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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

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

For the Quarter Ended September 30, 2001

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

Indicate by check mark whether the registrant (1) has filed all annual,
quarterly and other reports required to be filed by Section 12 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 CHECK MARK No _____

Indicate the number of shares outstanding for each of the issuers classes of
common stock, as of the latest practicable date.

|             |  |                                
|------------ |  | -------------------------------
|Class        |  | Outstanding at October 31, 2001
|             |  |                                
|Common Stock |  | 3,101,195 shares               



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TABLE OF CONTENTS



|                                                                                      |  |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION                                                         
|CONSOLIDATED BALANCE SHEETS                                                          
|CONSOLIDATED STATEMENTS OF OPERATIONS (Condensed)                                    
|CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed)                                    
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                           
|MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|PART II                                                                              
|OTHER INFORMATION                                                                    
|SIGNATURES                                                                           



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PART I

FINANCIAL INFORMATION




CONSOLIDATED BALANCE SHEETS
Maxco, Inc. and Subsidiaries

|                                       |                                                                                        |                      |         |                |        |   |           |         |        | 
|-------------------------------------- | -------------------------------------------------------------------------------------- | -------------------- | ------- | -------------- | ------ | - | --------- | ------- | ------ | 
|                                       |                                                                                        |                      |         | September 30,  |        |   | March 31, |        
|                                       |                                                                                        |                      |         | 2001           |        |   | 2001      |        
|                                       |                                                                                        |                      |         | (Unaudited)    |        |   |           |        
|                                       |                                                                                        |                      |         |                |        |  
|                                       |                                                                                        |                      |         | (in thousands) |       
|ASSETS                                 |                                                                                        |                      |         |                |        |   |           |        
|CURRENT ASSETS                         |                                                                                        |                      |         |                |        |   |           |        
|                                       | Cash and cash equivalents                                                              |                      | $       | 836            |        |   | $         | 968     |       
|                                       | Accounts and notes receivable, less allowance of
$541,000 ($570,000 at March 31, 2001) |                      |         | 30,743         |        |   |           | 19,998  |       
|                                       | Advances to affiliate                                                                  |                      |         | 3,008          |        |   |           | 3,008   |       
|                                       | InventoriesNote 2                                                                     |                      |         | 5,625          |        |   |           | 6,493   |       
|                                       | Prepaid expenses and other                                                             |                      |         | 1,376          |        |   |           | 795     |       
|                                       | Income taxes receivable                                                                |                      |         | 1,101          |        |   |           | 1,343   |       
|                                       |                                                                                        |                      |         |                |        |  
|                                       |                                                                                        | TOTAL CURRENT ASSETS |         |                | 42,689 |   |           |         | 32,605 | 
|MARKETABLE SECURITIESLONG TERMNote 3 |                                                                                        |                      | 95      |                |        |   | 1,511     |        
|PROPERTY AND EQUIPMENT                 |                                                                                        |                      |         |                |        |   |           |        
|                                       | Land                                                                                   |                      |         | 732            |        |   |           | 732     |       
|                                       | Buildings                                                                              |                      |         | 12,146         |        |   |           | 12,144  |       
|                                       | Machinery, equipment, and fixtures                                                     |                      |         | 51,842         |        |   |           | 53,728  |       
|                                       |                                                                                        |                      |         |                |        |  
|                                       |                                                                                        |                      | 64,720  |                |        |   | 66,604    |        
|                                       | Allowances for depreciation                                                            |                      |         | (22,622        | )      |   |           | (19,945 | )     
|                                       |                                                                                        |                      |         |                |        |  
|                                       |                                                                                        |                      | 42,098  |                |        |   | 46,659    |        
|OTHER ASSETS                          
|                                       | Investments                                                                            |                      |         | 8,282          |        |   |           | 8,224   |       
|                                       | Notes and contracts receivable and other, less
allowance of $335,000                   |                      |         | 3,854          |        |   |           | 4,411   |       
|                                       | Intangibles                                                                            |                      |         | 3,506          |        |   |           | 3,753   |       
|                                       | Deferred income taxes                                                                  |                      |         | 692            |        |   |           | 287     |       
|                                       |                                                                                        |                      |         |                |        |  
|                                       |                                                                                        |                      | 16,334  |                |        |   | 16,675    |        
|                                       |                                                                                        |                      |         |                |        |  
|                                       |                                                                                        | $                    | 101,216 |                |        | $ | 97,450    |        
|                                       |                                                                                        |                      |         |                |        |  

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|                                                                                                  |                                                                                                 |                |         |        |           |   |        |        |  | 
|------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | -------------- | ------- | ------ | --------- | - | ------ | ------ |  | 
|                                                                                                  |                                                                                                 | September
30,  |         |        | March 31,
|                                                                                                  |                                                                                                 | 2001           |         |        | 2001      |  
|                                                                                                  |                                                                                                 | (Unaudited)    |         |        |           |  
|                                                                                                  |                                                                                                 |                |         |        |           |  
|                                                                                                  |                                                                                                 | (in
thousands) |        
|LIABILITIES AND STOCKHOLDERS EQUITY                                                              |                                                                                                 |                |         |        |           |   |        |       
|                                                                                                 
|
|CURRENT LIABILITIES                                                                               |                                                                                                 |                |         |        |           |   |        |       
|                                                                                                  | Notes payableNote 8                                                                            |                | $       | 40,573 |           |   | $      | 17,088 | 
|
|                                                                                                  | Accounts payable                                                                                |                |         | 22,238 |           |   |        | 19,632 | 
|                                                                                                  | Employee compensation                                                                           |                |         | 2,564  |           |   |        | 2,741  | 
|                                                                                                  | Taxes, interest, and other liabilities                                                          |                |         | 2,224  |           |   |        | 1,906  | 
|                                                                                                  | Current maturities of long-term obligations                                                     |                |         | 1,231  |           |   |        | 3,480  | 
|                                                                                                  |                                                                                                 |                |         |        |           |  
|                                                                                                  | TOTAL CURRENT LIABILITIES                                                                       |                |         | 68,830 |           |   |        | 44,847 | 
|                                                                                                 
|LONG-TERM OBLIGATIONS, less current maturities                                                    |                                                                                                 |                | 6,481   |        |           |   | 24,831 |       
|                                                                                                 
|CONTINGENT LIABILITIES AND OTHER                                                                  |                                                                                                 |                | 260     |        |           |   | 938    |       
|                                                                                                 
|STOCKHOLDERS EQUITY                                                                              |                                                                                                 |                |         |        |           |   |        |       
|                                                                                                  | Preferred stock:                                                                                |                |         |        |           |   |        |        | 
|                                                                                                  | Series Three: 10% cumulative redeemable, $60 face
value; 14,784 shares issues and outstanding   |                |         | 678    |           |   |        | 678    | 
|                                                                                                  | Series Four: 10% cumulative redeemable, $51.50 face
value; 46,414 shares issues and outstanding |                |         | 2,390  |           |   |        | 2,390  | 
|                                                                                                  | Series Five: 10% cumulative redeemable, $120 face
value; 6,648 shares issues and outstanding    |                |         | 798    |           |   |        | 798    | 
|                                                                                                  | Series Six: 10% cumulative callable, $160 face
value; 20,000 shares authorized, issued  none   |                |         |        |           |   |        |        | 
|Common stock, $1 par value; 10,000,000 shares
authorized, 3,101,195 shares issued and outstanding |                                                                                                 |                | 3,101   |        |           |   | 3,101  |       
|Other comprehensive loss                                                                          |                                                                                                 |                | (2,249  | )      |           |   | (1,140 | )     
|Retained earnings                                                                                 |                                                                                                 |                | 20,927  |        |           |   | 21,007 |       
|                                                                                                  |                                                                                                 |                |         |        |           |  
|                                                                                                  |                                                                                                 |                | 25,645  |        |           |   | 26,834 |       
|                                                                                                  |                                                                                                 |                |         |        |           |  
|                                                                                                  |                                                                                                 | $              | 101,216 |        |           | $ | 97,450 |       
|                                                                                                  |                                                                                                 |                |         |        |           |  
|See notes to consolidated financial statements                                                    |                                                                                                 |                |         |        |           |   |        |       

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CONSOLIDATED STATEMENTS OF OPERATIONS (Condensed)
Maxco, Inc. and Subsidiaries

|                                                       |                                                     |   |                                              |                    |   |                                       |        |        |             |     |       | 
|------------------------------------------------------ | --------------------------------------------------- | - | -------------------------------------------- | ------------------ | - | ------------------------------------- | ------ | ------ | ----------- | --- | ----- | 
|                                                       |                                                     |   |                                              |                    |   | Three Months Ended September 30,      |       
|                                                       |                                                     |   |                                              |                    |   | 2001                                  |        |        | 2000        |    
|                                                       |                                                     |   |                                              |                    |   | (Unaudited)                           |        |        | (Unaudited) |    
|                                                       |                                                     |   |                                              |                    |   |                                      
|                                                       |                                                     |   |                                              |                    |   | (in thousands, except per share data) |       
|Net sales                                              |                                                     |   | 41,400                                       |                    |   | $                                     | 49,094 |       
|Costs and expenses:                                    |                                                     |   |                                              |                    |   |                                       |        |       
|                                                       | Cost of sales and operating expenses                |   |                                              | 32,793             |   |                                       |        | 38,008 |            
|                                                       | Selling, general and administrative                 |   |                                              | 6,483              |   |                                       |        | 7,308  |            
|                                                       | Depreciation and amortization                       |   |                                              | 1,580              |   |                                       |        | 1,584  |            
|                                                       |                                                     |   |                                              |                    |   |                                      
|                                                       |                                                     |   | 40,856                                       |                    |   |                                       | 46,900 |       
|                                                       |                                                     |   |                                              |                    |   |                                      
|                                                       |                                                     |   |                                              | Operating Earnings |   |                                       | 544    |        |             |     | 2,194 | 
|Other income (expense)                                 |                                                     |   |                                              |                    |   |                                       |        |       
|                                                       | Investment and interest income                      |   |                                              | 156                |   |                                       |        | 840    |            
|                                                       | Interest expense                                    |   |                                              | (992               | ) |                                       |        | (1,274 | )          
|                                                       |                                                     |   |                                              |                    |   |                                      
|                                                       | Income (Loss) Before Federal Income Taxes and       |   |                                              |                    |   |                                       |        |        |            
|                                                       | Equity in Losses of Affiliates                      |   |                                              | (292               | ) |                                       |        | 1,760  |            
|Federal income tax expense (benefit)                   |                                                     |   | (84                                          | )                  |   |                                       | 610    |       
|                                                       |                                                     |   |                                              |                    |   |                                      
|                                                       | Income
(Loss) Before Equity in Losses of Affiliates |   |                                              | (208               | ) |                                       |        | 1,150  |            
|Equity in losses of affiliates, net of tax             |                                                     |   | (73                                          | )                  |   |                                       | (297   | )     
|                                                       |                                                     |   |                                              |                    |   |                                      
|                                                       |                                                     |   |                                              | Net Income (loss)  |   |                                       | (281   | )      |             |     | 853   | 
|Less preferred stock dividends                         |                                                     |   | (102                                         | )                  |   |                                       | (102   | )     
|                                                       |                                                     |   |                                              |                    |   |                                      
|                                                       |                                                     |   | Net Income (Loss) Applicable to Common Stock |                    | $ | (383                                  | )      |        | $           | 751 |      
|                                                       |                                                     |   |                                              |                    |   |                                      
|Net Income (Loss) Per Common Share  Basic             |                                                     | $ | (0.12                                        | )                  |   | $                                     | 0.24   |       
|                                                       |                                                     |   |                                              |                    |   |                                      
|Net Income (Loss) Per Common Share  Assuming Dilution |                                                     | $ | (0.12                                        | )                  |   | $                                     | 0.24   |       
|                                                       |                                                     |   |                                              |                    |   |                                      
|See notes to consolidated financial statements         |                                                     |   |                                              |                    |  

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CONSOLIDATED STATEMENTS OF OPERATIONS (Condensed)

| |  |                              |  | 
| |  | ---------------------------- |  | 
| |  | Maxco, Inc. and Subsidiaries

|                                                       |                                                         |   |        |        |   |                                       |        |        |             |  |  | 
|------------------------------------------------------ | ------------------------------------------------------- | - | ------ | ------ | - | ------------------------------------- | ------ | ------ | ----------- |  |  | 
|                                                       |                                                         |   |        |        |   | Six Months Ended September 30,        |       
|                                                       |                                                         |   |        |        |   |                                       |       
|                                                       |                                                         |   |        |        |   | 2001                                  |        |        | 2000        | 
|                                                       |                                                         |   |        |        |   | (Unaudited)                           |        |        | (Unaudited) | 
|                                                       |                                                         |   |        |        |   |                                       |        |        |             | 
|                                                       |                                                         |   |        |        |   | (in thousands, except per share data) |       
|Net sales                                              |                                                         | $ | 85,973 |        |   | $                                     | 97,548 |       
|Costs and expenses:                                    |                                                         |   |        |        |   |                                       |        |       
|                                                       | Cost of sales and operating expenses                    |   |        | 68,234 |   |                                       |        | 75,922 |            
|                                                       | Selling, general and administrative                     |   |        | 12,721 |   |                                       |        | 14,655 |            
|                                                       | Depreciation and amortization                           |   |        | 3,310  |   |                                       |        | 3,063  |            
|                                                       |                                                         |   |        |        |   |                                      
|                                                       |                                                         |   | 84,265 |        |   |                                       | 93,640 |       
|                                                       |                                                         |   |        |        |   |                                      
|                                                       | Operating Earnings                                      |   |        | 1,708  |   |                                       |        | 3,908  |            
|Other income (expense)                                 |                                                         |   |        |        |   |                                       |        |       
|                                                       | Investment and interest income                          |   |        | 590    |   |                                       |        | 1,002  |            
|                                                       | Interest expense                                        |   |        | (2,100 | ) |                                       |        | (2,314 | )          
|                                                       |                                                         |   |        |        |   |                                      
|                                                       | Income Before Federal Income Taxes and Equity           |   |        |        |   |                                       |        |        |            
|                                                       | in Earnings (Losses) of Affiliates                      |   |        | 198    |   |                                       |        | 2,596  |            
|Federal income tax expense                             |                                                         |   | 89     |        |   |                                       | 919    |       
|                                                       |                                                         |   |        |        |   |                                      
|                                                       | Income Before Equity in Earnings (Losses) of Affiliates |   |        | 109    |   |                                       |        | 1,677  |            
|Equity in earnings (losses) of affiliates, net of tax  |                                                         |   | 14     |        |   |                                       | (622   | )     
|                                                       |                                                         |   |        |        |   |                                      
|                                                       | Net Income                                              |   |        | 123    |   |                                       |        | 1,055  |            
|Less preferred stock dividends                         |                                                         |   | (204   | )      |   |                                       | (204   | )     
|                                                       |                                                         |   |        |        |   |                                      
|                                                       | Net Income (Loss) Applicable to Common Stock            |   | $      | (81    | ) |                                       | $      | 851    |            
|                                                       |                                                         |   |        |        |   |                                      
|Net Income (Loss) Per Common Share  Basic             |                                                         | $ | (0.03  | )      |   | $                                     | 0.27   |       
|                                                       |                                                         |   |        |        |   |                                      
|Net Income (Loss) Per Common Share  Assuming Dilution |                                                         | $ | (0.03  | )      |   | $                                     | 0.27   |       
|                                                       |                                                         |   |        |        |   |                                      

See notes to consolidated financial statements

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed)

Maxco, Inc. and Subsidiaries

|                     |                                                                                             |  |   |        |   |                                |   |        |             |  |  | 
|-------------------- | ------------------------------------------------------------------------------------------- |  | - | ------ | - | ------------------------------ | - | ------ | ----------- |  |  | 
|                     |                                                                                             |  |   |        |   | Six Months Ended September 30, |  
|                     |                                                                                             |  |   |        |   | 2001                           |   |        | 2000        | 
|                     |                                                                                             |  |   |        |   | (Unaudited)                    |   |        | (Unaudited) | 
|                     |                                                                                             |  |   |        |   |                               
|                     |                                                                                             |  |   |        |   | (in thousands)                 |  
|Operating Activities |                                                                                             |  |   |        |   |                                |   |       
|                     | Net Income                                                                                  |  | $ | 123    |   |                                | $ | 1,055  |            
|                     | Adjustments to reconcile net income to net cash provided
by (used in) operating activities: |  |   |        |   |                                |   |        |            
|                     | Depreciation and other non-cash items                                                       |  |   | 3,289  |   |                                |   | 3,344  |            
|                     | Changes in operating assets and liabilities                                                 |  |   | (8,297 | ) |                                |   | (975   | )          
|                     |                                                                                             |  |   |        |   |                               
|                     | Net Cash Provided By (Used In) Operating Activities                                         |  |   | (4,885 | ) |                                |   | 3,424  |            
|Investing Activities |                                                                                             |  |   |        |   |                                |   |       
|                     | Proceeds from sale-leaseback                                                                |  |   | 3,000  |   |                                |   |        |            
|                     | Purchases of property and equipment                                                         |  |   | (1,205 | ) |                                |   | (7,942 | )          
|                     | Redemption of marketable securities                                                         |  |   |        |   |                                |   | 2,530  |            
|                     | Investment in affiliates                                                                    |  |   |        |   |                                |   | (272   | )          
|                     | Sale of investment                                                                          |  |   |        |   |                                |   | 1,143  |            
|                     | Other                                                                                       |  |   | 103    |   |                                |   | (268   | )          
|                     |                                                                                             |  |   |        |   |                               
|                     | Net Cash Provided By (Used In) Investing Activities                                         |  |   | 1,898  |   |                                |   | (4,809 | )          
|Financing Activities |                                                                                             |  |   |        |   |                                |   |       
|                     | Net proceeds from lines of credit                                                           |  |   | 5,650  |   |                                |   | 500    |            
|                     | Proceeds from other debt obligations                                                        |  |   |        |   |                                |   | 3,294  |            
|                     | Repayments on other debt obligations                                                        |  |   | (2,469 | ) |                                |   | (1,730 | )          
|                     | Payments on contingent liability                                                            |  |   | (122   | ) |                                |   |        |            
|                     | Dividends paid on preferred stock                                                           |  |   | (204   | ) |                                |   | (204   | )          
|                     |                                                                                             |  |   |        |   |                               
|                     | Net Cash Provided By Financing Activities                                                   |  |   | 2,855  |   |                                |   | 1,860  |            
|                     |                                                                                             |  |   |        |   |                               
|                     | Increase (Decrease) in Cash and Cash Equivalents                                            |  |   | (132   | ) |                                |   | 475    |            
|                     | Cash and Cash Equivalents at Beginning of Period                                            |  |   | 968    |   |                                |   | 542    |            
|                     |                                                                                             |  |   |        |   |                               
|                     | Cash and Cash Equivalents at End of Period                                                  |  | $ | 836    |   |                                | $ | 1,017  |            
|                     |                                                                                             |  |   |        |   |                               

See notes to consolidated financial statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Maxco, Inc. and Subsidiaries
September 30, 2001
(Unaudited)

NOTE 1  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The accompanying unaudited, condensed, consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by accounting principles generally accepted in
the United States for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation of the results of the interim
periods covered have been included. For further information, refer to the
consolidated financial statements and notes thereto included in Maxcos
annual report on Form 10-K for the year ended March 31, 2001.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The results of operations for the interim periods presented are not
necessarily indicative of the results for the full year. 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.



| |                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------
| | Certain other amounts in the consolidated financial statements have been
reclassified to conform to the current presentation.

NOTE 2  INVENTORIES



| |                                                                          
| | -------------------------------------------------------------------------
| | The major classes of inventories, at the dates indicated were as follows:

|                                    |  |                |       |  |           |   |       | 
|----------------------------------- |  | -------------- | ----- |  | --------- | - | ----- | 
|                                    |  | September 30,  |       |  | March 31, |  
|                                    |  | 2001           |       |  | 2001      |  
|                                    |  |                |       |  |           |  
|                                    |  | (in thousands) |      
|Raw materials                       |  | $              | 399   |  |           | $ | 531   | 
|Finished goods and work in progress |  |                | 648   |  |           |   | 1,293 | 
|Purchased products for resale       |  |                | 4,578 |  |           |   | 4,669 | 
|                                    |  |                |       |  |           |  
|                                    |  | $              | 5,625 |  |           | $ | 6,493 | 
|                                    |  |                |       |  |           |  

NOTE 3  MARKETABLE SECURITIES



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company classifies its marketable securities as securities available for
sale under FASB 115, Accounting for Certain Investments in Debt and Equity
Securities. 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. Application of this method resulted in an unrealized
loss, net of deferred tax, of approximately $2.1 million being reported as
part of stockholders equity at September 30, 2001.

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NOTE 4  INVESTMENT IN INTEGRAL VISION, INC.



| |                                                                                                            
| | -----------------------------------------------------------------------------------------------------------
| | The following table summarizes the operating results of Integral Vision,
Inc., Maxcos 25% owned affiliate:

|             |  |                    |        |   |                  |   |        |   |      |   |        |   |  |   |        |  
|------------ |  | ------------------ | ------ | - | ---------------- | - | ------ | - | ---- | - | ------ | - |  | - | ------ | -
|             |  | Three Months Ended |        |   | Six Months Ended |  
|             |  | September 30,      |        |   | September 30,    |  
|             |  |                    |        |   |                  |  
|             |  | 2001               |        |   | 2000             |   | 2001   |   | 2000 |  
|             |  |                    |        |   |                  |   |        |   |      |   |        |  
|             |  | (in thousands)    
|Net Sales    |  | $                  | 506    |   |                  | $ | 1,535  |   |      | $ | 1,175  |   |  | $ | 3,320  |  
|Gross Margin |  |                    | (1,209 | ) |                  |   | (65    | ) |      |   | (1,537 | ) |  |   | (197   | )
|Net Loss     |  |                    | (2,507 | ) |                  |   | (1,634 | ) |      |   | (4,115 | ) |  |   | (3,488 | )

NOTE 5  EARNINGS PER SHARE



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

|                                                                                                    |                                                                  |   |                                       |       |   |                  |       |       |      |   |       |       |   |   |       |       |  
|--------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | - | ------------------------------------- | ----- | - | ---------------- | ----- | ----- | ---- | - | ----- | ----- | - | - | ----- | ----- | -
|                                                                                                    |                                                                  |   | Three Months Ended                    |       |   | Six Months Ended |      
|                                                                                                    |                                                                  |   | September 30,                         |       |   | September 30,    |      
|                                                                                                    |                                                                  |   |                                       |       |   |                  |      
|                                                                                                    |                                                                  |   | 2001                                  |       |   | 2000             |       |       | 2001 |   |       | 2000  |  
|                                                                                                    |                                                                  |   |                                       |       |   |                  |       |       |      |   |       |       |  
|                                                                                                    |                                                                  |   | (in thousands, except per share data) |      
|NUMERATOR:                                                                                          |                                                                  |   |                                       |       |   |                  |       |       |      |   |       |       |   |   |       |      
|                                                                                                    | Net Income                                                       |   | $                                     | (281  | ) |                  | $     | 853   |      |   | $     | 123   |   |   | $     | 1,055 |  
|                                                                                                    | Preferred stock dividends                                        |   |                                       | (102  | ) |                  |       | (102  | )    |   |       | (204  | ) |   |       | (204  | )
|                                                                                                    |                                                                  |   |                                       |       |   |                  |       |       |      |   |       |       |  
|Numerator for basic and diluted earnings per
shareincome available to common stockholders          |                                                                  |   | (383                                  | )     |   |                  | 751   |       |      |   | (81   | )     |   |   | 851   |      
|DENOMINATOR:                                                                                        |                                                                  |   |                                       |       |   |                  |       |       |      |   |       |       |   |   |      
|                                                                                                    | Denominator for basic earnings per shareweighted
average shares |   |                                       | 3,101 |   |                  |       | 3,101 |      |   |       | 3,101 |   |   |       | 3,101 |  
|Effect of dilutive securities:                                                                      |                                                                  |   |                                       |       |   |                  |       |       |      |   |       |       |   |   |       |      
|                                                                                                    | Employee stock options                                           |   |                                       |      |   |                  |       | 2     |      |   |       |      |   |   |       | 4     |  
|                                                                                                    |                                                                  |   |                                       |       |   |                  |       |       |      |   |       |       |  
|Dilutive potential common shares                                                                    |                                                                  |   |                                      |       |   |                  | 2     |       |      |   |      |       |   |   | 4     |      
|                                                                                                    |                                                                  |   |                                       |       |   |                  |       |       |      |   |       |       |  
|Denominator for diluted earnings per shareadjusted
weighted average shares and assumed conversions |                                                                  |   | 3,101                                 |       |   |                  | 3,103 |       |      |   | 3,101 |       |   |   | 3,105 |      
|                                                                                                    |                                                                  |   |                                       |       |   |                  |       |       |      |   |       |       |  
|BASIC
EARNINGS PER SHARE                                                                            |                                                                  | $ | (0.12                                 | )     |   | $                | 0.24  |       |      | $ | (0.03 | )     |   | $ | 0.27  |      
|                                                                                                    |                                                                  |   |                                       |       |   |                  |       |       |      |   |       |       |  
|DILUTED
EARNINGS PER SHARE                                                                          |                                                                  | $ | (0.12                                 | )     |   | $                | 0.24  |       |      | $ | (0.03 | )     |   | $ | 0.27  |      
|                                                                                                    |                                                                  |   |                                       |       |   |                  |       |       |      |   |       |       |  

8



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##### Table of Contents



NOTE 6  COMPREHENSIVE INCOME



| |                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------
| | The components of comprehensive income for the three and six months ended
September 30, 2001 and 2000 are as follows:

|                                                   |  |                    |      |   |                  |                |       |      |  |   |      |   |  |   |       |  
|-------------------------------------------------- |  | ------------------ | ---- | - | ---------------- | -------------- | ----- | ---- |  | - | ---- | - |  | - | ----- | -
|                                                   |  | Three Months Ended |      |   | Six Months Ended |               
|                                                   |  | September 30,      |      |   | September 30,    |               
|                                                   |  |                    |      |   |                  |               
|                                                   |  | 2001               |      |   | 2000             |                |       | 2001 |  |   | 2000 |  
|                                                   |  |                    |      |   |                  |                |       |      |  |   |      |  
|                                                   |  |                    |      |   |                  | (in thousands) |       |      |  |   |     
|Net earnings (loss)                                |  | $                  | (281 | ) |                  | $              | 853   |      |  | $ | 123  |   |  | $ | 1,055 |  
|Unrealized gains (losses) on marketable securities |  |                    | (234 | ) |                  |                | 245   |      |  |   | (935 | ) |  |   | (110  | )
|Unrealized losses on swap agreement                |  |                    | (159 | ) |                  |                |      |      |  |   | (132 | ) |  |   |      |  
|                                                   |  |                    |      |   |                  |                |       |      |  |   |      |  
|Comprehensive income (loss)                        |  | $                  | (674 | ) |                  | $              | 1,098 |      |  | $ | (944 | ) |  | $ | 945   |  
|                                                   |  |                    |      |   |                  |                |       |      |  |   |      |  



| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | The components of accumulated comprehensive income, net of related tax at
September 30, 2001 and March 31, 2001 are as follows:

|                                           |  |                |        |   |           |   |        |  
|------------------------------------------ |  | -------------- | ------ | - | --------- | - | ------ | -
|                                           |  | September 30,  |        |   | March 31, |  
|                                           |  | 2001           |        |   | 2001      |  
|                                           |  |                |        |   |           |  
|                                           |  | (in thousands) |       
|Unrealized losses on marketable securities |  | $              | (2,075 | ) |           | $ | (1,140 | )
|Unrealized loss on swap agreement          |  |                | (174   | ) |           |   |       |  
|                                           |  |                |        |   |           |  
|Other comprehensive loss                   |  | $              | (2,249 | ) |           | $ | (1,140 | )
|                                           |  |                |        |   |           |  

NOTE 7  INDUSTRY SEGMENT INFORMATION

The following summarizes Maxcos industry segment information:

|                     |                           |  |                |         |  |           |   |        | 
|-------------------- | ------------------------- |  | -------------- | ------- |  | --------- | - | ------ | 
|                     |                           |  | September 30,  |         |  | March 31, |  
|                     |                           |  | 2001           |         |  | 2001      |  
|                     |                           |  |                |         |  |          
|                     |                           |  | (in thousands) |        
|Identifiable assets: |                           |  |                |         |  |           |   |       
|                     | Construction supplies     |  | $              | 38,868  |  |           | $ | 32,759 | 
|                     | Heat treating             |  |                | 32,440  |  |           |   | 34,714 | 
|                     | Packaging products        |  |                | 5,446   |  |           |   | 5,538  | 
|                     | Corporate and other       |  |                | 16,180  |  |           |   | 16,215 | 
|                     | Investments and advances  |  |                | 8,282   |  |           |   | 8,224  | 
|                     |                           |  |                |         |  |          
|                     | Total Identifiable Assets |  | $              | 101,216 |  |           | $ | 97,450 | 
|                     |                           |  |                |         |  |          

9



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##### Table of Contents



NOTE 7  INDUSTRY SEGMENT INFORMATION  Continued

|                                       |                                             |                            |                          |                 |     |                    |        |        |                  |                |        |        |       |       |        |        |       |       |        | 
|-------------------------------------- | ------------------------------------------- | -------------------------- | ------------------------ | --------------- | --- | ------------------ | ------ | ------ | ---------------- | -------------- | ------ | ------ | ----- | ----- | ------ | ------ | ----- | ----- | ------ | 
|                                       |                                             |                            |                          |                 |     | Three Months Ended |        |        | Six Months Ended |               
|                                       |                                             |                            |                          |                 |     | September 30,      |        |        | September 30,    |               
|                                       |                                             |                            |                          |                 |     |                    |        |        |                  |               
|                                       |                                             |                            |                          |                 |     | 2001               |        |        | 2000             |                |        | 2001   |       |       | 2000   |       
|                                       |                                             |                            |                          |                 |     |                    |        |        |                  |                |        |       
|                                       |                                             |                            |                          |                 |     |                    |        |        |                  | (in thousands) |        |        |       |       |       
|Net sales:                             |                                             |                            |                          |                 |     |                    |        |        |                  |                |        |        |       |       |        |       
|                                       | Construction supplies                       |                            | $                        | 29,073          |     |                    | $      | 34,773 |                  |                | $      | 61,206 |       |       | $      | 68,664 |      
|                                       | Heat treating                               |                            |                          | 8,761           |     |                    |        | 10,076 |                  |                |        | 17,799 |       |       |        | 20,437 |      
|                                       | Packaging products                          |                            |                          | 3,482           |     |                    |        | 4,162  |                  |                |        | 6,802  |       |       |        | 8,282  |      
|                                       | Corporate and other                         |                            |                          | 84              |     |                    |        | 83     |                  |                |        | 166    |       |       |        | 165    |      
|                                       |                                             |                            |                          |                 |     |                    |        |        |                  |                |        |       
|                                       |                                             |                            |                          | Total Net Sales |     | $                  | 41,400 |        |                  | $              | 49,094 |        |       | $     | 85,973 |        |       | $     | 97,548 | 
|                                       |                                             |                            |                          |                 |     |                    |        |        |                  |                |        |       
|Operating earnings (loss):             |                                             |                            |                          |                 |     |                    |        |        |                  |                |        |        |       |       |        |       
|                                       | Construction supplies                       |                            | $                        | 423             |     |                    | $      | 1,881  |                  |                | $      | 1,330  |       |       | $      | 3,512  |      
|                                       | Heat treating                               |                            |                          | 774             |     |                    |        | 1,125  |                  |                |        | 1,524  |       |       |        | 2,029  |      
|                                       | Packaging products                          |                            |                          | 52              |     |                    |        | 20     |                  |                |        | 8      |       |       |        | (85    | )    
|                                       | Corporate and other                         |                            |                          | (705            | )   |                    |        | (832   | )                |                |        | (1,154 | )     |       |        | (1,548 | )    
|                                       |                                             |                            |                          |                 |     |                    |        |        |                  |                |        |       
|                                       |                                             |                            | Total Operating Earnings |                 | $   | 544                |        |        | $                | 2,194          |        |        | $     | 1,708 |        |        | $     | 3,908 |       
|                                       |                                             |                            |                          |                 |     |                    |        |        |                  |                |        |       
|Depreciation and amortization expense: |                                             |                            |                          |                 |     |                    |        |        |                  |                |        |        |       |       |        |       
|                                       | Construction supplies                       |                            | $                        | 595             |     |                    | $      | 684    |                  |                | $      | 1,336  |       |       | $      | 1,249  |      
|                                       | Heat treating                               |                            |                          | 738             |     |                    |        | 604    |                  |                |        | 1,469  |       |       |        | 1,209  |      
|                                       | Packaging products                          |                            |                          | 179             |     |                    |        | 189    |                  |                |        | 360    |       |       |        | 381    |      
|                                       | Corporate and other                         |                            |                          | 68              |     |                    |        | 107    |                  |                |        | 145    |       |       |        | 224    |      
|                                       |                                             |                            |                          |                 |     |                    |        |        |                  |                |        |       
|                                       | Total Depreciation and Amortization Expense |                            | $                        | 1,580           |     |                    | $      | 1,584  |                  |                | $      | 3,310  |       |       | $      | 3,063  |      
|                                       |                                             |                            |                          |                 |     |                    |        |        |                  |                |        |       
|Capital expenditures:                  |                                             |                            |                          |                 |     |                    |        |        |                  |                |        |        |       |       |        |       
|                                       | Construction supplies                       |                            | $                        | 263             |     |                    | $      | 1,758  |                  |                | $      | 592    |       |       | $      | 3,190  |      
|                                       | Heat treating                               |                            |                          | 141             |     |                    |        | 2,100  |                  |                |        | 556    |       |       |        | 4,646  |      
|                                       | Packaging products                          |                            |                          | 27              |     |                    |        | 52     |                  |                |        | 57     |       |       |        | 105    |      
|                                       | Corporate and other                         |                            |                          |                |     |                    |        | 1      |                  |                |        |       |       |       |        | 1      |      
|                                       |                                             |                            |                          |                 |     |                    |        |        |                  |                |        |       
|                                       |                                             | Total Capital Expenditures |                          | $               | 431 |                    |        | $      | 3,911            |                |        | $      | 1,205 |       |        | $      | 7,942 |      
|                                       |                                             |                            |                          |                 |     |                    |        |        |                  |                |        |       



| |                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

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##### Table of Contents



NOTE 8  DEBT



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company is currently in default of certain covenants as required by loan
agreements with its principal lenders. As such the outstanding balance on
these borrowings ($38.9 million at September 30, 2001) has been classified as
current in the accompanying financial statements. There are ongoing
negotiations with the lenders to obtain waivers of default and amendments to
these covenants. Management anticipates that the negotiations will be
completed by December 2001.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 liquid long term equity investments that could be
used to meet its short term and long term debt service requirements and fund
operating cash flows.

NOTE 9  FEDERAL INCOME TAXES



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

NOTE 10  INTEREST RATE SWAP AGREEMENTS



| |                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company uses interest rate swap agreements to reduce the risk of rising
interest rates. Statement of Financial Accounting Standards No. 133 (SFAS No.
133), Accounting for Derivative Instruments and Hedging Activities,was
adopted by the Company effective April 1, 2001. SFAS No. 133 requires that
all derivatives be recognized on the balance sheet at fair value.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The adoption of Statement No. 133 on April 1, 2001 resulted in a pre-tax
charge of $42,000 in other comprehensive income. During the six months ended
September 30, 2001, changes in the fair value of the interest rate swap
agreement were recognized in comprehensive income and amounted to a $132,000
loss. The Company has recorded a $174,000 unrealized loss in other
comprehensive loss to record the fair value of the swap agreements at
September 30, 2001.

NOTE 11  SUBSEQUENT EVENT



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On October 29, 2001 the Company agreed to sell its 50% equity interest in
Mid-State Industrial Services, Inc. to Maxco President, Max A. Coon, for
$1.75 million. Additionally, Mid-State will retire the $0.5
million obligation it has with Maxco. The transaction is expected to close
in November 2001. A portion of the proceeds from the sale will be used to
retire certain obligations not related to Mid-State which were guaranteed by the Company. Accordingly, these obligations, previously classified as
contingent liabilities, have been reclassified as short term in the
accompanying financial statements.

11



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##### Table of Contents






MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Maxco, Inc. and Subsidiaries
September 30, 2001

MATERIAL CHANGES IN FINANCIAL CONDITION

Cash used in operating activities amounted to $4.9 million for the six months
ended September 30, 2001. Individual working capital component levels increased
over the March 31, 2001 level, primarily from the increased sales activity by
the Companys construction supplies unit (Ersco) over the traditionally slower
fourth quarter of the prior year.

Investing activities provided $1.9 million in cash primarily as a result of a
sale-leaseback transaction that occurred during the second quarter. This
transaction was partially offset by purchases of additional equipment for
Maxcos heat-treating unit (Atmosphere Annealing) and Ersco.

At September 30, 2001, the Company classified certain of its borrowings as
short term due to the Company being in default of certain covenants. There are
ongoing negotiations with the lenders to obtain waivers of default and
amendments to these covenants. Management anticipates that these negotiations
will be completed by December 2001.

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 liquid long term equity investments that could be
used to meet its short term and long term debt service requirements and fund
operating cash flows.

At September 30, 2001, the 2,240,605 shares of Integral Vision (formerly Medar)
common stock that Maxco owns had an aggregate market value of approximately
$314,000 ($291,000 at November 9, 2001). 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 September 30, 2001, the 249,230 shares of Provant common stock that Maxco
owns had an aggregate market value of approximately $95,000 ($125,000 at
November 9, 2001). Maxcos investment in Provant is reflected in Maxcos
financial statements under the cost method as an available-for-sale security as
the Company owns less than 20% of Provants outstanding stock. The change in
market value of $935,000 from March 31, 2001 is reflected as a component of
comprehensive loss.

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##### Table of Contents



MATERIAL CHANGES IN RESULTS OF OPERATIONS

Three Months Ended
September 30, 2001 Compared to 2000

Net sales decreased to $41.4 million compared to $49.1 million in last years
second quarter. Second quarter results reflect operating earnings of $544,000
compared to $2.2 million for the comparable period in 2000. Net loss was
$281,000 or $.12 per share assuming dilution compared to last years net income
of $853,000 or $.24 per share assuming dilution.

Sales and operating earnings for the three months ended September 30, 2001 and
2000 by each of the companys segments were as follows:

|                      |  |                    |        |          |           |                    |  |  |           |  |          |        |           |   |       | 
|--------------------- |  | ------------------ | ------ | -------- | --------- | ------------------ |  |  | --------- |  | -------- | ------ | --------- | - | ----- | 
|                      |  | Three Months Ended |        |          |           | Three Months Ended | 
|                      |  | September 30, 2001 |        |          |           | September 30, 2000 | 
|                      |  |                    |        |          |           |                    |  | 
|                      |  |                    |        |          | Operating |                    |  |  |           |  |          |        | Operating |  
|                      |  | Net Sales          |        | Earnings |           |                    |  |  | Net Sales |  | Earnings |       
|                      |  |                    |        |          |           |                    |  |  |           |  |          |       
|                      |  | (in thousands)    
|Construction supplies |  | $                  | 29,073 |          | $         | 423                |  |  |           |  | $        | 34,773 |           | $ | 1,881 | 
|Heat treating         |  |                    | 8,761  |          |           | 774                |  |  |           |  |          | 10,076 |           |   | 1,125 | 
|Packaging products    |  |                    | 3,482  |          |           | 52                 |  |  |           |  |          | 4,162  |           |   | 20    | 

The decrease in net sales at Ersco was a result of a slower economy, greater
competitive market conditions, and a lower level of commercial construction
compared to the second quarter of the prior year. The decrease in net sales at
Atmosphere Annealing was due to a slowdown in the automotive industry. Lower
net sales at its packaging products unit (Pak Sak) were primarily due to the
general economic slowdown and additional competitive pressures.

Consolidated gross profit (net sales less cost of sales and operating expenses)
decreased to $8.6 million from $11.1 million. Consolidated gross margin (gross
profit as a percentage of net sales) decreased to 21% from 23%. The decrease
in gross profit was primarily the result of the reduced sales from inventory at
Ersco. The increased proportion of sales at Ersco on a direct shipment basis,
which generally have a lower margin compared to sales from inventory,
contributed to the reduction in the overall gross margin. Although gross margin
improved at Atmosphere Annealing and Pak Sak, gross profit decreased due to
lower sales volume.

Selling, general, and administrative expenses (SG&A) decreased to $6.5 million
from $7.3 million. The decrease primarily resulted at Ersco due to reduced
selling expenses and reduced costs as a result of an expense reduction program.
Atmosphere Annealing and Pak Sak have also lowered their SG&A through cost
cutting measures.

Depreciation and amortization expense for the three months ended September 30,
2001 was comparable to the prior year.

As a result of the above, operating earnings decreased to approximately
$544,000 from $2.2 million in last years comparable period.

13



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##### Table of Contents



Investment and interest income decreased for the three month period ended
September 30, 2001 primarily due to recording Maxcos share of the minimum
contingent consideration in the prior year comparable period related to
Strategic Interactive (Maxcos former 45% owned affiliate sold to Provant, Inc.
in October, 1998). Interest expense decreased from the prior year quarter due
to reduced borrowings and a reduction in the average interest rate associated
with these borrowings.

Equity in earnings of affiliates increased approximately $224,000 from a loss
of $297,000 to a loss of $73,000. 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 as the Company determined that the investment was
impaired. Since managements estimate of the fair value of this investment at
September 30, 2001 has not changed, the Company did not recognize any gain or
loss on the investment. Maxcos share of Integral Visions net loss for the
three months ended September 30, 2000 was $267,000, net of tax.

Six Months Ended September 30, 2001 Compared to 2000

Net sales decreased to $86.0 million compared to $97.5 million in last years
comparable six-month period. Results for this period include operating earnings
of $1.7 million compared to $3.9 million for the comparable period in 2000. Net
income was $123,000 or, after preferred dividends, a loss of $.03 per share
assuming dilution compared to last years net income of $1.1 million or $.27
per share assuming dilution.

Sales and operating earnings for the six months ended September 30, 2001 and
2000 by each of the companys segments were as follows:

|                      |  |                    |        |  |                    |   |       |           |  |   |          |  |  |           |       |  
|--------------------- |  | ------------------ | ------ |  | ------------------ | - | ----- | --------- |  | - | -------- |  |  | --------- | ----- | -
|                      |  | Six Months Ended   |        |  | Six Months Ended   |  
|                      |  | September 30, 2001 |        |  | September 30, 2000 |  
|                      |  |                    |        |  |                    |  
|                      |  |                    |        |  |                    |   |       |           |  |   |          |  |  | Operating |      
|                      |  |                    |        |  | Operating          |   |       |           |  |   | Earnings | 
|                      |  | Net Sales          |        |  | Earnings           |   |       | Net Sales |  |   | (Loss)   | 
|                      |  |                    |        |  |                    |   |       |           |  |   |          | 
|                      |  | (in thousands)    
|Construction supplies |  | $                  | 61,206 |  |                    | $ | 1,330 |           |  | $ | 68,664   |  |  | $         | 3,512 |  
|Heat treating         |  |                    | 17,799 |  |                    |   | 1,524 |           |  |   | 20,437   |  |  |           | 2,029 |  
|Packaging products    |  |                    | 6,802  |  |                    |   | 8     |           |  |   | 8,282    |  |  |           | (85   | )

The decrease in net sales at Ersco was a 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 Atmosphere Annealing
was due to a slowdown in the automotive industry. Lower net sales at Pak Sak
were primarily due to the general economic slowdown and additional competitive
pressures.

Consolidated gross profit (net sales less cost of sales and operating expenses)
decreased to $17.7 million from $21.6 million. Consolidated gross margin
(gross profit as a percentage of net sales) decreased to 21% from 22%. The
decrease in gross profit was primarily the result of the reduced sales from
inventory at Ersco. The increased proportion of sales at Ersco on a direct
shipment basis, which generally have a lower margin compared to sales from
inventory, contributed to the reduction in the overall gross margin. Although
gross margin improved at Atmosphere Annealing and Pak Sak, gross profit
decreased due to lower sales volume.

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Selling, general, and administrative expenses decreased to $12.7 million from
$14.7 million. The decrease primarily resulted at Ersco due to reduced selling
expenses and reduced costs as a result of an expense reduction program.
Atmosphere Annealing and Pak Sak have also lowered their SG&A through cost
cutting measures.

Depreciation and amortization expense for the six months ended September 30,
2001 increased as a result of the additional depreciation resulting from the
purchases of property and equipment by Atmosphere Annealing and Ersco since
September of last year.

As a result of the above, operating earnings decreased to approximately $1.7
million from $3.9 million in last years comparable period.

Investment and interest income decreased for the six month period ended
September 30, 2001 primarily due to recording Maxcos share of the minimum
contingent consideration in the prior year comparable period related to
Strategic Interactive (Maxcos former 45% owned affiliate sold to Provant, Inc.
in October, 1998). Interest expense decreased from the prior year quarter due
to reduced borrowings and a reduction in the average interest rate associated
with these borrowings.

Equity in earnings of affiliates increased approximately $636,000 from a loss
of $622,000 to income of $14,000. 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 as the Company determined that the investment was
impaired. Since managements estimate of the fair value of this investment at
September 30, 2001 has not changed, the Company did not recognize any gain or
loss on the investment. Maxcos share of Integral Visions
net loss for the six months ended September 30, 2000 was $571,000 net of tax.

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 short and long term borrowings of $42.5
million at September 30, 2001. A 1% increase from the prevailing interest rates
at September 30, 2001 on the unhedged variable rate portion of the Companys
short and long-term borrowings would increase interest expense on an annualized
basis by $387,000 based on principal balances at September 30, 2001.

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##### Table of Contents






PART II




OTHER INFORMATION

Item 1. Legal Proceedings



| |     
| | ----
| | None

Item 2. Changes in Securities



| |     
| | ----
| | None

Item 3. Defaults Upon Senior Securities



| |                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company is currently in default on certain covenants as
required by its $18 million and $5 million lines of credit with
its two principal lenders.

Item 4. Submission of Matters to a Vote of Security Holders



| |                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The annual meeting of shareholders was held on August 28, 2001. The
matters voted upon were the election of directors and other business
which may come before the meeting (of which there was none). The
results of votes were as follows:



| |                       
| | ----------------------
| | Election of directors:

|                  |  |     |           |  |          |  |        | 
|----------------- |  | --- | --------- |  | -------- |  | ------ | 
|                  |  | For |           |  | Withheld | 
|                  |  |     |           |  |          | 
|Max A. Coon       |  |     | 2,989,966 |  |          |  | 12,740 | 
|Eric L. Cross     |  |     | 2,993,366 |  |          |  | 9,340  | 
|Charles J. Drake  |  |     | 2,993,866 |  |          |  | 8,840  | 
|Joel I. Ferguson  |  |     | 2,993,866 |  |          |  | 8,840  | 
|Richard G. Johns  |  |     | 2,993,366 |  |          |  | 9,340  | 
|David R. Layton   |  |     | 2,993,866 |  |          |  | 8,840  | 
|Vincent Shunsky   |  |     | 2,993,366 |  |          |  | 9,340  | 
|Michael P. Smorch |  |     | 2,993,866 |  |          |  | 8,840  | 
|Michael W. Wisti  |  |     | 2,993,851 |  |          |  | 8,855  | 

Item 5. Other Information



| |     
| | ----
| | None

Item 6(a) Exhibits

|    |  |                                                                                                        |  | 
|--- |  | ------------------------------------------------------------------------------------------------------ |  | 
|3   |  | Restated Articles
of Incorporation are hereby incorporated 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).

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##### Table of Contents



|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | 
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|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 and
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
registrant's 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 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 Form 8-K dated January 17, 1997.                                                                                                                                                                                                                                                                                                
|10.12 |  | Asset purchase
agreement - Axson North America, Inc. is hereby incorporated by reference from 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 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 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.                                                                                                                                                                                                                                                        

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|      |  |                                                                                                                                                                                                    |  | 
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|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.  
|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, 2001 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.        

Item 6(b) Reports on Form 8-K



| |     
| | ----
| | None

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|      |                   |  |                                                                                                                       |            
|----- | ----------------- |  | --------------------------------------------------------------------------------------------------------------------- | -----------
|      |                   |  |                                                                                                                       | MAXCO, INC.
|     
|     
|     
|Date: | November 14, 2001 |  | \S\ VINCENT SHUNSKYVincent Shunsky, Vice President-Finance
and Treasurer (Principal Financial and
Accounting Officer)

19