<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 04-30-02                         Commission File Number 0-2865

                               Universal Mfg, Co.
                                -----------------
             (Exact name of Registrant as specified in its charter)


            NEBRASKA                                      42 0733240
            --------                                      ----------
(State or other jurisdiction of               (IRS Employer Identification No.)
 incorporation 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 90 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 10-31-01  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
                                                                           -----
<C>       <C>      <S>                                                     <C>
Part I    Financial Information
          ---------------------
          Item 1.  Financial Statements (unaudited):
                   Consolidated Balance Sheets as of April 30, 2002
                   and July 31, 2001                                           3

                   Consolidated Statements of Loss and Retained
                   Earnings - Three Months Ended April 30, 2002
                   and April 28, 2001                                          4

                   Consolidated Statements of Loss and Retained
                   Earnings - Nine Months Ended April 30, 2002
                   And April 28, 2001                                          5

                   Consolidated Statements of Cash Flows - Nine
                   Months Ended April 30, 2002 and April 28, 2001              6

                   Notes to Consolidated Financial Statements               7-11

          Item 2.  Management's Discussion and Analysis of Financial
                   Condition and Results of Operations                     12-15



Part II   Other Information
          -----------------

          Item 1.  Legal Proceedings                                          16

          Item 2.  Changes in securities                                      16

          Item 3.  Defaults upon senior securities                            16

          Item 4.  Submission of Matters to a vote of security holders        16

          Item 5.  Other information                                          16

          Item 6.  Exhibits and reports on Form 8-K                           16

          Signatures                                                          17
</TABLE>

                                       2.

<PAGE>

                          ITEM 1. FINANCIAL STATEMENTS

UNIVERSAL MFG. CO. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
                                                               April 30,       July 31,
                                                                 2002            2001
                                                              -----------    -----------
<S>                                                           <C>            <C>
ASSETS
CURRENT ASSETS:
  Accounts receivable, net of allowances
    of $71,718 and $46,718, respectively                      $ 2,860,399    $ 3,645,445
  Inventories                                                   8,063,393     10,642,710
  Prepaid expenses                                                 59,084         48,397
  Property and equipment held for sale                            321,188         33,912
  Income tax receivable                                           298,873
  Deferred income taxes                                           504,620        293,942
                                                              -----------    -----------
    Total current assets                                       12,107,557     14,664,406
                                                              -----------    -----------
PROPERTY AND EQUIPMENT:
  Land                                                            100,499        100,499
  Buildings                                                     1,616,426      1,844,201
  Machinery and equipment                                       1,108,769      1,131,505
  Furniture and fixtures                                          472,923        637,559
  Trucks and automobiles                                          627,761      1,080,632
  Construction-in-Progress                                          8,550         33,280
                                                              -----------    -----------
    Total property                                              3,934,928      4,827,676
  Less accumulated depreciation                                (2,477,854)    (2,574,704)
                                                              -----------    -----------
  Property and Equipment- net                                   1,457,074      2,252,972
                                                              -----------    -----------
    TOTAL ASSETS                                              $13,564,631    $16,917,378
                                                              ===========    ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Bank overdrafts                                             $    28,630    $     6,239
  Current portion of long-term debt                             5,330,435      5,575,610
  Accounts payable                                              2,861,942      5,266,128
  Income taxes payable                                                            44,147
  Accrued compensation and payroll taxes                          293,783        231,305
  Accrued other                                                   123,709        141,868
                                                              -----------    -----------
    Total current liabilities                                   8,638,499     11,265,297
  Long-term debt, net of current portion                          449,934        489,054
                                                              -----------    -----------
    Total Liabilities                                           9,088,433     11,754,351
                                                              -----------    -----------
MINORITY INTEREST IN SUBSIDIARY                                   109,847        119,844
                                                              -----------    -----------
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                                             3,532,489      4,209,321
                                                              -----------    -----------
    Total Stockholders' Equity                                  4,366,351      5,043,183
                                                              -----------    -----------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $13,564,631    $16,917,378
                                                              ===========    ===========
</TABLE>

                                        3

<PAGE>

UNIVERSAL MFG. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (unaudited)
<TABLE>
<CAPTION>

                                                                         THREE MONTHS ENDED
                                                                     -----------------------------
                                                                      April 30,         April 28,
                                                                        2002              2001
                                                                     -----------       -----------
<S>                                                                  <C>                <C>
NET SALES                                                            $ 5,567,889       $ 8,172,677

COST OF GOODS SOLD                                                    (4,980,043)       (6,492,250)
                                                                     -----------       -----------
GROSS PROFIT                                                             587,846         1,680,427

SELLING, GENERAL AND
     ADMINISTRATIVE EXPENSES                                          (1,457,027)       (1,543,746)
IMPAIRMENT LOSS                                                         (179,998)
                                                                     -----------       -----------

INCOME/(LOSS)FROM OPERATIONS                                          (1,049,179)          136,681
                                                                     -----------       -----------
OTHER INCOME(EXPENSE):
     Loss on sales of property and equipment                              (4,352)
     Interest Expense                                                    (64,340)         (102,054)
     Other (Expense) income                                               (2,295)           (4,810)
                                                                     -----------       -----------
     Total Other Income (Expense)                                        (70,987)         (106,864)
                                                                     -----------       -----------

INCOME/(LOSS) BEFORE MINORITY INTEREST AND INCOME TAXES               (1,120,166)           29,817

MINORITY INTEREST IN NET (EARNINGS)LOSS OF SUBSIDIARY                      8,286            (2,210)
                                                                     -----------       -----------
INCOME/(LOSS) BEFORE INCOME TAXES                                     (1,111,880)           27,607

INCOME TAX BENEFIT(EXPENSE)                                              495,167           (14,326)

                                                                     -----------       -----------
NET INCOME (LOSS)                                                       (616,713)           13,281

RETAINED EARNINGS, Beginning of period                                 4,149,202         4,081,159

                                                                     -----------       -----------
RETAINED EARNINGS, End of period                                     $ 3,532,489       $ 4,094,440
                                                                     ===========       ===========
PER COMMON SHARE INFORMATION:
Basic and diluted loss per common share                                 $  (0.76)           $ 0.02
                                                                     ===========       ===========
</TABLE>


                                 4

<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
<TABLE>
<CAPTION>

                                                           NINE MONTHS ENDED
                                                       -------------------------
                                                         April 30,     April 28,
                                                           2002          2001
                                                       -----------   -----------
<S>                                                    <C>           <C>


CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                               $  (676,832)  $   (10,273)
Adjustments to reconcile net loss to
  net cash used in operating activities:
     Depreciation                                          325,766       175,850
     Impairment Loss                                       179,998
     Gain on sales of property and equipment              (302,506)
     Deferred income taxes                                (210,678)
     Minority interest                                     (10,017)        8,867
Changes in operating assets and liabilities:
     Accounts receivable                                   785,046       403,840
     Inventories                                         2,579,317    (1,880,613)
     Income taxes receivable/payable                      (343,020)       (9,844)
     Prepaid expenses                                      (10,687)      (19,920)
     Accounts payable                                   (2,404,186)      361,103
     Accrued expenses                                       44,318       100,973
                                                       -----------   -----------
Net cash used in operating activities                      (43,481)     (870,017)
                                                       -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property and equipment              419,889
Cash paid to acquire Value Independent Parts                          (5,157,562)
Purchases of property and equipment                       (114,524)      (80,598)
                                                       -----------   -----------
Net cash provided by (used in) investing activities        305,365    (5,238,160)
                                                       -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends                                                    (122,400)
Net increase in bank overdrafts                             22,391
Payment of capital leases                                  (36,571)
Net (decrease) increase in revolving notes payable        (247,724)    5,961,705
LLC membership contributions received                                    100,000
Distribution to minority shareholder                        (5,085)
Principal received on note receivable - officer              5,105
                                                       -----------   -----------
Net cash provided by (used in) financing activities       (261,884)    5,939,305
                                                       -----------   -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS                          0      (168,872)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                 0       336,756
                                                       -----------   -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD             $         0   $   167,884
                                                       ===========   ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (refunded) for income taxes                  $    18,440   $     3,761
                                                       ===========   ===========
Cash paid for interest                                 $   220,239   $   245,823
                                                       ===========   ===========

Cash Paid to Acquire Value Independent Parts:
  Assets acquired:
     Inventories                                                     $ 3,753,288
     Accounts Receivable                                                 638,131
     Property and equipment                                              756,392
     Other                                                                 9,751
                                                                     -----------
Total Assets Acquired                                                $ 5,157,562
                                                                     ===========
</TABLE>

                                       5

<PAGE>


UNIVERSAL MFG. CO. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (unaudited)

<TABLE>
<CAPTION>
                                                               NINE MONTHS ENDED
                                                          ----------------------------
                                                             April 30,       April 28,
                                                               2002            2001
                                                          ------------    ------------
<S>                                                       <C>             <C>
NET SALES                                                 $ 20,029,128    $ 23,601,198
COST OF GOODS SOLD                                         (16,536,004)    (19,209,798)
                                                          ------------    ------------
GROSS PROFIT                                                 3,493,124       4,391,400
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                (4,696,189)     (4,232,072)
IMPAIRMENT LOSS                                               (179,998)
                                                          ------------    ------------
INCOME/(LOSS) FROM OPERATIONS                               (1,383,063)        159,328
                                                          ------------    ------------
OTHER INCOME(EXPENSE):
  Gain on sales of property and equipment                      302,506
  Interest Income                                                               23,226
  Interest Expense                                            (235,457)       (245,823)
  Other Income                                                  94,118          53,546
                                                          ------------    ------------
    Total Other Income (Expense)                               161,167        (169,051)
                                                          ------------    ------------
INCOME/(LOSS) BEFORE MINORITY INTEREST AND INCOME TAXES     (1,221,896)         (9,723)
MINORITY INTEREST IN NET (EARNINGS)LOSS OF SUBSIDIARY           10,017          (4,342)
                                                          ------------    ------------
INCOME/(LOSS) BEFORE INCOME TAXES                           (1,211,879)        (14,065)
INCOME TAX BENEFIT(EXPENSE)                                    535,047           3,792
                                                          ------------    ------------
NET INCOME (LOSS)                                             (676,832)        (10,273)
RETAINED EARNINGS, Beginning of period                       4,209,321       4,104,713
                                                          ------------    ------------
RETAINED EARNINGS, End of period                          $  3,532,489    $  4,094,440
                                                          ============    ============
PER COMMON SHARE INFORMATION:
  Basic and diluted loss per common share                 $      (0.83)   $      (0.01)
                                                          ============    ============
</TABLE>

                                        6

<PAGE>


UNIVERSAL MFG.CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim financial statements - The accompanying consolidated financial
statements of Universal Mfg. Co. and subsidiaries (Company) are unaudited. In
the opinion of the Company's management, the consolidated financial statements
include all adjustments necessary to state fairly the financial position of the
Company as of April 30, 2002 and July 31, 2001, and the results of operations
and cash flows for the three month and nine month periods ended April 30, 2002,
and April 28, 2001. Certain notes and other information have been condensed or
omitted from the financial statements presented in this quarterly report on Form
10-QSB. Accordingly, these financial statements should be read in conjunction
with the Company's annual report on Form 10-KSB for the year ended July 31,
2001.

Nature of operations - Universal Manufacturing, the parent company, is engaged
in the business of remanufacturing and distribution, on a wholesale basis,
electric fuel pumps, transfer cases, calipers and other automobile parts for all
makes and models of vehicles. The principal markets for the Company's products
are automotive dealers and other automotive parts distributors located
throughout the United States. Universal Distribution LLC distributes Ford and
Motorcraft engine assemblies, transmission assemblies, and other components to
Ford Dealerships. Rainbo CO LLC dba Value Independent Parts (VIP) is a full line
distributor of AC Delco, Motorcraft and other well known manufactured auto
parts. VIP distributes to jobbers, repair shops as well as dealers.

During the year ended July 31, 1999, and continuing throughout the year ended
July 31, 2000, Ford deauthorized the remanufacturing of numerous automotive
parts which were being remanufactured by the Company.

     On October 1, 1998, the Company signed a new sales agreement with Ford
authorizing the Company to be a Ford Authorized Distributor. This agreement
expired December 31, 2001. Effective August 2001, the Ford Customer Service
Division advised the Company of significant changes that impacted the existing
sales agreement between Ford and the Company. The Company's prior sales
agreement with Ford authorized the distribution of Ford replacement engine
assemblies, transmission assemblies, and other components to Ford and
Lincoln-mercury dealerships. In addition, the sales agreement authorized the
distribution of Motorcraft replacement parts to Ford and Lincoln-Mercury
dealerships and independent installers. The change required separate sales
agreements for the distribution of Ford assemblies and Motorcraft replacement
parts, and Ford no longer authorizes the distribution of both product lines from
a single supplier. As a result, the Company had to decide whether to distribute
Ford assemblies or Motorcraft replacement parts and then enter into a new sales
agreement. The Company had considered both options, considering reduced sales
volume, potential future opportunities, and other factors and had elected to
discontinue distribution of Motorcraft replacement parts effective January 1,
2002.The decision resulted in the reduction of sales volume because the Company
was forced to surrender an entire distribution line.

                                        7

<PAGE>

The Company signed a new agreement effective January 1, 2002 to distribute Ford
and Motorcraft engine assemblies, transmission assemblies and other components
to Ford and Lincoln-Mercury dealerships.

Presentation - The accompanying consolidated financial statements include the
accounts of Universal Mfg. Co., and its subsidiaries, Universal Distribution LLC
and Rainbo Company LLC dba Value Independent Parts. Universal Distribution LLC
is owned 99% by Universal Mfg. CO. and 1% by the Company's President and was
established on June 30, 1999. Rainbo Company LLC was acquired September 29,
2000. All intercompany balances and transactions have been eliminated in
consolidation.

Use of Estimates - In preparing financial statements in conformity with
accounting principles generally accepted in the United States of America,
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 consolidated financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.

2.   INVENTORIES -

     Inventories consist of the following as of :

                                           April 30,            July 31,
                                             2002                 2001
FIFO balance:
  Product cores                           $ 3,498,248         $ 4,198,045
  Raw materials                               679,386             666,723
  Finished engines                          1,720,175           1,153,637
  Finished small parts                      5,507,987           8,142,820
                                          -----------         -----------
    Total FIFO balance                     11,405,796          14,161,225

LIFO reserve                               (2,595,904)         (3,083,616)
Obsolescence reserve                         (746,499)           (434,899)
                                          -----------         -----------

  Total inventories                       $ 8,063,393         $10,642,710
                                          ===========         ===========

                                        8

<PAGE>

3.   LONG-TERM DEBT

The Company has two revolving credit agreements with Firstar Bank, N.A. totaling
$6,000,000 in available borrowings. Borrowings totaling $5,330,435 as of April
30, 2002 bear interest payable monthly at variable rates equal to the bank's
prime rate or prime rate less 1.0% (effective rates at 4.75% as of April 30,
2002). The agreements mature July 31, 2002. Maximum availability under these
agreements is based on a borrowing base calculated as a percentage of eligible
inventory and accounts receivable amounts as defined by the agreements.
Substantially all assets of the Company are pledged as collateral against
outstanding borrowings. The credit agreements contain certain covenants,
including but not limited to requirements for the Company to maintain certain
tangible net worth and debt to net worth ratio amounts and limits to capital
expenditures. The Company was out of compliance with the Tangible Net Worth
covenant as of April 30, 2002.

4.   EPA PROJECT COSTS

On May 6, 1994, the Company and the United States Environmental Protection
Agency (EPA) entered into a Consent Agreement and Consent Order (Agreement) to
settle a complaint filed against the Company in 1991. As required by the
Agreement, the Company immediately paid a civil penalty of $32,955 and conducted
a Supplemental Environmental Project (SEP) during July and August of 1994 which
involved sludge removal and pit cleaning at the Company's Plant at a cost of
$91,076. After the sludge was removed, additional contamination was found in
"Pit D", an enclosed underground wastewater containment under the Company's
Plant. On June 10, 1998, the Company received notice from the EPA authorizing
submission of a detailed technical proposal for an additional SEP to ascertain
information concerning environmental conditions at the Company's Plant. The EPA
notice stated that if approved, the cost of the additional SEP work could be
used to offset the remaining approximately $37,000 in deferred penalties owed by
the Company to the EPA under the Agreement. On August 6, 1998, the Company's
consultant submitted a proposed SEP plan to the EPA detailing soil sampling work
and groundwater studies to be conducted across the Plant property over a 48-week
period at an estimated cost of $62,000, yielding an anticipated $38,840 in after
tax costs to the Company for offset against the remaining deferred penalty. The
EPA approved the consultant's proposal on September 11, 1998, and the work was
completed in November of 1999 within budget. The consultant's report to the EPA
disclosed chlorinated solvent contamination in the soil and groundwater only in
the immediate area of "Pit D." The consultant recommended conversion of "Pit D"
to a groundwater sump for removal and treatment of contaminated groundwater and
continued monitoring groundwater on the Company's property to detect any
migration of the contamination. The consultant recommended against removal of
contaminated soils due to cost and access problems. To date the EPA has not
responded to the consultant's recommendations, and the Company has no
information concerning the cost or extent of any further work that EPA may
require.

5.   GAIN ON SALE OF FIXED ASSETS

A facility located in Omaha, NE was sold for $397,684 on January 2, 2002. The
resulting gain totaled $341,498.

6.   IMPAIRMENT LOSS AND ASSETS HELD FOR SALE

Effective April 2002, Service and Parts Operations Unit of General Motors

                                        9

<PAGE>

Corporation (ACDelco) has advised VIP that as a result of an ACDelco national
program to limit the number of dedicated distributors, the existing distribution
agreement between ACDelco and VIP will not be continued. The pending change will
require that VIP purchase ACDelco products from another ACDelco authorized
distributor or discontinue resale of ACDelco branded products. ACDelco branded
parts accounted for the largest sales volume of the Company's VIP operating
division. Due to poor operating results and this loss of future sales volume,
the Company initiated a process to sell its equipment and facilities associated
with VIP operations. Pursuant to SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," the Company
recorded a $179,998 expense to reflect the property and equipment associated
with the VIP facilities at its estimated fair value. The net carrying amount of
such assets was reduced to $321,188.

PROPERTY AND EQUIPMENT HELD FOR SALE, NET AS OF APRIL 30, 2002:

  Buildings                                                       $ 232,515
  Machinery and equipment                                            30,532
  Office equipment and software                                     177,975
  Trucks and automobiles                                            337,524
                                                                  ---------
           Total property and equipment                             778,546
  Accumulated depreciation                                         (277,360)
  Impairment Reserve                                               (179,998)
                                                                  ---------
           Property and equipment held for sale - net             $ 321,188
                                                                  =========

7.   Going Concern

During the last several fiscal years, Universal Manufacturing Co has experienced
major events that impacted all operating divisions. During 1999 and continuing
through 2001, Ford has deauthorized Universal Manufacturing from remanufacturing
all products lines. Currently, Universal Manufacturing Co is remanufacturing
electric fuel pumps, transfer cases, transfer case motors, calipers, power
steering pumps and integral gears under it's own Retech label and attempting to
break into the aftermarket. This is a very competitive price sensitive market.

Universal Distribution Co was a Ford Authorized Distributor of both Powertrain
and Motorcraft small parts and accessories. The contract expired on December 31,
2001. Ford would renew the distribution agreement for either Powertrain or
Motorcraft small parts and accessories, but not both. Universal Distribution
chose the Powertrain agreement due to market conditions in the distribution area
at the time of the decision. Since last fall, Powertrain sales decrease from the
prior year. Factors contributing to this include 0% financing on new vehicles,
increase competition from other Ford Authorized Distributors, and an overall
slowdown in the economy.

Rainbo Co. LLC dba as VIP was purchased October 1, 2000. VIP was a full-line
distributor with AC Delco comprising approximately 60% of the total sales of VIP
and Motorcraft approximately 10% of total sales of VIP. VIP's contract with Ford
also expired December 31, 2001 and was not renewed. VIP was notified by AC Delco
that due to territory realignments they would not be considered a direct
distributor which goes into effect June 24, 2002. Universal Manufacturing Co is
currently considering options, which includes selling or disposing of VIP
assets.

                                       10

<PAGE>


Sales since last fall decreased over the same period in prior years due to 0%
financing on new vehicles and a general slowdown in the economy.

The events that have occurred along with a slow economy has reduced sales and
margins in all operating divisions and eroded the net worth of the company.
Obsolescence reserves were increased due to excess inventories on hand as a
result of lost markets. VIP recorded impairment on fixed assets during the third
quarter of approximately $180,000. The poor operating results in the third
quarter caused a violation of a note covenant on tangible net worth. A request
for waiver has been sent to the bank with anticipated approval. The note expires
July 31, 2002, but an extension until December 31, 2002 is anticipated.

To replace the volume lost, Universal Manufacturing has stepped up marketing
efforts by sending mailings to new possible markets for the existing product
lines. There are current negotiations with 2 potential customers that would
increase sales substantially. Also, extensive research is being done and
contacts made for possible new manufacturing opportunities. Manufacturing costs
are being reduced through purchasing efficiencies and through the use of
technology for customer ordering. Universal Distribution is reviewing core truck
routes for possible consolidation, using technology for customer ordering, and
reviewing the shipping methods for efficiencies. It is too early to anticipate
the overall adverse financial impact of the lost sales volumes or the Company's
ability to replace those lost sales volumes at a level to achieve profitability.

                                         11

<PAGE>


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

RESULTS OF OPERATIONS:

Thirteen weeks ended April 30, 2002 compared to Thirteen weeks ended April 28,
2001.

Third quarter sales for the consolidated Company were approximately 55% lower
than the second quarter a year ago. Powertrain sales in Universal Distribution
were approximately 22% lower than the same quarter a year ago. This was due in
part to the general slowdown of the economy and low interest promotions to sell
new cars. VIP sales were approximately 28% below last year's due to a general
business slowdown that started on September 11, 2001. Universal Manufacturing
sales were down 52% from same quarter last year. Last year, there were lines
still being remanufactured as part of the Ford Authorized Remanufacturing
program during the third quarter.

Gross profit as a per cent of sales was 10.5% for the third quarter of this year
compared to 17.2% for the second quarter of last year. The major difference was
due to increasing obsolescence reserves in direct proportion to the total FIFO
balance of the inventories.

Selling, general and administrative (SG&A) expenses for the Company as a per
cent of sales was 26.2% this quarter compared to 18.8% for the corresponding
quarter last year. SG&A dollars were down $165,938 compared to the same quarter
last year. Competition forced the Company to revise freight policies to
qualifying customers on all orders. This increased expense in Universal
Distribution and is expected to continue. The warehouses in Des Moines and Omaha
are actively seeking tenants to sublease unneeded space. Currently, core
retrieval routes are being reviewed in Universal Distribution and any
appropriate route consolidations will be implemented. New customer ordering
procedures are being tested to reduce labor costs and increase customer service.
There was an impairment charge of $179,998 taken during the third quarter to
recognize expected losses of VIP's fixed assets being offered for sale.

Thirty-nine weeks ended April 30, 2002 compared to thirty-nine weeks ended April
28, 2001.

Revenues for the Company were down approximately 16.7% for the first nine months
of this year compared to the first nine months of last year. This was due to the
loss of the Motorcraft business in Universal Distribution and VIP and the slow
down in the economy since September 11, 2001.

Gross profit as a per cent of was sales was 17.4% for the first nine months of
this year compared to 17.4% for the first nine months of last year. The gross
profit is expected to decline for the rest of this fiscal year. This is due to
the loss of the Motorcraft business and building up the volume of
remanufacturing calipers. With anticipated increased

                                       12

<PAGE>



volume in selling calipers, the cost of production per unit is expected to
decrease. VIP sales, which experiences approximately a 30% margin, will be
diminishing during the fourth quarter of this year causing a reduced gross
profit margin.

SG&A was 23.4% of sales for the first nine months of this year compared to 17.9%
for the same period last year. Most of the same reasons discussed above in the
thirteen week discussion apply here. Additional expenses were also incurred
during the first quarter of this year due to the installation of a new computer
system.

Accounts Receivable has decreased from the beginning of the fiscal year due to
lower sales. Inventory has also decreased from the beginning of the fiscal year
due to selling down cores from deauthorized Ford product lines and reducing the
Powertrain inventory. Vendor negotiations and revising the purchasing strategies
are underway to reduce the VIP inventory. Property and equipment held for sale
increased due to VIP's fixed assets being offered for sale.

The Service and Parts Operations Unit of General Motors Corporation (ACDelco)
has advised Rainbo Company LLC dba Value Independent Parts (VIP) that as a
result of the ACDelco national program to establish a limited number of
dedicated distributors, the existing distribution agreement with ACDelco will
not be continued.

The existing distribution agreement with ACDelco authorizes the direct purchase
from ACDelco of ACDelco branded automotive replacement parts for resale to
automotive dealerships and installers. The pending change will require that VIP
purchase ACDelco products from another ACDelco authorized distributor, or
discontinue resale of ACDelco branded products. Universal must inform ACDelco
whether it intends to purchase products from another distributor or discontinue
resale of ACDelco products by June 24, 2002, or such later date as is mutually
agreed upon by the parties.

Universal is continuing discussions with ACDelco on the specifics of the
discontinuation of the current distribution agreement. VIP is also evaluating
all of its available options, including selling VIP assets relating to the
ACDelco business line to third parties, negotiating better terms and conditions
with ACDelco relating to the discontinuation. Universal is also having legal
counsel review issues relating to the termination of the ACDelco distribution
agreement. Regardless of the outcome of Universal's negotiations relating to its
available options, it is anticipated that future sales and earnings will be
adversely affected by this change, and depending on the response chosen by VIP,
may result in the discontinuation of certain VIP operations. For the fiscal year
ended July 31, 2001, VIP sales totaled $7,015,639 and $5,224,293 for the nine
months ended April 30, 2002. Gross profit attributed to VIP during the fiscal
year ended July 31, 2001 totaled $1,822,725 and $1,124,505 for the nine months
ended April 30, 2002. The selling, general and administrative costs attributed
to VIP during the fiscal year ended July 31, 2001 totaled $2,622,267 and
$2,246,289 for the nine months ended April 30, 2002.

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<PAGE>


The Third Quarter financial information reflects the establishment of
appropriate reserves to cover losses which may occur as the result of a
sell-down of inventories or other assets. These adjustments reduced pre-tax net
income by approximately $347,000.

Going Concern

During the last several fiscal years, Universal Manufacturing Co has experienced
major events that impacted all operating divisions. During 1999 and continuing
through 2001, Ford has deauthorized Universal Manufacturing from remanufacturing
all products lines. Currently, Universal Manufacturing Co is remanufacturing
electric fuel pumps, transfer cases, transfer case motors, calipers, power
steering pumps and integral gears under it's own Retech label and attempting to
break into the aftermarket. This is a very competitive price sensitive market.

Universal Distribution Co was a Ford Authorized Distributor of both Powertrain
and Motorcraft small parts and accessories. The contract expired on December 31,
2001. Ford would renew the distribution agreement for either Powertrain or
Motorcraft small parts and accessories, but not both. Universal Distribution
chose the Powertrain agreement due to market conditions in the distribution area
at the time of the decision. Since last fall, Powertrain sales decrease from the
prior year. Factors contributing to this include 0% financing on new vehicles,
increase competition from other Ford Authorized Distributors, and an overall
slowdown in the economy.

Rainbo Co. LLC dba as VIP was purchased October 1, 2000. VIP was a full-line
distributor with AC Delco comprising approximately 60% of the total sales of VIP
and Motorcraft approximately 10% of total sales of VIP. VIP's contract with Ford
also expired December 31, 2001 and was not renewed. VIP was notified by AC Delco
that due to territory realignments they would not be considered a direct
distributor which goes into effect June 24, 2002. Universal Manufacturing Co is
currently considering options, which includes selling or disposing of VIP
assets. Sales since last fall decreased over the same period in prior years due
to 0% financing on new vehicles and a general slowdown in the economy.

The events that have occurred along with a slow economy has reduced sales and
margins in all operating divisions and eroded the net worth of the company.
Obsolescence reserves were increased due to excess inventories on hand as a
result of lost markets. VIP recorded impairment on fixed assets during the third
quarter of approximately $180,000. The poor operating results in the third
quarter caused a violation of a note covenant on tangible net worth. A request
for waiver has been sent to the bank with anticipated approval. The note expires
July 31, 2002, but an extension until December 31, 2002 is anticipated.

To replace the volume lost, Universal Manufacturing has stepped up marketing
efforts by sending mailings to new possible markets for the existing product
lines. There are current negotiations with 2 potential customers that would
increase sales substantially. Also, extensive research is being done and
contacts made for possible new manufacturing opportunities. Manufacturing costs
are being reduced through purchasing efficiencies and through the use of
technology for customer ordering. Universal Distribution is reviewing core truck
routes for possible consolidation, using technology for customer ordering, and
reviewing the shipping methods for efficiencies. It is too early to anticipate
the overall adverse financial impact of the the Company's ability to replace
those lost sales volumes at a level to achieve profitability.

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<PAGE>



Critical Accounting Policies and Estimates

The preparation of the consolidated financial statements requires estimates and
assumptions that affect the reported amounts. The estimates and assumptions are
evaluated on an on-going basis and are based on historical experience and on
various other factors that are believed to be reasonable. Estimates and
assumptions include, but are not limited to, certain customer and vendor
receivables and allowances, inventory obsolescence reserves, assets held for
sale, fixed asset depreciable lives, income taxes, self-insurance liability
estimates, retirement benefits, and contingencies. There have been no
significant changes to these estimates and assumptions since the issuance of the
2001 10-KSB other than disclosed in the third quarter 10-QSB.

In preparing the consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America, management must
make a variety of decisions that impact the reported amounts and the related
disclosures. These decisions include the selection of the appropriate accounting
principles to be applied and the assumptions on which to base accounting
estimates. In reaching these decisions, management applies judgment based on its
understanding and analysis of the relevant circumstances. Note 1 to the
consolidated financial statements in the July 31, 2001 annual report on Form
10-KSB provides a summary of the significant accounting policies followed in the
preparation of the financial statements; other footnotes describe various
elements of the financial statements and the assumptions on which specific
amounts were determined. While actual results could, in fact, differ from those
estimated at the time of preparation of the financial statements, management is
committed to preparing financial statements that incorporate accounting
principles, assumptions and estimates that promote the representational
faithfulness, verifiability, neutrality and transparency of the accounting
information included in the financial statements.

This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Investors are cautioned that all
forward-looking statements involve risks and uncertainties, including, without
limitation, the effect of the general economic conditions, customer requirements
for VIP products, future actions by ACDelco, the continuing strength of the
automotive industry, increased competition and other factors. Such factors could
cause actual results to differ materially from those in the forward-looking
statements.

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<PAGE>

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                                   NONE
          VOTE OF SECURITY HOLDERS                                     ----


Item 5.   Other Information                                            NONE
                                                                       ----

Item 6.   Exhibits and 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.

Date  6-14-02           /s/ Donald D. Heupel
     ------------       --------------------------------------------------------
                        Donald D. Heupel, President and Chief Financial Officer





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