SEC File No. 33-85044-d

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-QSB\A

     [X]  AMENDMENT  NO. 1 TO QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended February 28, 1997

     [ ] TRANSITION  REPORT UNDER SECTION 13 OR 15(d)OF THE SECURITIES  EXCHANGE
ACT OF 1934

Commission File number 33-85044-d

                              NACO Industries, Inc.
                              ---------------------
             (Exact Name of Registrant as specified in its charter)

                       Utah                            48-0836971
                       ----                            ----------
             (State of Incorporation)             (Federal I.R.S. No.)

                     395 West 1400 North, Logan, Utah 84341
                     --------------------------------------
          (Address of principal executive offices)    (Zip Code)

                   Registrant's Telephone Number 801-753-8020
                                                 ------------

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes X No


         As of February 28, 1997, the Registrant had 1,500,000  shares of Common
Stock and 140,412 shares of Preferred Stock outstanding.

         Transitional Small Business Disclosure Format      Yes    No  X






<PAGE>



The Registrant's  Quarterly Report on Form 10-QSB for the quarter ended February
28,  1997 is hereby  amended to amend Item 1 - Financial  Statements  to read in
their entirety as set forth below.

                         PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements



                              NACO Industries, Inc.

                              FINANCIAL STATEMENTS


                                February 28, 1997













                                        2

<PAGE>

                         PART 1 - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                             NACO INDUSTRIES, INC.
                    CONSOLIDATED BALANCE SHEETS (UNAUDITED)

                                                   February 28      November 30
                                                  -------------    -------------
ASSETS                                                 1997            1996
------                                            -------------    -------------
Current assets:
  Cash                                             $   114,780          198,306
  Accounts receivable, net of allowances
    of $84,781 / $73,570                               711,151          615,775
  Inventory                                            881,259          668,501
  Prepaid income taxes                                  48,400           48,600
  Other current assets                                  50,861           72,202
                                                  -------------    -------------
       Total current assets                          1,806,451        1,603,384
                                                  -------------    -------------
Property and equipment:
  Land                                                  40,700           40,700
  Buildings and improvements                           555,822          526,329
  Equipment and vehicles                             2,075,193        2,033,174
  Equipment construction in progress                   177,807           93,130
                                                  -------------    -------------
       Total property and equipment                  2,849,522        2,693,333

  Accumulated depreciation                          (1,254,077)      (1,195,036)
                                                  -------------    -------------
       Net property and equipment                    1,595,445        1,498,297
                                                  -------------    -------------
Other assets:
  Intangible and other assets                          115,145          105,907
                                                  -------------    -------------
       Total other assets                              115,145          105,907
                                                  -------------    -------------
       Total assets                                $ 3,517,041        3,207,588
                                                  =============    =============






                                        3
<PAGE>

                             NACO INDUSTRIES, INC.
                    CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>

                                                                   February 28    November 30
                                                                  -------------  -------------
LIABILITIES:                                                           1997           1996
------------                                                      -------------  -------------
Current liabilities:
<S>                                                                <C>                <C>    
  Accounts payable                                                 $   900,746        544,074
  Accrued expenses                                                     165,390        188,076
  Income taxes payable                                                       0              0
  Line of credit                                                       854,326        664,326
  Current portion of long-term obligations                             251,784        316,215
  Payable to related party                                                (737)        34,382
                                                                  -------------  -------------
       Total current liabilities                                     2,171,509      1,747,073

Long-term liabilities:
  Long-term obligations, less current portion                          905,229        896,379
  Deferred income taxes                                                 79,100         79,100
                                                                  -------------  -------------
       Total long-term liabilities                                     984,329        975,479
                                                                  -------------  -------------
       Total liabilities                                             3,155,838      2,722,552

Stockholders' equity:
  Common stock, $.01 par value; 10,000,000
    shares authorized; 1,918,951 issued
    (including 418,551 shares in treasury)                              19,186         19,186
  Preferred Stock,  7% Cummulative, convertible  $3.00 par value
    Shares authorized; 330,000. shares issued 140,412 and
    132,412, respectively 
    (Aggregate liquidation preference $842,472 and
    $794,472, respectively)                                            421,236        397,236
  Additional paid-in capital                                           176,819        115,637
  Retained earnings                                                   (114,469)        94,546
                                                                  -------------  -------------
                                                                       502,772        626,605
  Less: treasury stock - at cost                                      (141,569)      (141,569)
                                                                  -------------  -------------
       Total stockholders' equity                                      361,203        485,036
                                                                  -------------  -------------
       Total liabilities and
         stockholders' equity                                      $ 3,517,041      3,207,588
                                                                  =============  =============
</TABLE>

See Notes to Consolidated Financial Statements.

                                        4
<PAGE>



                             NACO INDUSTRIES, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                  (UNAUDITED)
<TABLE>
<CAPTION>

                                                             Three months ended
                                                                 February 28
                                                        ---------------------------
                                                             1997           1996
                                                        ------------    -----------
<S>                                                     <C>              <C>      
Sales, net                                              $ 1,531,195      1,142,957

Cost of goods sold                                          959,306        705,158
                                                        ------------    -----------
       Gross profit                                         571,889        437,799

Operating expenses:
  Selling expenses                                          346,173        276,013
  General and administrative expenses                       342,202        302,601
  Other                                                           0              0
                                                        ------------    -----------
       Total operating expenses                             688,375        578,614
                                                        ------------    -----------
       Income (loss) from operations                       (116,486)      (140,815)

Other income (expense):
  Interest income                                               436          1,068
  Interest expense                                          (55,782)       (56,174)
                                                        ------------    -----------
       Total other income (expense)                         (55,346)       (55,106)
                                                        ------------    -----------
Income (loss) before income taxes                          (171,832)      (195,921)

Income tax expense (benefit)                                      0              0
                                                        ------------    -----------
       Net income (loss)                                $  (171,832)      (195,921)

Adjustment for preferred dividends in arrears               (28,183)       (10,701)
                                                        ------------    -----------
Adjusted net loss to Common Stockholders                   (200,015)      (206,622)
                                                        ------------    -----------
Earnings (loss) per common share:
  Primary:
      Earnings (loss) from net income                         (0.11)         (0.13)
      Dividends in arrears                                    (0.02)         (0.01)
                                                        ------------    -----------
  Net Earnings (loss)                                   $    ($0.13)        ($0.14)
                                                        ============    ===========
Fully Diluted:
     Earnings (loss) from net income                    $     (0.13)         (0.14)
                                                        ============    ===========
Weighted average number of common shares outstanding:
    Primary                                               1,500,000      1,500,000
                                                        ============    ===========
</TABLE>

See Notes to Consolidated Financial Statements
                
                                       5
<PAGE>



                             NACO INDUSTRIES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
<TABLE>
<CAPTION>

                                                                 Three months ended
                                                             February 28   February 29
                                                            ------------- -------------
                                                                 1997         1996
                                                            ------------- -------------
Cash flows from operating activities         
<S>                                                           <C>           <C>      
  Net income (loss)                                           $(171,832)    (195,921)
  Adjustments to reconcile net income (loss) to
   net cash provided by (used in) operating activities:
     Depreciation                                                59,041        42538
     Amortization                                                 1,479
     Deferred income taxes
   (Increase) decrease in:
     Accounts receivable, net                                   (95,376)    (194,959)
     Inventory                                                 (212,758)     (12,199)
     Prepaid income taxes                                         48600      120,226
     Taxes Receivable                                           (48,400)    (105,226)
     Other                                                       21,341       18,218
   Increase (decrease) in:
     Accounts payable                                           356,671      396,301
     Accrued expenses                                           (22,686)     (13,398)
     Income taxes payable                                                          0
                                                            ------------- -------------
        Net cash provided by (used in)
         operating activities                                   (63,920)      55,580
                                                            ------------- -------------
Cash flows from investing activities
  Net change  property and equipment                           (156,189)     (15,478)
  Investment in intangible and other assets                     (10,717)     194,465
                                                            ------------- -------------
        Net cash provided by (used in) investing activities    (166,906)     178,987

Cash flows from financing activities
  Net change in line of credit                                  190,000            0
  Payments on related party loan                                (35,119)      (1,878)
  Payments on long-term debt                                    (74,049)    (672,441)
  Proceeds from short term notes payable
  Proceeds from long-term loans                                  18,468            0
  Proceeds from issuance of common stock
  Proceeds from issuance of preferred stock                      48,000      394,073
  Purchase of treasury stock
                                                            ------------- -------------
        Net cash provided by (used in) financing activities     147,300     (280,246)
                                                            ------------- -------------
Increase (decrease) in cash                                     (83,526)     (45,679)
     
        Cash, beginning of period                               198,306      133,481
                                                            ------------- -------------
        Cash, end of period                                   $ 114,780       87,802
                                                            ============= =============
See Notes to Consolidated Financial Statements
Supplemental disclosures:
    Income taxes paid                                         $       0            0
    Interest Paid                                             $  39,667       65,905
</TABLE>

                                        6



<PAGE>






                              NACO INDUSTRIES, INC.
                    Notes to Financial Statements (Unaudited)
                                February 28, 1997


NOTE A - BASIS OF PRESENTATION

Management has elected to omit  substantially  all footnotes to these  unaudited
consolidated quarterly financial statements.  In the opinion of management,  all
adjustments  (consisting only of normal recurring accruals) considered necessary
for a fair  presentation  have been  included.  Operating  results for the three
month  period  ended  February 28, 1997 are not  necessarily  indicative  of the
results that may be expected for the fiscal year ending November 30, 1997. These
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements  and related notes in the Company's  Annual Report on Form 10-KSB for
the year ended November 30, 1996.

NOTE B - DIVIDENDS

Dividends on the preferred  stock are cumulative at 7%. At February 28, 1997 the
cumulative amount of dividends in arrears was $28,183.

NOTE C - EARNINGS PER SHARE

Primary earnings per common share is calculated by dividing  adjusted net income
by  the  average  shares  of  common  stock  of the  Company  and  Common  Stock
equivalents  outstanding  during the period.  Net income has been  adjusted  for
dividends in arrears as of February 28, 1997. Common stock equivalents represent
certain  outstanding  stock options and  warrants.  During the period the market
price did not exceed the option price for the  outstanding  options and warrants
and therefore no dilution occurred.

The calculation of fully diluted  earnings per share of Common Stock assumes the
dilutive effect of the Company's Cumulative Preferred Stock.

NOTE D - CONSULTING AGREEMENTS, WARRANTS AND OPTIONS

In September 1996 the Company entered into an agreement with Extol International
Corporation  ("Extol") to provide  investor  relations and financial  consulting
services  to the  Company.  As part of this  agreement,  Extol  has the right to
purchase for $100, a warrant to purchase  50,000 shares of the Company's  Common
Stock at $3.50 per share.  This warrant is  exercisable  for five (5) years from
the date of issuance, and will carry "piggyback" registration rights.


                                        7

<PAGE>



NOTE E - COMMON STOCK

Subsequent  to quarter  end,  the Company  entered  into an offshore  securities
subscription  agreement with Britannia  Holdings Ltd. of England and on March 5,
1997,  the  Company  sold  343,750  Units  for an  aggregate  purchase  price of
$825,000.  The sale was made without  registration  under the  Securities Act of
1933 in reliance  upon  Regulation  S. Each Unit consists of one share of Common
Stock and forty four  hundredth  (.44) of a warrant to  purchase  an  additional
share of Common Stock at an exercise price of $3.50 per share.  The Warrant will
expire in three years, subject to extension as described below. The Warrants are
currently callable by the Registrant anytime after its Common Stock trades for a
bid price of $7.50 or higher for 30 trading days in a row.

The Company also granted  Britannia  Holdings Ltd. a 12 month option to purchase
an additional  343,750 Units in connection  with the sale of the above Units. If
the Purchaser  purchases all of the Units subject to the Option,  the Registrant
will extend the exercise  period of all of the Warrants  issued as part of Units
(including  the Units  issued  on March 5,  1997)  from 3 years to 7 years,  and
increase the call price on such Warrants from $7.50 to $15.00.

As part of the consideration for the stock agreement,  the Company has agreed to
credit additional shares of common stock to Britannia Holdings Ltd of England if
the Company does not establish a market for NACO Common Stock that trades for at
least  $6.00 per share for any 10  consecutive  days  within  twenty four months
after March 5, 1997.

A finders  fee of 10% was paid to James Czirr who is an employee of Extol and is
nominated to the board of directors of the Company.

NOTE F - PREFERRED STOCK

On  March 7,  1996 the  Company  initiated  an  offering  of Units  exempt  from
registration under the Securities Act of 1933. The offering consisted of 175,000
Units at an offering price of $6.00. Each Unit consists of one share of Series 1
Class A 7% Cumulative  Convertible Preferred Stock and a Warrant to purchase one
share of Common  Stock at an  exercise  price of $3.75  per  common  share.  The
offering is made on a "best  efforts"  basis and will continue until the earlier
of the sale of a maximum of 175,000 Units, or June 30, 1997. Selling commissions
equal to 10% of the offering price of the Units will be paid to placement agents
participating in the offering.

Through  February  28,  1997,  the Company  sold 27,000  units and  received net
proceeds of $145,800.  Subsequent to quarter end an additional 25,000 units were
sold with net proceeds of $135,000.

Exhibits

An Amended Financial Data Schedule is filed herewith as Exhibit 27

                                        8

<PAGE>


                                   SIGNATURES


     In accordance  with Section 15(d) of the  Securities  Exchange Act of 1934,
the Registrant has duly caused this Amendment No.1 on Form 10-KSB\A to be signed
on its behalf by the undersigned, thereunto duly authorized, on August 13, 1997.

                                       NACO INDUSTRIES, INC.



                                       By: /s/ Jeffrey J. Kirby
                                           -----------------------------   
                                           Vice President



                                        9