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 29,2000


 [ ]      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)(Zip Code)


                   Registrant'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 29, 2000, the Registrant had 1,902,268 shares of Common Stock and
165,412 shares of Preferred Stock outstanding.

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





<PAGE>





                         PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

--------------------------------------------------------------------------------

See attached Consolidated Financial Statements


                                       2
<PAGE>


                              NACO Industries, Inc.
                        CONSOLIDATED FINANCIAL STATEMENTS
                                February 29, 2000

                                       3
<PAGE>


PART 1 - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NACO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                                  February 29    November 30
                                                 -----------    -----------
ASSETS                                              2000            1999
                                                 -----------    -----------
Current assets:
  Cash                                           $   274,170    $    58,073
  Accounts receivable, net of allowances
    Of $70,017 / $67,753                           1,151,283        862,913
  Related parties                                     28,931         38,385
  Inventory                                          525,600        528,461
  Other current assets                                50,388         41,283
  Deferred income taxes                              133,900        153,900
                                                 -----------    -----------
       Total current assets                        2,198,159      1,683,015
                                                 -----------    -----------

Property and equipment:
  Land                                                40,700         40,700
  Buildings and improvements                         610,038        610,038
  Equipment and vehicles                           2,805,455      2,805,455
  Equipment construction in process                      577
                                                 -----------    -----------
       Total property and equipment                3,456,770      3,456,193

  Accumulated depreciation                        (2,152,538)    (2,076,200)
                                                 -----------    -----------
       Net property and equipment                  1,304,232      1,379,993
                                                 -----------    -----------

Other assets:
  Accounts receivable from related parties           325,119        311,231
  Intangible and other assets                        162,900        167,711
  Deferred income taxes, net
  of allowance of $80,000                            198,600        255,800
                                                 -----------    -----------
       Total other assets                            686,618        734,742
                                                 -----------    -----------
       Total assets                              $ 4,155,123    $ 3,797,750
                                                 ===========    ===========

                 See Notes to Consolidated Financial Statements


                                       4
<PAGE>



NACO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                                  February 29   November 30
                                                 -----------    -----------
LIABILITIES:                                         2000           1999
                                                 -----------    -----------

Current liabilities:
  Accounts payable                              $   659,109    $   769,056
  Accrued expenses                                  289,290        231,720
  Income taxes payable                                  900
  Due to related parties                             15,311         15,311
  Current portion of long-term obligations           81,688         81,700
                                                 -----------    -----------
       Total current liabilities                  1,046,299      1,097,787

Long-term liabilities:
  Accrued expenses                                   48,000         48,000
  Long-term obligations, less current portion     2,183,918      1,928,763
                                                 -----------    -----------
       Total long-term liabilities                2,231,918      1,976,763
                                                 -----------    -----------
       Total liabilities                          3,278,217      3,074,550

Stockholders' equity:

  Common stock, $.01 par value,
 10,000,000 shares authorized; 1,902,268             19,023         19,023
  shares and 1,902,268
  shares issued respectively
  Preferred Stock,  7% Cumulative,
  convertible  $3.00 par value, 330,000             496,236        496,236
  shares authorized, 165,412 and 165,412
 shares issued respectively
(Aggregate liquidation preference
 $1,165,869 and $1,131,418 respectively)
  Additional paid-in capital                      1,018,284      1,018,284
  Retained earnings (deficit)                      (656,637)      (810,343)
                                                 -----------    -----------
       Total stockholders' equity                   876,906        723,200
                                                 -----------    -----------

       Total liabilities and

         stockholders' equity                   $ 4,155,123    $ 3,797,750
                                                 ===========    ===========

                 See Notes to Consolidated Financial Statements


                                       5
<PAGE>



NACO INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
                                                           Three months ended
                                                     February 29     February 28
                                                     ---------------------------
                                                         2000          1999
                                                     -----------    -----------

Sales, net                                           $ 2,197,038    $ 1,629,027

Cost of goods sold                                     1,280,727        996,893
                                                     -----------    -----------
       Gross profit                                      916,311        632,134

Operating expenses:
  Selling expenses                                       361,532        321,451
  General and administrative expenses                    257,066        256,708
                                                     -----------    -----------
       Total operating expenses                          618,598        578,159
                                                     -----------    -----------

       Income (loss) from operations                     297,713         53,975

Other income (expense):
  Interest income                                            700            435
  Other                                                   13,888
  Interest expense                                       (80,593)       (70,976)
                                                     -----------    -----------
       Total other income (expense)                      (66,005)       (70,541)
                                                     -----------    -----------

Income (loss) before income taxes                    $   231,708    $   (16,566)

Income tax expense (benefit)                              78,000              0
                                                     -----------    -----------

       Net income (loss)                             $   153,708    $   (16,566)

Adjustment for preferred dividends in arrears           (173,397)      (103,723)
                                                     -----------    -----------

Income (loss) from continuing
  operations to Common Stockholders                  $   (19,689)   $  (120,289)

Discontinued Operations:
  Loss from operations of discontinued segment          (265,243)

                                                     -----------    -----------
Adjusted net income (loss) to common stockholders    $   (19,689)      (385,532)
                                                     ===========    ===========

Earnings (loss) per common share:
  Basic:
      Earnings (loss) from net income                $      0.08    $     (0.01)
      Dividends in arrears                                 (0.09)         (0.05)
                                                     -----------    -----------
    Net Earnings (loss) from continuing operations   $     (0.01)   $     (0.06)
                                                     ===========    ===========
    Net Earnings (loss)                              $     (0.01)         (0.20)
                                                     ===========    ===========
 Diluted:
    Earnings (loss) from net income
    from continuing operations                       $     (0.01)   $     (0.06)
                                                     ===========    ===========
    Earnings (loss) from net income                  $     (0.01)   $     (0.20)
Weighted average number of common
  Shares outstanding:
    Basic                                              1,876,227      1,849,083
                                                     ===========    ===========
    Diluted                                            2,207,051      2,176,573
                                                     ===========    ===========

                 See Notes to Consolidated Financial Statements


                                       6
<PAGE>



                         NACO INDUSTRIES, INC.
                 CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
                                                        Three months ended
                                                   -----------------------------
                                                    February 29      February 28
                                                    -----------      ----------
                                                       2000             1999
Cash flows from operating activities
  Net income (loss)                                   $ 153,708       $ (16,566)
  Adjustments to reconcile
   net income (loss) to
   net cash provided by (used in)
   operating activities:
     Depreciation                                        76,337          82,928
     Amortization                                         4,811            --
     Deferred income taxes                               77,200            --
   (Increase) decrease in:
     Accounts receivable, net                          (288,370)       (564,503)
     Receivable from related parties                     (4,433)        (51,691)
     Inventory                                            2,860          34,982)
     Other                                               (9,108)         14,090
   Increase (decrease) in:
     Accounts payable                                   711,374
                                                                       (109,946)

     Accrued expenses                                    57,571          30,298
     Income taxes payable                                  --              (100)
                                                      ---------       ---------
   Net cash provided by
     (used in) continuing activities                    (38,469)        240,812

   Net cash provided by (used in)
     discontinued activities                               --          (265,243)
                                                      ---------       ---------

 Net cash provided by (used in)
     operating activities                               (38,469)        (24,431)

Cash flows from investing activities
  Net change  property and equipment                       (577)        (18,618)
  Loan to related parties                                  --          (102,050)
  Investment in intangible
    and other assets                                       --           169,610
                                                      ---------       ---------
        Net cash provided by
         (used in) investing activities                    (577)         48,942

Cash flows from financing activities
  Net change in line of credit                          303,768               0
  Increase in related party loan                              0             401
  Payments on long-term debt                            (48,625)        (68,852)
  Payment of Preferred Stock Dividends                        0               0
        Net cash provided by
         (used in) financing activities                 255,143         (68,451)
                                                      ---------       ---------
Increase (decrease) in cash                             216,097         (43,940)

        Cash, beginning of period                        58,073          97,428
                                                      ---------       ---------
        Cash, end of period                           $ 274,170       $  53,488
                                                      =========       =========

See Notes to Consolidated
  Financial Statements
Supplemental disclosures:
    Income taxes paid                                 $     900       $       0
    Interest Paid                                     $  61,093       $  44,939


                                       7
<PAGE>


                             NACO INDUSTRIES, INC.

             Notes to Consolidated Financial Statements (Unaudited)
                               February 29, 2000



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 29, 2000 are not necessarily indicative of the
results that may be expected for the fiscal year ending November 30, 2000. 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, 1999.

NOTE B - INVENTORY
     Inventory consists of the following:


                                                February 29,      November 30,
                                                   2000              1999
                                                -----------      -------------
Raw Materials                                   $  183,959       $  168,389
Finished Goods                                     341,641          360,072
                                                -----------      -------------

                  Total                         $  525,600       $  528,461



NOTE C - DIVIDENDS
         Dividends on the preferred  stock are cumulative at 7%. At February 29,
2000, the cumulative amount of dividends  accrued was $173,397.  Of this amount,
$173,397 was in arrears.

NOTE D - EARNINGS PER SHARE
         Effective  February  28,  1998,  the  Company  adopted  SFAS  No.  128,
"Earnings  Per  Share,"  which  establishes  new  standards  for  computing  and
presenting  earnings  per share.  No  restatement  was required for prior year's
earnings per share  figures to conform to the new standard.  Basic  earnings per
common  share are  calculated  by  dividing  adjusted  net income by the average
shares of common stock outstanding during the period. The calculation of diluted
earnings per share of common stock assumes the diluting  effect of the Company's
cumulative preferred 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.  When conversion of potential common shares
has an anti-dilutive effect no conversion is assumed in the diluted earnings per
share calculation.

NOTE E - PREFERRED STOCK AND WARRANTS

         There were no shares of capital stock sold or warrants exercised during
the first quarter of 2000.

NOTE F - DEBT AND LOAN AGREEMENTS

         At  February  29,  2000,  the  outstanding  balance  of  the  Company's
revolving line of credit was $1,091,566. This line of credit was entered into on
April 22, 1999 with Wells Fargo Business  Credit.  The amounts,  available under
the facility,  are based on a percentage of accounts receivable and inventories.
This line of credit matures April 30, 2002.

         Also,  on April 22,  1999,  a second  facility  was closed with Webbank
Corporation.  This facility was for $1,100,000. It is secured by current assets,
property and equipment,  and life insurance. It is payable with interest at 1.5%
over prime and matures April 30, 2014.

                                       8
<PAGE>

NOTE G - RELATED PARTY OPERATING LEASES

         In  December,  1999 the Company  entered into two  related-party  lease
agreements  with  PVC,  Inc.,  a company  owned by Verne  Bray,  the  President,
Chairman of the Board, and majority stockholder of the Company. The terms of the
leases are for a period of five years commencing December 1999. Rentals begin at
$13,500  per month for the land and  building,  and $9,500 per month for various
pieces of equipment.  Upon each annual anniversary date, the monthly rentals for
each lease shall be adjusted by the amount of any increase in the Consumer Price
Index  over the  preceding  year.  The  previous  lease for land,  building  and
equipment,  which was executed by the Company and Mr. Bray and expired  December
31, 1999,  required lease  payments of $9,300 per month.  The lease amounts were
negotiated at the  fair-market  rental value and approved by Company's  Board of
Directors.

NOTE H - PROVISION FOR INCOME TAXES

         The  Company  has  loss  carry-overs  from  previous  fiscal  years  of
$489,700,  which is stated  on the  balance  sheet as an asset.  Due to the loss
carry-overs  it is  anticipated  that no income  taxes will be owed at year-end.
However  according to gap,  when income is  generated,  the  tax-deferred  asset
should be reduced and a tax provision  should be shown on the income  statement.
To estimate the tax provision for the three months ended  2/29/2000,  a marginal
tax rate of 34% was used.  The tax  provision  was  rounded to  $78,000  for the
period.


                                       9
<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" and composite  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). Pipefittings produced by
the Company  include tees,  reducers,  elbows,  couplers,  end caps,  and bolted
repair couplers. 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 29,
2000 and February 28, 1999, respectively.  For comparison purposes,  percentages
of sales will be used rather than  dollars.  In the  following  discussion,  the
three  months  ended  February 29, 2000 and February 28, 1999 are referred to as
1Q00 and 1Q99,  respectively.  Readers are cautioned  that results of operations
for the three months ended February 29, 2000 are not  necessarily  indicative of
the results that may be expected for the fiscal year ending November 30, 2000.

     Overview.  The  Company  sustained  an  operating  profit  before  taxes of
$231,708 for 1Q00  compared to an operating  loss of $(16,566)  for 1Q99.  Gross
margin  as a  percentage  of  sales  for 1Q00 and  1Q99  was  41.7%  and  38.8%,
respectively.  The  improvement  in the  Company's  operating  profit  and gross
margins was mainly due to a 34.9% increase in net sales and to  improvements  in
manufacturing processes. (explained below).

     Net Sales: Net sales for 1Q00 increased by 34.9% to $2,197,038, compared to
net sales of $1,629,027 for 1Q99.  There are several factors that contributed to
increased sales. The agricultural  market has been stronger during the past year
and this trend  continued  during the first  quarter  of fiscal  year 2000.  The
Company's  increased  manufacturing  capacity and  throughput  has decreased the
average  delivery  times,  resulting in a quicker  turnaround  to the  Company's
distributors than many of the Company's competitors have been able to offer. The
Company  increased  prices  on  it's  products  by 5% in  October  1999  and has
implemented  another  5% price  increase  effective  April 1, 2000 to offset the
continuing rise in raw material prices.

     Gross  Margin.  Gross margin as a percentage of sales for 1Q00 and 1Q99 was
41.7% and 38.8%,  respectively.  The margin has increased mainly due to improved
manufacturing  efficiencies  and sales volume.  Increases in raw material  costs
during the past year have  continued to put downward  pressure on the  Company's
gross margin.  Raw material prices  continued to rise during 1Q00. Raw materials
as a percentage of sales for 1Q00 and 1Q99 was 37.7% and 31.8% respectively. The
Company  increased  prices  on  it's  products  by 5% in  October  1999  and has
implemented  another 5% price  increase  effective  April 1, 2000 to offset this
continuing rise in raw material  prices.  Labor and related  expenses  increased
20.8% or $65,005 from 1Q99 to 1Q00 mainly due to 34.9%  increases in  production
of product and to an average of 3.5%  increase in wages,  effective  December 1,
1999.  Rent expense  increased  145.7% or $43,385 from 1Q99 1Q00  primarily  due
lease payments  associated with lease agreements with PVC, Inc. The terms of the
leases are for a period of five years commencing December 1999. Rentals begin at
$13,500  per month for the land and  building,  and $9,500 per month for various
pieces of equipment.  Upon each annual anniversary date, the monthly rentals for
each lease shall be adjusted by the amount of any increase in the Consumer Price
Index  over the  preceding  year.  The  previous  lease for land,  building  and
equipment,  which was executed by the Company and Mr. Bray and expired  December
31, 1999,  required lease  payments of $9,300 per month.  The lease amounts were
negotiated at the  fair-market  rental value and approved by Company's  Board of
Directors.  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 16.5% of net sales for 1Q00,  compared to
19.7% for 1Q99.  The decrease in selling  expenses as a percentage  of sales was
mainly due to  increased  sales  volume.  In actual  dollars,  selling  expenses
increased  $40,081,  or 12.5%, from 1Q998 to 1Q00.  Commission expense decreased
 .1% on net sales,  but  increased  $11,924  mainly due to increased  commissions
attributable to increased sales.  Shipping supplies increased as a percentage of
sales from 1.7% in 1Q99 to 1.8% in 1Q00 or $11,830 mainly due to higher shipping
volumes. Freight out decreased as a percentage of net sales from 6.8% in 1Q99 to
4.8% in 1Q00 mainly due to higher  sales volume and  partially  due to receiving
quantity discounts on freight on larger shipments.

     General and administrative: General and administrative expenses represented
11.7% of net sales for 1Q00, compared to 15.8% for 1Q99. The decrease was mainly
due to increased  sales volume.  Overall,  general and  administrative  expenses
remained  relatively even in dollars at $256,708 and $257,066 for 1Q99 and 1Q00,
respectively.  R & D expenses  decreased $13,814 mainly because of the departure
of the Company's  engineer that was not replaced.  Salaries,  as a percentage of
net  sales,  decreased  from  9.1% in 1Q99 to 5.9% in 1Q00  mainly  due to three

                                       10
<PAGE>

factors.  1) Increased sales. 2) The executive  officers received no increase in
pay this past year and 3) a voluntary  reduction in the salary of the CEO. Lease
expenses  increased $3,159 due to new lease agreements  between NACO Industries,
Inc. and PVC Inc.

     Other:  Other  expenses/revenues  were 3.1% for 1Q00,  compared to 4.3% for
1Q99 mainly due to increased  sales volume.  Interest  expense went from 4.4% in
1Q99 to 3.7% in 1Q00.  Interest increased $9,617 from 1Q99 to 1Q00 mainly due to
increased borrowings.  The effective interest rates (interest expense divided by
the  average  debt  balance  for the  period)  for 1Q00 and 1Q99 were 10.16% and
9.87%, respectively.

Liquidity and Capital Resources

         The  Company's  principal  sources  of  liquidity  have  been cash from
operations,  credit  facilities  and equity  financing.  Cash used in  operating
activities  was $42,735 in 1Q00.  Cash as of February 29, 2000 was $274,170,  up
$220,682 from November 30, 1999.

         With the loss  incurred  by the  Company  during the fiscal  year ended
11/30/99  primarily as a result of the discontinued  NACO Composites  operation,
the  Company's  working  capital  position had been reduced  significantly.  The
Company's  liquidity  position has improved  during 1Q00 due to strong sales and
profits for the quarter.  The Company  decreased trade payables by $158,928 from
November 30, 1999 to February 29,  2000.  At November 30, 1999,  the Company was
out over 90 days on  trade  payables,  due  principally  to a lack of  operating
funds.  As of February 29, 2000,  the Company's 90 days trade  payables had been
reduced by $208,027 to $55,472.  As of April 7, 2000, the Company had $40,086 in
past due payables.

         At  February  29,  2000,  the  outstanding  balance  of  the  Company's
revolving line of credit was $1,091,566. This line of credit was entered into on
April 22, 1999 with Wells Fargo Business Credit. The amounts available under the
facility are based on a percentage of accounts  receivable and  inventories.  It
matures April 30, 2002.

         Also,  on April 22,  1999,  a second  facility  was closed with WebBank
Corporation.  This facility was for $1,100,000. It is secured by current assets,
property and equipment,  and life insurance. It is payable with interest at 1.5%
over prime and matures April 30, 2014. On November 30, 1999,  the Company was in
default of  WebBank's  loan  covenants.  In a letter  dated  February  18, 2000,
WebBank  provided a waiver  that  extended a grace  period to the  Company  with
respect to meeting certain ratio  requirements  and advances to affiliates until
August 31,  2000.  The waiver also  extended a grace  period for the  debt-worth
requirement  until  November  30,  2000.  The  Company  received a waiver of the
default and has been given a twelve-month grace period.

         The  Company  currently  has plans to spend up to  $150,000  in capital
expenditures  to update and expand its operations on the condition of securing a
new line of credit and restructuring its term debt as described above.

         Management believes that with its capital resources on hand at February
29, 2000,  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.

                                       11
<PAGE>


                           PART II - OTHER INFORMATION

Item 2 - Changes in Securities and Use of Proceeds   none

Item 6 - Exhibits and Reports on Form 8-K

(a)      Exhibits.  The following are filed as exhibits to this Report.

Regulation S-K

Exhibit
No.      Description
---      -----------
10.11    Indemnification Agreement
10.12    Commercial Property Lease Agreement
10.13    Equipment Lease Agreement
10.14    Loan Documents - WebBank
10.15    Loan Documents - Wells Fargo Business Credit
27       Financial Data Schedule

  (b)  Reports on Form 8-K.  None


                                       12
<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 13, 2000
   -----------------------------------------               ---------------
         Verne E. Bray                                        Date
         President


By       /s/ JEFFREY J. KIRBY                              April 13, 2000
   -----------------------------------------              ---------------
         Jeffrey J. Kirby                                     Date
         xecutive Vice President/Treasurer


                                       13