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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

|  |  |                                                                                     
|- |  | ------------------------------------------------------------------------------------
|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|  |  | For the fiscal year ended March 31, 2002                                            

OR

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|  |  | For the transition period from ________ to ________                                     

Commission File Number 0-2762

MAXCO, INC.(Exact Name of Registrant as Specified in its Charter)

|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Michigan                                                       |  | 38-1792842                             
|                                                               |  |                                        
|(State or other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification Number)
|                                                               |  |                                        
|1118 Centennial Way, Lansing, Michigan                         |  | 48917                                  
|                                                               |  |                                        
|(Address of principal executive offices)                       |  | (Zip Code)                             
|                                                               |  |                                        
|Registrants Telephone Number, including area code:            |  | (517) 321-3130                         
|                                                               |  |                                        

Securities registered pursuant to Section 12(b) of the Act:

|                         |  |                                               
|------------------------ |  | ----------------------------------------------
|Title of each class
NONE |  | Name of each exchange on which registered
NONE
|                         |  |                                               

Securities registered pursuant to Section 12(g) of the Act:

|                 |  |                             
|---------------- |  | ----------------------------
|Common stock     |  | Series Three Preferred Stock
|                 |  |                             
|(Title of Class) |  | (Title of Class)            

Indicate by check mark whether the registrant (1) has filed all annual,
quarterly and other reports required to be filed by Section 13 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 ü    No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ü ]

The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of May 31, 2002: $11,528,100.

At May 31, 2002, there were 3,101,195 outstanding shares of Registrants common
stock.

Documents Incorporated By Reference

Portions of the annual proxy statement for the year ended March 31, 2002 are
incorporated by reference into Part III.



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TABLE OF CONTENTS



|                                                                                        |  |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|Item                                                                                   
|1  Business                                                                            
|2 Properties                                                                           
|3 Legal Proceedings                                                                    
|4 Submission of Matters to a Vote of Security Holders                                  
|5 Market for Registrant's Common Equity and Related Shareholder Matters                
|6 Selected Financial Data                                                              
|7 Management's Discussion and Analysis of Financial Condition and Results of Operations
|7A Quantitative and Qualitative Disclosures About Market Risk                          
|8 Financial Statements and Supplemental Data                                           
|9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|10 Directors and Executive Officers of the Registrant                                  
|11 Executive Compensation                                                              
|12 Security Ownership of Certain Beneficial Owners and Management                      
|13 Certain Relationships and Related Transactions                                      
|14 Exhibits, Financial Statement Schedules, and Reports On Form 8-K                    
|Signatures                                                                             
|List of Financial Statements and Financial Statement Schedules                         
|EX-10.25 Amendment to Amended/Restated Loan Agrmt.                                     
|EX-21 Subsidiaries of the Registrant                                                   
|EX-23 Consent of Ernst & Young LLP                                                     
|EX-23.1 Consent of Moore Stephens Doeren Mayhew                                        



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MAXCO, INC.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS

|     |  |                                                                                       |  |      |    | 
|---- |  | ------------------------------------------------------------------------------------- |  | ---- | -- | 
|ITEM |  |                                                                                       |  | PAGE |   
|     |  |                                                                                       |  |      |   
|1    |  | Business                                                                              |  |      | 3  | 
|2    |  | Properties                                                                            |  |      | 7  | 
|3    |  | Legal Proceedings                                                                     |  |      | 7  | 
|4    |  | Submission of Matters to a Vote of Security Holders                                   |  |      | 7  | 
|5    |  | Market for Registrants Common Equity and Related Shareholder Matters                 |  |      | 8  | 
|6    |  | Selected Financial Data                                                               |  |      | 9  | 
|7    |  | Managements Discussion and Analysis of Financial Condition and
Results of Operations |  |      | 10 | 
|7A   |  | Quantitative and Qualitative Disclosures About Market Risk                            |  |      | 17 | 
|8    |  | Financial Statements and Supplemental Data                                            |  |      | 17 | 
|9    |  | Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure  |  |      | 17 | 
|10   |  | Directors and Executive Officers of the Registrant                                    |  |      | 17 | 
|11   |  | Executive Compensation                                                                |  |      | 17 | 
|12   |  | Security Ownership of Certain Beneficial Owners and Management                        |  |      | 17 | 
|13   |  | Certain Relationships and Related Transactions                                        |  |      | 17 | 
|14   |  | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                      |  |      | 18 | 
|     |  | Signatures                                                                            |  |      | 20 | 
|     |  | List of Financial Statements and Financial Statement Schedules                        |  |      | 22 | 

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PART I

ITEM 1  BUSINESS
Maxco, Inc. (the Company) is a Michigan corporation incorporated in 1946.
Maxco currently operates in three business segments: construction supplies,
heat-treating, and packaging products. Maxcos businesses include Ersco
Corporation, a distributor of construction supplies; Atmosphere Annealing Inc.,
a production metal heat-treating service company; and Pak-Sak Industries Inc.,
which makes polyethylene packaging. Maxco also has investments in real estate
and investments representing less than majority interests in the following: a
registered investor advisory firm; a registered broker-dealer of securities
that is primarily focused on the trading of fixed income investments over the
internet; a company offering a business-to-business vertical web portal
designed to bring solution-seekers together with solution-providers; a limited
partnership that has equity investments in companies focused on the information
technology, telecommunications, and medical technology markets; two
technology-related businesses; and one energy-related business. Subsequent to
March 31, 2002, L/M II, of which Maxco owns 31%, entered into an agreement to
sell its investments in real estate.

During the year ended March 31, 2002, the Company sold its equity interest in
Mid-State Industrial Services, Inc. to Maxco President Max A. Coon. Ersco
entered into a sale-leaseback agreement involving some of its concrete forming
products with a limited liability company in which Mr. Coon is a member. Maxco
also recorded additional consideration to be received as one of the former
shareholders of Strategic Interactive (Maxcos former 45% owned affiliate sold
to Provant, Inc. in October 1998). Additionally, Maxco recorded a charge to
income to recognize a decline in the value of its investment in Provant common
stock that has been deemed other than temporary.

During the year ended March 31, 2001, Maxco invested in its operating companies
through the purchase of additional property and equipment. In April 2000, the
Company invested in Vertical VC, a limited partnership that has equity
investments in companies focused on the information technology, and medical
technology markets. As discussed below, the Company completed the sale of its
investment in Axson in August 2000. The Company also recorded its share of the
minimum additional consideration to be received as one of the former
shareholders of Strategic Interactive.

During the year ended March 31, 2000, the Company invested in its construction
supplies segment through the purchase of property and equipment at its existing
branches and the purchase of two businesses. Maxco also added capacity at its
heat-treating company through the purchase of property and equipment.
Additionally, Maxco invested in Phoenix Financial Group, LTD and its subsidiary
Cambridge Group Investments, LTD (dba Bondpage.com), a registered broker-dealer
of securities that is primarily focused on the trading of fixed income
investments over the Internet. The Company also made an investment in
MYOEM.COM, a company offering a business-to-business vertical web portal
designed to bring solution-seekers together with solution-providers. Maxco also
made additional investments in Foresight Solutions, Inc. In relation to the
Companys 7% interest in Axson, S.A. of France, the majority shareholders of
Axson began negotiations with Axson management in the fourth quarter of fiscal
2000, for a management buyout of the existing shareholders interests.
Consequently, Maxco classified its investment in Axson as available for sale at
March 31, 2000 and adjusted its carrying amount to its estimated fair value,
which resulted in a $860,000 charge. This transaction was completed in August
2000.

CONSTRUCTION SUPPLIES
Ersco Corporation

Ersco Corporation distributes concrete construction products and accessories,
fabricates reinforcing steel and rents concrete forms used in road and
commercial building construction. Their products include reinforcing steel rod
and mesh, expansion fiber and concrete curing compounds, as well as custom
fabrication of steel (rod and mesh) and fiber products used in concrete paving
and construction. Ersco also rents concrete forming and shoring systems used
in the construction of concrete structures. The geographic market is the
Midwest, primarily in Michigan, Illinois, Indiana, Kansas, Missouri, Ohio, and
Wisconsin. Warehouses are located in Detroit, Grand Rapids, Saginaw and
Traverse City, Michigan; South Bend, Indiana; Columbus, Ohio; Milwaukee,
Wisconsin; and St. Louis, Missouri. A sales office is located in metropolitan
Chicago, which specializes in product sales to highway contractors on a direct
shipment basis from the manufacturers. Competition is intense and larger
project orders are secured on a competitive bid basis. During the years ended
March 31, 2002, 2001, and 2000, net sales of the construction supplies group
were approximately 65%, 65% and 64%, respectively, of consolidated net sales.

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This segment is not dependent on any patents, trademarks, licenses, franchises,
or concessions and is not dependent upon a single or a few customers, the loss
of which would have a significant adverse effect on the segment.

Units of this segment may carry significant amounts of inventory to meet
delivery requirements of customers. Inventories of this segment were
equivalent to 46 days sales on hand and represented 71% of Maxcos total
inventories at March 31, 2002. Credit policies have been established that
provide for extension of credit and collection of amounts due. The Companys
general policy requires payment within 30 days of invoice date. Adherence to
these policies results in accounts receivable levels that generally change with
volume levels. However, the collection periods may be extended by prior
agreement to accommodate customer cash flows. Where applicable, accounts
receivable are secured by perfected lien rights and payment bonds.

The volume of the construction supplies unit in the third and fourth quarters
is generally lower due to reduced construction activity during the winter
months in the segments market area. Historically, the activities of this
segment have generally followed the economic cycles within the respective
business units market area.

Generally, the construction supplies segment of the Company does not enter into
specific long-term contracts with its customers. As such, no backlog exists
for this segment.

HEAT TREATING
Atmosphere Annealing, Inc.

Atmosphere Annealing, Inc. provides metal heat treating, phosphate coating and
bar shearing and sawing services to the cold forming, stamping, forging and
casting industries. Its services are sold through Atmospheres own sales
personnel and outside sales representatives, primarily to automotive companies
and automotive suppliers. This units facilities are located in Lansing,
Michigan; Canton, Ohio; and North Vernon, Indiana.

Since Atmosphere is a service business, inventory levels for this segment are
traditionally small and consist mainly of steel inventory, various lubricants
and other materials used in the heat treating, phosphate coating or bar
shearing and sawing process. Inventories of this segment represent 8% of
Maxcos total inventories at March 31, 2002. In addition to pickup and
delivery of consigned inventory by its customers, Atmosphere maintains its own
trucks, which are in operation 24 hours a day throughout the Midwest to insure
prompt pickup and delivery.

The heat-treating industry is competitive with over 250 heat treaters in
Michigan, Ohio, and Indiana. Atmosphere specializes in high volume, low
priced, ferrous heat-treating using large furnaces. In its market niche of
this type of heat-treating, Atmosphere competes with only a limited number of
competitors. Much of the commercial heat treating industry is comprised of
smaller companies that specialize in higher priced batch heat-treating such as
carburizing, nitriding, tool and die, brazing, salt bath or induction
hardening.

This units response time to its customer just-in-time requirements does not
result in significant backlog for this segment. Growth is possible by this
unit in the future due to its customers outsourcing of high volume
heat-treating services. These services are usually outsourced by Atmospheres
customers because of extensive storage requirements, costs, and other issues.

Sales for this unit are fairly consistent throughout the year with the
exception of lower volume during model changeovers for its automotive customers
in July, and during the winter holiday season. Sales to a single or a few
customers are significant to this segment. This segment accounted for
approximately 25%, 25%, and 26% of consolidated net sales for the years ended
March 31, 2002, 2001, and 2000, respectively.

PACKAGING PRODUCTS
Pak-Sak Industries, Inc.

Pak-Sak Industries, Inc. extrudes polyethylene film and converts it into a
variety of polyethylene bags and packaging materials. A smaller portion of the
business is the purchase and resale of film products produced by other
companies. Manufactured products are both printed and plain. Products are
sold primarily throughout the Midwest area by its own sales personnel,
manufacturers representatives, and paper jobbers. Manufacturing facilities
are located in Sparta, Michigan.

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The customers served by this unit are primarily industrial customers, food
packagers, and specialty distributors. This segments business is primarily
affected by changing consumer demands and the general condition of the economy.
The business of this segment is relatively stable within the economic cycle of
industry in general.

Inventory levels of this segment tend to be in proportion to the level of sales
activity. Total inventories of this segment were equivalent to 61 days sales
on hand and represented 21% of Maxcos total inventories at March 31, 2002.
Credit policies are enforced to help insure that increases in accounts
receivable are primarily related to volume increases.

This units response time to its customers just-in-time inventory
requirements, which may change on a daily basis, does not result in significant
backlog for this segment.

Sales of packaging products to a single customer were not significant for the
years ended March 31, 2002, 2001, and 2000. The segment is not dependent on
any patents, trademarks, licenses, franchises, or concessions. This segment
accounted for approximately 10% of consolidated net sales for the years ended
March 31, 2002, 2001, and 2000.

For additional information regarding the Companys industry segments, see Note
10 to Notes to Consolidated Financial Statements.

INVESTMENT IN REAL ESTATE
Maxco has an ownership interest ranging from 25-50% in primarily two LLCs
which have been involved in the development and ownership of real estate in
central Michigan. Effective January 1, 2000, a Master LLC (L/M Associates II)
was formed consisting of the majority of the stabilized buildings in which
Maxco had an ownership interest. At March 31, 2002 Maxcos ownership interest
in the Master LLC was approximately 31%. The other LLC (L/M Associates)
includes properties under development that are not fully leased or individual
properties not included in the Master LLC.

In early 2002, Maxco, as managing member of L/M Associates, which is the
managing member of L/M Associates II, began negotiations to sell its real
estate portfolio. Subsequent to March 31, 2002, L/M Associates II entered into
an agreement to sell the properties within the Master LLC to an outside
investor. The transaction is subject to approval of 75% of the member
interests. If approved, the transaction is expected to be completed by
September 30, 2002.

Additionally, the Company is currently negotiating to liquidate the remaining
portion of Maxcos real estate investments.

Maxco also has an investment in Nilson Builders, a residential home builder, as
well as LandEquities, which was previously engaged in the construction,
leasing, and space planning for its clients including the L/M company
portfolios. These entities have been discontinued and their assets are
currently being liquidated.

OTHER INVESTMENTS
In addition to its investments in real estate, the Company has other
investments in 50% or less owned affiliates.

Maxcos equity interest is 20% or greater in the following companies and
consequently is accounted for using the equity method: approximately a 24%
interest in Integral Vision, Inc. (formerly Medar, Inc.), a company that
develops, manufactures, and markets microprocessor-based process monitoring and
control systems related to optical inspection for use in industrial
manufacturing environments; a one-third interest in Blasen Brogan Asset
Management Company, a registered investor advisory firm; approximately a 12%
direct (36% indirect) interest in Phoenix Financial Group, LTD and its
subsidiary Cambridge Group Investments, LTD (dba Bondpage.com), a registered
broker-dealer of securities that is primarily focused on the trading of fixed
income investments over the Internet; a 50% equity interest in Foresight
Solutions, Inc., a developer of accounting software and e-business solutions
for small to medium size businesses; and a 50% interest in Robinson Oil
Company, LLC, which is in the business of acquiring and developing oil and gas
interests.

Maxcos equity interest is less than 20% in the following companies and
consequently is accounted for using the cost method: approximately 6% of the
common stock of MYOEM.COM, a company offering a business-to-business vertical
web portal designed to bring solution-seekers together with solution-providers;
and a 16% interest in Vertical VC, a limited partnership that has equity
investments in companies focused on the information technology,
telecommunications, and medical technology markets.

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In November 1999, Maxco began accounting for its investment in Provant, Inc.
common stock as securities available for sale as defined by FASB 115.
Consequently, the securities are carried at market value with the unrealized
gains and losses net of tax, reported as a separate component of stockholders
equity. In 2002, the Company recognized a previously unrealized loss on its
investment in Provant as an other than temporary impairment in its statement of
operations of $3.1 million. At March 31, 2002, the unrealized gain on this
stock was approximately $5,000 net of tax.

RESEARCH AND DEVELOPMENT
Expenditures on research activities related to development or improvement of
products were not significant.

MAJOR CUSTOMERS
No sales to any single customer exceeded 10% of consolidated sales for 2002,
2001, or 2000.

ENVIRONMENTAL FACTORS
Compliance by Maxco and its operating subsidiaries with environmental
protection laws had no material effect on capital expenditures, earnings, or
competitive position.

EMPLOYEES
At March 31, 2002, Maxco and its wholly owned subsidiaries employed
approximately 600 full time employees.

EXPORT SALES AND FOREIGN OPERATIONS
The Company and its operating subsidiaries had no foreign operations or
material export sales during the years ended March 31, 2002, 2001, or 2000.

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ITEM 2  PROPERTIES
The following table provides information relative to the principal properties
owned or leased by the Company and its operating subsidiaries as of March 31,
2002. The Company considers its facilities to be in good operating condition.

|                           |  |                  |  |                    |  |             |  |                                         
|-------------------------- |  | ---------------- |  | ------------------ |  | ----------- |  | ----------------------------------------
|                           |  |                  |  |                    |  | OWNED/      |  |                                         
|LOCATION                   |  | APPROXIMATE SIZE |  | LEASED             |  | USE         |  |                                         
|                           |  |                  |  |                    |  |             |  |                                         
|DISTRIBUTION              
|Ersco Corporation          |  |                  |  |                    |  |             |  |                                         
|Okemos, MI                 |  | 7,300            |  | sq ft              |  | Leased      |  | Administrative offices                  
|Southfield, MI             |  | 24,000           |  | sq ft              |  | Leased      |  | Warehouse and distribution              
|Saginaw, MI                |  | 15,000           |  | sq ft              |  | Leased      |  | Warehouse and distribution              
|Traverse City, MI          |  | 7,800            |  | sq ft              |  | Leased      |  | Warehouse and distribution              
|Wyoming, MI                |  | 7,500            |  | sq ft              |  | Leased      |  | Warehouse and distribution              
|Mishawaka, IN              |  | 21,200           |  | sq ft on 1.3 acres |  | Owned(A)    |  | Warehouse and distribution              
|Chicago, IL                |  | 1,850            |  | sq ft              |  | Leased      |  | Direct highway sales office             
|Columbus, OH               |  | 9,000            |  | sq ft              |  | Leased      |  | Warehouse and distribution              
|Brookfield, WI             |  | 15,000           |  | sq ft on 1.6 acres |  | Owned(A)    |  | Warehouse and distribution              
|Brookfield, WI             |  | 5,900            |  | sq ft on .75 acres |  | Owned(A)    |  | Held for sale                           
|Fairview Heights, IL       |  | 29,000           |  | sq ft              |  | Leased      |  | Warehouse and distribution              
|Bridgeton, MO              |  | 6,000            |  | sq ft              |  | Leased      |  | Warehouse and distribution              
|HEAT TREATING             
|Atmosphere Annealing, Inc. |  |                  |  |                    |  |             |  |                                         
|Lansing, MI                |  | 145,000          |  | sq ft              |  | Leased      |  | Plant and administrative offices        
|Lansing, MI                |  | 58,000           |  | sq ft              |  | Leased      |  | Heat treating plant                     
|Canton, OH                 |  | 160,000          |  | sq ft on 8 acres   |  | Owned(A)    |  | Heat treating plant                     
|N. Vernon, IN              |  | 88,000           |  | sq ft on 6 acres   |  | Owned(A)    |  | Heat treating plant                     
|PACKAGING PRODUCTS         |  |                  |  |                    |  |             |  |                                         
|Pak-Sak Industries, Inc.   |  |                  |  |                    |  |             |  |                                         
|Sparta, MI                 |  | 78,000           |  | sq ft on 2.5 acres |  | Owned(A)    |  | Manufacturing and administrative offices
|Sparta, MI                 |  | 12,000           |  | sq ft              |  | Leased      |  | Manufacturing                           
|CORPORATE                 
|Maxco, Inc.                |  |                  |  |                    |  |             |  |                                         
|Lansing, MI                |  | 7,200            |  | sq ft on 1.9 acres |  | Owned(A)    |  | Executive offices                       
|Thornapple Township, MI    |  | 150              |  | acres              |  | Owned       |  | Held for investment                     
|Lansing, MI                |  | 6,000            |  | sq ft on 1.0 acre  |  | Owned(A)(B) |  | Leased to FinishMaster, Inc.            
|Eaton Rapids, MI           |  | 44,200           |  | sq ft on 5 acres   |  | Owned(A)(B) |  | Leased to Axson, N.A.                   
|Eaton Rapids, MI           |  | 9,300            |  | sq ft on 1.5 acres |  | Owned       |  | Leased to Axson, N.A.                   



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|(A) |  | Subject to a mortgage                            
|--- |  | -------------------------------------------------
|(B) |  | Properties were sold subsequent to March 31, 2002

Expiration dates of leases relative to the Companys principal properties range
from 2002 to 2016. Leases expiring within 12 months are expected to be renewed
at substantially the same terms as the present leases.







ITEM 3  LEGAL PROCEEDINGS
None

ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None

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PART II

ITEM 5  MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Maxcos common stock trades on the Nasdaq SmallCap Market under the symbol
MAXC. The approximate number of record and beneficial holders of Maxcos
common stock at May 31, 2002 was 1,000.

The range of high and low sales prices for the last two years as reported by
NASDAQ were:

|     |  |               |  |  |       |  |  |     |      |  |  | 
|---- |  | ------------- |  |  | ----- |  |  | --- | ---- |  |  | 
|YEAR |  | QUARTER ENDED |  |  | HIGH  |  |  | LOW |     
|     |  |               |  |  |       |  |  |     |     
|2000 |  | March 31      |  |  | 10.75 |  |  |     | 6.63 | 
|     |  | June 30       |  |  | 9.25  |  |  |     | 6.00 | 
|     |  | September 30  |  |  | 9.63  |  |  |     | 5.06 | 
|     |  | December 31   |  |  | 9.13  |  |  |     | 5.72 | 
|2001 |  | March 31      |  |  | 9.50  |  |  |     | 5.25 | 
|     |  | June 30       |  |  | 7.75  |  |  |     | 5.52 | 
|     |  | September 30  |  |  | 7.03  |  |  |     | 4.66 | 
|     |  | December 31   |  |  | 7.00  |  |  |     | 2.70 | 
|2002 |  | March 31      |  |  | 7.37  |  |  |     | 4.16 | 

No cash dividends on common stock have been paid during any period.

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ITEM 6  SELECTED FINANCIAL DATA

|                                                               |  |      |         |   |      |                                       |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|-------------------------------------------------------------- |  | ---- | ------- | - | ---- | ------------------------------------- | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                               |  |      |         |   |      | Year Ended March 31,                  |         |      |  |   |        
|                                                               |  |      |         |   |      |                                       |         |      |  |   |        
|                                                               |  | 2002 |         |   | 2001 |                                       |         | 2000 |  |   | 1999    |   |  | 1998 |        
|                                                               |  |      |         |   |      |                                       |         |      |  |   |         |   |  |      |        
|                                                               |  |      |         |   |      | (in thousands, except per share data) |         |      |  |   |        
|Net sales                                                      |  | $    | 136,552 |   |      | $                                     | 157,315 |      |  | $ | 156,490 |   |  | $    | 124,732 |   |  | $ | 102,544 |  
|Loss on investment (1)                                         |  |      | (3,103  | ) |      |                                       |        |      |  |   | (860    | ) |  |      |        |   |  |   |        |  
|Income (loss) before equity in
net income (loss) of affiliates |  |      | (3,973  | ) |      |                                       | (1,808  | )    |  |   | 38      |   |  |      | 1,183   |   |  |   | 2,784   |  
|Equity in net income (loss) of
affiliates, net of tax          |  |      | (528    | ) |      |                                       | (2,997  | )    |  |   | 278     |   |  |      | (395    | ) |  |   | (1,373  | )
|                                                               |  |      |         |   |      |                                       |         |      |  |   |         |   |  |      |        
|Net income (loss)                                              |  |      | (4,501  | ) |      |                                       | (4,805  | )    |  |   | 316     |   |  |      | 788     |   |  |   | 1,411   |  
|Net income (loss) per share(2)                                 |  | $    | (1.58   | ) |      | $                                     | (1.68   | )    |  | $ | (0.03   | ) |  | $    | 0.12    |   |  | $ | 0.30    |  
|At March 31:                                                   |  |      |         |   |      |                                       |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Total assets                                                   |  | $    | 87,038  |   |      | $                                     | 97,450  |      |  | $ | 102,222 |   |  | $    | 85,430  |   |  | $ | 76,055  |  
|Long-term obligations (net of
current obligations)             |  |      | 13,332  |   |      |                                       | 24,831  |      |  |   | 22,390  |   |  |      | 32,856  |   |  |   | 27,698  |  
|Working capital                                                |  |      | (13,838 | ) |      |                                       | (12,242 | )    |  |   | (7,687  | ) |  |      | 9,858   |   |  |   | 9,232   |  

NOTES



|(1) |  | Represents a $3.1 million charge for the year ended March 31, 2002 for an
impairment of the Companys investment in Provant, Inc. to estimated fair
value and an $860,000 charge for the year ended March 31, 2000 for an
adjustment of the Companys Axson investment to estimated fair value.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Net income (loss) per share amounts assume dilution for all years
presented.                                                                                                                                                                                                                   

No cash dividends on common stock have been paid during any period.

The above selected financial data should be read in conjunction with the
consolidated financial statements, which appear in Part II, Item 8 of this
report.

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ITEM 7-MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

CRITICAL ACCOUNTING POLICIES
The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States.
When more than one accounting method or its application is generally accepted,
management selects the principle or method that is appropriate in the specific
circumstances. Application of these accounting principles requires the
Companys management to make estimates about the future resolution of existing
uncertainties; as a result, actual results could differ from these estimates.
In preparing these financial statements, management has made its best estimates
and judgments of the amounts and disclosures included in the financial
statements, giving due regard to materiality. The Company does not believe
there is a great likelihood that materially different amounts would be reported
under different conditions or using different assumptions pertaining to the
accounting policies described below.

Principles of Consolidation and Transactions With Affiliates
The consolidated financial statements include the accounts of Maxco, Inc. and
its majority owned subsidiaries. Upon consolidation, all intercompany accounts
and transactions are eliminated. Investments in greater than 20% owned
investments are accounted for under the equity method. Investments in less
than 20% owned affiliates are accounted for under the cost method.
Transactions with equity affiliates are in the ordinary course of business and
are conducted on an arms-length basis. Certain investments in equity
affiliates and other activities may be between related parties and are
conducted on an arms-length basis.

On December 20, 2001 the Company sold its 50% equity interest in Mid-State
Industrial Services, Inc. to Maxco President, Max A. Coon, for $1.75 million,
of which $750,000 was paid in cash with the remainder being applied to amounts
due Mr. Coon for advances he had made to the Company and its affiliates.
Additionally, Mid-State retired the $0.5 million obligation it had with Maxco.
A portion of the proceeds from the sale was used to retire certain obligations
not related to Mid-State which were guaranteed by the Company.

On August 17, 2001 Ersco entered into a sale-leaseback agreement involving some
of its concrete forming products with a limited liability company in which Mr.
Coon is a member. Ersco sold approximately $3.0 million in assets to the LLC
that are now being leased back to the Ersco for a period of 60 months.

The Companys policy has been to advance funds to its equity holdings as
operating cash is required. As of March 31, 2002, the Company has advances to
its affiliates totaling $5.3 million, net of a reserve of $1.0 million.

In addition, the Companys policy has allowed the guarantee of various debt
obligations of certain real estate and other investments in an aggregate amount
of approximately $40.0 million as of May 31, 2002. Certain of the debt
agreements related to its real estate investments, which Maxco and
other guarantors have guaranteed, are in default at March 31, 2002.
Forbearance agreements have been issued by two
of the respective banks and the applicable entities are currently working with
the lenders to rectify the default issues. However, efforts to negotiate a
forbearance agreement with one of the lenders, representing $12.5 million in
loans guaranteed by Maxco and other guarantors, have currently stalled and the lender has delivered
a Demand for Payment and Notice of Intent to Commence Foreclosure. The Company
remains hopeful that negotiations with the lender will be successful. The
Company believes that the agreement to sell its investment in L/M Associates II
will significantly reduce the debt obligations it has guaranteed (see note 8).
Except as specifically accrued, the Company does not believe that there is any
unusual degree of risk related to these guarantees because of sufficient
underlying asset values supporting the respective debt obligations.

At March 31 2001, the Company accrued contingent liabilities totaling
approximately $950,000 related to its investments and advances to Foresight
Solutions and AMI Energy. These liabilities were paid by the Company in fiscal
2002.

Investments and Marketable Securities
The Company accounts for certain of its investments under FASB 115 as
securities available-for-sale. 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. The amortized cost of securities
in this category is adjusted for amortization of premiums and accretion of
discounts to maturity. Such amortization is included in investment income.
Realized gains and losses and declines in value judged to be other than
temporary on available-for-sale securities are included in investment income or
loss. The cost of securities sold is based on the specific identification
method. Interest and dividends on securities classified as available-for-sale
are included in investment income. The fair value of marketable securities is
based on quoted market value.

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The Company reviews its investments to determine if the value shows a decline
that has been deemed other than temporary. Accordingly, Maxcos investment in
Provant was reduced by $3.1 million in fiscal 2002. Additionally, in
accordance with APB 18, the Company recorded a charge of $899,000, net of tax,
in 2001 to recognize a decline in the value of its investment in Integral
Vision that had been deemed other than temporary. The charge is included in
equity in net income (loss) of affiliates for the year ended March 31, 2001.
Maxco had a 7% interest in Axson, S.A. of France. The majority shareholders of
Axson began negotiations with Axson management in the fourth quarter of fiscal
2000 for a management buyout of the existing shareholders interests.
Consequently, Maxco classified its investment in Axson as available for sale at
March 31, 2000 and adjusted its carrying amount to its estimated fair value,
which resulted in a $860,000 charge. This transaction was completed in August
2000.

Revenue Recognition
The Company recognizes revenue from product sales upon transfer of title, which
is generally upon shipment. An estimate of reserves is recorded for
anticipated returns and credit memos which will be issued on sales recognized
to date. Accounts and notes receivable are collateralized or secured by
perfected lien rights and payment bonds where applicable. The SECs Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition, provides guidance
on the application of generally accepted accounting principles to selected
revenue recognition issues. The Company has concluded its revenue recognition
policy is appropriate and in accordance with generally accepted accounting
principles and SAB No. 101.

Allowance for Uncollectible Accounts Receivable
Accounts receivable have been reduced by an allowance for amounts that may
become uncollectible in the future. This estimated allowance is based
primarily on managements evaluation of the financial condition of the customer
and historical experience.

Inventories
Inventories are stated at the lower of first-in, first-out cost or market.

Goodwill, Intangible and Other Long-Lived Assets
Property, plant and equipment, goodwill, intangible and certain other
long-lived assets are amortized over their useful lives. Useful lives are
based on managements estimates of the period that the asset will be useful to
the Company.

Goodwill, intangible and other long-lived assets are reviewed by management for
impairment whenever events or changes in circumstances indicate the carrying
amounts may not be recoverable. If management believes impairment may exist,
an assessment is performed. This assessment consists of comparing the
estimated undiscounted future cash flows with the carrying amount of the
long-lived assets. If the undiscounted future cash flows are less than the
carrying amounts of the long-lived assets, the Company adjusts the carrying
amount of the long-lived assets to their estimated fair value. Fair value is
determined by anticipated future cash flows discounted at a rate commensurate
with the risk involved. Goodwill totaled approximately $3.3 million at March
31, 2002 and represented 4% of total assets.

Effective April 1, 2002, the Company will adopt SFAS No. 142, Goodwill and
Other Intangible Assets, (SFAS No. 142) which will result in the
discontinuance of amortization of goodwill and indefinite-lived intangible
assets that were recorded in connection with previous business combinations.
Amortization expense for the years ended March 31, 2002, 2001, and 2000 was
$586,000, $705,000, and $675,000, respectively. SFAS No. 142 will also require
the Company to perform impairment tests of goodwill and indefinite lived
intangible assets on an annual basis (or more frequently if impairment
indicators exist). During fiscal 2003, the Company will complete the first of
the required impairment tests of goodwill and indefinite lived intangible
assets under this statement. The Company has not determined the effect on the
financial statements for potential impairment of adopting SFAS No. 142.

RESULTS OF OPERATIONS
The following is a discussion of the major elements relating to Maxcos
financial and operating results for 2002 compared with 2001, and 2001 compared
with 2000. The comments that follow should be read in conjunction with Maxcos
Consolidated Financial Statements and related notes, contained in Part II, Item
8 of this report.

Except for the historical information contained herein, the matters discussed
in this report are forward-looking statements made pursuant to the safe harbor
provisions of Section 27A of the securities Act of 1933 and Section 21 E of
the Securities Act of 1934. Such statements are based on managements current
expectations and are subject to a number of factors and uncertainties, which
could cause actual results to differ materially from those described in the
forward-looking statements. These forward-looking statements represent the
companys best estimates as of

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the date of this report. The company assumes no obligation to
update such estimates except as required by the rules and regulations of the
Securities and Exchange Commission.

2002 versus 2001
Net sales decreased to $136.6 million in 2002 compared to $157.3 million in
2001. Operating loss was $2.4 million in 2002 compared to earnings of $679,000
for the comparable period in 2001. Net loss was $4.5 million, a loss of $4.9
million after preferred dividends, or a loss of $1.58 per share assuming
dilution compared to last years net loss of $4.8 million, a loss of $5.2
million after preferred dividends, or a loss of $1.68 per share assuming
dilution.

Sales and operating earnings for the years ending March 31, 2002 and 2001 by
each of the Companys segments were as follows:

|                      |  |                |        |  |                |                |        |           |  |   |         |  |           |   |       |  
|--------------------- |  | -------------- | ------ |  | -------------- | -------------- | ------ | --------- |  | - | ------- |  | --------- | - | ----- | -
|                      |  | Year Ended     |        |  | Year Ended     |               
|                      |  | March 31, 2002 |        |  | March 31, 2001 |               
|                      |  |                |        |  |                |               
|                      |  |                |        |  |                | Operating      |        |           |  |   |         |  | Operating |  
|                      |  |                |        |  |                | Earnings       |        |           |  |   |         |  | Earnings  |  
|                      |  | Net Sales      |        |  | (loss)         |                |        | Net Sales |  |   | (loss)  | 
|                      |  |                |        |  |                |                |        |           |  |   |         | 
|                      |  |                |        |  |                | (in thousands) |        |           |  |   |        
|Construction supplies |  | $              | 88,823 |  |                | $              | (2,161 | )         |  | $ | 102,501 |  |           | $ | 510   |  
|Heat treating         |  |                | 34,364 |  |                |                | 2,482  |           |  |   | 39,229  |  |           |   | 3,670 |  
|Packaging products    |  |                | 13,033 |  |                |                | (219   | )         |  |   | 15,255  |  |           |   | (175  | )

The $13.7 million decrease in net sales at the construction supplies segment
was primarily the result of a slower economy, greater competitive market
conditions, and a lower level of commercial construction compared to the prior
year. The decrease in net sales at the heat treating segment was due to a
slowdown in production experienced by its automotive customers. Lower sales at
the packaging products segment were a result of the general economic slowdown
and additional competitive pressures.

Consolidated gross profit (net sales less cost of sales and operating expenses)
decreased $6.5 million to $29.2 million from $35.7 million. Consolidated gross
margin (gross profit as a percentage of net sales) decreased to 21.4% from
22.7%. Gross profit at the Companys construction supplies segment was
affected by lower sales compared to last year, particularly forming sales and
sales from inventory. This segment also experienced a lower gross profit due
to its sales mix. The increased proportion of sales on a direct shipment
basis, which typically have a lower margin than forming sales and sales from
inventory, contributed to the reduction in gross profit at this segment.
Although gross margin improved for the Companys heat treating and packaging
products segments, gross profit decreased primarily due to the lower sales
volume. The operating expense portion as used in arriving at gross profit was
reduced by $5.5 million as a result of reduced facility and sales expenses.

Selling, general, and administrative (SG&A) expenses decreased $3.8 million
or 13.2% to $25.1 million from $28.9 million. This decrease primarily resulted
at the Companys construction supplies segment due to a reduction in selling
and administrative expenses and other reduced costs as a result of an expense
reduction program. SG&A expenses for the Companys heat-treating and packaging
products segments decreased as a result of their efforts to reduce costs.

Depreciation and amortization expense increased $423,000 to $6.5 million from
$6.1 million primarily due to additions of property and equipment at the
Companys construction supplies and heat treating segments.

As a result of the facts discussed above, operating profit decreased $3.1
million to a loss of $2.4 million from profit of $679,000.

Investment and interest income increased in fiscal 2002 primarily due to income
of $2.0 million representing Maxcos remaining share of the additional
consideration to be received as one of the former shareholders of Strategic
Interactive, Inc. (Maxcos former 45% owned affiliate sold to Provant, Inc. in
October 1998). The payment will be made to the Company in cash, common stock,
or a combination of both, at Provants option, in July 2002. The Company also
recognized a gain of approximately $422,000 on the sale of its investment in
Mid-State Industrial Services, Inc. Interest expense decreased in 2002 from
the prior year primarily due to reduced borrowings and a reduction in the
average interest rate associated with these borrowings. In accordance with FAS
115, the Company recorded a charge of $3.1 million to recognize a previously
unrealized decline in the value of its investment in Provant, Inc. common stock
that has been deemed other than temporary.

Equity in net income (loss) of affiliates consists of Maxcos share of the
operating results of 50% or less owned entities accounted for under the equity
method. On a consolidated basis, equity in net loss of affiliates, net of tax,

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was $528,000 for the year ended March 31, 2002, compared to a loss of $3.0
million for the prior year comparable period. This was primarily the result of
the Companys investment in Integral Vision, Inc. At March 31, 2001, the
Company adjusted the carrying value of its investment in Integral Vision, Inc.
to its estimated fair value, a charge of $899,000 net of tax, as the Company
determined that the investment was impaired. Additionally, for Maxcos fiscal
year ended March 31, 2001, its proportionate share of Integral Visions net
loss, net of tax, totaled $1.3 million. In 2002, Maxco recorded its share of
equity losses from Integral Vision, Inc. ($182,000 net of tax) which reduced
the recorded amount below its fair value established at March 31, 2001.

The Companys effective tax rate varied from the statutory rate of 34% due to
certain expenses, which are not deductible for tax purposes.

2001 versus 2000
Net sales increased to $157.3 million in 2001 compared to $156.5 million in
2000. Operating earnings were $679,000 in 2001 compared to $4.0 million for
the comparable period in 2000. Net loss was $4.8 million, a loss of $5.2
million after preferred dividends, or a loss of $1.68 per share assuming
dilution in 2001 compared to net income of $316,000, a loss of $92,000 after
preferred dividends, or a loss of $.03 per share assuming dilution in 2000.

Sales and operating earnings for the years ending March 31, 2001 and 2000 by
each of the Companys segments were as follows:

|                      |  |                |         |  |                |                |       |           |  |   |        |  |           |   |       |  
|--------------------- |  | -------------- | ------- |  | -------------- | -------------- | ----- | --------- |  | - | ------ |  | --------- | - | ----- | -
|                      |  | Year Ended     |         |  | Year Ended     |               
|                      |  | March 31, 2001 |         |  | March 31, 2000 |               
|                      |  |                |         |  |                |               
|                      |  |                |         |  |                | Operating      |       |           |  |   |        |  | Operating |  
|                      |  |                |         |  |                | Earnings       |       |           |  |   |        |  | Earnings  |  
|                      |  | Net Sales      |         |  | (Loss)         |                |       | Net Sales |  |   | (Loss) | 
|                      |  |                |         |  |                |                |       |           |  |   |        | 
|                      |  |                |         |  |                | (in thousands) |       |           |  |   |       
|Construction supplies |  | $              | 102,501 |  |                | $              | 510   |           |  | $ | 99,924 |  |           | $ | 2,770 |  
|Heat treating         |  |                | 39,229  |  |                |                | 3,670 |           |  |   | 40,368 |  |           |   | 5,245 |  
|Packaging products    |  |                | 15,255  |  |                |                | (175  | )         |  |   | 15,865 |  |           |   | (530  | )

The $2.6 million increase in net sales at the construction supplies segment was
the result of an increase in direct shipment sales and form rental revenues.
The benefit of this sales increase was lessened by a change in the mix of sales
to lower margin direct shipments. Additionally, labor strikes in two of
Erscos markets affecting the redi-mix industry adversely impacted the level of
activity of its customers in the early part of fiscal 2001. Extreme weather
conditions in the Midwest also adversely impacted Erscos customers activity
levels in the third and fourth quarters of fiscal 2001. Although the Companys
heat treating segment added capacity through additional purchases of equipment,
sales slowed dramatically beginning late in the third quarter as the automotive
industry corrected its inventory levels.

Consolidated gross profit (net sales less cost of sales and operating expenses)
decreased $1.0 million to $35.7 million or 22.7% of sales from $36.7 million or
23.5% of net sales. Gross profit decreased for the Companys heat treating
segment primarily due to the lower sales volume. Although its net sales
increased, gross profit for the Companys construction supplies segment
decreased primarily due to the fact that a greater proportion of those sales
were on a direct shipment basis, which typically have a lower margin than sales
from inventory. An improvement in gross margin percentage for the Companys
packaging products segment resulted in a modest increase in gross profit in
spite of the decrease in net sales.

Selling, general, and administrative (SG&A) expenses increased $1.1 million
or 4.0% to $28.9 million from $27.8 million. This increase was primarily
attributable to an increase in SG&A expenses for the construction supplies
segment resulting from the increase in sales, wage and other expenses incurred
to support the planned growth of this unit. Since the growth has not
materialized to the levels anticipated, management has begun a program to
reduce SG&A expenses. SG&A expenses for the Companys packaging products
segment decreased as a result of its continuing efforts to reduce costs.

Maxco classified its investment in Axson as available for sale at March 31,
2000 and adjusted its carrying amount to its estimated fair value, which
resulted in a $860,000 charge.

Depreciation and amortization expense increased $1.2 million to $6.1 million
from $4.9 million primarily due to additions of property and equipment at the
Companys construction supplies and heat treating segments.

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As a result of the facts discussed above, operating profit decreased $3.3
million or 83.0% to $679,000 from $4.0 million.

Interest expense increased in 2001 from the prior year primarily due to
additional borrowings, the proceeds of which were used for additional purchases
of property and equipment. Additionally, an increase in the interest rate the
Company is charged on its variable rate borrowings also contributed to the
increase in net interest expense. Investment and interest income increased in
fiscal 2001 primarily due to the fact that the Company recorded income of
$675,000 representing its share of the minimum additional consideration to be
received as one of the former shareholders of Strategic Interactive, Inc.
(Maxcos former 45% owned affiliate sold to Provant, Inc. in October 1998).

Equity in net income (loss) of affiliates consists of Maxcos share of the
operating results of 50% or less owned entities. On a consolidated basis,
equity in net loss of affiliates, net of tax, was $3.0 million for the year
ended March 31, 2001, compared to income of $278,000 for the prior year
comparable period. This decrease was primarily attributable to Maxcos
proportionate share of Integral Vision, Inc.s (formerly Medar, Inc.) losses
and a charge to recognize an impairment of the Companys investment in Integral
Vision. For Maxcos fiscal year ended March 31, 2001, its proportionate share
of Integral Visions net loss, net of tax, totaled $1.3 million. Additionally,
in accordance with APB 18, the Company recorded a charge of $899,000, net of
tax, in 2001 to recognize a decline in the value of its investment in Integral
Vision that has been deemed other than temporary. For Maxcos fiscal year
ended March 31, 2000, its proportionate share of Integral Visions net income,
net of tax, totaled $591,000. Integral Visions net income for that period was
primarily the result of a gain on the sale of its welding controls division in
2000.

Equity in net income of affiliates was also negatively impacted by an increase
in losses at Foresight Solutions, Inc. Maxcos proportionate share of
Foresights net loss, net of tax, totaled $452,000 in 2001 compared to $207,000
in 2000. In the first quarter of fiscal 2001, the carrying value of the
Companys investment in Foresight was reduced to zero after recognizing the
first $72,000 of its proportionate share of Foresights losses. However, in
accordance with APB 18, the Company continued to recognize its proportionate
share of Foresights losses, an additional $613,000, as a contingent liability
as Maxco has loans to Foresight totaling $1.8 million and has guaranteed
$750,000 of Foresights bank debt.

Equity in net income of affiliates was also negatively impacted by the fiscal
2001 discontinuance of AMI Energy, Inc.(AMI). Although the liquidation of AMI
is substantially complete, $365,000 remains outstanding on a line of credit
with a bank. Given that Maxco has guaranteed that facility, and based on the
estimated remaining liquidation value of AMI, Maxco has recorded a $325,000
contingent liability at March 31, 2001.

The Companys effective tax rate varied from the statutory rate of 34% due to
certain expenses, which are not deductible for tax purposes.

LIQUIDITY AND SOURCES OF CAPITAL
Operating activities for 2002 generated $3.9 million in cash. Earnings, after
non-cash adjustments, generated $3.5 million of that amount. Changes in net
working capital generated approximately $375,000.

Overall, the Companys working capital (defined as current assets less current
liabilities) decreased from a $12.2 million deficit at March 31, 2001 to a
$13.8 million deficit at March 31, 2002. This decrease was primarily
attributable to the reclassification of certain of the Companys borrowings as
short term due to being in default of financial covenants required by certain
of its borrowings at March 31, 2002. The Company had $22.6 million of its debt
classified as short term. A forbearance agreement has been reached with one of
the lenders. There are ongoing negotiations with the banks to amend their
agreements and obtain any necessary waivers of default.

The Companys ability to meet its short term and long term debt service and
other obligations (including compliance with financial covenants) will be
dependent upon its future operating performance and the successful
renegotiation of its credit facilities. These dependencies will be subject to
financial, business and other factors, certain of which are beyond the
Companys control, such as prevailing economic conditions. There can be no
assurance that, in the event the Company were to require additional financing,
such additional financing would be available on satisfactory terms. The
Company believes that funds generated by its operations and funds available
under other credit facilities will be sufficient to finance short term capital
needs, as well as to fund existing operations for the foreseeable future.
However, in the event that the Company is unable to successfully renegotiate
its credit facilities, the Company has long term equity investments that could be
liquidated within a year to meet its short term and long term debt service
requirements and fund operating cash flows.

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The Company used approximately $200,000 in investing activities. Specifically,
during the year, the Company received $1.3 million in cash from the sale of its
investment in Mid-State Industrial Services, Inc. The Company used
approximately $1.7 million to acquire property and equipment for its
construction supplies, heat treating, and packaging supplies segments.

Net cash used in financing activities during the year amounted to $4.2 million.
Ersco entered into a sale-leaseback transaction involving some of its concrete
forming products that generated $3.0 million. Repayments of long-term and
short-term obligations were $6.9 million. At March 31, 2002 the Company had
two lines of credit, an $18 million facility and a $5 million facility. These
facilities are secured by Company assets. The amount that can be borrowed
under these facilities is dependent on certain accounts receivable and
inventory levels at the Companys construction supplies, packaging products,
and heat treating companies. At March 31, 2002, based on these specific
collateral levels, the Company could borrow up to $13.5 million under its lines
of credit of which approximately $750,000 was available. At March 31, 2002,
the Company had $475,000 in letters of credit issued against its $18 million
credit facility. There is a corresponding decrease in borrowings available
under the credit facility as a result of the issuance of these letters of
credit.

The aggregate principal maturities of long-term debt are approximately
$2,990,000 in 2003, $3,439,000 in 2004, $3,873,000 in 2005, $1,941,000 in
2006, $1,932,000 in 2007, and $2,147,000 thereafter.

Maxco and certain operating subsidiaries occupy facilities and use equipment
under operating lease agreements requiring annual rental payments approximating
$2,436,000 in 2003, $2,090,000 in 2004, $1,120,000 in 2005, $806,000 in 2006,
$281,000 in 2007, and $53,000 in 2008 for a total commitment aggregating
$6,786,000. Included in those amounts are payments to a related party
approximating $676,000 in 2003, 2004, 2005, and 2006, and $225,000 in 2007 for
a total commitment of $2,929,000.

At March 31, 2002, the 2,240,605 shares of Integral Vision (formerly Medar)
common stock that Maxco owns had an aggregate market value of approximately
$1.3 million ($700,000 at July 9, 2002). Maxcos investment in Integral Vision
is reflected in Maxcos financial statements under the equity method for all
periods presented as the Company owns greater than 20% of Integral Visions
outstanding stock.

At March 31, 2002, the 249,230 shares of Provant common stock that Maxco owns
had an aggregate market value of approximately $145,000 ($47,000 at July 9,
2002). Maxcos investment in Provant is reflected in Maxcos financial
statements as an available-for-sale security.

Maxco believes that its current financial resources, availability under its
lines of credit, and cash generated from operations will be adequate to meet
its cash requirements for the next year.

Additionally, the Company believes the value that has been created in its
portfolio of investments could provide additional cash resources for the
Company if needed.

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SEASONAL AND QUARTERLY FLUCTUATIONS
The following table sets forth consolidated operating data for each of the
eight quarters ended March 31, 2002. The unaudited quarterly information has
been prepared on the same basis as the annual information and, in managements
opinion, includes all adjustments, consisting of only normal recurring entries,
necessary for a fair presentation of the information for the quarters
presented. The operating results for any quarter are not necessarily
indicative of results for any future period.

|                                                     |  |   |                                       |  |  |             |        |   |          |   |        |         |  |   |         |   |  |         |        |   |          |   |        |         |  |   |        |   |  |   |        |   | 
|---------------------------------------------------- |  | - | ------------------------------------- |  |  | ----------- | ------ | - | -------- | - | ------ | ------- |  | - | ------- | - |  | ------- | ------ | - | -------- | - | ------ | ------- |  | - | ------ | - |  | - | ------ | - | 
|                                                     |  |   | Quarter Ended                        
|                                                     |  |   | Fiscal 2002                           |  |  | Fiscal 2001
|                                                     |  |   |                                       |  |  |            
|                                                     |  |   | 6/30/01                               |  |  | 9/30/01     |        |   | 12/31/01 |   |        | 3/31/02 |  |   | 6/30/00 |   |  | 9/30/00 |        |   | 12/31/00 |   |        | 3/31/01 | 
|                                                     |  |   |                                       |  |  |             |        |   |          |   |        |         |  |   |         |   |  |         |        |   |          |   |        |         | 
|                                                     |  |   | (in thousands, except per share data) | 
|Net Sales                                            |  | $ | 44,573                                |  |  | $           | 41,400 |   |          | $ | 29,048 |         |  | $ | 21,531  |   |  | $       | 48,454 |   |          | $ | 49,094 |         |  | $ | 33,515 |   |  | $ | 26,252 |  
|Gross profit                                         |  |   | 9,132                                 |  |  |             | 8,607  |   |          |   | 6,521  |         |  |   | 4,980   |   |  |         | 10,540 |   |          |   | 11,086 |         |  |   | 7,684  |   |  |   | 6,400  |  
|Gains
(1)                                            |  |   |                                       |  |  |             |        |   |          |   | 2,447  |         |  |   |         |   |  |         |        |   |          |   | 675    |         |  |   |        |   |  |   |        |  
|Loss
on investment (2)                               |  |   |                                       |  |  |             |        |   |          |   | (3,103 | )       |  |   |         |   |  |         |        |   |          |   |        |         |  |   |        |   |  |   |        |  
|Equity
in net income (loss)of affiliates, net of tax |  |   | 87                                    |  |  |             | (73    | ) |          |   | (22    | )       |  |   | (520    | ) |  |         | (325   | ) |          |   | (297   | )       |  |   | (453   | ) |  |   | (1,922 | )
|Net income (loss)                                    |  |   | 404                                   |  |  |             | (281   | ) |          |   | (1,651 | )       |  |   | (2,973  | ) |  |         | 202    |   |          |   | 853    |         |  |   | (1,709 | ) |  |   | (4,151 | )
|Net income (loss) per
common share                   |  | $ | 0.10                                  |  |  | $           | (0.12  | ) |          | $ | (0.57  | )       |  | $ | (0.99   | ) |  | $       | 0.03   |   |          | $ | 0.24   |         |  | $ | (0.58  | ) |  | $ | (1.37  | )
|                                                     |  |   |                                       |  |  |             |        |   |          |   |        |         |  |   |         |   |  |         |        |   |          |   |        |        

(1)  Represents additional considerations of $675,000 in the quarter ended
September 30, 2000 and $2.0 million in the quarter ended December 31, 2001 to
be received as one of the former shareholders of Strategic Interactive, Inc.
(Maxcos former 45% owned affiliate sold to Provant, Inc. in October 1998).
Also includes a gain of $422,000 on the sale of the Companys investment in
Mid-State Industrial Services, Inc. in the quarter ended December 31, 2001.

(2)  Represents a $3.1 million charge in the quarter ended December 31, 2001 to
recognize a decline in the value of the Companys investment in Provant common
stock that has been deemed other than temporary.

The sum of the quarterly net income per share amounts may not equal the annual
amounts reported. Net income per share is computed independently for each
quarter and the full year and is based on the respective weighted average
common shares outstanding.

Maxcos sales and operating results have varied substantially from quarter to
quarter. Net sales are typically lower in the third and fourth quarters. The
most significant factors affecting these fluctuations are the seasonal buying
patterns of the Companys customers due to inclement weather and the reduced
number of business days during the holiday season. In addition, the timing of
acquisitions or the occasional sale of corporate investments may cause
substantial fluctuations of operating results from quarter to quarter. Maxco
expects its net sales and operating results to continue to fluctuate from
quarter to quarter.

IMPACT OF INFLATION
Inflation impacts Maxcos costs for materials, labor and related costs of
manufacturing and distribution. To the extent permitted by competition, Maxco
has offset these higher costs through selective price increases.

NEW FINANCIAL ACCOUNTING PRONOUNCEMENT
On July 20, 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards (SFAS) No. 141, Business Combinations and
SFAS No. 142 Goodwill and Other Intangible Assets. These pronouncements
significantly change the accounting for business combinations, goodwill, and
intangible assets. SFAS No. 141 eliminates the pooling-of-interests method of
accounting for business combinations and further clarifies the criteria to
recognize intangible assets separately from goodwill. The requirements of SFAS
No. 141 are effective for any business combination accounted for by the
purchase method that is completed after June 30, 2001. Under SFAS No. 142,
goodwill and indefinite lived intangible assets are no longer amortized but are
reviewed for impairment annually (or more frequently if impairment indicators
arise). Separable intangible assets that are not deemed to have an indefinite
life will continue to be amortized over their useful lives. The amortization
provisions of SFAS No. 142 apply to goodwill and intangible assets acquired
after June 30, 2001. With respect to goodwill and intangible assets acquired
prior to July 1, 2001, companies are required to adopt the pronouncement in
their fiscal year beginning after December 15, 2001.

Effective April 1, 2002, the Company will adopt SFAS No. 142 which will result
in the discontinuance of amortization of goodwill and indefinite-lived
intangible assets that were recorded in connection with previous business

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combinations. Amortization expense for the years ended March 31, 2002, 2001,
and 2000 was $586,000, $705,000, and $675,000, respectively. SFAS No. 142 will
also require the Company to perform impairment tests of goodwill and indefinite
lived intangible assets on an annual basis (or more frequently if impairment
indicators exist). During fiscal 2003, the Company will complete the first of
the required impairment tests of goodwill and indefinite lived intangible
assets under this statement. The Company has not determined the effect on the
financial statements of potential impairment of adopting SFAS No. 142.

ITEM 7A  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 and short-term borrowings of
$34.9 million at March 31, 2002. A 1% increase from the prevailing interest
rates at March 31, 2002 on the unhedged variable rate portion of the Companys
long-term and short-term borrowings would increase interest expense by $313,000
based on principal balances at March 31, 2002.

ITEM 8  FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The response to this item is submitted in a separate section of this report.

ITEM 9  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
None

PART III

ITEM 10  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Item 10 is hereby incorporated by reference from the Registrants definitive
proxy statement to be filed within 120 days of March 31, 2002.

ITEM 11  EXECUTIVE COMPENSATION
Item 11 is hereby incorporated by reference from the Registrants definitive
proxy statement to be filed within 120 days of March 31, 2002.

ITEM 12  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Item 12 is hereby incorporated by reference from the Registrants definitive
proxy statement to be filed within 120 days of March 31, 2002.

ITEM 13  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13 is hereby incorporated by reference from the Registrants definitive
proxy statement to be filed within 120 days of March 31, 2002.

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PART IV

ITEM 14  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) and (2)The response to this portion of Item 14 is submitted as a separate section of this report.
(3) Listing of Exhibits

|               |  | 
|-------------- |  | 
|Exhibit Number | 
|               | 

|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3     |  | Restated Articles of Incorporation are hereby
incorporated by reference 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)                                                                                                                                                                                                                                                                                  
|4.3   |  | Resolution authorizing the redemption of Series Two
Preferred Stock, 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 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 registrants 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
registrants Form 8-K dated January 17, 1997.                                                                                                                                                                                                                                                                       
|10.12 |  | Asset Purchase Agreement  Axson North America Inc. is
hereby incorporated by reference from registrants 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 registrants 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 registrants 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.                                                                                                                                                                                                                                          
|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 is
hereby incorporated by reference from Form 10-Q dated November 12,
1999.                                                                                                                                                                                                                                    

18



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|      |  |                                                                                                                                                                                                  
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.21 |  | Sixth amendment to amended and restated loan agreement
between Comerica Bank and Maxco, Inc. dated July 12, 2000 is
hereby incorporated by reference from Form 10-K dated July 14,
2000.         
|10.22 |  | Seventh amendment to amended and restated loan agreement
between Comerica Bank and Maxco, Inc. dated January 11, 2000 is
hereby incorporated by reference from Form 10-Q dated February 14,
2001.
|10.23 |  | Eighth amendment to amended and restated loan agreement
between Comerica Bank and Maxco, Inc. dated March 19, 2001 is
hereby incorporated by reference from Form 10-K dated July 13,
2001.       
|10.24 |  | Ninth amendment to amended and restated loan agreement
between Comerica Bank and Maxco, Inc. dated October 1, 2001 is
hereby incorporated by reference from Form 10-Q dated February 19,
2002.   
|10.25 |  | Tenth amendment to amended and restated loan agreement
between Comerica Bank and Maxco, Inc. dated February 19, 2002.                                                                            
|21    |  | Subsidiaries of the Registrant                                                                                                                                                                   
|23    |  | Consent of Independent AuditorsErnst & Young LLP (Form
S-8 filed June 2, 1992  File No. 33-48351 and Form S-8 filed
November 19, 1998  File No. 333-67539).                                   
|23.1  |  | Consent of Independent AuditorsMoore Stephens Doeren
Mayhew (Form S-8 filed June 2, 1992  File No. 33-48351 and Form
S-8 filed November 19, 1998  File No. 333-67539)                         



|(b) |  | Reports on
Form 8-K:None                                                                                                
|--- |  | ------------------------------------------------------------------------------------------------------------------------
|(c) |  | Exhibits                                                                                                                
|    |  |                                                                                                                         
|    |  | - Tenth amendment to amended and restated loan agreement between
Comerica Bank and Maxco, Inc. dated February 19, 2002. 
|    |  | - Subsidiaries of the Registrant                                                                                        
|    |  | - Consent of Independent Auditors-Ernst & Young LLP                                                                     
|    |  | - Consent of Independent Auditors-Moore Stephens Doeren Mayhew                                                          
|(d) |  | Financial Statement Schedules
The response to this portion of Item 14 is submitted as a separate section of
this report.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 |  | July 16, 2002 |  | MAXCO, INC.                                                                                                                
|     |  |               | 
|    
|     |  |               |  | By /S/ VINCENT SHUNSKYVincent Shunsky, Vice President of Finance and Treasurer
(Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

|                                     |  |                   |  |                                                                                                  
|------------------------------------ |  | ----------------- |  | -------------------------------------------------------------------------------------------------
|/S/ MAX A. COONMax A. Coon           |  | July 16, 2002Date |  | President (Principal Executive Officer) and Director                                             
|                                    
|/S/ VINCENT SHUNSKYVincent Shunsky   |  | July 16, 2002Date |  | Vice President of Finance and Treasurer (Principal
Financial and Accounting Officer) and Director
|                                    
|/S/ ERIC L. CROSSEric L. Cross       |  | July 16, 2002Date |  | Director                                                                                         
|                                    
|/S/ CHARLES J. DRAKECharles J. Drake |  | July 16, 2002Date |  | Director                                                                                         
|                                    
|/S/ JOEL I. FERGUSONJoel I. Ferguson |  | July 16, 2002Date |  | Director                                                                                         
|                                    
|/S/ RICHARD G. JOHNSRichard G. Johns |  | July 16, 2002Date |  | Director                                                                                         
|                                    
|/S/ DAVID R. LAYTONDavid R. Layton   |  | July 16, 2002Date |  | Director                                                                                         
|                                    
|/S/ MICHAEL W. WISTIMichael W. Wisti |  | July 16, 2002Date |  | Director                                                                                         

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ANNUAL REPORT ON FORM 10-K

ITEM 14(a)(1) AND (2), (c), AND (d)

LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

CERTAIN EXHIBITS

FINANCIAL STATEMENT SCHEDULE

YEAR ENDED MARCH 31, 2002

MAXCO, INC.

LANSING, MICHIGAN

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FORM 10-KITEM 14(a)(1) AND (2)

MAXCO, INC. AND SUBSIDIARIES

LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

The following consolidated financial statements of Maxco, Inc. and subsidiaries
are included in Item 8:

|                                                                                           |  |  |    | 
|------------------------------------------------------------------------------------------ |  |  | -- | 
|Report of Independent Auditors                                                             |  |  | 23 | 
|Consolidated balance sheetsMarch 31, 2002 and 2001                                        |  |  | 24 | 
|Consolidated statements of operationsYears ended March 31, 2002, 2001, and 2000           |  |  | 25 | 
|Consolidated statements of stockholders equityYears ended March 31, 2002, 2001, and 2000 |  |  | 26 | 
|Consolidated statements of cash flowsYears ended March 31, 2002, 2001, and 2000           |  |  | 27 | 
|Notes to consolidated financial statementsMarch 31, 2002                                  |  |  | 28 | 

The following consolidated financial statement schedule of Maxco, Inc. and subsidiaries is included in Item 14(d):

|                                                           |  |  |    | 
|---------------------------------------------------------- |  |  | -- | 
|Schedule IIValuation and qualifying accounts and reserves |  |  | 38 | 

All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and, therefore, have been omitted.



| |                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Financial statements of the Registrants significant unconsolidated affiliate
(Integral Vision, Inc.) are hereby incorporated by reference from the
Integral Vision, Inc. Form 10-K for the year ended December 31, 2001, as
filed with the Securities and Exchange Commission (SEC File Number 0-12728).

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REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholders
Maxco, Inc.

We have audited the accompanying consolidated balance sheets of Maxco, Inc. and
subsidiaries as of March 31, 2002 and 2001, and the related consolidated
statements of operations, stockholders equity, and cash flows for each of the
three years in the period ended March 31, 2002. Our audits also included the
financial statement schedule listed in the index at Item 14(a). These financial
statements and schedule are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits. The financial statements of Integral Vision,
Inc. (formerly Medar, Inc.), (a corporation in which the Company has
approximately a 24% interest) as of December 31, 2001 and 2000 and for the
years then ended, have been audited by other auditors whose report has been
furnished to us; insofar as our opinion on the consolidated financial
statements relates to data included for Integral Vision, Inc., it is based
solely on their report. In the consolidated financial statements, the
Companys investment in Integral Vision, Inc. is stated at $845,000 at March
31, 2002, and the Companys equity in the net loss of Integral Vision, Inc. is
stated at $275,000 for the year then ended.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the report of
other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Maxco, Inc. and
subsidiaries at March 31, 2002 and 2001, and the consolidated results of their
operations and their cash flows for each of the three years in the period ended
March 31, 2002, in conformity with accounting principles generally accepted in
the United States. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.

/S/ ERNST & YOUNG LLP

Detroit, MI
June 7, 2002
Except for Note 3 as to which the date is July 16, 2002

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CONSOLIDATED BALANCE SHEETS
MAXCO, INC. AND SUBSIDIARIES

|                                                      |                                                                              |                                                                        |                               |                            |       |           |        |         |       |  |        | 
|----------------------------------------------------- | ---------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ----------------------------- | -------------------------- | ----- | --------- | ------ | ------- | ----- |  | ------ | 
|                                                      |                                                                              |                                                                        |                               |                            |       | March 31, |       
|                                                      |                                                                              |                                                                        |                               |                            |       |           |       
|                                                      |                                                                              |                                                                        |                               |                            |       | 2002      |        |         | 2001  | 
|                                                      |                                                                              |                                                                        |                               |                            |       |           |        |         |       | 
|ASSETS                                                |                                                                              | (in
thousands)                                                         |                              
|CURRENT ASSETS                                        |                                                                              |                                                                        |                               |                            |       |           |        |        
|                                                      | Cash and cash equivalents                                                    |                                                                        | $                             | 442                        |       |           | $      | 968     |      
|                                                      | Accounts receivable, less allowance of $424,000 in 2002 and $570,000 in 2001 |                                                                        |                               | 18,592                     |       |           |        | 19,998  |      
|                                                      | Note receivableshort-term                                                   |                                                                        |                               | 2,700                      |       |           |        |        |      
|                                                      | Advances to affiliate                                                        |                                                                        |                               | 3,008                      |       |           |        | 3,008   |      
|                                                      | InventoriesNote 1                                                           |                                                                        |                               | 4,580                      |       |           |        | 6,493   |      
|                                                      | Prepaid expenses and other                                                   |                                                                        |                               | 844                        |       |           |        | 795     |      
|                                                      | Income taxes receivable and deferred taxesNote 7                            |                                                                        |                               | 4,506                      |       |           |        | 1,343   |      
|                                                      |                                                                              |                                                                        |                               |                            |       |          
|                                                      |                                                                              |                                                                        |                               | TOTAL CURRENT ASSETS       |       |           | 34,672 |         |       |  | 32,605 | 
|MARKETABLE SECURITIES  LONG-TERMNote 1              |                                                                              |                                                                        | 145                           |                            |       |           | 1,511  |        
|PROPERTY AND EQUIPMENT                                |                                                                              |                                                                        |                               |                            |       |           |        |        
|                                                      | Land                                                                         |                                                                        |                               | 732                        |       |           |        | 732     |      
|                                                      | Buildings                                                                    |                                                                        |                               | 12,095                     |       |           |        | 12,144  |      
|                                                      | Machinery, equipment, and fixtures                                           |                                                                        |                               | 51,937                     |       |           |        | 53,728  |      
|                                                      |                                                                              |                                                                        |                               |                            |       |          
|                                                      |                                                                              |                                                                        | 64,764                        |                            |       |           | 66,604 |        
|                                                      | Allowances for depreciation                                                  |                                                                        |                               | (25,235                    | )     |           |        | (19,945 | )    
|                                                      |                                                                              |                                                                        |                               |                            |       |          
|                                                      |                                                                              |                                                                        | 39,529                        |                            |       |           | 46,659 |        
|OTHER ASSETS                                          |                                                                              |                                                                        |                               |                            |       |           |        |        
|                                                      | InvestmentsNote 8                                                           |                                                                        |                               | 6,018                      |       |           |        | 8,224   |      
|                                                      | Notes and contracts receivable and other, less allowance of $335,000 in      |                                                                        |                               | 1,036                      |       |           |        | 2,660   |      
|                                                      |                                                                              |                                                                        | 2002 and 2001                 |                            |       |           |        |         |       |  |       
|                                                      | Note receivablerelated party, less allowance of $956,000 in 2002            |                                                                        |                               | 2,349                      |       |           |        | 1,751   |      
|                                                      | IntangiblesNote 1                                                           |                                                                        |                               | 3,289                      |       |           |        | 3,753   |      
|                                                      | Deferred income taxesNote 7                                                 |                                                                        |                               |                           |       |           |        | 287     |      
|                                                      |                                                                              |                                                                        |                               |                            |       |          
|                                                      |                                                                              |                                                                        | 12,692                        |                            |       |           | 16,675 |        
|                                                      |                                                                              |                                                                        |                               |                            |       |          
|                                                      |                                                                              | $                                                                      | 87,038                        |                            |       | $         | 97,450 |        
|                                                      |                                                                              |                                                                        |                               |                            |       |          
|LIABILITIES AND STOCKHOLDERS EQUITY                  |                                                                              |                                                                        |                               |                            |       |           |        |        
|CURRENT LIABILITIES                                   |                                                                              |                                                                        |                               |                            |       |           |        |        
|                                                      | Notes payableNote 3                                                         |                                                                        | $                             | 22,626                     |       |           | $      | 17,088  |      
|                                                      | Accounts payable                                                             |                                                                        |                               | 18,216                     |       |           |        | 19,632  |      
|                                                      | Employee compensation                                                        |                                                                        |                               | 2,331                      |       |           |        | 2,741   |      
|                                                      | Taxes, interest, and other liabilities                                       |                                                                        |                               | 2,347                      |       |           |        | 1,906   |      
|                                                      | Current maturities of long-term obligations                                  |                                                                        |                               | 2,990                      |       |           |        | 3,480   |      
|                                                      |                                                                              |                                                                        |                               |                            |       |          
|                                                      |                                                                              |                                                                        |                               | TOTAL CURRENT LIABILITIES  |       |           | 48,510 |         |       |  | 44,847 | 
|LONG-TERM OBLIGATIONS, less current maturitiesNote 3 |                                                                              |                                                                        | 13,332                        |                            |       |           | 24,831 |        
|DEFERRED INCOME TAXESNote 7                          |                                                                              |                                                                        | 1,983                         |                            |       |           |       |        
|DEFERRED GAIN                                         |                                                                              |                                                                        | 226                           |                            |       |           |       |        
|CONTINGENT LIABILITYNote 8                           |                                                                              |                                                                        |                              |                            |       |           | 938    |        
|STOCKHOLDERS EQUITYNotes 4 and 5                    |                                                                              |                                                                        |                               |                            |       |           |        |        
|                                                      | Preferred stock:                                                             |                                                                        |                               |                            |       |           |        |         |      
|                                                      |                                                                              | Series Three: 10% cumulative callable, $60 face value; 14,784 shares   |                               |                            | 678   |           |        |         | 678   | 
|                                                      |                                                                              |                                                                        |                               | issued and outstanding     |       |           |        |         |       |  |        | 
|                                                      |                                                                              | Series Four: 10% cumulative callable, $51.50 face value; 46,414 shares |                               |                            | 2,390 |           |        |         | 2,390 | 
|                                                      |                                                                              |                                                                        |                               | issued and outstanding     |       |           |        |         |       |  |        | 
|                                                      |                                                                              | Series Five: 10% cumulative callable, $120 face value; 6,648 shares    |                               |                            | 798   |           |        |         | 798   | 
|                                                      |                                                                              |                                                                        |                               | issued and outstanding     |       |           |        |         |       |  |        | 
|                                                      |                                                                              | Series Six: 10% cumulative callable, $160 face value; 20,000 shares    |                               |                            |      |           |        |         |      | 
|                                                      |                                                                              |                                                                        |                               | authorized, none issued    |       |           |        |         |       |  |        | 
|                                                      | Common stock, $1 par value; 10,000,000 shares authorized, 3,101,195          |                                                                        |                               | 3,101                      |       |           |        | 3,101   |      
|                                                      |                                                                              |                                                                        | shares issued and outstanding |                            |       |           |        |         |       |  |       
|                                                      | Accumulated other comprehensive loss                                         |                                                                        |                               | (78                        | )     |           |        | (1,140  | )    
|                                                      | Retained earnings                                                            |                                                                        |                               | 16,098                     |       |           |        | 21,007  |      
|                                                      |                                                                              |                                                                        |                               |                            |       |          
|                                                      |                                                                              |                                                                        |                               | TOTAL STOCKHOLDERS EQUITY |       |           | 22,987 |         |       |  | 26,834 | 
|                                                      |                                                                              |                                                                        |                               |                            |       |          
|                                                      |                                                                              | $                                                                      | 87,038                        |                            |       | $         | 97,450 |        
|                                                      |                                                                              |                                                                        |                               |                            |       |          

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF OPERATIONS
MAXCO, INC. AND SUBSIDIARIES

|                                                                        |                                      |                                                                                         |                                     |                                                                |        |                                       |         |         |        |        |         |         |     |     |       | 
|----------------------------------------------------------------------- | ------------------------------------ | --------------------------------------------------------------------------------------- | ----------------------------------- | -------------------------------------------------------------- | ------ | ------------------------------------- | ------- | ------- | ------ | ------ | ------- | ------- | --- | --- | ----- | 
|                                                                        |                                      |                                                                                         |                                     |                                                                |        | Year Ended March 31,                  |        
|                                                                        |                                      |                                                                                         |                                     |                                                                |        |                                       |        
|                                                                        |                                      |                                                                                         |                                     |                                                                |        | 2002                                  |         |         | 2001   |        |         | 2000    |    
|                                                                        |                                      |                                                                                         |                                     |                                                                |        |                                       |         |         |        |        |         |         |    
|                                                                        |                                      |                                                                                         |                                     |                                                                |        | (in
thousands, except per share data) |        
|Net sales                                                               |                                      | $                                                                                       | 136,552                             |                                                                |        | $                                     | 157,315 |         |        | $      | 156,490 |        
|Costs and expenses:                                                     |                                      |                                                                                         |                                     |                                                                |        |                                       |         |         |        |        |         |        
|                                                                        | Cost of sales and operating expenses |                                                                                         |                                     | 107,312                                                        |        |                                       |         | 121,605 |        |        |         | 119,749 |    
|                                                                        | Selling, general, and administrative |                                                                                         |                                     | 25,121                                                         |        |                                       |         | 28,946  |        |        |         | 27,832  |    
|                                                                        | Depreciation and amortization        |                                                                                         |                                     | 6,508                                                          |        |                                       |         | 6,085   |        |        |         | 4,907   |    
|                                                                        |                                      |                                                                                         |                                     |                                                                |        |                                       |         |         |       
|                                                                        |                                      |                                                                                         | 138,941                             |                                                                |        |                                       | 156,636 |         |        |        | 152,488 |        
|                                                                        |                                      |                                                                                         |                                     |                                                                |        |                                       |         |         |       
|                                                                        |                                      |                                                                                         |                                     | OPERATING EARNINGS (LOSS)                                      |        |                                       | (2,389  | )       |        |        | 679     |         |     |     | 4,002 | 
|Other income (expense):                                                 |                                      |                                                                                         |                                     |                                                                |        |                                       |         |         |        |        |         |        
|                                                                        | Investment and interest income       |                                                                                         |                                     | 888                                                            |        |                                       |         | 713     |        |        |         | 656     |    
|                                                                        | Gain on sale of investmentsNote 8   |                                                                                         |                                     | 2,447                                                          |        |                                       |         | 675     |        |        |         |        |    
|                                                                        | Interest expense                     |                                                                                         |                                     | (3,776                                                         | )      |                                       |         | (4,705  | )      |        |         | (3,624  | )  
|                                                                        | Loss on investmentNote 8            |                                                                                         |                                     | (3,103                                                         | )      |                                       |         |        |        |        |         | (860    | )  
|                                                                        |                                      |                                                                                         |                                     |                                                                |        |                                       |         |         |       
|                                                                        |                                      |                                                                                         | (3,544                              | )                                                              |        |                                       | (3,317  | )       |        |        | (3,828  | )      
|                                                                        |                                      |                                                                                         |                                     |                                                                |        |                                       |         |         |       
|                                                                        |                                      | INCOME
(LOSS) BEFORE FEDERAL INCOME TAXES AND
EQUITY IN NET INCOME (LOSS) OF AFFILIATES |                                     |                                                                | (5,933 | )                                     |         |         | (2,638 | )      |         |         | 174 |    
|Federal income tax expense (benefit)Note 7                             |                                      |                                                                                         | (1,960                              | )                                                              |        |                                       | (830    | )       |        |        | 136     |        
|                                                                        |                                      |                                                                                         |                                     |                                                                |        |                                       |         |         |       
|                                                                        |                                      |                                                                                         |                                     | INCOME
(LOSS) BEFORE EQUITY IN NET
INCOME (LOSS) OF AFFILIATES |        |                                       | (3,973  | )       |        |        | (1,808  | )       |     |     | 38    | 
|Equity in net income (loss) of affiliates, net of taxNotes 2, 7, and 8 |                                      |                                                                                         | (528                                | )                                                              |        |                                       | (2,997  | )       |        |        | 278     |        
|                                                                        |                                      |                                                                                         |                                     |                                                                |        |                                       |         |         |       
|                                                                        |                                      |                                                                                         |                                     | NET INCOME (LOSS)                                              |        |                                       | (4,501  | )       |        |        | (4,805  | )       |     |     | 316   | 
|Less preferred stock dividends                                          |                                      |                                                                                         | (408                                | )                                                              |        |                                       | (408    | )       |        |        | (408    | )      
|                                                                        |                                      |                                                                                         |                                     |                                                                |        |                                       |         |         |       
|                                                                        |                                      |                                                                                         | NET LOSS APPLICABLE TO COMMON STOCK |                                                                | $      | (4,909                                | )       |         | $      | (5,213 | )       |         | $   | (92 | )    
|                                                                        |                                      |                                                                                         |                                     |                                                                |        |                                       |         |         |       
|NET LOSS PER COMMON SHAREBasic and dilutedNote 11                     |                                      | $                                                                                       | (1.58                               | )                                                              |        | $                                     | (1.68   | )       |        | $      | (0.03   | )      

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
MAXCO, INC. AND SUBSIDIARIES

|                           |                                                                        |                          |       |           |   |   |        |      |   |               |        |                |          |   |        |        |   |   |        |        |        |  
|-------------------------- | ---------------------------------------------------------------------- | ------------------------ | ----- | --------- | - | - | ------ | ---- | - | ------------- | ------ | -------------- | -------- | - | ------ | ------ | - | - | ------ | ------ | ------ | -
|                           |                                                                        |                          |       |           |   |   |        |      |   |               |        | Accumulated    |          |   |        |        |   |   |        |        |       
|                           |                                                                        |                          |       |           |   |   |        |      |   |               |        | Other          |          |   |        |        |   |   |        |        |       
|                           |                                                                        |                          |       | Preferred |   |   | Common |      |   | Comprehensive |        |                | Retained |   |        |        |   |  
|                           |                                                                        |                          |       | Stock     |   |   | Stock  |      |   | Income (Loss) |        |                | Earnings |   |        | Totals |  
|                           |                                                                        |                          |       |           |   |   |        |      |   |               |        |                |          |   |        |        |  
|                           |                                                                        |                          |       |           |   |   |        |      |   |               |        | (in thousands) |          |   |        |        |   |   |        |        |       
|Balances at April 1, 1999  |                                                                        | $                        | 3,871 |           |   | $ | 3,220  |      |   | $             | 9      |                |          | $ | 27,044 |        |   | $ | 34,144 |       
|                           | Net income for the year                                                |                          |       |           |   |   |        |      |   |               |        |                |          |   |        | 316    |   |   |        | 316    |       
|                           | Net unrealized loss on marketable
securities, net of taxes of $456,000 |                          |       |           |   |   |        |      |   |               |        | (886           | )        |   |        |        |   |   |        | (886   | )     
|                           |                                                                        |                          |       |           |   |   |        |      |   |               |        |                |          |   |        |        |   |   |       
|                           |                                                                        | Total Comprehensive Loss |       |           |   |   |        |      |   |               |        |                |          |   |        |        |   |   |        |        | (570   | )
|                           | Preferred stock dividends                                              |                          |       |           |   |   |        |      |   |               |        |                |          |   |        | (408   | ) |   |        | (408   | )     
|                           | Redemption of preferred stock                                          |                          |       | (5        | ) |   |        |      |   |               |        |                |          |   |        |        |   |   |        | (5     | )     
|                           | Acquisition and retirement of
118,800 shares                           |                          |       |           |   |   |        | (119 | ) |               |        |                |          |   |        | (732   | ) |   |        | (851   | )     
|                           |                                                                        |                          |       |           |   |   |        |      |   |               |        |                |          |   |       
|Balances at March 31, 2000 |                                                                        |                          | 3,866 |           |   |   | 3,101  |      |   |               | (877   | )              |          |   | 26,220 |        |   |   | 32,310 |       
|                           | Net loss for the year                                                  |                          |       |           |   |   |        |      |   |               |        |                |          |   |        | (4,805 | ) |   |        | (4,805 | )     
|                           | Net unrealized loss on marketable
securities, net of taxes of $135,000 |                          |       |           |   |   |        |      |   |               |        | (263           | )        |   |        |        |   |   |        | (263   | )     
|                           |                                                                        |                          |       |           |   |   |        |      |   |               |        |                |          |   |        |        |   |   |       
|                           |                                                                        | Total Comprehensive Loss |       |           |   |   |        |      |   |               |        |                |          |   |        |        |   |   |        |        | (5,068 | )
|                           | Preferred stock dividends                                              |                          |       |           |   |   |        |      |   |               |        |                |          |   |        | (408   | ) |   |        | (408   | )     
|                           |                                                                        |                          |       |           |   |   |        |      |   |               |        |                |          |   |       
|Balances at March 31, 2001 |                                                                        |                          | 3,866 |           |   |   | 3,101  |      |   |               | (1,140 | )              |          |   | 21,007 |        |   |   | 26,834 |       
|                           | Net loss for the year                                                  |                          |       |           |   |   |        |      |   |               |        |                |          |   |        | (4,501 | ) |   |        | (4,501 | )     
|                           | Net unrealized loss on marketable
securities, net of taxes of $465,000 |                          |       |           |   |   |        |      |   |               |        | (901           | )        |   |        |        |   |   |        | (901   | )     
|                           | Realized loss on marketable
securities, net of taxes of $1,056,000     |                          |       |           |   |   |        |      |   |               |        | 2,047          |          |   |        |        |   |   |        | 2,047  |       
|                           | Unrealized loss on swap agreement                                      |                          |       |           |   |   |        |      |   |               |        | (84            | )        |   |        |        |   |   |        | (84    | )     
|                           |                                                                        |                          |       |           |   |   |        |      |   |               |        |                |          |   |        |        |   |   |       
|                           |                                                                        | Total Comprehensive Loss |       |           |   |   |        |      |   |               |        |                |          |   |        |        |   |   |        |        | (3,439 | )
|                           | Preferred stock dividends                                              |                          |       |           |   |   |        |      |   |               |        |                |          |   |        | (408   | ) |   |        | (408   | )     
|                           |                                                                        |                          |       |           |   |   |        |      |   |               |        |                |          |   |       
|BALANCES AT MARCH 31, 2002 |                                                                        | $                        | 3,866 |           |   | $ | 3,101  |      |   | $             | (78    | )              |          | $ | 16,098 |        |   | $ | 22,987 |       
|                           |                                                                        |                          |       |           |   |   |        |      |   |               |        |                |          |   |       

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS
MAXCO, INC. AND SUBSIDIARIES

|                                                    |                                                                                          |                                              |                                                |                             |        |                      |        |         |       |                |         |         |       |        |       |  
|--------------------------------------------------- | ---------------------------------------------------------------------------------------- | -------------------------------------------- | ---------------------------------------------- | --------------------------- | ------ | -------------------- | ------ | ------- | ----- | -------------- | ------- | ------- | ----- | ------ | ----- | -
|                                                    |                                                                                          |                                              |                                                |                             |        | Year Ended March 31, |       
|                                                    |                                                                                          |                                              |                                                |                             |        |                      |       
|                                                    |                                                                                          |                                              |                                                |                             |        | 2002                 |        |         | 2001  |                |         | 2000    |      
|                                                    |                                                                                          |                                              |                                                |                             |        |                      |        |         |       |                |         |         |      
|                                                    |                                                                                          |                                              |                                                |                             |        |                      |        |         |       | (in thousands) |         |         |       |        |      
|OPERATING ACTIVITIES                                |                                                                                          |                                              |                                                |                             |        |                      |        |         |       |                |         |        
|                                                    | Net income (loss)                                                                        |                                              | $                                              | (4,501                      | )      |                      | $      | (4,805  | )     |                | $       | 316     |      
|                                                    | Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |                                              |                                                |                             |        |                      |        |         |       |                |         |         |      
|                                                    |                                                                                          | Depreciation                                 |                                                |                             | 5,922  |                      |        |         | 5,380 |                |         |         | 4,232 |       
|                                                    |                                                                                          | Amortization                                 |                                                |                             | 586    |                      |        |         | 705   |                |         |         | 675   |       
|                                                    |                                                                                          | Equity in net (income) loss of affiliates    |                                                |                             | 528    |                      |        |         | 2,997 |                |         |         | (278  | )     
|                                                    |                                                                                          | Deferred federal income taxes                |                                                |                             | 293    |                      |        |         | (669  | )              |         |         | 855   |       
|                                                    |                                                                                          | Gain on sale of investments                  |                                                |                             | (2,447 | )                    |        |         | (675  | )              |         |         |      |       
|                                                    |                                                                                          | Loss on investments                          |                                                |                             | 3,103  |                      |        |         |      |                |         |         | 860   |       
|                                                    |                                                                                          | Changes in operating assets and liabilities: |                                                |                             |        |                      |        |         |       |                |         |         |       |       
|                                                    |                                                                                          |                                              | Accounts receivable                            |                             |        | 1,833                |        |         |       | 2,635          |         |         |       | (2,014 | )    
|                                                    |                                                                                          |                                              | Inventories                                    |                             |        | 1,998                |        |         |       | 1,507          |         |         |       | (436   | )    
|                                                    |                                                                                          |                                              | Prepaid expenses and other                     |                             |        | (1,638               | )      |         |       | 168            |         |         |       | (132   | )    
|                                                    |                                                                                          |                                              | Accounts payable and other current liabilities |                             |        | (1,818               | )      |         |       | 7,560          |         |         |       | 1,735  |      
|                                                    |                                                                                          |                                              |                                                |                             |        |                      |        |         |      
|NET CASH PROVIDED BY OPERATING ACTIVITIES           |                                                                                          |                                              | 3,859                                          |                             |        |                      | 14,803 |         |       |                | 5,813   |        
|INVESTING ACTIVITIES                                |                                                                                          |                                              |                                                |                             |        |                      |        |         |       |                |         |        
|                                                    | Purchases of property and equipment                                                      |                                              |                                                | (1,746                      | )      |                      |        | (12,419 | )     |                |         | (11,698 | )    
|                                                    | Sale of investment                                                                       |                                              |                                                | 750                         |        |                      |        | 1,143   |       |                |         |        |      
|                                                    | Payments received on notes receivable                                                    |                                              |                                                | 591                         |        |                      |        |        |       |                |         | 750     |      
|                                                    | Net proceeds from (investment in) marketable securities                                  |                                              |                                                |                            |        |                      |        | 2,530   |       |                |         | (31     | )    
|                                                    | Investment in affiliates                                                                 |                                              |                                                |                            |        |                      |        | (272    | )     |                |         | (3,867  | )    
|                                                    | Purchase of businesses                                                                   |                                              |                                                |                            |        |                      |        |        |       |                |         | (4,587  | )    
|                                                    | Other                                                                                    |                                              |                                                | 190                         |        |                      |        | 523     |       |                |         | 274     |      
|                                                    |                                                                                          |                                              |                                                |                             |        |                      |        |         |      
|NET CASH USED IN INVESTING ACTIVITIES               |                                                                                          |                                              | (215                                           | )                           |        |                      | (8,495 | )       |       |                | (19,159 | )      
|FINANCING ACTIVITIES                                |                                                                                          |                                              |                                                |                             |        |                      |        |         |       |                |         |        
|                                                    | Net proceeds from (repayments on) lines of credit                                        |                                              |                                                | (500                        | )      |                      |        | (12,941 | )     |                |         | 9,242   |      
|                                                    | Repayments on other debt obligations                                                     |                                              |                                                | (6,364                      | )      |                      |        | (4,181  | )     |                |         | (2,584  | )    
|                                                    | Sale of assets                                                                           |                                              |                                                | 3,000                       |        |                      |        |        |       |                |         |        |      
|                                                    | Dividends paid on preferred stock                                                        |                                              |                                                | (306                        | )      |                      |        | (408    | )     |                |         | (408    | )    
|                                                    | Proceeds from other debt obligations                                                     |                                              |                                                |                            |        |                      |        | 11,648  |       |                |         | 7,372   |      
|                                                    | Acquisition and retirement of preferred and common stock                                 |                                              |                                                |                            |        |                      |        |        |       |                |         | (856    | )    
|                                                    |                                                                                          |                                              |                                                |                             |        |                      |        |         |      
|NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |                                                                                          |                                              | (4,170                                         | )                           |        |                      | (5,882 | )       |       |                | 12,766  |        
|                                                    |                                                                                          |                                              |                                                |                             |        |                      |        |         |      
|                                                    |                                                                                          |                                              |                                                | INCREASE (DECREASE) IN CASH |        |                      | (526   | )       |       |                | 426     |         |       |        | (580  | )
|                                                    |                                                                                          |                                              |                                                | CASH AT BEGINNING OF YEAR   |        |                      | 968    |         |       |                | 542     |         |       |        | 1,122 |  
|                                                    |                                                                                          |                                              |                                                |                             |        |                      |        |         |      
|                                                    |                                                                                          |                                              |                                                | CASH AT END OF YEAR         |        | $                    | 442    |         |       | $              | 968     |         |       | $      | 542   |  
|                                                    |                                                                                          |                                              |                                                |                             |        |                      |        |         |      

See notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAXCO, INC. AND SUBSIDIARIES

March 31, 2002

NOTE 1  SIGNIFICANT ACCOUNTING POLICIES

Nature of Business: Maxco, Inc. (the Company) is a Michigan corporation
incorporated in 1946. Maxco currently operates in three business segments:
construction supplies, heat-treating, and packaging products. Maxcos
businesses include Ersco Corporation, a distributor of construction supplies;
Atmosphere Annealing Inc., a production metal heat-treating service company;
and Pak-Sak Industries Inc., which makes polyethylene packaging. Maxco also has
investments in real estate and investments representing less than majority
interests in the following: a registered investor advisory firm; a registered
broker-dealer of securities that is primarily focused on the trading of fixed
income investments over the internet; a company offering a business-to-business
vertical web portal designed to bring solution-seekers together with
solution-providers; a limited partnership that has equity investments in
companies focused on the information technology, telecommunications, and
medical technology markets; three technology-related businesses; and one
energy-related business.

Principles of Consolidation: The consolidated financial statements include the
accounts of Maxco, Inc. and its majority owned subsidiaries. Upon
consolidation, all intercompany accounts and transactions are eliminated.
Investments in greater than 20% owned investments are accounted for under the
equity method. Investments in less than 20% owned affiliates are accounted for
under the cost method.

Use of Estimates: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. Actual results could differ
from those estimates.

Reclassifications: Certain items in the prior year financial statements have
been reclassified to conform with the presentation used in 2002.

Cash and Cash Equivalents: The Company considers cash and other highly liquid
investments, including investments in interest bearing repurchase agreements
with less than 90-day maturities, as cash and cash equivalents.

Receivables: Trade accounts receivable represent amounts due from customers in
the highway and general construction, automotive, and flexible packaging
industries, primarily in the mid-western United States. Accounts and notes
receivable at the Companys construction supplies unit are collateralized or
secured by perfected lien rights and payment bonds, where applicable.

Inventories: Inventories are stated at the lower of first-in, first-out cost
or market and at March 31 consisted of the following:

|                                    |  |                |       |  |      |   |       | 
|----------------------------------- |  | -------------- | ----- |  | ---- | - | ----- | 
|                                    |  | 2002           |       |  | 2001 |  
|                                    |  |                |       |  |      |  
|                                    |  | (in
thousands) |      
|Raw materials                       |  | $              | 464   |  |      | $ | 531   | 
|Finished goods and work in progress |  |                | 852   |  |      |   | 1,293 | 
|Purchased products for resale       |  |                | 3,264 |  |      |   | 4,669 | 
|                                    |  |                |       |  |      |  
|                                    |  | $              | 4,580 |  |      | $ | 6,493 | 
|                                    |  |                |       |  |      |  

Marketable Securities: Marketable securities are classified in accordance with
FASB 115 as securities available-for-sale. 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. The amortized cost of
securities in this category is adjusted for amortization of premiums and
accretion of discounts to maturity. Such amortization is included in investment
income. Realized gains and losses and declines in value judged to be other than
temporary on available-for-sale securities are included in investment income or
loss. The cost of securities sold is based on the specific identification
method. Interest and dividends on securities classified as available-for-sale
are included in investment income. The fair value of marketable securities is
based on quoted market value.

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In November 1999, Maxco began accounting for its investment in Provant, Inc.
common stock as securities available for sale as defined by FASB 115.
Consequently, the securities are carried at market value with the unrealized
gains and losses net of tax, reported as a separate component of stockholders
equity. In 2002, the Company realized a loss on its investment in Provant
common stock as an other than temporary impairment in its statement of
operations of $3.1 million. At March 31, 2002, the unrealized gain on this
stock was approximately $5,000 net of tax.

Advances to Affiliates: The Company has advanced amounts to its real estate
investment holding and a technology related investment holding. These advances
are unsecured and bear interest. As of March 31, 2002, the Company has
advances to these affiliates totaling $5.3 million, net of a reserve of $1.0
million.

Properties and Depreciation: Property and equipment are stated on the basis of
cost and include expenditures for new facilities and equipment and those which
materially extend the useful lives of existing facilities and equipment.
Equipment capitalized under lease agreements is not significant.

Expenditures for normal repairs and maintenance are charged to operations as
incurred. Depreciation (and amortization of capitalized leases) for financial
reporting purposes is computed by the straight-line method based on the
estimated useful lives of the assets ranging from 3 to 31 years.

Federal Income Taxes: The Company provides for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes.

Intangibles: Intangibles primarily consist of the excess of cost over fair
market value of net tangible assets of acquired businesses. Intangibles,
including non-compete agreements, are amortized on a straight-line basis over
periods ranging from 5 to 20 years. The carrying value of goodwill will be
reviewed if the facts and circumstances suggest that it may be impaired. If
this review indicates that goodwill will not be recoverable, as determined
based on the undiscounted cash flows of the entity acquired over the remaining
amortization period, the Companys carrying value of the goodwill will be
reduced by the estimated shortfall of discounted cash flows. Accumulated
amortization was approximately $2.4 million and $1.9 million at March 31, 2002
and 2001, respectively.

Revenue Recognition: The Company recognizes revenue from product sales upon
transfer of title, which is generally upon shipment.

Gain Recognition on Sale of Subsidiary Stock: The Companys policy is to
record gains from the sale or other issuance of previously unissued stock by
its subsidiaries.

Advertising: Advertising costs are expensed as incurred. The amounts were not
material for all years presented.

Shipping and Handling Costs: The Company recognizes shipping and handling
costs as a component of cost of sales and operating expenses in the statement
of operations.

Interest Rate Swap: The Company entered into an interest rate swap agreement
to modify the interest characteristics of certain of its outstanding debt. The
interest rate swap agreement is designated with the principal balance and term
of a specific debt obligation. This agreement involves the exchange of amounts
based on a fixed interest rate for amounts based on variable interest rates
over the life of the agreement without an exchange of the notional amount upon
which the payments are based. The swap agreement was in a loss position of
$84,000 at March 31, 2002.

Fair Value Disclosure: The carrying amounts of certain financial instruments
such as cash and cash equivalents, accounts receivable, marketable securities,
accounts payable and long-term debt approximate their fair values. The fair
value of the long-term debt is estimated using discounted cash flow analysis
and the Companys current incremental borrowing rates for similar types of
arrangements.

Comprehensive Income: The Company displays comprehensive income in the
Consolidated Statements of Stockholders Equity. At March 31, 2002, accumulated
other comprehensive income (loss) consisted of the unrealized gain (loss) on
marketable securities and the market value of the interest rate swap agreement.

Stock Options: The Company has elected to follow APB No. 25 Accounting for
Stock Issued to Employees and related interpretations in accounting for its
employee stock options because, in managements opinion, the alternative fair
value provided for under FASB Statement No. 123, Accounting for Stock-Based
Compensation, requires the use of option valuation models that were not
developed for use in valuing employee stock options.

29



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Under APB 25, because the exercise price of the Companys employee stock
options equals the market price of the underlying stock on the date of grant,
no compensation expense is recognized.

New Financial Accounting Pronouncement: On July 20, 2001, the Financial
Accounting Standards Board issued Statements of Financial Accounting Standards
(SFAS) No. 141, Business Combinations and SFAS No. 142 Goodwill and Other
Intangible Assets. These pronouncements significantly change the accounting
for business combinations, goodwill, and intangible assets. SFAS No. 141
eliminates the pooling-of-interests method of accounting for business
combinations and further clarifies the criteria to recognize intangible assets
separately from goodwill. The requirements of SFAS No. 141 are effective for
any business combination accounted for by the purchase method that is completed
after June 30, 2001. Under SFAS No. 142, goodwill and indefinite lived
intangible assets are no longer amortized but are reviewed for impairment
annually (or more frequently if impairment indicators arise). Separable
intangible assets that are not deemed to have an indefinite life will continue
to be amortized over their useful lives. The amortization provisions of SFAS
No. 142 apply to goodwill and intangible assets acquired after June 30, 2001.
With respect to goodwill and intangible assets acquired prior to July 1, 2001,
companies are required to adopt the pronouncement in their fiscal year
beginning after December 15, 2001.

In fiscal 2003, the Company will adopt SFAS No. 142 which will result in the
discontinuance of amortization of goodwill and indefinite-lived intangible
assets that were recorded in connection with previous business combinations.
Amortization expense for the years ended March 31, 2002, 2001, and 2000 was
$586,000, $705,000, and $675,000, respectively. SFAS No. 142 will also require
the Company to perform impairment tests of goodwill and indefinite lived
intangible assets on an annual basis (or more frequently if impairment
indicators exist). During fiscal 2003, the Company will complete the first of
the required impairment tests of goodwill and indefinite lived intangible
assets under this statement. The Company has not determined the effect on the
financial statements of potential impairment of adopting SFAS No. 142.

NOTE 2  INVESTMENT IN INTEGRAL VISION, INC. (FORMERLY MEDAR, INC.)

At March 31, 2002, Maxco owned 2,240,605 shares of Integral Visions common
stock (aggregate market value of $1.3 million), representing approximately 24%
of Integral Visions total common stock outstanding.

During the quarter ended September 30, 1997, the Company participated in a
private placement by Integral Vision of $7.0 million of subordinated
debentures. Maxco purchased $750,000 of these debentures representing 10.7% of
the total placed. Maxco also received warrants to purchase 150,000 shares of
Integral Vision stock at $6.86, which were all outstanding and exercisable at
March 31, 2002. In connection with this transaction, Maxco also purchased
150,000 shares of previously unissued Integral Vision stock at $5.00 a share.
On June 30, 1999, Integral Vision sold its welding division for cash and debt.
Maxco recognized its proportionate share of the gain on this transaction as
part of equity in income (loss) of affiliates. Also, as a result of this
transaction, Maxco received payment on June 30, 1999 of the balance due on
subordinated debentures of $750,000. Maxcos investment in Integral Vision is
accounted for under the equity method for all periods presented.

In accordance with APB 18, the Company recorded a charge of $1.4 million
($899,000 net of tax), in 2001 to recognize a decline in the value of its
investment in Integral Vision that has been deemed other than temporary. The
charge is included in equity in net income (loss) of affiliates for the year
ended March 31, 2001. Integral Vision had a net loss for the year ended March
31, 2002 of approximately $6.8 million, a net loss of $8.0 million in 2001, and
net income of $3.8 million in 2000.

In 2002, Maxco recorded its share of equity losses from Integral Vision, Inc.
($182,000 net of tax) which reduced the recorded amount below its fair value
established at March 31, 2001. Maxcos equity share of Integral Visions
results of operations for the years ended March 31, 2001 and 2000 were
approximately a loss of $2.0 million and income of $896,000 respectively, and
are recorded net of deferred tax for these periods in equity in net income
(loss) of affiliates, along with the equity results of other 50% or less owned
affiliates accounted for under the equity method. For the years ended March 31,
2002, 2001, and 2000, Integral Visions sales were $2.0 million, $5.0 million
and $11.0 million, respectively.

NOTE 3  DEBT

At March 31, 2002 the Company had two lines of credit, an $18 million facility
and a $5 million facility. These facilities are secured by Company assets.
The amount that can be borrowed under these facilities is dependent on certain
accounts receivable and inventory levels at the Companys construction
supplies, packaging products, and heat treating companies. At March 31, 2002,
based on these specific collateral levels, the Company could borrow up to $13.5
million under its lines of credit of which approximately $750,000 was
available. At March 31,

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2002, the Company had $475,000 in letters of credit issued against its $18
million credit facility. There is a corresponding decrease in borrowings
available under the credit facility as a result of the issuance of these
letters of credit. The $5 million line reduces to $4 million in July 2002 and
matures in April 2003 and the $18 million line matures in August 2003.

Long-term obligations at March 31 consisted of the following:

|                                                                                        |  |                |        |  |      |   |        | 
|--------------------------------------------------------------------------------------- |  | -------------- | ------ |  | ---- | - | ------ | 
|                                                                                        |  | 2002           |        |  | 2001 |  
|                                                                                        |  |                |        |  |      |  
|                                                                                        |  | (in thousands) |       
|Revolving line of credit (variable interest
rate7.75% at March 31, 2002)               |  | $              |       |  |      | $ | 9,000  | 
|Tax exempt revenue bonds (variable interest rate)                                       |  |                | 2,927  |  |      |   | 1,690  | 
|Taxable revenue bonds (fixed interest rate of 5.34%)                                    |  |                | 3,594  |  |      |   |        | 
|Mortgage notes payable (various interest rates
ranging up to 9.0%)                      |  |                | 1,874  |  |      |   | 1,994  | 
|Equipment purchase contracts and capitalized
lease obligations (various interest rates) |  |                | 4,687  |  |      |   | 11,808 | 
|Subordinated debt (fixed interest rate of 10%)                                          |  |                | 2,307  |  |      |   | 2,842  | 
|Other                                                                                   |  |                | 933    |  |      |   | 977    | 
|                                                                                        |  |                |        |  |      |  
|                                                                                        |  |                | 16,322 |  |      |   | 28,311 | 
|Less current maturities                                                                 |  |                | 2,990  |  |      |   | 3,480  | 
|                                                                                        |  |                |        |  |      |  
|                                                                                        |  | $              | 13,332 |  |      | $ | 24,831 | 
|                                                                                        |  |                |        |  |      |  

At March 31, 2002, the Company was in default of financial covenants required
by certain of its lenders and classified $22.6 million of its debt as short
term. A forbearance agreement has been reached with one of the lenders. There
are ongoing negotiations with the banks to amend their agreements and obtain
any necessary waivers of default.

The Companys weighted average short-term borrowing rate was 6.17% and 7.02% at
March 31, 2002 and 2001, respectively.

The accompanying financial statements have been prepared on the basis that the
Company will continue as a going concern. The Companys ability to meet its
short term and long term debt service and other obligations (including
compliance with financial covenants) will be dependent upon its future
operating performance and the successful renegotiation of its credit
facilities. These dependencies will be subject to financial, business and
other factors, certain of which are beyond the Companys control, such as
prevailing economic conditions. There can be no assurance that, in the event
the Company were to require additional financing, such additional financing
would be available on satisfactory terms. The Company believes that funds
generated by its operations and funds available under other credit facilities,
will be sufficient to finance short term capital needs, as well as to fund
existing operations for the foreseeable future. However, in the event that the
Company is unable to successfully renegotiate its credit facilities, the
Company has equity investments that could be liquidated within a year to meet
its short term and long term debt service requirements and fund operating cash
flows.

Certain of the agreements require a facility fee of 0.25%, a commitment fee of
0.25% of the unused line, and compensating balances equal to 5% of borrowings
under this arrangement or the fee equivalent. Certain of these agreements
require maintenance of specified financial ratios.

In December 1998, Maxco entered into a swap agreement with a notional amount of
approximately $5.0 million converting its variable rate taxable revenue bonds
to a fixed rate of 5.34%, which matures in December 2005. The swap agreement
was in a loss position of $84,000 at March 31, 2002.

Notes and contracts payable are generally collateralized by assets purchased
with proceeds of the borrowings. The aggregate principal maturities of
long-term debt are approximately $3,439,000 in 2004, $3,873,000 in 2005,
$1,941,000 in 2006, $1,932,000 in 2007, and $2,147,000 thereafter.

Interest paid approximates interest expensed for the years presented.

The Company has guaranteed various debt obligations of certain real estate and
other investments in an aggregate amount of approximately $40.0 million as of
May 31, 2002 ($54.0 million at May 31, 2001). Certain of the debt agreements related
to its real estate investments, which Maxco and other guarantors have guaranteed, are in default
at March 31, 2002. Forbearance agreements have been issued by two of the respective banks and the
applicable entities are currently working with the lenders to rectify the default issues. However,
efforts to negotiate a forbearance agreement with one of the lenders, representing $12.5 million in loans
guaranteed by Maxco and other guarantors, have currently stalled and the lender has delivered a Demand
for Payment and Notice of Intent to Commence Foreclosure. The Company remains hopeful that negotiations
with the lender will be successful. The Company believes that the agreement to sell its investment in
L/M Associates II will significantly reduce the debt obligations it has guaranteed. Except as
specifically accrued, the Company does not believe that there is any unusual
degree of risk related to these guarantees because of sufficient underlying
asset values supporting the respective debt obligations.

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NOTE 4  PREFERRED STOCK

Maxco may issue up to 100,000 shares of preferred stock with terms determined
by Maxcos Board of Directors.

Series Three Preferred Stock is voting stock on a par with the common stock,
and has twenty votes per share. Quarterly cumulative dividends are provided at
the annual rate of 10% of face value annually, subject to the restrictions of
Michigan corporate law and the discretion of the Maxco Board of Directors. The
stock is callable at the option of the Company, with the call price declining
at the rate of one percent per year to a minimum price after February 1999,
equal to face value ($60 per share).

Series Four Preferred Stock is cumulative, callable at the Companys option, is
non-voting, has no conversion rights, and pay an annual dividend at the rate of
10% of face value annually.

Series Five Preferred shares have a face value of $120, are callable at the
Companys option, are non-voting, have no conversion rights, and pay a
quarterly cumulative dividend at the rate of 10% of face value annually.

Series Six Preferred Stock, established February 4, 1999, is voting stock on a
par with the common stock, and has twenty votes per share. Quarterly cumulative
dividends are provided at the annual rate of 10% of face value annually,
subject to the restrictions of Michigan corporate law and the discretion of the
Maxco Board of Directors. The stock is callable, at the option of the Company,
at any time after the second anniversary of their issuance in whole or in part.
The call price will be face value ($160 per share) plus a declining premium
amount, which shall be equal to 5% until the third anniversary of issuance and
shall decline 1% annually thereafter to zero following the seventh anniversary.

Effective January 1, 2002, the Maxco Board of Directors suspended the payment
of dividends on all preferred stock. These dividend payments have been accrued
in the accompanying financial statements and totaled approximately $204,000 at
March 31, 2002, or $.07 per common share.

NOTE 5  STOCK OPTIONS

Under the terms of Maxcos incentive common stock option plan, options for the
purchase of up to 500,000 shares of common stock may be granted and options are
exercisable upon grant.

There were 145,000 stock options outstanding and exercisable at March 31, 2002,
2001, and 2000 with a weighted average price of $7.90 per share and an exercise
price ranging from $7.00 to $8.00. There were no options granted during the
years ended March 31, 2000, 2001 and 2002. The weighted average remaining
contractual life of those options is approximately seven years.

NOTE 6  EMPLOYEE SAVINGS PLAN

Company contributions charged to operations under the employee savings plans
were approximately $363,000, $403,000 and $335,000 for the years ended March
31, 2002, 2001 and 2000, respectively.

NOTE 7  FEDERAL INCOME TAXES

The provision (benefit) for federal income taxes consists of the following:

|                                                            |  |                |        |   |      |   |        |      |  |   |      |  
|----------------------------------------------------------- |  | -------------- | ------ | - | ---- | - | ------ | ---- |  | - | ---- | -
|                                                            |  | 2002           |        |   | 2001 |   |        | 2000 | 
|                                                            |  |                |        |   |      |   |        |      | 
|                                                            |  | (in thousands) |       
|Current benefit                                             |  | $              | (2,253 | ) |      | $ | (161   | )    |  | $ | (719 | )
|Deferred expense (benefit)                                  |  |                | 293    |   |      |   | (669   | )    |  |   | 855  |  
|                                                            |  |                |        |   |      |   |        |      | 
|                                                            |  |                | (1,960 | ) |      |   | (830   | )    |  |   | 136  |  
|Deferred amount allocated to equity in
income of affiliates |  |                | (273   | ) |      |   | (1,544 | )    |  |   | 143  |  
|                                                            |  |                |        |   |      |   |        |      | 
|                                                            |  | $              | (2,233 | ) |      | $ | (2,374 | )    |  | $ | 279  |  
|                                                            |  |                |        |   |      |   |        |      | 

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The reconciliation of income taxes computed at the United States federal
statutory tax rate to income tax expense is as follows:

|                                                            |  |                |        |   |      |   |      |      |  |   |     | 
|----------------------------------------------------------- |  | -------------- | ------ | - | ---- | - | ---- | ---- |  | - | --- | 
|                                                            |  | 2002           |        |   | 2001 |   |      | 2000 | 
|                                                            |  |                |        |   |      |   |      |      | 
|                                                            |  | (in thousands) |       
|Income taxes computed at
United States statutory rate (34%) |  | $              | (2,017 | ) |      | $ | (897 | )    |  | $ | 59  | 
|Other                                                       |  |                | 57     |   |      |   | 67   |      |  |   | 77  | 
|                                                            |  |                |        |   |      |   |      |      | 
|                                                            |  | $              | (1,960 | ) |      | $ | (830 | )    |  | $ | 136 | 
|                                                            |  |                |        |   |      |   |      |      | 

Federal income taxes paid by Maxco were $150,000 in 2001, and $350,000 in 2000.
No federal income taxes were paid in 2002.

Due to enacted changes in the tax law, the Company carried back its net
operating loss at March 31, 2001 and will carry back its net operating loss
incurred in 2002 against the Companys taxable income in 1997. As a result,
the Company had a $3.9 million income tax receivable at March 31, 2002.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Companys deferred tax liabilities and assets as of March 31 were as
follows:

|                                               |                                         |                                   |                                |                       |        |                |       |       |      |       |       | 
|---------------------------------------------- | --------------------------------------- | --------------------------------- | ------------------------------ | --------------------- | ------ | -------------- | ----- | ----- | ---- | ----- | ----- | 
|                                               |                                         |                                   |                                |                       |        | 2002           |       |       | 2001 |      
|                                               |                                         |                                   |                                |                       |        |                |       |       |      |      
|                                               |                                         |                                   |                                |                       |        | (in thousands) |      
|DEFERRED TAX ASSETS:                           |                                         |                                   |                                |                       |        |                |       |      
|                                               | Net operating loss carryforward         |                                   | $                              |                      |        |                | $     | 1,740 |     
|                                               | Allowance for doubtful accounts         |                                   |                                | 258                   |        |                |       | 308   |     
|                                               | Inventory                               |                                   |                                | 146                   |        |                |       | 158   |     
|                                               | Marketable securities                   |                                   |                                | 1,052                 |        |                |       | 588   |     
|                                               | Excess capital loss                     |                                   |                                | 250                   |        |                |       | 276   |     
|                                               | Amortization of intangibles             |                                   |                                | 125                   |        |                |       | 117   |     
|                                               | Net cumulative unrealized equity losses |                                   |                                | 948                   |        |                |       | 806   |     
|                                               | Installment gain                        |                                   |                                | 77                    |        |                |       |      |     
|                                               | Wages not paid within 2-1/2 months      |                                   |                                | 231                   |        |                |       | 136   |     
|                                               | Other                                   |                                   |                                | 25                    |        |                |       |      |     
|                                               |                                         |                                   |                                |                       |        |               
|                                               |                                         |                                   |                                | Total Deferred Assets |        |                | 3,112 |       |      |       | 4,129 | 
|DEFERRED TAX LIABILITIES:                      |                                         |                                   |                                |                       |        |                |       |      
|Depreciation                                   |                                         | $                                 | 3,523                          |                       |        | $              | 3,003 |      
|Additional consideration on sale of investment |                                         |                                   | 918                            |                       |        |                | 230   |      
|Other                                          |                                         |                                   |                               |                       |        |                | 10    |      
|                                               |                                         |                                   |                                |                       |        |               
|                                               |                                         |                                   | Total Deferred Tax Liabilities |                       |        | 4,441          |       |       |      | 3,243 |      
|                                               |                                         |                                   |                                |                       |        |               
|                                               |                                         | Net Deferred Assets (Liabilities) |                                | $                     | (1,329 | )              |       | $     | 886  |      
|                                               |                                         |                                   |                                |                       |        |               

Deferred tax assets and liabilities are recorded in the consolidated balance
sheets as follows:

|             |                         |                                   |     |                |        |   |      |     |     | 
|------------ | ----------------------- | --------------------------------- | --- | -------------- | ------ | - | ---- | --- | --- | 
|             |                         |                                   |     | 2002           |        |   | 2001 |    
|             |                         |                                   |     |                |        |   |      |    
|             |                         |                                   |     | (in thousands) |       
|ASSETS:      |                         |                                   |     |                |        |   |      |    
|             | Income taxes receivable |                                   | $   | 654            |        |   | $    | 599 |    
|             | Deferred income taxes   |                                   |     |               |        |   |      | 287 |    
|             |                         |                                   |     |                |        |  
|             |                         |                                   | 654 |                |        |   | 886  |    
|LIABILITIES: |                         |                                   |     |                |        |   |      |    
|             | Deferred income taxes   |                                   |     | 1,983          |        |   |      |    |    
|             |                         |                                   |     |                |        |  
|             |                         | Net Deferred Assets (Liabilities) |     | $              | (1,329 | ) |      | $   | 886 | 
|             |                         |                                   |     |                |        |  

Components of accumulated comprehensive income are shown net of tax.

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NOTE 8  OTHER INVESTMENTS

Real Estate:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Maxco has an ownership interest ranging
from approximately 25 - 50% in
primarily two LLCs (L/M Associates and L/M Associates II) which have been
involved in the development and ownership of real estate in central Michigan.
In early 2002, Maxco, as managing member of L/M Associates, which is the
managing member of L/M Associates II, began negotiations to sell its real
estate portfolio. Subsequent to March 31, 2002, L/M Associates II entered
into an agreement to sell the properties within the Master LLC to an outside
investor. The transaction is subject to approval of 75% of the member
interests. If approved, the transaction is expected to be completed by
September 30, 2002.



| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | Additionally, the Company is currently negotiating to liquidate the remaining
portion of Maxcos investments in L/M Associates.



| |                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Maxco also has an investment in Nilson Builders, a residential home builder,
as well as LandEquities, which was previously engaged in the construction,
leasing, and space planning for its clients including the L/M company
portfolios. These entities have been discontinued and their assets are
currently being liquidated.

Technology Related:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In addition to its investment in Integral Vision, Inc., the Company has an
equity interest in two other technology related businesses. In October 1998,
Provant, Inc. acquired 100% of the stock of Strategic Interactive. Maxco
received cash and approximately 249,000 shares of Provant, Inc. common stock
in exchange for its 45% equity interest in Strategic Interactive. The sale
also included an earn-out provision. In fiscal 2002, Maxco recognized $2.0
million as its remaining share of the additional consideration to be paid to
the former shareholders of Strategic Interactive. The payment will be made to
the Company in cash, common stock, or a combination of both, at Provants
option, in July 2002. In accordance with FAS 115, the Company recorded a
charge of $3.1 million to recognize a previously unrealized decline in the
value of its investment in Provant, Inc. that has been deemed other than
temporary.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company has a 50% equity interest in Foresight Solutions, Inc., a
developer of accounting software and e-business solutions for small to medium
size businesses. In the first quarter of fiscal 2001, the carrying value of
the Companys investment in Foresight was reduced to zero. However, in
accordance with APB 18, the Company continued to recognize its proportionate
share of Foresights losses as a reserve against the amount receivable from
Foresight that is reported in the accompanying financial statements. These
charges are included in equity in net income (loss) of affiliates for the year
ended March 31, 2002.

Energy Related:



| |                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------
| | Maxco has a 50% interest in Robinson Oil Company, LLC, which is in the
business of acquiring and developing oil and gas interests.

Other:



| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | Maxco has a one-third interest in Blasen Brogan Asset Management Company, a
registered investor advisory firm.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company had a 50% equity interest in and agreed to finance certain debt of
Mid-State Industrial Services, Inc., which is in the business of selling,
leasing, and servicing lift trucks. In December 2001, Maxco sold its interest
in Mid-State to Maxco President Max A. Coon for $1.75 million, of which
$750,000 was paid in cash with the remainder being applied to amounts due Mr.
Coon for advances he had made to the Company and its affiliates.
Additionally, Mid-State retired the $0.5 million obligation it had with Maxco.
A portion of the proceeds from the sale was used to retire certain
obligations not related to Mid-State which were guaranteed by the Company.



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Maxco has a 12.5% direct (37.5% indirect) equity interest in Phoenix Financial
Group, LTD and its subsidiary Cambridge Group Investments, LTD (dba
Bondpage.com), a registered broker-dealer of securities that is primarily
focused on the trading of fixed income investments over the Internet.



| |                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company has an approximately 6% interest in the common stock of MYOEM.COM,
a company offering a business-to-business vertical web portal designed to
bring solution-seekers together with solution-providers.



| |                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company has a 16% equity interest in Vertical VC, a limited partnership
that has equity investments in companies focused on the information
technology, telecommunications, and medical technology markets.

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##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Maxco had a 7% investment in Axson, S.A. of France (Axson), a manufacturer of
resins and composite materials for advanced applications. In the fourth
quarter of fiscal 2000, the majority shareholders of Axson began negotiations
with Axson management for a management buyout of the existing shareholders
interests. As such, Maxco classified its investment in Axson as available for
sale at March 31, 2000 and adjusted its carrying amount to its estimated fair
value, which resulted in a $860,000 charge. This transaction was completed in
August 2000.

At March 31 2001, the Company accrued contingent liabilities totaling
approximately $950,000 related to its investments and advances to Foresight
Solutions and AMI Energy. These liabilities were paid by the Company in fiscal
2002.

The combined results of operations and financial position of the Companys
unconsolidated affiliates are summarized below:

|                                        |  |                |         |   |                    |   |         |                          |  |   |        |  |  |      |        |   |      |   |        |      |  |   |        |  |  |      |       |  |  |   |        |  |  |   |        | 
|--------------------------------------- |  | -------------- | ------- | - | ------------------ | - | ------- | ------------------------ |  | - | ------ |  |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ----- |  |  | - | ------ |  |  | - | ------ | 
|                                        |  | Real Estate    |         |   | Technology Related |   |         | Energy Related and Other | 
|                                        |  | March 31,      |         |   | March 31,          |   |         | March 31,                | 
|                                        |  |                |         |   |                    |   |         |                          | 
|                                        |  | 2002           |         |   | 2001               |   |         | 2000                     |  |   | 2002   |  |  | 2001 |        |   | 2000 |   |        | 2002 |  |   | 2001   |  |  | 2000 |      
|                                        |  |                |         |   |                    |   |         |                          |  |   |        |  |  |      |        |   |      |   |        |      |  |   |        |  |  |      |      
|                                        |  | (in thousands) |        
|Condensed
income statement information: |  |                |         |   |                    |   |         |                          |  |   |        |  |  |      |        |   |      |   |        |      |  |   |        |  |  |      |       |  | 
|Net sales                               |  | $              | 18,317  |   |                    | $ | 30,379  |                          |  | $ | 22,917 |  |  | $    | 3,357  |   |      | $ | 6,095  |      |  | $ | 12,974 |  |  | $    | 7,200 |  |  | $ | 12,775 |  |  | $ | 12,247 | 
|Gross margin                            |  |                | 14,308  |   |                    |   | 16,058  |                          |  |   | 13,125 |  |  |      | (1,520 | ) |      |   | (188   | )    |  |   | 2,433  |  |  |      | 2,907 |  |  |   | 4,631  |  |  |   | 3,900  | 
|Net income (loss)                       |  |                | (625    | ) |                    |   | (768    | )                        |  |   | 280    |  |  |      | (7,310 | ) |      |   | (9,302 | )    |  |   | 3,153  |  |  |      | 435   |  |  |   | 685    |  |  |   | 104    | 
|Condensed balance sheet information:    |  |                |         |   |                    |   |         |                          |  |   |        |  |  |      |        |   |      |   |        |      |  |   |        |  |  |      |       |  | 
|Current assets                          |  | $              | 20,008  |   |                    | $ | 26,919  |                          |  |   |        |  |  | $    | 786    |   |      | $ | 3,143  |      |  |   |        |  |  | $    | 745   |  |  | $ | 2,632  |  |  |   |        | 
|Non-current assets                      |  |                | 102,212 |   |                    |   | 104,982 |                          |  |   |        |  |  |      | 1,560  |   |      |   | 7,243  |      |  |   |        |  |  |      | 598   |  |  |   | 4,215  |  |  |   |        | 
|                                        |  |                |         |   |                    |   |         |                          |  |   |        |  |  |      |        |   |      |   |        |      |  |   |        |  |  |      |       |  |  |  
|                                        |  | $              | 122,220 |   |                    | $ | 131,901 |                          |  |   |        |  |  | $    | 2,346  |   |      | $ | 10,386 |      |  |   |        |  |  | $    | 1,343 |  |  | $ | 6,847  |  |  |   |        | 
|                                        |  |                |         |   |                    |   |         |                          |  |   |        |  |  |      |        |   |      |   |        |      |  |   |        |  |  |      |       |  |  |  
|Current liabilities                     |  | $              | 62,368  |   |                    | $ | 70,888  |                          |  |   |        |  |  | $    | 3,192  |   |      | $ | 3,312  |      |  |   |        |  |  | $    | 118   |  |  | $ | 1,538  |  |  |   |        | 
|Non-current liabilities                 |  |                | 54,897  |   |                    |   | 54,480  |                          |  |   |        |  |  |      | 4,060  |   |      |   | 5,454  |      |  |   |        |  |  |      | 123   |  |  |   | 1,880  |  |  |   |        | 
|Minority interest                       |  |                | 1,254   |   |                    |   | 1,887   |                          |  |   |        |  |  |      |        |   |      |   |       |      |  |   |        |  |  |      |       |  |  |   |       |  |  |   |        | 
|Stockholders equity                    |  |                | 3,701   |   |                    |   | 4,646   |                          |  |   |        |  |  |      | (4,906 | ) |      |   | 1,620  |      |  |   |        |  |  |      | 1,102 |  |  |   | 3,429  |  |  |   |        | 
|                                        |  |                |         |   |                    |   |         |                          |  |   |        |  |  |      |        |   |      |   |        |      |  |   |        |  |  |      |       |  |  |  
|                                        |  | $              | 122,220 |   |                    | $ | 131,901 |                          |  |   |        |  |  | $    | 2,346  |   |      | $ | 10,386 |      |  |   |        |  |  | $    | 1,343 |  |  | $ | 6,847  |  |  |   |        | 
|                                        |  |                |         |   |                    |   |         |                          |  |   |        |  |  |      |        |   |      |   |        |      |  |   |        |  |  |      |       |  |  |  

The difference between the carrying amount and the underlying equity of the
Companys investment in the net assets of the Companys 50% or less owned
investments, approximately $670,000, is being amortized over a 15 year life.

NOTE 9  CONTINGENCIES AND COMMITMENTS

Maxco and certain operating subsidiaries occupy facilities and use equipment
under operating lease agreements requiring annual rental payments approximating
$2,436,000 in 2003, $2,090,000 in 2004, $1,120,000 in 2005, $806,000 in 2006,
$281,000 in 2007, and $53,000 thereafter for a total commitment aggregating
$6,786,000. Included in those amounts are payments to a related party
approximating $676,000 in 2003, 2004, 2005, and 2006, and $225,000 in 2007 for
a total commitment of $2,929,000. Rent expense charged to operations,
including short-term leases, aggregated $2,870,000 in 2002, $2,503,000 in 2001,
and $2,285,000 in 2000.

The Company is involved in various lawsuits and other claims arising in the
ordinary course of business. While the results of these matters cannot be
predicted with certainty, management, upon advice from counsel, believes that
losses, if any, arising from these proceedings will not have a material adverse
effect on its financial statements.

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NOTE 10  INDUSTRY SEGMENT INFORMATION

The following summarizes Maxcos industry segment information:

|                                            |                          |                                 |                            |                           |        |                |         |         |      |        |         |        |       |        |         | 
|------------------------------------------- | ------------------------ | ------------------------------- | -------------------------- | ------------------------- | ------ | -------------- | ------- | ------- | ---- | ------ | ------- | ------ | ----- | ------ | ------- | 
|                                            |                          |                                 |                            |                           |        | 2002           |         |         | 2001 |        |         | 2000   |      
|                                            |                          |                                 |                            |                           |        |                |         |         |      |        |         |        |      
|                                            |                          |                                 |                            |                           |        | (in thousands) |        
|Net sales:                                  |                          |                                 |                            |                           |        |                |         |         |      |        |         |       
|                                            | Construction supplies    |                                 | $                          | 88,823                    |        |                | $       | 102,501 |      |        | $       | 99,924 |      
|                                            | Heat treating            |                                 |                            | 34,364                    |        |                |         | 39,229  |      |        |         | 40,368 |      
|                                            | Packaging products       |                                 |                            | 13,033                    |        |                |         | 15,255  |      |        |         | 15,865 |      
|                                            | Corporate and other      |                                 |                            | 332                       |        |                |         | 330     |      |        |         | 333    |      
|                                            |                          |                                 |                            |                           |        |                |         |         |     
|                                            |                          |                                 |                            | Total Net Sales           |        | $              | 136,552 |         |      | $      | 157,315 |        |       | $      | 156,490 | 
|                                            |                          |                                 |                            |                           |        |                |         |         |     
|Operating earnings (loss)                   |                          |                                 |                            |                           |        |                |         |         |      |        |         |       
|                                            | Construction supplies    |                                 | $                          | (2,161                    | )      |                | $       | 510     |      |        | $       | 2,770  |      
|                                            | Heat treating            |                                 |                            | 2,482                     |        |                |         | 3,670   |      |        |         | 5,245  |      
|                                            | Packaging products       |                                 |                            | (219                      | )      |                |         | (175    | )    |        |         | (530   | )    
|                                            | Corporate and other      |                                 |                            | (2,491                    | )      |                |         | (3,326  | )    |        |         | (3,483 | )    
|                                            |                          |                                 |                            |                           |        |                |         |         |     
|                                            |                          | Total Operating Earnings (Loss) |                            | $                         | (2,389 | )              |         | $       | 679  |        |         | $      | 4,002 |       
|                                            |                          |                                 |                            |                           |        |                |         |         |     
|Identifiable assets:                        |                          |                                 |                            |                           |        |                |         |         |      |        |         |       
|                                            | Construction supplies    |                                 | $                          | 24,244                    |        |                | $       | 32,759  |      |        | $       | 32,902 |      
|                                            | Heat treating            |                                 |                            | 31,444                    |        |                |         | 34,714  |      |        |         | 30,367 |      
|                                            | Packaging products       |                                 |                            | 4,912                     |        |                |         | 5,538   |      |        |         | 6,565  |      
|                                            | Corporate and other      |                                 |                            | 20,420                    |        |                |         | 16,215  |      |        |         | 20,223 |      
|                                            | Investments and advances |                                 |                            | 6,018                     |        |                |         | 8,224   |      |        |         | 12,165 |      
|                                            |                          |                                 |                            |                           |        |                |         |         |     
|                                            |                          |                                 |                            | Total Identifiable assets |        | $              | 87,038  |         |      | $      | 97,450  |        |       | $      | 102,222 | 
|                                            |                          |                                 |                            |                           |        |                |         |         |     
|Depreciation and amortization expense:      |                          |                                 |                            |                           |        |                |         |         |      |        |         |       
|                                            | Construction supplies    |                                 | $                          | 2,579                     |        |                | $       | 2,507   |      |        | $       | 1,870  |      
|                                            | Heat treating            |                                 |                            | 2,930                     |        |                |         | 2,375   |      |        |         | 1,852  |      
|                                            | Packaging products       |                                 |                            | 716                       |        |                |         | 750     |      |        |         | 742    |      
|                                            | Corporate and other      |                                 |                            | 283                       |        |                |         | 453     |      |        |         | 443    |      
|                                            |                          |                                 |                            |                           |        |                |         |         |     
|Total Depreciation and Amortization Expense |                          | $                               | 6,508                      |                           |        | $              | 6,085   |         |      | $      | 4,907   |       
|                                            |                          |                                 |                            |                           |        |                |         |         |     
|Capital expenditures:                       |                          |                                 |                            |                           |        |                |         |         |      |        |         |       
|                                            | Construction supplies    |                                 | $                          | 1,069                     |        |                | $       | 5,822   |      |        | $       | 5,310  |      
|                                            | Heat treating            |                                 |                            | 572                       |        |                |         | 6,455   |      |        |         | 5,656  |      
|                                            | Packaging products       |                                 |                            | 105                       |        |                |         | 135     |      |        |         | 693    |      
|                                            | Corporate and other      |                                 |                            |                          |        |                |         | 7       |      |        |         | 39     |      
|                                            |                          |                                 |                            |                           |        |                |         |         |     
|                                            |                          |                                 | Total Capital Expenditures |                           | $      | 1,746          |         |         | $    | 12,419 |         |        | $     | 11,698 |        
|                                            |                          |                                 |                            |                           |        |                |         |         |     

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.

No sales to any single customer exceeded 10% of consolidated sales for 2002,
2001 or 2000.

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NOTE 11  EARNINGS PER SHARE

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

|                                                                                         |                           |   |                                      |        |   |      |        |        |      |   |       |      |  
|---------------------------------------------------------------------------------------- | ------------------------- | - | ------------------------------------ | ------ | - | ---- | ------ | ------ | ---- | - | ----- | ---- | -
|                                                                                         |                           |   | 2002                                 |        |   | 2001 |        |        | 2000 |  
|                                                                                         |                           |   |                                      |        |   |      |        |        |      |  
|                                                                                         |                           |   | (in thousands except per share data) |       
|NUMERATOR:                                                                               |                           |   |                                      |        |   |      |        |        |      |   |       |     
|                                                                                         | Net income (loss)         |   | $                                    | (4,501 | ) |      | $      | (4,805 | )    |   | $     | 316  |  
|                                                                                         | Preferred stock dividends |   |                                      | (408   | ) |      |        | (408   | )    |   |       | (408 | )
|                                                                                         |                           |   |                                      |        |   |      |        |        |     
|Numerator
for basic and diluted earnings per shareloss available to common stockholders |                           | $ | (4,909                               | )      |   | $    | (5,213 | )      |      | $ | (92   | )   
|DENOMINATOR:                                                                             |                           |   |                                      |        |   |      |        |        |      |   |       |     
|Denominator
for basic and diluted earnings per shareweighted average shares             |                           |   | 3,101                                |        |   |      | 3,101  |        |      |   | 3,157 |     
|BASIC AND DILUTED LOSS PER SHARE                                                         |                           | $ | (1.58                                | )      |   | $    | (1.68  | )      |      | $ | (0.03 | )   

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MAXCO, INC. AND SUBSIDIARIES
SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS

(in thousands)

|                                |  |              |     |  |            |           |     |                  |  |              |     |          |     |  |            |     |  |     |  |   |      
|------------------------------- |  | ------------ | --- |  | ---------- | --------- | --- | ---------------- |  | ------------ | --- | -------- | --- |  | ---------- | --- |  | --- |  | - | -----
|Column A                        |  | Column B     |     |  | Column C   |           |     | Column D         |  | Column E     |     | Column F
|                                |  |              |     |  |            |           |     |                  |  |              |     |         
|                                |  |              |     |  |            | Additions |     |                  |  |              |     |          |     | 
|                                |  |              |     |  |            |           |     |                  |  |              |     |          |     | 
|                                |  | Balance at   |     |  | Charged to |           |     | Charged to       |  |              |     |          |     |  | Balance at
|                                |  | Beginning of |     |  | Costs and  |           |     | Other Accounts - |  | Deductions - |     | End of  
|Description                     |  | Period       |     |  | Expenses   |           |     | Describe         |  | Describe     |     | Period  
|                                |  |              |     |  |            |           |     |                  |  |              |     |         
|Accounts Receivable:            |  |              |     |  |            |           |     |                  |  |              |     |          |     |  |            |     |  |     |  |   |      
|Year ended March 31, 2002:      |  |              |     |  |            |           |     |                  |  |              |     |          |     |  |            |     |  |     |  |   |      
|Allowance for doubtful accounts |  | $            | 570 |  |            | $         | 74  |                  |  | $            |    |          |     |  | $          | 220 |  | (A) |  | $ | 424  
|                               
|Year ended March 31, 2001:      |  |              |     |  |            |           |     |                  |  |              |     |          |     |  |            |     |  |     |  |   |      
|Allowance for doubtful accounts |  |              | 513 |  |            |           | 559 |                  |  |              |    |          |     |  |            | 502 |  | (A) |  | $ | 570  
|                               
|Year ended March 31, 2000:      |  |              |     |  |            |           |     |                  |  |              |     |          |     |  |            |     |  |     |  |   |      
|Allowance for doubtful accounts |  |              | 558 |  |            |           | 370 |                  |  |              |    |          |     |  |            | 415 |  | (A) |  | $ | 513  
|                               
|Notes Receivable:               |  |              |     |  |            |           |     |                  |  |              |     |          |     |  |            |     |  |     |  |   |      
|Year ended March 31, 2002:      |  |              |     |  |            |           |     |                  |  |              |     |          |     |  |            |     |  |     |  |   |      
|Allowance for doubtful accounts |  | $            | 335 |  |            | $         | 290 |                  |  | $            | 666 |          | (B) |  | $          |    |  |     |  | $ | 1,291
|                               
|Year ended March 31, 2001:      |  |              |     |  |            |           |     |                  |  |              |     |          |     |  |            |     |  |     |  |   |      
|Allowance for doubtful accounts |  |              |    |  |            |           | 335 |                  |  |              |    |          |     |  |            |     |  |     |  | $ | 335  



| |                                                                          
| | -------------------------------------------------------------------------
| | (A)   Represents uncollectible accounts written off, less recoveries.    
|
| | (B)   Represents a reclass from the prior year from contingent liability.

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MAXCO, INC.
ANNUAL REPORT ON FORM 10-K

EXHIBIT INDEX

|            |  |                                                                                                                                                                          |  |  |  | 
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  |  | 
|Exhibit No. |  | Description                                                                                                                                                              |  |  |  | 
|            |  |                                                                                                                                                                          |  |  |  | 
|10.25       |  | Tenth amendment to amended and restated loan agreement
between Comerica Bank and Maxco, Inc. dated February 19, 2002.                                                   
|            |  |                                                                                                                                                                         
|21          |  | Subsidiaries of the Registrant                                                                                                                                          
|            |  |                                                                                                                                                                         
|23          |  | Consent of Independent AuditorsErnst & Young LLP (Form S-8
filed June 2, 1992  File No. 33-48351 and Form S-8 filed
November 19, 1998  File No. 333-67539)           
|            |  |                                                                                                                                                                         
|23.1        |  | Consent of Independent AuditorsMoore Stephens Doeren
Mayhew (Form S-8 filed June 2, 1992  File No. 33-48351 and
Form S-8 filed November 19, 1998  File No. 333-67539)