SEC File No. 33-85044-d


                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB
                                   -----------

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

                For the quarterly period ended February 28, 2002

[ ]      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 small business issuer as specified in its charter)

                                 Utah 48-0836971
              (State of Incorporation) (IRS Employer Identification

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


                     Issuer's telephone number 435-753-8020
--------------------------------------------------------------------------------


         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,  2002,  the issuer had  1,950,393  shares of Common Stock and
165,412 shares of Preferred Stock outstanding.


     Transitional Small Business Disclosure Format      Yes     No  X
--------------------------------------------------------------------------------

<PAGE>

PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NACO INDUSTRIES, INC.
BALANCE SHEETS

                                                    February     November
                                                       28,          30,
ASSETS                                                2002         2001
------                                              ----------   ----------
                                                   (Unaudited)
Current assets:
  Cash                                             $  113,754   $  137,355
  Accounts receivable, net of allowances
    Of $20,155 / $14,734                              928,559      742,026
  Current portion of related parties receivables       10,000       10,000
  Inventory                                           616,116      584,272
  Other current assets                                 25,793       28,237
  Deferred income taxes                               296,200      307,000
                                                   ----------   ----------
       Total current assets                         1,990,422    1,808,890

Property and equipment, net                           842,373      867,732
Related party receivables                             303,245      304,152
Other assets, net                                     179,669      181,773
                                                   ----------   ----------
Total assets                                       $3,315,709   $3,162,547

                       See Notes to Financial Statements

                                       2
<PAGE>

<TABLE>
<CAPTION>

NACO INDUSTRIES, INC.
BALANCE SHEETS

                                                                          February 28,   November 30,
                                                                          -----------    -----------
LIABILITIES:                                                                  2002          2001
------------                                                              -----------    -----------
                                                                                (Unaudited)
Current liabilities:
<S>                                                                       <C>            <C>
  Accounts payable                                                        $   471,206    $   343,086
  Accrued expenses                                                            258,485        406,518
  Current portion of long-term obligations                                     57,822         56,043
                                                                          -----------    -----------
       Total current liabilities                                              787,513        805,647
                                                                          -----------    -----------

Long-term liabilities:
  Long-term obligations, less current portion                                 920,047        935,853
  Note Payable                                                                302,126        131,375
  Deferred income tax liability                                                77,000         77,000
                                                                          -----------    -----------
       Total long-term liabilities                                          1,299,173      1,144,228
                                                                          -----------    -----------
       Total liabilities                                                    2,086,686      1,949,875
                                                                          -----------    -----------

Stockholders' equity:
   Preferred Stock, 7% Cumulative, convertible $3.00 par value, 330,000       496,236        496,236
shares authorized and 165,412 shares issued and outstanding. (Aggregate
liquidation preference $1,304,815 and $1,270,364 respectively)
  Common stock, $.01 par value, 10,000,000 shares authorized; 1,950,393        19,504         19,504
shares issued and outstanding
  Additional paid-in capital                                                1,017,803      1,017,803
  Accumulated deficit                                                        (304,520)      (320,871)
                                                                          -----------    -----------
       Total stockholders' equity                                           1,229,023      1,212,672
                                                                          -----------    -----------

       Total liabilities and
         Stockholders' equity                                             $ 3,315,709    $ 3,162,547
                                                                          ===========    ===========
</TABLE>

                       See Notes to Financial Statements


                                       3
<PAGE>



NACO INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
                                                         Three months ended
                                                     February 28,  February 28,
                                                    ---------------------------
                                                       2002            2001
                                                    -----------    -----------

Sales, net                                          $ 1,819,374    $ 1,589,323

Cost of goods sold                                    1,108,417        979,018
                                                    -----------    -----------
       Gross profit                                     710,957        610,305

Operating expenses:
  Selling expenses                                      398,126        341,430
  General and administrative expenses                   252,630        256,003
                                                    -----------    -----------
       Total operating expenses                         650,756        597,433
                                                    -----------    -----------

       Income from operations                            60,201         12,872

Other income (expense):
  Interest income                                           733            399
  Interest expense                                      (33,783)       (63,310)
                                                    -----------    -----------
       Total other income (expense)                     (33,050)       (62,911)
                                                    -----------    -----------

Income before income taxes                          $    27,151    $   (50,040)

Income tax expense (benefit)                             10,800         13,300
                                                    -----------    -----------

       Net income                                   $    16,351    $   (36,740)
                                                    ===========    ===========

Adjustment for preferred dividends in arrears           (34,451)       (34,451)

                                                    -----------    -----------
Adjusted net income (loss) to common stockholders   $   (18,100)   $   (71,191)
                                                    ===========    ===========

Earnings per common share:
 Basic:                                             $     (0.01)   $     (0.04)
                                                    ===========    ===========
 Diluted:                                           $     (0.01)   $     (0.04)
                                                    ===========    ===========
Weighted average number of common
  Shares outstanding:
    Basic                                             1,950,393      1,926,330
                                                    ===========    ===========
    Diluted                                           1,950,393      1,926,330
                                                    ===========    ===========
                      See Notes to Financial Statements


                                       4
<PAGE>


<TABLE>
<CAPTION>

NACO INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
                                                                              Three months ended
                                                               ---------------------------------------------
                                                                   February 28,             February 28,
                                                               ---------------------      ------------------
                                                                        2002                    2001
<S>                                                                  <C>                     <C>
Cash flows from operating activities
  Net income (loss)                                                  $  16,351               $ (36,740)
  Adjustments to reconcile net income (loss) to
   net cash provided by (used in) operating activities:
     Depreciation                                                       49,833                  58,552
     Amortization                                                        2,103                   4,811
     Deferred income taxes                                              10,800                 (13,300)
   (Increase) decrease in:
     Accounts receivable, net                                         (186,533)                (84,632)
     Receivable from related parties                                       907                  (1,126)
     Inventory                                                         (31,843)                (46,077)
     Other                                                               2,444                    (166)
   Increase (decrease) in:
     Accounts payable                                                  128,119                   6,588
     Accrued expenses                                                 (148,031)                (13,130)
     Income taxes payable
                                                                     ---------               ---------
 Net cash used in operating activities                                (155,850)               (125,220)
                                                                     ---------               ---------

Cash flows from investing activities
  Purchase of  property and equipment                                  (24,473)                 (7,559)

                                                                     ---------               ---------
        Net cash used in investing activities                          (24,473)                 (7,559)
                                                                     ---------               ---------

Cash flows from financing activities
  Net change in line of credit                                         170,750                 252,622
  Payments on long-term debt                                           (14,028)                (12,709)

                                                                     ---------               ---------
        Net cash provided by financing activities                      156,722                 239,913
                                                                     ---------               ---------

Increase (decrease) in cash                                            (23,601)                107,134

        Cash, beginning of period                                      137,355                  32,576
                                                                     ---------               ---------

        Cash, end of period                                          $ 113,754               $ 139,710
                                                                     =========               =========

See Notes to Financial Statements
Supplemental disclosures:
    Income taxes paid                                                $       0               $       0
    Interest Paid                                                    $  33,783               $  51,781
</TABLE>

                                       5
<PAGE>

NACO INDUSTRIES, INC.
Notes to Financial Statements (Unaudited)
February 28, 2002



NOTE A - BASIS OF PRESENTATION
         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,
2002 are not necessarily  indicative of the results that may be expected for the
fiscal  year  ending  November  30,  2002.  These  statements  should be read in
conjunction  with the  financial  statements  and related notes in the Company's
Annual Report on Form 10-KSB for the year ended November 30, 2001.


NOTE B - DIVIDENDS
         Dividends on the preferred  stock are cumulative at 7%. At February 28,
2002, dividends in the amount of $312,343 were in arrears.

NOTE C - RELATED PARTY OPERATING LEASES

The Company leases its Logan, Utah, manufacturing and sales facility and certain
equipment  from  P.V.C.,  Inc.  (PVC),  a  corporation  owned 100 percent by the
Company's majority  shareholder,  Verne Bray. The lease agreement requires rents
in the amount of approximately $23,000 per month. The Company has guaranteed the
mortgage on the  facilities  it leases from PVC. At November  30, 2001 and 2000,
the  outstanding  mortgage  balance was  approximately  $720,000  and  $682,000,
respectively.  At February 28, 2002, the Company had a lease deposit with PVC of
$23,000, which is included in other assets on the balance sheet.


In  addition,  Verne Bray has signed an  indemnification  agreement  to hold the
Company  harmless  for funds  paid on behalf of an  inactive  limited  liability
company (Rimshot) owned by a son of Verne Bray. The Board of Directors  approved
the Company's execution of the indemnification  agreement.  The agreement covers
$311,231 of costs advanced to Rimshot for start-up  operations and principal and
interest payments made on leased machinery used by Rimshot.  The agreement calls
for  monthly  payments  of $2,500  beginning  October 1, 2000.  Pursuant  to the
indemnification  agreement,  Verne  Bray  conveyed  to the  Company  a  security
interest in all PVC lease  receivables  from the  Company.  The Company has also
signed a security  agreement with PVC that allows the Company to offset payments
due to PVC in the event of default on the indemnification agreement.



At February 28, 2002 and November 30, 2001, Verne Bray and related entities owed
the Company $313,245 and $314,152, respectively.


                                       6
<PAGE>

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


Introduction
NACO  Industries,  Inc.  ("NACO" or the "Company") is a  manufacturing  company,
which produces and sells  polyvinyl  chloride  ("PVC")  products.  The Company's
primary line of business consists of manufacturing PVC pipe fittings and valves,
which are sold  throughout the United States through  wholesale  distributors to
irrigation,  industrial,   construction  and  utility  industries.  The  Company
manufactures and sells fabricated fittings (4" through 30" in diameter), as well
as molded  fittings  (4" though 10" in  diameter).  Pipefitting  produced by the
Company include tees, reducers,  elbows,  couplers,  end caps, and bolted repair
couplers,  etc. NACO also  manufacturers and sells PVC valves (4" through 12" in
diameter).


Results of Operations
     The  following  discussion  relates to the three months ended  February 28,
2002 and February 28, 2001, respectively.  For comparison purposes,  percentages
of sales will be used rather than  dollars.  In the  following  discussion,  the
three  months  ended  February 28, 2002 and February 28, 2001 are referred to as
1Q02 and 1Q01,  respectively.  Readers are cautioned  that results of operations
for the three months ended February 28, 2002 are not  necessarily  indicative of
the results that may be expected for the fiscal year ending November 30, 2002.

     Overview. The Company sustained an operating profit before taxes of $28,701
for 1Q02 compared to an operating loss before taxes of $(50,040) for 1Q01. Gross
margin  as a  percentage  of  sales  for 1Q02 and  1Q01  was  39.1%  and  38.4%,
respectively.  The increase in the Company's  operating profit and gross margins
was mainly due to a 14.5% increase in net sales as discussed below.

     Net Sales: Net sales for 1Q02 increased by 14.5% to $1,819,374, compared to
net sales of $1,589,323 for 1Q01. Management believes that the increase in sales
was due primarily to two factors. First, the Company increased its sales efforts
in the agricultural  and utility markets.  Sales in the utility market increased
34.9% from 1Q01 to 1Q02. Sales in the  agricultural  market increased 10.9% from
1Q01 to 1Q02.  Agricultural  and utility sales as a percentage of net sales were
82.6% and 17.4% for 1Q02 and 85.3% and 14.7% for 1Q01  respectively.  The second
factor that contributed to the year-to-year  difference was the low level of the
Company's  sales during 1Q01. A slower than normal  market  occurred in 1Q01 due
mainly to a weak agricultural  market and a cold wet winter in many parts of the
country,  which contributed to less construction and fewer water projects during
those month. As a result,  the net sales for 1Q01 were  approximately  28% lower
than the comparable quarter of the 2000 fiscal year.

     Gross  Margin.  Gross margin as a percentage of sales for 1Q02 and 1Q01 was
39.1% and 38.4%,  respectively.  The margin  for 1Q02  increased,  mainly due to
increased  sales  volume.  When sales  change,  the  Company's  fixed costs stay
relatively constant, resulting in a higher or lower gross margin for the period.
The  increase in sales  during  1Q02  resulted in higher  margins  during  1Q02.
Variable  cost of raw materials as a percentage of net sales was 28.6% and 27.6%
for  1Q02 and  1Q01  respectively  mainly  due to the  increase  in sales in the
utility  market,  which  generally  has a lower  gross  margin than sales in the
agricultural  market. Labor and related expenses increased $54,083 or 15.6% from
1Q01 to 1Q02 mainly due to an increase in the production labor force,  which was
due mainly to higher sales volume for the quarter.  The Company also experienced
certain  manufacturing  inefficiencies,   which  contributed  to  the  increased
production  force.  Management  feels  it has  identified  and  addressed  these
inefficiencies  and has reduced  production  labor  levels.  The Company takes a
complete physical  inventory once a year and a physical inventory of the top 80%
of the dollars in inventory  every  quarter.  This helps to offset any inventory
adjustments  at year-end.  Any year-end  adjustments  are  reflected  during the
fourth quarter after the year-end physical inventory is completed.

     Selling:  Selling  expenses  were 21.9% of net sales for 1Q02,  compared to
21.5% for 1Q01.  The increase in selling  expenses as a percentage  of sales was
due to several principal factors. In actual dollars,  selling expenses increased
$56,696,  or 16.6%, from 1Q01 to 1Q02.  Commission expense increased $13,043, or
31.7%,  from 1Q01 to 1Q02 mainly due to increased  commissions  attributable  to
increased sales.  Shipping supplies decreased as a percentage of sales from 2.0%
in 1Q01 to 1.9% in 1Q02 mainly due to higher sales  volume and timing  purchases
of supplies.  Freight out  increased  as a percentage  of net sales from 6.9% in
1Q01 to 7.3% in 1Q02 mainly due to increased  sales volume of larger  shipments,
on which the Company pays the freight.

     General and administrative: General and administrative expenses represented
13.9% of net sales for 1Q02, compared to 16.1% for 1Q01. The decrease was mainly
due to increased  sales volume.  Overall,  general and  administrative  expenses
remained  relatively even in dollars at $252,630 and $256,003 for 1Q02 and 1Q01,
respectively.  Travel  increased  by  $1,654  from  1Q01 to 1Q02  mainly  due to
increased travel by the Company's  President and other employees in an effort to
bolster sales during 1Q02. Legal and accounting  expenses  decreased $9,522 from
1Q01 to 1Q02 mainly due to timing of the year-end  accounting fees. Salaries and
related expenses increased 2%, or $2,968,  from 1Q01 to 1Q02, mainly due to cost
of living increases given on December 1, 2001.

     Other: Other expenses/revenues were 1.8% of net sales for 1Q02, compared to
4.0% for 1Q01, mainly due to decreased  interest expense.  Interest expense went


                                       7
<PAGE>

from 4.0% of net sales in 1Q01 to 1.9% in 1Q02.  Interest decreased $29,528 from
1Q01 to 1Q02,  mainly due to improved cash flow and lower borrowings  during the
quarter and lower interest rates. The effective interest rates (interest expense
divided by the average debt balance for the period) for 1Q02 and 1Q01 were 9.43%
and 11.26%, respectively.


Liquidity and Capital Resources

         The Company's  principal  sources of liquidity have  historically  been
cash from  operations,  credit  facilities  and equity  financing.  Cash used in
operating  activities  was  $155,850 in 1Q02.  Cash as of February  28, 2002 was
$113,754, down $23,601 from November 30, 2001. The Company's working capital has
increased $195,663 from November 30, 2001 to February 28, 2002, due primarily to
an  increase  in current  assets and a  reduction  in current  liabilities.  The
increase in current  assets was financed by an increase in the Company's line of
credit,  which is  classified as long-term  debt.  The Company  increased  trade
payables by $128,120  from  November 30, 2001 to February 28, 2002.  The Company
decreased  accrued  warranty  by  $121,738  mainly  due to the  settlement  of a
warranty claim.

         At  February  28,  2002,  the  outstanding  balance  of  the  Company's
revolving  line of credit was $302,126.  On October 1, 2001 the Company  entered
into a new line of credit  with Zions  Bank.  The  amounts  available  under the
facility are based on a percentage of accounts  receivable and inventories.  The
new  facility  matures  March 31,  2003.  The  interest  rate on the facility is
variable and is equal to 1.75 percentage  points over the prime rate. Prime rate
means an index  which is  determined  daily  by the  published  commercial  loan
variable rate index held by any two of the following banks:  J.P. Morgan Chase &
Co., Wells Fargo Bank N.A. and Bank of America N.A.

         On February  28,  2002,  the Company  was in  compliance  with all loan
covenants with Zions Bank. The maximum line is  $1,200,000,  of which,  based on
the "Borrowing  Base  Certificate"  prepared by the Company,  there was $710,615
available to borrow as of February 28, 2002.

         Also,  the Company  has a note with  WebBank  Corporation.  The note is
secured by land,  buildings and equipment  owned by the Company.  The note has a
variable interest rate equal to The Wall Street Journal Prime Interest Rate plus
one and one-half  percent  (1.5%)  provided  however,  that the rate shall never
exceed  14.75% nor be less than 9.75%.  The rate on February 28, 2002 was 9.75%.
The term of the note is fifteen (15) years from the date of closing (April 1999)
and the note requires monthly payments. On February 28, 2002 the monthly payment
required was $11,972.  On February 28, 2002, the outstanding balance of the note
was  $963,640 and the Company was in  compliance  with all loan  covenants  with
WebBank. This note is subordinated to the Zions Bank line of credit.

         Management  believes that its capital resources on hand at February 28,
2002,  revenues from sales and bank  resources will be sufficient to satisfy its
working  capital  requirements  for  the  foreseeable  future.  There  can be no
assurance, however, that additional debt or equity financing may not be required
or that, if such financing is required,  it will be available on terms favorable
to the  Company,  if at  all.  The  Company's  inability  to  secure  additional
financing  or raise  additional  capital  would  likely have a material  adverse
effect on the  Company's  operations,  financial  condition,  and its ability to
continue to grow and expand its operations.

Factors Affecting Future Results
         The Company's operating results are subject to certain risks that could
adversely  affect the  Company's  operating  results  and its ability to operate
profitably.  The  Company's  operating  results  could be adversely  affected by
increased  competition in the markets in which the Company's  products  compete,
manufacturing delays and inefficiencies  associated with expanding the Company's
manufacturing  capacity,  adverse weather conditions,  increases in labor or raw
materials, changes in economic conditions in its markets, unanticipated expenses
or events and other  factors  discussed in this report and the  Company's  other
filings with the Securities and Exchange Commission.


                                       8
<PAGE>


PART II - OTHER INFORMATION
Item  3 - Defaults  Upon  Senior  Securities(b)  During  the  fiscal  year ended
      November 30, 2001, and for the prior two fiscal years, the Company did not
      pay  dividends  due on its  Series  1  Class A 7%  Cumulative  Convertible
      Preferred Stock (the "Preferred  Stock").  Although the Company's Board of
      Directors has declared a dividend for the year ended November 30, 2001, in
      the  aggregate  amount of $69,473,  the  dividend  had not been paid as of
      April 15, 2002. As of April 15, 2002,  the total  dividend in arrears with
      respect to the Preferred Stock was $312,343.

Item 6 - Exhibits and Reports on Form 8-K


     (a) none


     (b) Reports on form 8-K.  None



                                       9
<PAGE>


SIGNATURES
In accordance with the  requirements of the Securities  Exchange Act of 1934, as
amended,  the  Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

Naco Industries, Inc.
Registrant


By       /s/ VERNE E. BRAY                                   April 15, 2002
         -----------------------------------------          ---------------
             Verne E. Bray                                        Date
             CEO, Secretary, Chairman

              (Principal Executive Officer)

By          /s/ W. MICHAEL HOPKINS                           April 15, 2002
            --------------------------------------          ---------------
         W. Michael Hopkins                                       Date
                    President


By       /s/ JEFFREY J. KIRBY                                April 15, 2002
             -----------------------------------------      ---------------
             Jeffrey J. Kirby                                     Date
             Executive Vice President/Chief
             Financial Officer/Treasurer
            (Principal Financial and Accounting Officer)


                                       10
<PAGE>