Basic Earnings Per Share  Weighted-Average
	Shares |                                       |       | 3,164            |   |      |       | 3,270 |   |   |       | 3,179 |   |   |       | 3,284 |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Effect of dilutive securities:                                                                         |                                                                     |                                       |       |                  |   |      |       |       |   |   |       |       |   |   |       |      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                       | Employee stock options                                              |                                       |       | 1                |   |      |       | 45    |   |   |       | 1     |   |   |       | 49    |  
|                                                                                                       |                                                                     |                                       |       |                  |   |      |       |       |   |   |       |       |   |   |       |      
|Dilutive potential common shares                                                                       |                                                                     |                                       | 1     |                  |   |      | 45    |       |   |   | 1     |       |   |   | 49    |      
|                                                                                                       |                                                                     |                                       |       |                  |   |      |       |       |   |   |       |       |   |   |       |      
|Denominator for Diluted Earnings Per Share  Adjusted
	Weighted-Average Shares and Assumed Conversions |                                                                     |                                       | 3,165 |                  |   |      | 3,315 |       |   |   | 3,180 |       |   |   | 3,333 |      
|                                                                                                       |                                                                     |                                       |       |                  |   |      |       |       |   |   |       |       |   |   |       |      
|Basic Earnings Per Share                                                                               |                                                                     | $                                     | .37   |                  |   | $    | .16   |       |   | $ | .94   |       |   | $ | .47   |      
|                                                                                                       |                                                                     |                                       |       |                  |   |      |       |       |   |   |       |       |   |   |       |      
|Diluted Earnings Per Share                                                                             |                                                                     | $                                     | .37   |                  |   | $    | .15   |       |   | $ | .94   |       |   | $ | .46   |      
|                                                                                                       |                                                                     |                                       |       |                  |   |      |       |       |   |   |       |       |   |   |       |      

8



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)


MAXCO, INC. AND SUBSIDIARIES


NOTE 7  Comprehensive Income

The components of comprehensive income for the three and six
months ended September 30, 1999 and 1998 are as follows:

|                                           |  |                    |       |                  |  |      |     |      |  |   |       |   |  |   |       | 
|------------------------------------------ |  | ------------------ | ----- | ---------------- |  | ---- | --- | ---- |  | - | ----- | - |  | - | ----- | 
|                                           |  |                    |       |                 
|                                           |  | Three Months Ended |       | Six Months Ended
|                                           |  | September 30,      |       | September 30,   
|                                           |  |                    |       |                 
|                                           |  | 1999               |       | 1998             |  | 1999 |     | 1998
|                                           |  |                    |       |                  |  |      |     |     
|                                           |  |                   
|                                           |  | (in thousands)    
|                                          
|                                          
|                                          
|                                          
|Net earnings                               |  | $                  | 1,277 |                  |  | $    | 609 |      |  | $ | 3,185 |   |  | $ | 1,737 | 
|                                          
|                                          
|                                          
|                                          
|Unrealized losses on marketable securities |  |                    | (12   | )                |  |      | 14  |      |  |   | (48   | ) |  |   | 8     | 
|                                           |  |                    |       |                  |  |      |     |      |  |   |       |   |  |   |       | 
|                                           |  | $                  | 1,265 |                  |  | $    | 623 |      |  | $ | 3,137 |   |  | $ | 1,745 | 
|                                           |  |                    |       |                  |  |      |     |      |  |   |       |   |  |   |       | 

The components of accumulated comprehensive income, net of
related tax at September 30, 1999 and March 31, 1999
are as follows:

|                                                   |  |                |     |           |  |   |   | 
|-------------------------------------------------- |  | -------------- | --- | --------- |  | - | - | 
|                                                   |  | September 30,  |     | March 31,
|                                                   |  | 1999           |     | 1999     
|                                                   |  |                |     |          
|                                                   |  |               
|                                                   |  | (in thousands)
|                                                  
|                                                  
|                                                  
|                                                  
|Unrealized gains (losses) on marketable securities |  | $              | (39 | )         |  | $ | 9 | 

NOTE 8  Industry Segment Information

The following summarizes Maxcos industry segment
information:

|                     |                                      |                           |   |           |         |  |   |        |        | 
|-------------------- | ------------------------------------ | ------------------------- | - | --------- | ------- |  | - | ------ | ------ | 
|                     |                                      | September 30,             |   | March 31,
|                     |                                      | 1999                      |   | 1999     
|                     |                                      |                           |   |          
|                     |                                      |                          
|                     |                                      | (in thousands)           
|                    
|                    
|                    
|                    
|Identifiable assets: |                                      |                           |   |           |         |  |   |       
|                    
|                    
|                    
|                    
|                     | Distribution  construction supplies |                           | $ | 41,280    |         |  | $ | 21,275 |       
|                    
|                    
|                    
|                    
|                     | Heat treating                        |                           |   | 27,720    |         |  |   | 26,211 |       
|                    
|                    
|                    
|                    
|                     | Packaging products                   |                           |   | 6,983     |         |  |   | 7,402  |       
|                    
|                    
|                    
|                    
|                     | Corporate and other                  |                           |   | 13,853    |         |  |   | 14,398 |       
|                    
|                    
|                    
|                    
|                     | Investments and advances             |                           |   | 17,527    |         |  |   | 16,144 |       
|                     |                                      |                           |   |           |         |  |   |       
|                     |                                      | Total Identifiable Assets |   | $         | 107,363 |  |   | $      | 85,430 | 
|                     |                                      |                           |   |           |         |  |   |       

9



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)


MAXCO, INC. AND SUBSIDIARIES


NOTE 8  Industry Segment Information 
Continued

|                                       |                                      |                                             |   |                  |        |      |   |        |        |  |   |        |        |  |   |        |        | 
|-------------------------------------- | ------------------------------------ | ------------------------------------------- | - | ---------------- | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                                       |                                      |                                             |   |                 
|                                       |                                      | Three Months Ended                          |   | Six Months Ended
|                                       |                                      | September 30,                               |   | September 30,   
|                                       |                                      |                                             |   |                 
|                                       |                                      | 1999                                        |   | 1998             |        | 1999 |   | 1998  
|                                       |                                      |                                             |   |                  |        |      |   |       
|Net sales:                             |                                      |                                             |   |                  |        |      |   |        |        |  |   |        |        |  |   |       
|                                      
|                                      
|                                      
|                                      
|                                       | Distribution  construction supplies |                                             | $ | 33,240           |        |      | $ | 22,867 |        |  | $ | 62,653 |        |  | $ | 45,764 |       
|                                      
|                                      
|                                      
|                                      
|                                       | Heat treating                        |                                             |   | 9,702            |        |      |   | 8,258  |        |  |   | 19,786 |        |  |   | 16,660 |       
|                                      
|                                      
|                                      
|                                      
|                                       | Packaging products                   |                                             |   | 4,203            |        |      |   | 4,346  |        |  |   | 8,599  |        |  |   | 8,661  |       
|                                      
|                                      
|                                      
|                                      
|                                       | Corporate and other                  |                                             |   | 82               |        |      |   | 82     |        |  |   | 165    |        |  |   | 164    |       
|                                       |                                      |                                             |   |                  |        |      |   |        |        |  |   |        |        |  |   |       
|                                       |                                      | Total Net Sales                             |   | $                | 47,227 |      |   | $      | 35,553 |  |   | $      | 91,203 |  |   | $      | 71,249 | 
|                                       |                                      |                                             |   |                  |        |      |   |        |        |  |   |        |        |  |   |       
|Operating earnings (loss):             |                                      |                                             |   |                  |        |      |   |        |        |  |   |        |        |  |   |       
|                                      
|                                      
|                                      
|                                      
|                                       | Distribution  construction supplies |                                             | $ | 2,421            |        |      | $ | 1,550  |        |  | $ | 4,480  |        |  | $ | 3,472  |       
|                                      
|                                      
|                                      
|                                      
|                                       | Heat treating                        |                                             |   | 930              |        |      |   | 600    |        |  |   | 2,379  |        |  |   | 1,299  |       
|                                      
|                                      
|                                      
|                                      
|                                       | Packaging products                   |                                             |   | (26              | )      |      |   | (125   | )      |  |   | (49    | )      |  |   | (259   | )     
|                                      
|                                      
|                                      
|                                      
|                                       | Corporate and other                  |                                             |   | (848             | )      |      |   | (579   | )      |  |   | (1,479 | )      |  |   | (1,145 | )     
|                                       |                                      |                                             |   |                  |        |      |   |        |        |  |   |        |        |  |   |       
|                                       |                                      | Total Operating Earnings                    |   | $                | 2,477  |      |   | $      | 1,446  |  |   | $      | 5,331  |  |   | $      | 3,367  | 
|                                       |                                      |                                             |   |                  |        |      |   |        |        |  |   |        |        |  |   |       
|Depreciation and amortization expense: |                                      |                                             |   |                  |        |      |   |        |        |  |   |        |        |  |   |       
|                                      
|                                      
|                                      
|                                      
|                                       | Distribution  construction supplies |                                             | $ | 448              |        |      | $ | 169    |        |  | $ | 871    |        |  | $ | 321    |       
|                                      
|                                      
|                                      
|                                      
|                                       | Heat treating                        |                                             |   | 481              |        |      |   | 333    |        |  |   | 963    |        |  |   | 653    |       
|                                      
|                                      
|                                      
|                                      
|                                       | Packaging products                   |                                             |   | 180              |        |      |   | 172    |        |  |   | 354    |        |  |   | 343    |       
|                                      
|                                      
|                                      
|                                      
|                                       | Corporate and other                  |                                             |   | 90               |        |      |   | 54     |        |  |   | 180    |        |  |   | 108    |       
|                                       |                                      |                                             |   |                  |        |      |   |        |        |  |   |        |        |  |   |       
|                                       |                                      | Total Depreciation And Amortization Expense |   | $                | 1,199  |      |   | $      | 728    |  |   | $      | 2,368  |  |   | $      | 1,425  | 
|                                       |                                      |                                             |   |                  |        |      |   |        |        |  |   |        |        |  |   |       
|Capital expenditures:                  |                                      |                                             |   |                  |        |      |   |        |        |  |   |        |        |  |   |       
|                                      
|                                      
|                                      
|                                      
|                                       | Distribution  construction supplies |                                             | $ | 1,412            |        |      | $ | 928    |        |  | $ | 2,750  |        |  | $ | 1,274  |       
|                                      
|                                      
|                                      
|                                      
|                                       | Heat treating                        |                                             |   | 1,671            |        |      |   | 1,529  |        |  |   | 2,696  |        |  |   | 3,019  |       
|                                      
|                                      
|                                      
|                                      
|                                       | Packaging products                   |                                             |   | 278              |        |      |   | 342    |        |  |   | 497    |        |  |   | 440    |       
|                                      
|                                      
|                                      
|                                      
|                                       | Corporate and other                  |                                             |   | 2                |        |      |   | 4      |        |  |   | 9      |        |  |   | 31     |       
|                                       |                                      |                                             |   |                  |        |      |   |        |        |  |   |        |        |  |   |       
|                                       |                                      | Total Capital Expenditures                  |   | $                | 3,363  |      |   | $      | 2,803  |  |   | $      | 5,952  |  |   | $      | 4,764  | 
|                                       |                                      |                                             |   |                  |        |      |   |        |        |  |   |        |        |  |   |       

Accounting policies of the business segments are consistent with
those described in the summary of significant accounting policies
 (see Note 1).

Identifiable assets are those assets that are used in
Maxcos operations in each industry segment. Corporate
assets are principally cash, notes receivable, investments, and
corporate office properties.

Maxco has no significant foreign operations, export sales, or
inter-segment sales.

10



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##### Table of Contents








MANAGEMENTS DISCUSSION AND ANALYSIS OF


FINANCIAL CONDITION AND RESULTS OF OPERATIONS


MAXCO, INC. AND SUBSIDIARIES


SEPTEMBER 30, 1999


Material Changes in Financial Condition

Operating activities generated $1.0 million in cash for the
six months. Individual working capital component levels increased
 over the March 31, 1999 level, primarily due to the
seasonally higher sales levels by the Companys construction
 supplies unit (Ersco) as well as working capital components of
an acquired business added to this unit.

Investing activities included the purchase by Ersco, in
April 1999, of a distributor of concrete construction
products and accessories in the St. Louis market area. Cash
was also used in investing activities during the quarter at Ersco
 to purchase equipment, primarily forms, used for rental to its
customers and additional equipment for Maxcos heat-treating
 unit (Atmosphere Annealing).

During the quarter ended June 30, 1999, Integral Vision,
Inc. (formerly Medar, Inc.), Maxcos 24% owned affiliated
company, sold its welding division for cash and debt.
Consequently, payment was received of the full balance due of
$750,000 on subordinated debentures held by Maxco.

Net proceeds from additional long-term debt were used primarily
to fund the acquisition of Erscos St. Louis branch and the
purchase of equipment at Ersco and Atmosphere Annealing.

At September 30, 1999, Maxco could borrow up to
$33 million under its lines of credit of which
$10.6 million was available at September 30, 1999.

Beginning November 1999 Maxco will recognize its investment
in Provant Inc. common stock as securities available for sale.
These shares will be classified as available for sale and will no
 longer be considered restricted stock under FASB 115, as these
securities will be saleable without restriction within one year.
Consequently, the securities will be carried at fair value, with
the unrealized gains and losses net of tax, reported as a
separate component of stockholders equity. At
September 30,1999 the unrealized gain of this stock was
approximately $500,000 net of tax.

The Company believes that its current financial resources,
together with cash generated from operations and its available
resources under its lines of credit, will be adequate to meet its
 cash requirements for the next year.

Material Changes in Results of Operations

Three Months Ended September 30, 1999 Compared to 1998

Net sales increased to $47.2 million compared to
$35.6 million in last years second quarter. Second
quarter results reflect operating earnings of $2.5 million
compared to $1.4 million for the comparable period in 1998.
Net income was $1.3 million or $.37 per share assuming
dilution compared to last years $609,000 or $.15 per share
assuming dilution.

11



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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)


MAXCO, INC. AND SUBSIDIARIES


Higher sales in the current period occurred at Maxcos
construction supplies unit (Ersco) over the comparable 1998
period primarily as a result of an increase in same branch sales
and sales generated by branches added since September 1998
in the St. Louis, Columbus, and Louisville metropolitan
areas. A strong general construction market resulting from an
overall stable and growing general economy, increased
availability of federal highway repair dollars, as well as an
increase in form rental revenues were primary reasons for the
sales increase. On a comparable basis, sales at Atmosphere
Annealing increased in part because last years sales levels
 were depressed due to a labor strike at one of its automotive
customers. Additionally, sales of coating and other services
increased due to greater processing capabilities of equipment and
 facilities recently placed in service.

Consolidated gross profit (net sales less cost of sales and
operating expenses) increased to $10.7 million or
approximately 23% of sales from $7.4 million or 21% of
sales. The construction supplies unit generated additional gross
profit in the current period over last year due to its increased
sales level. Gross margin at this unit was higher in the current
quarter due primarily to the increase in sales of higher margin
products such as rentals and associated accessories. A higher
proportion of these sales were from inventory which generally
have a higher margin as compared to sales made on a direct
shipment basis. The higher sales from inventory were due in part
to sales by Erscos newly acquired St. Louis branch being
primarily from inventory. Improvements in gross margin also
occurred at Maxcos heat-treating unit as efficiency
improvements resulting from the completion of certain major
capital projects were realized.

Selling, general, and administrative expenses increased to
$7.0 million from $5.2 million. The increase is
primarily attributable to the construction supplies segment due
to additional operating costs associated with new locations,
costs of additional selling activities, increases in staffing
levels, and other expenses incurred to support the planned growth
 of this unit.

The increase in depreciation expense in 1999 was attributable to
depreciation by Ersco on purchases of rental forms and shoring
equipment and depreciation of assets from its acquired
businesses, as well as depreciation by Atmosphere Annealing on
new equipment, including a new coating line, additional furnaces,
 and facility improvements since September of last year. The
increase in amortization expense was attributable to the goodwill
 recorded as a result of acquisitions by Ersco since September of
 last year.

As a result of the above, operating earnings increased to
approximately $2.5 million from $1.4 million in last
years comparable period.

Net interest expense increased in 1999 from the prior year
quarter due to additional long-term borrowings and reduction in
marketable securities, the proceeds of which were used primarily
for additional purchases of property and equipment and the
purchase of businesses.

12



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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)


MAXCO, INC. AND SUBSIDIARIES


Equity in earnings of affiliates increased primarily because of
higher net income at Integral Vision for the current three-month
period. Integral Visions net income for the three months
ended September 30, 1999 was $1.1 million compared to a
 net loss of $1.1 million for the three months ended
September 30, 1998.

Six Months Ended September 30, 1999 Compared to 1998

Net sales increased to $91.2 million compared to
$71.2 million in last years comparable six-month
period. Results for this period include operating earnings of
$5.3 million compared to $3.4 million for the
comparable period in 1998. Net income was $3.2 million or
$.94 per share assuming dilution compared to last years
$1.7 million or $.46 per share assuming dilution.

Higher sales in the current period occurred at Maxcos
construction supplies unit (Ersco) over the comparable 1998
period primarily as a result of a 10.5% increase in same branch
sales, and sales of approximately $12.1 million generated by
 branches added since September 1998 in the St. Louis,
Columbus, and Louisville metropolitan areas. A strong general
construction market resulting from an overall stable and growing
general economy, increased availability of federal highway repair
 dollars, as well as an increase in form rental revenues were
primary reasons in the increase in same branch sales for the six
months. Sales at Atmosphere Annealing increased in the current
six-month period over the comparable six-month period last year
in part because last years sales levels were depressed due
to a labor strike at one of its automotive customers.
Additionally, sales of coating and other services increased due
to greater processing capabilities of equipment and facilities
recently placed in service.

Consolidated gross profit (net sales less cost of sales and
operating expenses) increased to $21.2 million or
approximately 23% of sales from $14.9 million or 21% of
sales. The construction supplies unit generated additional gross
profit in the current period over last year due to its increased
sales level. Gross margin at this unit was higher for the current
 six-month period due to increased sales of higher margin
products such as rentals and associated accessories as well as
higher percentage of sales from inventory. Inventory sales
generally have higher margins as compared to sales on a direct
shipment basis. The higher proportion of products sold from
inventory was primarily attributable to Erscos acquisition
of its St. Louis branch where sales are primarily made by this
method. Improvements in gross margin also occurred at
Maxcos heat-treating unit as efficiency improvements
resulting from the completion of certain major capital projects
were realized.

Selling, general, and administrative expenses increased to
$13.5 million from $10.1 million. The increase was in
large part attributable to the construction supplies segment.
Additional operating costs associated with new locations and
related selling activities were incurred as Ersco added four
branches since September 1998. Additionally, staffing levels
 were increased at Atmosphere Annealing and Ersco to support
their planned growth. At September 30,1999 Maxcos
total number of employees was 770 compared to 620 at
September 30, 1998.

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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)


MAXCO, INC. AND SUBSIDIARIES


The increase in depreciation expense in 1999 was attributable to
depreciation by Ersco on purchases of rental forms and shoring
equipment well as assets of its acquired businesses.
Additionally, depreciation by Atmosphere Annealing also increased
 as a result of new equipment including a new coating line,
additional furnaces, and facility improvements placed in service
since September of last year. The increase in amortization
expense was attributable to the goodwill recorded as a result of
acquisitions by Ersco since September of last year.

As a result of the above, operating earnings increased to
approximately $5.3 million from $3.4 million in last
years comparable period.

Net interest expense increased from the prior year due to
additional long-term borrowings and reduction in marketable
securities, the proceeds of which were used primarily for
additional purchases of property and equipment and the purchase
of businesses.

On June 30, 1999, Integral Vision, Inc. (formerly Medar
Inc.) sold its welding division for cash and debt. The gain
recognized through September 30, 1999 on this transaction
was $6.6 million. Integral Visions net income for the
six months ended September 30, 1999 was $4.7 million
compared to a net loss of $953,000 for the six months ended
September 30, 1998. The increase in Integral Visions
net income was the major reason that Maxcos equity in
affiliates, net of tax, increased $513,000 over the same period
of the prior year.

Impact of the Year 2000 Issue

The Year 2000 Issue is the result of computer programs being
written using two digits rather than four to define the
applicable year. Any of the Companys computer programs that
 have date-sensitive software may recognize a date using
00 as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a
temporary inability to process transactions, send invoices, or
engage in similar normal business activities.

The Company recognizes the need to ensure its operations will not
 be adversely impacted by Year 2000 software failures. The
Company has addressed this risk to the availability and integrity
 of financial systems and the reliability of operational systems.
 Except for Erscos St. Louis operation, we believe that all
 of our date sensitive equipment is Year 2000 compliant and all
major systems have been tested.

Remediation costs are not expected to be significant. We estimate
 the total pre-tax costs to date relating to the Year 2000 issue
are approximately $200,000. Separate from the Y2K issue, the
Company has committed to upgrade Erscos business
information system for approximately $800,000, which is expected
to be completed by the first quarter of fiscal 2001. The portion
of this upgrade assignable to Erscos St. Louis operation is
 approximately $145,000.

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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)


MAXCO, INC. AND SUBSIDIARIES


The Company believes its planning efforts are adequate to address
 the Year 2000 Issue and that its greatest risks in this area are
 primarily those that it cannot directly control, including the
readiness of its major suppliers, customers and service
providers. Failure on the part of any of these entities to timely
 remediate their Year 2000 Issues could result in disruptions in
the Companys supply of materials, disruptions in our
customers ability to conduct business and interruptions to
the Companys daily operations. Management believes that its
 exposure to third party risk may be minimized to some extent
because we obtain supplies from a variety of sources and no one
supplier is significant to our operations. There can be no
guarantee, however, that the systems of other third parties on
which the Companys systems and operations rely will be
corrected on a timely basis and will not have a material adverse
effect on the Company.

The Company has contacted its major suppliers, customers, and
service providers regarding their Year 2000 Issues. The Company
believes this area is among its greatest risks, as information is
 received and evaluated, the Company has developed contingency
plans, as deemed necessary, to safeguard its ongoing operations.
Such contingency plans include identifying alternative suppliers
or service providers, stockpiling certain inventories if
alternative sources of supply are not available, and the addition
 of lending capacity if deemed necessary to finance higher levels
 of inventory or working capital on an interim basis. In
addition, because the impact of the Year 2000 issue would occur
for our construction segment at its seasonal slow period, we
believe that we will have adequate inventory on hand at that
unit, even if our alternative suppliers are adversely affected.

The costs of the project and the date on which the Company plans
to complete the Year 2000 modifications are based on
managements best estimates, which were derived utilizing
numerous assumptions of future events including the continued
availability of certain resources, third party modification
plans, and other factors. However, there can be no guarantee that
 these estimates will be achieved and actual results could differ
 materially from those plans.

New Financial Accounting Pronouncement

The Financial Accounting Standards Board issued Statement
No. 133, Accounting for Derivative Instruments and Hedging
Activities. Statement 133 is effective for fiscal years beginning
 after December 31, 1999. The Company expects to adopt the
new statement effective April 1, 2000. The statement
requires the Company to recognize all derivatives on the balance
sheet at fair value. The Company has not evaluated the potential
effect the adoption of this statement will have on its results of
 operations or financial condition.

Quantitative and Qualitative Disclosures About Market Risk

The Companys variable interest expense is sensitive to
changes in the general level of United States interest rates.
Some of the Companys interest expense is fixed through
long-term borrowings to mitigate the impact of such potential
exposure. Additionally, the Company entered into an interest rate
 swap agreement based on a notional amount of $5.0 million
to manage its exposure to interest rate changes. The swap
involves the exchange of fixed and variable interest payments
without changing the notional principal amount. The Company had
total outstanding variable rate long-term borrowings of
$38.6 million at March 31, 1999. A 1% increase from the
 prevailing interest rates at March 31, 1999 on the unhedged
 variable rate portion of the Companys long-term borrowings
 would increase interest expense by $339,000 based on principal
balances at September 30, 1999.

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##### Table of Contents








PART II


OTHER INFORMATION

|        |  |                                                                                                                                                                                                                                                 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 1. |  | Legal Proceedings                                                                                                                                                                                                                               
|        |  | None                                                                                                                                                                                                                                            
|Item 2. |  | Changes in Securities                                                                                                                                                                                                                           
|        |  | None                                                                                                                                                                                                                                            
|Item 3. |  | Defaults Upon Senior Securities                                                                                                                                                                                                                 
|        |  | None                                                                                                                                                                                                                                            
|Item 4. |  | Submission of Matters to a Vote of Security Holders                                                                                                                                                                                             
|        |  | The annual meeting of shareholders was held on August 24,
	1999. The matters voted upon were the election of directors and
	other business, which may come before the meeting (of which there
	 was none). The results of votes were as follows:
|        |  | Election of directors:                                                                                                                                                                                                                          

|                  |  |     |           |          |  |  |        | 
|----------------- |  | --- | --------- | -------- |  |  | ------ | 
|                  |  | For |           | Withheld
|                  |  |     |           |         
|Max A. Coon       |  |     | 3,207,312 |          |  |  | 13,480 | 
|                 
|                 
|                 
|                 
|Eric L. Cross     |  |     | 3,207,312 |          |  |  | 13,480 | 
|                 
|                 
|                 
|                 
|Charles J. Drake  |  |     | 3,207,312 |          |  |  | 13,480 | 
|                 
|                 
|                 
|                 
|Joel I Ferguson   |  |     | 3,207,267 |          |  |  | 13,525 | 
|                 
|                 
|                 
|                 
|Richard G. Johns  |  |     | 3,207,267 |          |  |  | 13,525 | 
|                 
|                 
|                 
|                 
|Vincent Shunsky   |  |     | 3,207,312 |          |  |  | 13,480 | 
|                 
|                 
|                 
|                 
|J. Michael Warren |  |     | 3,207,312 |          |  |  | 13,480 | 
|                 
|                 
|                 
|                 
|Michael W. Wisti  |  |     | 3,207,312 |          |  |  | 13,480 | 
|                 
|                 
|                 
|                 
|Andrew S. Zynda   |  |     | 3,206,812 |          |  |  | 13,980 | 

|          |  |                                                                                                                                                      
|--------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|Item 5.   |  | Other Information                                                                                                                                    
|          |  | None                                                                                                                                                 
|Item 6(a) |  | Exhibits                                                                                                                                             
|3         |  | Restated Articles of Incorporation are hereby incorporated from
	Form 10-Q dated February 13, 1998.                                                  
|3.1       |  | By-laws are hereby incorporated by reference from Form S-4
	dated November 4, 1991 (File No. 33-43855).                                              
|4.2       |  | Resolution establishing Series Three Preferred Shares is
	hereby incorporated by reference from Form S-4 dated
	November 4, 1991 (File No. 33-43855).

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##### Table of Contents



PART II

OTHER INFORMATION (Continued)

|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.3   |  | Resolution authorizing the redemption of Series Two
	Preferred Stock and establishing Series Four Preferred Stock
	 and the terms of the subordinated notes is hereby incorporated
	by reference from Form 10-Q dated February  14, 1997.                                                                                                                                                                                                                
|4.4   |  | Resolution establishing Series Five Preferred Shares is
	hereby incorporated by reference from Form 10-K dated
	June  5, 1997.                                                                                                                                                                                                                                                                                                                           
|4.5   |  | Resolution establishing Series Six Preferred Shares is
	hereby incorporated by reference from Form 10-K dated
	June  23, 1999.                                                                                                                                                                                                                                                                                                                           
|10.1  |  | Incentive stock option plan adopted August 15, 1983,
	including the amendment (approved by shareholders August 
	25, 1987) to increase the authorized shares on which options may
	be granted by two hundred fifty thousand (250,000), up to five
	hundred thousand (500,000) shares of the common stock of the
	company is hereby incorporated by reference from the
	registrants annual report on Form 10-K for the fiscal
	year ended March 31, 1988.
|10.9  |  | Asset purchase agreement  Wright Plastic Products,
	Inc. is hereby incorporated by reference from registrants
	Form  10-Q dated November 14, 1996.                                                                                                                                                                                                                                                                                                      
|10.10 |  | Amended and restated loan agreement between Comerica Bank and
	Maxco, Inc. dated September 30, 1996 is hereby incorporated
	by reference from Form 10-Q dated November  14, 1996.                                                                                                                                                                                                                                                                        
|10.11 |  | Asset purchase agreement for the purchase of Atmosphere
	Annealing, Inc. is hereby incorporated by reference from Form 8-K
	 dated January 17, 1997.                                                                                                                                                                                                                                                                                                     
|10.12 |  | Asset purchase agreement  Axson North America, Inc. is
	 hereby incorporated by reference from Form 10-Q dated
	February 14, 1997.                                                                                                                                                                                                                                                                                                                      
|10.13 |  | Loan agreement between Michigan Strategic Fund and Atmosphere
	Annealing, Inc. is hereby incorporated by reference from Form
	10-Q dated February 13, 1998.                                                                                                                                                                                                                                                                                              
|10.14 |  | Loan agreement between LAM Funding, L.L.C. and borrower including
	 Guaranty-Maxco, Inc. is hereby incorporated by reference from
	Form 10-Q dated February 13, 1998.                                                                                                                                                                                                                                                                                    
|10.15 |  | First Amendment to amended and restated loan agreement between
	Comerica Bank and Maxco, Inc. dated August 1, 1997, is
	hereby incorporated by reference from Form 10-K dated
	June 24, 1998.                                                                                                                                                                                                                                                            
|10.16 |  | Second amendment to amended and restated loan agreement between
	Comerica Bank and Maxco, Inc. dated June 24, 1998 is hereby
	incorporated by reference from Form 10-K dated June 24,
	 1998.                                                                                                                                                                                                                                                            

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##### Table of Contents



PART II

OTHER INFORMATION (Continued)

|           |  |                                                                                                                                                                                                      
|---------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.17      |  | Third amendment to amended and restated loan agreement between
	Comerica Bank and Maxco, Inc. dated September 24, 1998, is
	hereby incorporated by reference from Form 10-Q dated
	November 12, 1998.
|10.18      |  | Maxco, Inc. 1998 Employee Stock Option Plan is hereby
	incorporated by reference from Form 10-Q dated
	November  12, 1998.                                                                           
|10.19      |  | Fourth amendment to amended and restated loan agreement between
	Comerica Bank and Maxco, Inc. dated June 22, 1999, is hereby
	 incorporated by reference from Form 10-K dated
	June 23, 1999.       
|10.20*     |  | Fifth amendment to amended and restated loan agreement between
	Comerica bank and Maxco, Inc. dated September 1, 1999.                                                                               
|27*        |  | Financial Data Schedule                                                                                                                                                                              
|Item  6(b) |  | Reports on Form 8-K                                                                                                                                                                                  
|           |  | None                                                                                                                                                                                                 






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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
its behalf by the undersigned thereunto duly authorized.






| |            
| | -----------
| | MAXCO, INC.

|                        |  |                                                                                                                                                                                    
|----------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Date: November 12, 1999 |  | /s/ VINCENT SHUNSKY
	--------------------------------------------------------
	Vincent Shunsky, Vice President-Finance
	and Treasurer (Principal Financial and
	Accounting Officer)

19