<PAGE>
                                    FORM 10-QSB

                         SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D. C.  20549

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

For Quarter Ended 01-31-98                       Commission File Number 0-2865
                                 UNIVERSAL MFG, CO.
                                -------------------
               (Exact name if Registrant as specified in its charter)

          NEBRASKA                                      42 0733240
          ---------                                     ----------
(State or other jurisdiction of incorporation  (IRS Employer Identification No.)
  or organization)

              405 Diagonal Street., P. O. Box 190, Algona, Iowa  50511
                      (Address of principal executive office)

Registrant's telephone number, including area code    (515)-295-3557
                                                    ----------------
                        Not  Applicable
Former name, former address and former fiscal year if changed since last report

"Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days."

                        Yes    X         No
                             ----------------------

"Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date."
            Number of shares outstanding as of 01-31-98            816,000
                                                                   -------
                                                                    common

Transitional Small Business Disclosed Format  ( Check one ):

                         Yes             No      X
                             ----------------------






                                          1

<PAGE>





                                UNIVERSAL MFG. CO.
                                    FORM 10-QSB
                                       INDEX


<TABLE>
<CAPTION>

                                                                          PAGES
<S>          <C>                                                          <C>  
Part I       FINANCIAL INFORMATION                                             
             Item 1.   Financial Statements:                                3  
                Balance Sheets - January 31, 1998                              
                (unaudited) and July 31, 1997                                  
                                                                               
                Statements of Income and Retained                           4  
                Earnings - Six Months ended January 31, 1998                   
                and 1997. (unaudited)                                          
                                                                               
                Statements of Income and Retained                           5  
                Earnings - Three Months ending January 31, 1998                
                And 1997. (unaudited)                                          
                                                                               
                Statements of Cash Flows - Six months ended                    
                January 31, 1998 and 1997. (unaudited)                       6 
                                                                               
                                                                               
                                                                               
                Notes to Financial Statements                              7-9 
                                                                               
             Item 2.   Management's Discussion and Analysis of 
                       Financial Condition and results of Operations         10
                                                                               
Part II      OTHER INFORMATION                                                 
             Item 1.   Legal proceedings                                     10
                                                                               
             Item 2.   Changes in securities                                 10
                                                                               
             Item 3.   Defaults upon senior securities                       10
                                                                               
             Item 4.   Submission of Matters to a vote of
                       security holders                                      10
                                                                               
             Item 5.   Other information                                     10
                                                                               
             Item 6.   Exhibits and reports on Form 8-K                      10
                                                                               
                                                                               
Signatures                                                                   11


</TABLE>

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<PAGE>

 
                               ITEM 1.  FINANCIAL STATEMENTS

UNIVERSAL MFG. CO.
BALANCE SHEETS
<TABLE>
<CAPTION>

                                                           January 31,
                                                               1998               July 31,
                                                           (Unaudited)              1997
                                                          --------------         -----------
<S>                                                       <C>                    <C>
ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                                    $338,566            $881,389
  Accounts receivable                                         1,714,557           1,884,917
  Inventories                                                 3,822,655           2,412,712
  Income taxes recoverable                                       31,303              23,180
  Prepaid expenses                                              204,040              70,929
                                                          --------------         -----------
  Total current assets                                        6,111,121           5,273,127
                                                          --------------         -----------
Deferred Income Taxes                                            44,208              44,208
                                                          --------------         -----------
Lease Receivable                                                  7,596              14,041
                                                          --------------         -----------
PROPERTY - At cost
  Land                                                          120,499             120,499
  Buildings                                                   1,179,892           1,157,116
  Machinery and equipment                                     1,007,839             938,466
  Furniture and fixtures                                        227,599             208,086
  Trucks and automobiles                                        748,161             743,530
                                                          --------------         -----------
  Total property                                              3,283,991           3,167,697
  Less accumulated depreciation                              (2,118,061)         (2,055,549)
                                                          --------------         -----------
  Property - net                                              1,165,930           1,112,148
                                                          --------------         -----------
                                                             $7,328,855          $6,443,524
                                                          --------------         -----------
                                                          --------------         -----------
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                           $2,122,489          $1,419,725
  Dividends payable                                             204,000             204,000
  Payroll taxes                                                  35,882              24,944
  Income taxes payable                                              -                     0
  Accrued compensation                                           54,259              87,631
  Accrued local taxes                                            19,093              22,269
                                                          --------------         -----------
  Total current liabilities                                   2,435,723           1,758,569
                                                          --------------         -----------
STOCKHOLDERS' EQUITY
  Common stock, $1 par value,
    authorized, 2,000,000 shares,
    issued and outstanding, 816,000 shares                      816,000             816,000
  Additional paid-in capital                                     17,862              17,862
  Retained earnings                                           4,059,270           3,851,093
                                                          --------------         -----------
  Total stockholders' equity                                  4,893,132           4,684,955
                                                          --------------         -----------
                                                             $7,328,855          $6,443,524
                                                          --------------         -----------
                                                          --------------         -----------

</TABLE>




                                         3


<PAGE>



UNIVERSAL MFG. CO.
STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>


                                                                    Six Months Ended
                                                          ----------------------------------
                                                           January 31,           January 31,
                                                               1998                 1997
                                                          --------------         -----------
<S>                                                       <C>                    <C>
NET SALES                                                    $9,493,294          $9,649,036

COST OF GOODS SOLD                                            7,461,399           7,558,452
                                                          --------------         -----------
GROSS PROFIT                                                  2,031,895           2,090,584

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES                                     1,056,143           1,009,285
                                                          --------------         -----------

INCOME FROM OPERATIONS                                          975,752           1,081,299
                                                          --------------         -----------

OTHER INCOME:
  Interest                                                       26,223              27,184
  Other income                                                    8,155               9,091
                                                          --------------         -----------
  Total other income                                             34,378              36,275
                                                          --------------         -----------

INCOME BEFORE INCOME TAXES                                    1,010,130           1,117,574

INCOME TAXES                                                    393,953             435,854

                                                          --------------         -----------
NET INCOME                                                      616,177             681,720

RETAINED EARNINGS, Beginning of period                        3,851,093           3,514,161

DIVIDENDS                                                      (408,000)           (408,000)
                                                          --------------         -----------
RETAINED EARNINGS, End of period                             $4,059,270          $3,787,881
                                                          --------------         -----------
                                                          --------------         -----------

EARNINGS PER COMMON SHARE:

 Earnings per common share                                        $0.76               $0.84
                                                          --------------         -----------
                                                          --------------         -----------

</TABLE>



                                         4



<PAGE>



UNIVERSAL MFG. CO.
STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>


                                                                   Three Months Ended
                                                          ----------------------------------
                                                           January 31,           January 31,
                                                               1998                 1997
                                                          --------------         -----------
<S>                                                       <C>                    <C>
NET SALES                                                    $4,117,510          $4,794,903

COST OF GOODS SOLD                                            3,247,221           3,999,027
                                                          --------------         -----------
GROSS PROFIT                                                    870,289             795,876

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES                                       513,514             513,472
                                                          --------------         -----------

INCOME FROM OPERATIONS                                          356,775             282,404
                                                          --------------         -----------

OTHER INCOME:
  Interest                                                       13,000              12,097
  Other income                                                    3,544               5,346
                                                          --------------         -----------
  Total other income                                             16,544              17,443
                                                          --------------         -----------

INCOME BEFORE INCOME TAXES                                      373,319             299,847

INCOME TAXES                                                    145,594             116,941

                                                          --------------         -----------
NET INCOME                                                      227,725             182,906

RETAINED EARNINGS, BEGINNING OF QUARTER                       4,035,545           3,808,875

DIVIDENDS PAID                                                 (204,000)           (204,000)
                                                          --------------         -----------
RETAINED EARNINGS, END OF QUARTER                            $4,059,270          $3,787,781
                                                          --------------         -----------
                                                          --------------         -----------

EARNINGS PER COMMON SHARE:

 Earnings per common share                                        $0.28               $0.22
                                                          --------------         -----------
                                                          --------------         -----------

</TABLE>



                                         5


<PAGE>


UNIVERSAL MFG. CO.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>


                                                                  Six Months Ended
                                                          ----------------------------------
                                                           January 31,           January 31,
                                                               1998                 1997
                                                          --------------         -----------
<S>                                                       <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                     $616,177            $681,720
Adjustments to reconcile net income to
 net cash from operating activities:
  Depreciation                                                   62,512              98,137
  Gain on sale of property                                            0                (595)
Changes in operating assets and liabilities:
  Accounts receivable                                           170,360            (202,759)
  Inventories                                                (1,409,943)            296,484
  Prepaid expenses                                             (133,111)            (64,331)
  Income taxes recoverable                                       (8,123)            (61,380)
  Lease receivable                                                6,445               5,774
  Accounts payable                                              702,764            (303,046)
  Payroll taxes                                                  10,938              23,199
  Accrued compensation                                          (33,372)            (42,543)
  Accrued local taxes                                            (3,176)              5,139
  Income taxes payable                                                0             (56,790)
                                                          --------------         -----------
Net cash flows from operating activities                        (18,529)            379,009
                                                          --------------         -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property                                        0               7,300
Purchases of property                                          (116,294)           (148,857)
Proceeds from maturities of investments                               0                   0
                                                          --------------         -----------
Net cash flows from investing activities                       (116,294)           (141,557)
                                                          --------------         -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends                                           (408,000)           (408,000)
                                                          --------------         -----------
Net cash flows from financing activities                       (408,000)           (408,000)
                                                          --------------         -----------

NET CHANGE IN CASH AND CASH EQUIVALENTS                        (542,823)           (170,548)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                881,389             934,072
                                                          --------------         -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                     $338,566            $763,524
                                                          --------------         -----------
                                                          --------------         -----------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during period for:
  Income taxes                                                 $403,955            $554,024
                                                          --------------         -----------
                                                          --------------         -----------

</TABLE>
 

                                          6


<PAGE>


                                 UNIVERSAL Mfg. Co.
                           NOTES TO FINANCIAL STATEMENTS
                            AS OF AND FOR THE SIX MONTHS
                         ENDED JANUARY 31, 1998 (unaudited)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS - The Company is engaged in the business of remanufacturing
and selling on a wholesale basis remanufactured engines and other remanufactured
automobile parts for Ford, Lincoln and Mercury automobile and trucks. The
Company is a franchised remanufacturer for Ford Motor Company with a defined
territory. The Company purchases the majority of its new raw materials from Ford
Motor Company. Remanufactured engines for non-Ford vehicles are also marketed on
a limited basis. The principal markets for the Company's products are automotive
dealers and jobber supply houses. The Company has no separate segments, major
customers, foreign operations or export sales.

USE OF ESTIMATES - In preparing financial statements in conformity with
generally accepted principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period.  Actual results could differ from those estimates.

INVENTORIES - Inventories are stated at the lower of cost (last-in first-out
method) or market.

INVESTMENTS - Short-term investments are considered as either trading securities
or available for sale securities and, accordingly, are carried at fair market
value in the Company's financial statements.

DEPRECIATION, MAINTENANCE, AND REPAIRS - Property is depreciated generally as
follows:
<TABLE>
<CAPTION>

Assets              Depreciation Method                          Lives
------              -------------------                          -----
<S>                 <C>                                          <C>
Buildings           Straight-line and declining balance          10 - 20 years
Mach & Equip        Declining balance                             7 - 10 years
Furniture & Fix.    Declining balance                             5 - 7 years
Trucks & Auto's     Declining balance                             3 - 5 years

</TABLE>

Maintenance and repairs are charged to operations as incurred. Renewals and
betterments are capitalized and depreciated over their estimated useful service
lives. The applicable property accounts are relieved of the cost and related
depreciation upon disposition. Gains or losses are recognized at the time of
disposal.

REVENUE RECOGNITION - Sales and related cost of sales are recognized primarily
upon shipment of product.

CASH EQUIVALENT - For the purposes of the Statement of Cash Flows, the Company
considers all highly liquid instruments purchased with a maturity of three
months or less to be cash equivalents.


                                          7


<PAGE>

NOTES TO FINANCIAL STATEMENTS - CONTINUED
(Unaudited)

Financial Instruments - Cash and cash equivalents, accounts receivable and
accounts payable are short term in nature and the values at which they are
recorded are considered to be reasonable estimates of their fair market values.

Earnings Per Share - Earnings per share have been computed on the weighted
average number of shares outstanding. (816,000 shares.)

Company Representation - In the opinion of the Company, the accompanying
unaudited financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial position as
of January 31, 1998, and the results of operations and cash flows for the three
and six month periods ending January 31, 1998 and January 1997. The results of
operations for these periods are not necessarily indicative of results to be
expected for the full year. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted. The Company suggests that
these condensed financial statements be read in conjunction with the financial
statements and notes included in the Company's Form 10-KSB for the fiscal year
ended July 31, 1997.

CHANGES IN ACCOUNTING PRINCIPLES

Pending Accounting Changes - In February 1997, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards No.
128, "Earning per Share" and in addition issued "Statement of Financial
Accounting  Standards No. 129, "Disclosure of Information about Capital
Structure." In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" and Statement of Financial
Accounting Standards No. 131, "Disclosure about segments of an Enterprise and
Related Information", all of which are effective for fiscal years beginning
after December 15, 1997. The adoption of these statements is not expected to
have a material impact on the operations of the company.

LEASE RECEIVABLE

On May 26, 1993, the Company entered into a lease agreement with another
manufacturer to lease equipment at 8% interest for a sixty-month period. The
total minimum lease payments are $13,687 and the unearned income is $6,091, as
of January 31, 1998. These amounts are shown on a net basis for financial 
statement purposes.







                                          8

<PAGE>


                     NOTES TO FINANCIAL STATEMENTS - CONTINUED
                                    (Unaudited)



EPA PROJECT COSTS

In February, 1991, the Company was served with a complaint from the United
States Environmental Protection Agency (EPA), which contained eight counts of
alleged violations of the Resource Conservation and Recovery Act of 1976 and the
Hazardous Solid Waste Amendments of 1984. The complaint alleges, among other
things, that the Company failed to adequately test and properly transport
certain residue of hazardous wastes, which it was treating at its facility. The
Company entered into a Consent Agreement and Consent Order with the EPA, dated
May 6, 1994, which provides for settlement of this complaint.

This settlement called for payment of civil penalties of $32,955 and for
completion of certain remedial projects, estimated to cost approximately
$149,725. Total costs paid as of January 31, 1998 are $90,113. The remaining
amount of $59,612 has been recorded, as a liability, in the accompanying
financial statements.





                                          9


<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Sales for the first six months of fiscal 1997-98 were 1.6% lower than a year
ago. This sales decrease is the result of the unusually mild winter and the
de-authorization of brake shoes in August of 1997.

Earnings from operations increased during the second quarter as a result of the
purchase of fuel pump seed units a year ago.

The lower cash balance for January 31, 1998, compared to July 31, 1997, is due
to increased investment in inventories. Inventories were increased to
participate in expanded distribution programs for Ford Motor Company.  Accounts
Payable increases are also due to the expansion of inventories and to a change
in accrual procedures, which recognizes product receipt prior to invoicing.

Part II
Item 1.   LEGAL PROCEEDINGS:

          With  respect to the Supplemental Environmental Project (the "SEP")
          being performed by the Company pursuant to the May 6, 1994 Consent
          Agreement with the United States Environmental Protection Agency
          ("EPA"), the Company has paid total costs of $90,113 for work
          performed. No further direction has been received from the EPA
          regarding any testing or clean-up that may be required for
          contamination found in the large pit after the sludge was removed. No
          estimate of these costs can be made at this time. If the EPA
          determines that no further work is required under the SEP, the Company
          will owe a deferred penalty of approximately $32,955 under the terms
          of the Consent Agreement with the EPA. 

          Please refer to the Part I, Item 3 of the Form 10-KSB report for 
          the Company's fiscal year ended July 31, 1997, for further 
          discussion of this matter.

Item 2.   CHANGES IN SECURITIES                             NONE
Item 3.   DEFAULTS UPON SENIOR SECURITIES                   NONE
Item 4.   SUBMISSION OF MATTERS TO A                        NONE
          VOTE OF SECURITY HOLDERS
Item 5.   OTHER INFORMATION                                 NONE
Item 6.   EXHIBITS AND REPORTS ON FORM 8-K:
          (a.) Exhibits       NONE
          (b.) Reports on Form 8-K:
               The Company did not file any reports on
               Form 8-K during the quarter for which this
               report is filed.


                                          10



<PAGE>


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.




Date  3-3-98        /s/ Donald D. Heupel
     --------      --------------------------------------------------------
                    Donald D. Heupel, President and Chief Financial Officer






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