##### Table of Contents



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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



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



Commission File Number 0-2762



|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|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 |  | 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 December 31, 2000
|            
|            
|            
|            
|            
|Common Stock |  | 3,101,195 shares                





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1



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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                                                                           
|7th Amendment to Amended & Restated Loan Agreement                                   



---









FINANCIAL INFORMATION




CONSOLIDATED BALANCE SHEETS
Maxco, Inc. and Subsidiaries

|                                           |                                                                                            |                      |         |                |        |           |         |         |        | 
|------------------------------------------ | ------------------------------------------------------------------------------------------ | -------------------- | ------- | -------------- | ------ | --------- | ------- | ------- | ------ | 
|                                           |                                                                                            |                      |         | December 31,   |        | March 31,
|                                           |                                                                                            |                      |         | 2000           |        | 2000     
|                                           |                                                                                            |                      |         | (Unaudited)    |        |          
|                                           |                                                                                            |                      |         |               
|                                           |                                                                                            |                      |         | (in
thousands)
|ASSETS                                    
|                                          
|                                          
|                                          
|                                          
|CURRENT ASSETS                            
|                                          
|                                          
|                                          
|                                          
|                                           | Cash and cash equivalents                                                                  |                      | $       | 1,014          |        |           | $       | 542     |       
|                                          
|                                          
|                                          
|                                          
|                                           | Marketable securities                                                                      |                      |         |                |        |           |         | 185     |       
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts and notes receivable, less allowance of
    $710,000 ($513,000 at March 31, 2000) |                      |         | 24,425         |        |           |         | 22,098  |       
|                                          
|                                          
|                                          
|                                          
|                                           | Advances to affiliate                                                                      |                      |         | 3,008          |        |           |         | 3,008   |       
|                                          
|                                          
|                                          
|                                          
|                                           | Inventories  Note 2                                                                       |                      |         | 7,081          |        |           |         | 8,000   |       
|                                          
|                                          
|                                          
|                                          
|                                           | Investment held for sale
 Note 9                                                          |                      |         |                |        |           |         | 1,121   |       
|                                          
|                                          
|                                          
|                                          
|                                           | Prepaid expenses and other                                                                 |                      |         | 1,183          |        |           |         | 760     |       
|                                           |                                                                                            |                      |         |                |        |           |         |         |       
|                                           |                                                                                            | TOTAL CURRENT ASSETS |         |                | 36,711 |           |         |         | 35,714 | 
|                                          
|                                          
|                                          
|                                          
|                                          
|MARKETABLE SECURITIES  LONG TERM  Note 3 |                                                                                            |                      | 1,067   |                |        |           | 4,240   |        
|                                          
|                                          
|                                          
|                                          
|                                          
|PROPERTY AND EQUIPMENT                    
|                                          
|                                          
|                                          
|                                          
|                                           | Land                                                                                       |                      |         | 732            |        |           |         | 732     |       
|                                          
|                                          
|                                          
|                                          
|                                           | Buildings                                                                                  |                      |         | 12,780         |        |           |         | 12,271  |       
|                                          
|                                          
|                                          
|                                          
|                                           | Machinery, equipment, and fixtures                                                         |                      |         | 49,782         |        |           |         | 41,650  |       
|                                           |                                                                                            |                      |         |                |        |           |         |         |       
|                                           |                                                                                            |                      | 63,294  |                |        |           | 54,653  |        
|                                          
|                                          
|                                          
|                                          
|                                           | Allowances for depreciation                                                                |                      |         | (18,633        | )      |           |         | (14,893 | )     
|                                           |                                                                                            |                      |         |                |        |           |         |         |       
|                                           |                                                                                            |                      | 44,661  |                |        |           | 39,760  |        
|                                          
|                                          
|                                          
|                                          
|OTHER ASSETS                              
|                                          
|                                          
|                                          
|                                          
|                                           | Investments                                                                                |                      |         | 10,270         |        |           |         | 12,165  |       
|                                          
|                                          
|                                          
|                                          
|                                           | Notes and contracts receivable and other                                                   |                      |         | 5,334          |        |           |         | 4,325   |       
|                                          
|                                          
|                                          
|                                          
|                                           | Intangibles                                                                                |                      |         | 3,846          |        |           |         | 4,216   |       
|                                           |                                                                                            |                      |         |                |        |           |         |         |       
|                                           |                                                                                            |                      | 19,450  |                |        |           | 20,706  |        
|                                           |                                                                                            |                      |         |                |        |           |         |         |       
|                                           |                                                                                            | $                    | 101,889 |                |        | $         | 100,420 |        
|                                           |                                                                                            |                      |         |                |        |           |         |         |       

2



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##### Table of Contents



|                                               |                                               |                                                                                                    |                           |        |                |        |           |        |       |        | 
|---------------------------------------------- | --------------------------------------------- | -------------------------------------------------------------------------------------------------- | ------------------------- | ------ | -------------- | ------ | --------- | ------ | ----- | ------ | 
|                                               |                                               |                                                                                                    |                           |        | December 31,   |        | March 31,
|                                               |                                               |                                                                                                    |                           |        | 2000           |        | 2000     
|                                               |                                               |                                                                                                    |                           |        | (Unaudited)    |        |          
|                                               |                                               |                                                                                                    |                           |        |               
|                                               |                                               |                                                                                                    |                           |        | (in
thousands)
|LIABILITIES AND STOCKHOLDERS EQUITY          
|                                              
|                                              
|                                              
|                                              
|CURRENT LIABILITIES                           
|                                              
|                                              
|                                              
|                                              
|                                               | Notes payable                                 |                                                                                                    | $                         | 19,314 |                |        | $         | 23,667 |      
|                                              
|                                              
|                                              
|                                              
|                                               | Accounts payable                              |                                                                                                    |                           | 18,903 |                |        |           | 12,989 |      
|                                              
|                                              
|                                              
|                                              
|                                               | Employee compensation                         |                                                                                                    |                           | 2,485  |                |        |           | 3,247  |      
|                                              
|                                              
|                                              
|                                              
|                                               | Taxes, interest, and other liabilities        |                                                                                                    |                           | 499    |                |        |           | 381    |      
|                                              
|                                              
|                                              
|                                              
|                                               | Current maturities of long-term obligations   |                                                                                                    |                           | 3,734  |                |        |           | 3,117  |      
|                                               |                                               |                                                                                                    |                           |        |                |        |           |        |      
|                                               |                                               |                                                                                                    | TOTAL CURRENT LIABILITIES |        |                | 44,935 |           |        |       | 43,401 | 
|                                              
|                                              
|                                              
|                                              
|LONG-TERM OBLIGATIONS, less current maturities |                                               |                                                                                                    | 24,196                    |        |                |        | 22,390    |       
|                                              
|                                              
|                                              
|                                              
|DEFERRED INCOME TAXES                          |                                               |                                                                                                    | 1,965                     |        |                |        | 2,319     |       
|                                              
|                                              
|                                              
|                                              
|STOCKHOLDERS EQUITY                          
|                                              
|                                              
|                                              
|                                              
|                                               | Preferred stock:                             
|                                              
|                                              
|                                              
|                                              
|                                               |                                               | Series Three: 10% cumulative redeemable, $60 face
   value; 14,784 shares issued and outstanding   |                           |        | 678            |        |           |        | 678   |       
|                                              
|                                              
|                                              
|                                              
|                                               |                                               | Series Four: 10% cumulative redeemable, $51.50 face
   value; 46,414 shares issued and outstanding |                           |        | 2,390          |        |           |        | 2,390 |       
|                                              
|                                              
|                                              
|                                              
|                                               |                                               | Series Five: 10% cumulative redeemable, $120 face
   value; 6,648 shares issued 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  |      
|                                              
|                                              
|                                              
|                                              
|                                               | Net unrealized loss on marketable securities  |                                                                                                    |                           | (1,434 | )              |        |           | (877   | )    
|                                              
|                                              
|                                              
|                                              
|                                               | Retained earnings                             |                                                                                                    |                           | 25,260 |                |        |           | 26,220 |      
|                                               |                                               |                                                                                                    |                           |        |                |        |           |        |      
|                                               |                                               |                                                                                                    | 30,793                    |        |                |        | 32,310    |       
|                                               |                                               |                                                                                                    |                           |        |                |        |           |        |      
|                                               |                                               | $                                                                                                  | 101,889                   |        |                | $      | 100,420   |       
|                                               |                                               |                                                                                                    |                           |        |                |        |           |        |      

See notes to consolidated financial statements

3



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##### Table of Contents






|                                              |                                          |   |                                     |                           |   |                                       |        |             |   |      |      |  
|--------------------------------------------- | ---------------------------------------- | - | ----------------------------------- | ------------------------- | - | ------------------------------------- | ------ | ----------- | - | ---- | ---- | -
|                                              |                                          |   |                                     |                           |   | Three Months Ended December 31,      
|                                              |                                          |   |                                     |                           |   |                                      
|                                              |                                          |   |                                     |                           |   | 2000                                  |        | 1999       
|                                              |                                          |   |                                     |                           |   | (Unaudited)                           |        | (Unaudited)
|                                              |                                          |   |                                     |                           |   |                                       |        |            
|                                              |                                          |   |                                     |                           |   | (in
thousands, except per share data)
|Net sales                                     |                                          | $ | 33,515                              |                           |   | $                                     | 33,963 |            
|                                             
|                                             
|                                             
|                                             
|Costs and expenses:                          
|                                             
|                                             
|                                             
|                                             
|                                              | Cost of sales and operating expenses     |   |                                     | 25,831                    |   |                                       |        | 25,754      |  
|                                             
|                                             
|                                             
|                                             
|                                              | Selling, general and administrative      |   |                                     | 6,921                     |   |                                       |        | 6,697       |  
|                                             
|                                             
|                                             
|                                             
|                                              | Depreciation and amortization            |   |                                     | 1,549                     |   |                                       |        | 1,249       |  
|                                              |                                          |   |                                     |                           |   |                                       |        |            
|                                              |                                          |   | 34,301                              |                           |   |                                       | 33,700 |            
|                                              |                                          |   |                                     |                           |   |                                       |        |            
|                                             
|                                             
|                                             
|                                             
|                                              |                                          |   |                                     | Operating Earnings (Loss) |   |                                       | (786   | )           |   |      | 263  |  
|                                             
|                                             
|                                             
|                                             
|Other income (expense)                        |                                          |   |                                     |                           |   |                                       |        |            
|                                             
|                                             
|                                             
|                                             
|                                              | Investment and interest income           |   |                                     | 207                       |   |                                       |        | 144         |  
|                                             
|                                             
|                                             
|                                             
|                                              | Interest expense                         |   |                                     | (1,268                    | ) |                                       |        | (939        | )
|                                              |                                          |   |                                     |                           |   |                                       |        |            
|                                              |                                          |   |                                     | Loss Before Federal      
|                                             
|                                             
|                                             
|                                             
|Income Taxes and Equity in Loss of Affiliates |                                          |   | (1,847                              | )                         |   |                                       | (532   | )          
|                                             
|                                             
|                                             
|                                             
|Federal income tax benefit                    |                                          |   | (591                                | )                         |   |                                       | (149   | )          
|                                              |                                          |   |                                     |                           |   |                                       |        |            
|                                             
|                                             
|                                             
|                                             
|                                              | Loss Before Equity in Loss of Affiliates |   |                                     | (1,256                    | ) |                                       |        | (383        | )
|                                             
|                                             
|                                             
|                                             
|Equity in loss of affiliates, net of tax      |                                          |   | (453                                | )                         |   |                                       | (110   | )          
|                                              |                                          |   |                                     |                           |   |                                       |        |            
|                                              |                                          |   |                                     | Net Loss                  |   |                                       | (1,709 | )           |   |      | (493 | )
|                                             
|                                             
|                                             
|                                             
|Less preferred stock dividends                |                                          |   | (102                                | )                         |   |                                       | (102   | )          
|                                              |                                          |   |                                     |                           |   |                                       |        |            
|                                              |                                          |   | Net Loss Applicable to Common Stock |                           |   | (1,811                                | )      |             |   | (595 | )   
|                                              |                                          |   |                                     |                           |   |                                       |        |            
|Net Loss Per Common Share
 Basic             |                                          | $ | (.58                                | )                         |   | $                                     | (.19   | )          
|                                              |                                          |   |                                     |                           |   |                                       |        |            
|                                             
|Net Loss Per Common Share
 Assuming Dilution |                                          | $ | (.58                                | )                         |   | $                                     | (.19   | )          
|                                              |                                          |   |                                     |                           |   |                                       |        |            

See notes to consolidated financial statements

4



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##### Table of Contents



|                                                       |                                                   |   |                                                |                                              |   |                                       |         |             |   |       |       | 
|------------------------------------------------------ | ------------------------------------------------- | - | ---------------------------------------------- | -------------------------------------------- | - | ------------------------------------- | ------- | ----------- | - | ----- | ----- | 
|                                                       |                                                   |   |                                                |                                              |   | Nine Months Ended December 31,       
|                                                       |                                                   |   |                                                |                                              |   |                                      
|                                                       |                                                   |   |                                                |                                              |   | 2000                                  |         | 1999       
|                                                       |                                                   |   |                                                |                                              |   | (Unaudited)                           |         | (Unaudited)
|                                                       |                                                   |   |                                                |                                              |   |                                       |         |            
|                                                       |                                                   |   |                                                |                                              |   | (in
thousands, except per share data)
|Net sales                                              |                                                   | $ | 131,063                                        |                                              |   | $                                     | 125,166 |            
|                                                      
|                                                      
|                                                      
|                                                      
|Costs and expenses:                                   
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Cost of sales and operating expenses              |   |                                                | 101,753                                      |   |                                       |         | 95,799      |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Selling, general and administrative               |   |                                                | 21,576                                       |   |                                       |         | 20,156      |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Depreciation and amortization                     |   |                                                | 4,612                                        |   |                                       |         | 3,617       |  
|                                                       |                                                   |   |                                                |                                              |   |                                       |         |            
|                                                       |                                                   |   | 127,941                                        |                                              |   |                                       | 119,572 |            
|                                                       |                                                   |   |                                                |                                              |   |                                       |         |            
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                   |   |                                                | Operating Earnings                           |   |                                       | 3,122   |             |   |       | 5,594 | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                      
|Other income (expense)                                 |                                                   |   |                                                |                                              |   |                                       |         |            
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Investment and interest income                    |   |                                                | 1,209                                        |   |                                       |         | 433         |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Interest expense                                  |   |                                                | (3,582                                       | ) |                                       |         | (2,522      | )
|                                                       |                                                   |   |                                                |                                              |   |                                       |         |            
|                                                       |                                                   |   |                                                | Income Before Federal                       
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Income Taxes and Equity in Earnings of Affiliates |   |                                                | 749                                          |   |                                       |         | 3,505       |  
|                                                      
|                                                      
|                                                      
|                                                      
|Federal income tax expense                             |                                                   |   | 328                                            |                                              |   |                                       | 1,258   |            
|                                                       |                                                   |   |                                                |                                              |   |                                       |         |            
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                   |   | Income Before Equity in Earnings of Affiliates |                                              |   | 421                                   |         |             |   | 2,247 |      
|                                                      
|                                                      
|                                                      
|                                                      
|Equity in earnings (loss) of affiliates, net of tax    |                                                   |   | (1,075                                         | )                                            |   |                                       | 445     |            
|                                                       |                                                   |   |                                                |                                              |   |                                       |         |            
|                                                       |                                                   |   |                                                | Net Income (Loss)                            |   |                                       | (654    | )           |   |       | 2,692 | 
|                                                      
|                                                      
|                                                      
|                                                      
|Less preferred stock dividends                         |                                                   |   | (306                                           | )                                            |   |                                       | (306    | )          
|                                                       |                                                   |   |                                                |                                              |   |                                       |         |            
|                                                       |                                                   |   |                                                | Net Income (Loss) Applicable to Common Stock |   |                                       | (960    | )           |   |       | 2,386 | 
|                                                       |                                                   |   |                                                |                                              |   |                                       |         |            
|                                                      
|Net Income (Loss) Per Common Share  Basic             |                                                   | $ | (.31                                           | )                                            |   | $                                     | .75     |            
|                                                       |                                                   |   |                                                |                                              |   |                                       |         |            
|                                                      
|Net Income (Loss) Per Common Share  Assuming Dilution |                                                   | $ | (.31                                           | )                                            |   | $                                     | .75     |            
|                                                       |                                                   |   |                                                |                                              |   |                                       |         |            

See notes to consolidated financial statements

5



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##### Table of Contents






|                     |                                                                                             |                                             |                                                     |        |                                |        |             |        |        |         |  
|-------------------- | ------------------------------------------------------------------------------------------- | ------------------------------------------- | --------------------------------------------------- | ------ | ------------------------------ | ------ | ----------- | ------ | ------ | ------- | -
|                     |                                                                                             |                                             |                                                     |        | Nine Months Ended December 31,
|                     |                                                                                             |                                             |                                                     |        |                               
|                     |                                                                                             |                                             |                                                     |        | 2000                           |        | 1999       
|                     |                                                                                             |                                             |                                                     |        | (Unaudited)                    |        | (Unaudited)
|                     |                                                                                             |                                             |                                                     |        |                                |        |            
|                     |                                                                                             |                                             |                                                     |        | (in
thousands)                
|Operating Activities
|                    
|                    
|                    
|                    
|                     | Net Income (loss)                                                                           |                                             | $                                                   | (654   | )                              |        | $           | 2,692  |       
|                    
|                    
|                    
|                    
|                     | Adjustments to reconcile net
income (loss) to net cash provided
   by operating activities:
|                    
|                    
|                    
|                    
|                     |                                                                                             | Depreciation and other non-cash items       |                                                     |        | 5,360                          |        |             |        | 3,580  |        
|                    
|                    
|                    
|                    
|                     |                                                                                             | Changes in operating assets and liabilities |                                                     |        | 4,680                          |        |             |        | (4,071 | )      
|                     |                                                                                             |                                             |                                                     |        |                                |        |             |        |       
|                     |                                                                                             |                                             | Net Cash Provided By Operating Activities           |        |                                | 9,386  |             |        |        | 2,201   |  
|                    
|                    
|                    
|                    
|Investing Activities
|                    
|                    
|                    
|                    
|                     | Purchase of businesses                                                                      |                                             |                                                     |        |                                |        |             | (4,587 | )     
|                    
|                    
|                    
|                    
|                     | Sale of investment                                                                          |                                             |                                                     | 1,143  |                               
|                    
|                    
|                    
|                    
|                     | Payment received on note receivable                                                         |                                             |                                                     |        |                                |        |             | 750    |       
|                    
|                    
|                    
|                    
|                     | Redemption of (investment in) marketable securities                                         |                                             |                                                     | 2,530  |                                |        |             | (28    | )     
|                    
|                    
|                    
|                    
|                     | Investment in affiliates                                                                    |                                             |                                                     | (272   | )                              |        |             | (833   | )     
|                    
|                    
|                    
|                    
|                     | Advances to affiliates, net of distributions                                                |                                             |                                                     | (147   | )                              |        |             | (704   | )     
|                    
|                    
|                    
|                    
|                     | Purchases of property and equipment                                                         |                                             |                                                     | (8,989 | )                              |        |             | (9,140 | )     
|                    
|                    
|                    
|                    
|                     | Other                                                                                       |                                             |                                                     | 159    |                                |        |             | 26     |       
|                     |                                                                                             |                                             |                                                     |        |                                |        |             |        |       
|                     |                                                                                             |                                             | Net Cash Used In Investing Activities               |        |                                | (5,576 | )           |        |        | (14,516 | )
|                    
|                    
|                    
|                    
|Financing Activities
|                    
|                    
|                    
|                    
|                     | Proceeds from long-term obligations                                                         |                                             |                                                     | 4,794  |                                |        |             | 15,386 |       
|                    
|                    
|                    
|                    
|                     | Repayments on long-term obligations and notes payable                                       |                                             |                                                     | (2,371 | )                              |        |             | (2,258 | )     
|                    
|                    
|                    
|                    
|                     | Repayments on short-term obligations                                                        |                                             |                                                     | (5,455 | )                             
|                    
|                    
|                    
|                    
|                     | Changes in capital stock                                                                    |                                             |                                                     |        |                                |        |             | (476   | )     
|                    
|                    
|                    
|                    
|                     | Dividends paid on preferred stock                                                           |                                             |                                                     | (306   | )                              |        |             | (306   | )     
|                     |                                                                                             |                                             |                                                     |        |                                |        |             |        |       
|                     |                                                                                             |                                             | Net Cash Provided by (Used in) Financing Activities |        |                                | (3,338 | )           |        |        | 12,346  |  
|                     |                                                                                             |                                             |                                                     |        |                                |        |             |        |       
|                     |                                                                                             |                                             | Increase in Cash and Cash Equivalents               |        |                                | 472    |             |        |        | 31      |  
|                    
|                    
|                    
|                    
|                     |                                                                                             |                                             | Cash and Cash Equivalents at Beginning of Period    |        |                                | 542    |             |        |        | 1,122   |  
|                     |                                                                                             |                                             |                                                     |        |                                |        |             |        |       
|                     |                                                                                             |                                             | Cash and Cash Equivalents at End of Period          |        | $                              | 1,014  |             |        | $      | 1,153   |  
|                     |                                                                                             |                                             |                                                     |        |                                |        |             |        |       

See notes to consolidated financial statements

6



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##### Table of Contents






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 generally accepted accounting principles
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, 2000.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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:

|                                    |  |                |       |           |  |   |       | 
|----------------------------------- |  | -------------- | ----- | --------- |  | - | ----- | 
|                                    |  | December 31,   |       | March 31,
|                                    |  | 2000           |       | 2000     
|                                    |  |                |       |          
|                                    |  | (unaudited)   
|                                    |  | (in
thousands)
|                                   
|Raw materials                       |  | $              | 554   |           |  | $ | 589   | 
|                                   
|                                   
|                                   
|                                   
|Finished goods and
work in progress |  |                | 967   |           |  |   | 1,136 | 
|                                   
|                                   
|                                   
|                                   
|Purchased products
for resale       |  |                | 5,560 |           |  |   | 6,275 | 
|                                    |  |                |       |           |  |   |       | 
|                                    |  | $              | 7,081 |           |  | $ | 8,000 | 
|                                    |  |                |       |           |  |   |       | 

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 $1.4 million being reported as
part of stockholders equity at December 31, 2000.

7



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##### Table of Contents



NOTE 4  INVESTMENT IN INTEGRAL VISION, INC.

| |                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On June 30, 1999, Integral Vision (formerly Medar, Inc.), Maxcos 25% owned
affiliated company sold its welding division for cash and debt. The gain
recognized through December 31, 1999 on this transaction was $8.7 million, of
which Maxco recognized $522,000 and $2.1 million for the three and nine
months ended December 31, 1999, respectively.

NOTE 5  OTHER INVESTMENTS

| |                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Condensed income statement information for the three and
nine months ended December 31, 2000 and 1999 for the equity investees
where Maxco's share of their net income (loss) exceeded 20% of
consolidated pre-tax income for the year ended March 31, 2000 is as
follows:

Foresight Solutions, Inc.

|             |  |                    |      |   |                   |   |      |      |  |   |        |   |  |   |       |  
|------------ |  | ------------------ | ---- | - | ----------------- | - | ---- | ---- |  | - | ------ | - |  | - | ----- | -
|             |  | Three Months Ended |      |   | Nine Months Ended |  
|             |  | December 31,       |      |   | December 31,      |  
|             |  |                    |      |   |                   |  
|             |  | 2000               |      |   | 1999              |   |      | 2000 |  |   | 1999   |  
|             |  |                    |      |   |                   |   |      |      |  |   |        |  
|             |  | (in
thousands)     |     
|Net Sales    |  | $                  | 373  |   |                   | $ | 557  |      |  | $ | 817    |   |  | $ | 1,475 |  
|            
|            
|            
|            
|Gross Margin |  |                    | 279  |   |                   |   | 367  |      |  |   | 494    |   |  |   | 1,246 |  
|            
|            
|            
|            
|Net Loss     |  |                    | (388 | ) |                   |   | (324 | )    |  |   | (1,666 | ) |  |   | (847  | )

Midstate Industrial Services, Inc.

|             |  |                    |       |  |                   |   |       |      |  |   |       |  |  |   |       | 
|------------ |  | ------------------ | ----- |  | ----------------- | - | ----- | ---- |  | - | ----- |  |  | - | ----- | 
|             |  | Three Months Ended |       |  | Nine Months Ended |  
|             |  | December 31,       |       |  | December 31,      |  
|             |  |                    |       |  |                   |  
|             |  | 2000               |       |  | 1999              |   |       | 2000 |  |   | 1999  | 
|             |  |                    |       |  |                   |   |       |      |  |   |       | 
|             |  | (in
thousands)     |      
|Net Sales    |  | $                  | 3,043 |  |                   | $ | 3,178 |      |  | $ | 9,406 |  |  | $ | 9,339 | 
|            
|            
|            
|            
|Gross Margin |  |                    | 817   |  |                   |   | 682   |      |  |   | 3,070 |  |  |   | 2,649 | 
|            
|            
|            
|            
|Net Loss     |  |                    | 61    |  |                   |   | 60    |      |  |   | 585   |  |  |   | 523   | 



NOTE 6  EARNINGS PER SHARE

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

|                                                                                                  |                                                       |   |                                       |        |                   |   |      |       |      |   |      |       |   |   |       |       |  
|------------------------------------------------------------------------------------------------- | ----------------------------------------------------- | - | ------------------------------------- | ------ | ----------------- | - | ---- | ----- | ---- | - | ---- | ----- | - | - | ----- | ----- | -
|                                                                                                  |                                                       |   | Three Months Ended                    |        | Nine Months Ended
|                                                                                                  |                                                       |   | December 31,                          |        | December 31,     
|                                                                                                  |                                                       |   |                                       |        |                  
|                                                                                                  |                                                       |   | 2000                                  |        | 1999              |   | 2000 |       | 1999
|                                                                                                  |                                                       |   |                                       |        |                   |   |      |       |     
|                                                                                                  |                                                       |   | (in
thousands, except per share data)
|NUMERATOR:                                                                                       
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Net income (loss)                                     |   | $                                     | (1,709 | )                 |   | $    | (493  | )    |   | $    | (654  | ) |   | $     | 2,692 |  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Preferred stock dividends                             |   |                                       | (102   | )                 |   |      | (102  | )    |   |      | (306  | ) |   |       | (306  | )
|                                                                                                  |                                                       |   |                                       |        |                   |   |      |       |      |   |      |       |   |   |       |      
|Numerator for basic and
diluted earnings per shareincome (loss)
available to common stockholders |                                                       |   | (1,811                                | )      |                   |   | (595 | )     |      |   | (960 | )     |   |   | 2,386 |      
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|DENOMINATOR:                                                                                     
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Denominator for basic and diluted earnings per share |   |                                       |        |                   |   |      |       |      |   |      |       |   |   |       |       |  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                  | Weighted-average shares                               |   |                                       | 3,101  |                   |   |      | 3,151 |      |   |      | 3,101 |   |   |       | 3,170 |  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|BASIC AND DILUTED EARNINGS (LOSS) PER SHARE                                                       |                                                       | $ | (.58                                  | )      |                   | $ | (.19 | )     |      | $ | (.31 | )     |   | $ | .75   |      
|                                                                                                  |                                                       |   |                                       |        |                   |   |      |       |      |   |      |       |   |   |       |      

8



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##### Table of Contents



NOTE 7  COMPREHENSIVE INCOME



| |                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------
| | The components of comprehensive income for the three and nine months ended
December 31, 2000 and 1999 are as follows:

|                                                   |  |                    |        |                   |  |                |       |      |  |   |        |   |  |   |       | 
|-------------------------------------------------- |  | ------------------ | ------ | ----------------- |  | -------------- | ----- | ---- |  | - | ------ | - |  | - | ----- | 
|                                                   |  | Three Months Ended |        | Nine Months Ended
|                                                   |  | December 31,       |        | December 31,     
|                                                   |  |                    |        |                  
|                                                   |  | 2000               |        | 1999              |  | 2000           |       | 1999
|                                                   |  |                    |        |                   |  |                |       |     
|                                                   |  |                    |        |                   |  | (in
thousands)
|Net income (loss)                                  |  | $                  | (1,709 | )                 |  | $              | (493  | )    |  | $ | (654   | ) |  | $ | 2,692 | 
|                                                  
|                                                  
|                                                  
|                                                  
|Unrealized gains (losses) on marketable securities |  |                    | (447   | )                 |  |                | 2,001 |      |  |   | (557   | ) |  |   | 1,953 | 
|                                                   |  |                    |        |                   |  |                |       |      |  |   |        |   |  |   |       | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |  | $                  | (2,156 | )                 |  | $              | 1,508 |      |  | $ | (1,211 | ) |  | $ | 4,645 | 
|                                                   |  |                    |        |                   |  |                |       |      |  |   |        |   |  |   |       | 



| |                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------
| | The components of accumulated comprehensive income, net of related tax at
December 31, 2000 and March 31, 2000 are as follows:

|                                           |  |                |        |           |  |  |      |  
|------------------------------------------ |  | -------------- | ------ | --------- |  |  | ---- | -
|                                           |  | December 31,   |        | March 31,
|                                           |  | 2000           |        | 2000     
|                                           |  |                |        |          
|                                           |  | (in
thousands)
|Unrealized losses on marketable securities |  |                | (1,434 | )         |  |  | (877 | )

NOTE 8  INDUSTRY SEGMENT INFORMATION

The following summarizes Maxcos industry segment information:

|                     |                           |                          |   |                |        |           |   |         |        | 
|-------------------- | ------------------------- | ------------------------ | - | -------------- | ------ | --------- | - | ------- | ------ | 
|                     |                           |                          |   | December 31,   |        | March 31,
|                     |                           |                          |   | 2000           |        | 2000     
|                     |                           |                          |   |                |        |          
|                     |                           |                          |   | (in
thousands)
|Identifiable assets:
|                    
|                    
|                    
|                    
|                     |                           | Construction supplies    |   | $              | 36,967 |           |   | $       | 32,902 | 
|                    
|                    
|                    
|                    
|                     |                           | Heat treating            |   |                | 33,329 |           |   |         | 30,367 | 
|                    
|                    
|                    
|                    
|                     |                           | Packaging products       |   |                | 5,911  |           |   |         | 6,565  | 
|                    
|                    
|                    
|                    
|                     |                           | Corporate and other      |   |                | 15,412 |           |   |         | 18,421 | 
|                    
|                    
|                    
|                    
|                     |                           | Investments and advances |   |                | 10,270 |           |   |         | 12,165 | 
|                     |                           |                          |   |                |        |           |   |        
|                     | Total Identifiable Assets |                          | $ | 101,889        |        |           | $ | 100,420 |       
|                     |                           |                          |   |                |        |           |   |        

9



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##### Table of Contents



NOTE 8  INDUSTRY
SEGMENT INFORMATION  Continued

|                                            |                       |                                 |                            |                 |      |                    |        |                   |     |       |        |        |       |       |         |        |       |       |         | 
|------------------------------------------- | --------------------- | ------------------------------- | -------------------------- | --------------- | ---- | ------------------ | ------ | ----------------- | --- | ----- | ------ | ------ | ----- | ----- | ------- | ------ | ----- | ----- | ------- | 
|                                            |                       |                                 |                            |                 |      | Three Months Ended |        | Nine Months Ended
|                                            |                       |                                 |                            |                 |      | December 31,       |        | December 31,     
|                                            |                       |                                 |                            |                 |      |                    |        |                  
|                                            |                       |                                 |                            |                 |      | 2000               |        | 1999              |     | 2000  |        | 1999  
|                                            |                       |                                 |                            |                 |      |                    |        |                   |     |       |        |       
|Net sales:                                 
|                                           
|                                           
|                                           
|                                           
|                                            | Construction supplies |                                 | $                          | 19,900          |      |                    | $      | 20,524            |     |       | $      | 88,564 |       |       | $       | 83,177 |      
|                                           
|                                           
|                                           
|                                           
|                                            | Heat treating         |                                 |                            | 9,655           |      |                    |        | 9,793             |     |       |        | 30,092 |       |       |         | 29,579 |      
|                                           
|                                           
|                                           
|                                           
|                                            | Packaging products    |                                 |                            | 3,876           |      |                    |        | 3,562             |     |       |        | 12,158 |       |       |         | 12,161 |      
|                                           
|                                           
|                                           
|                                           
|                                            | Corporate and other   |                                 |                            | 84              |      |                    |        | 84                |     |       |        | 249    |       |       |         | 249    |      
|                                            |                       |                                 |                            |                 |      |                    |        |                   |     |       |        |        |       |       |         |       
|                                           
|                                           
|                                           
|                                           
|                                            |                       |                                 |                            | Total Net Sales |      | $                  | 33,515 |                   |     | $     | 33,963 |        |       | $     | 131,063 |        |       | $     | 125,166 | 
|                                            |                       |                                 |                            |                 |      |                    |        |                   |     |       |        |        |       |       |         |       
|Operating earnings (loss):                 
|                                           
|                                           
|                                           
|                                           
|                                            | Construction supplies |                                 | $                          | (468            | )    |                    | $      | 86                |     |       | $      | 3,044  |       |       | $       | 4,565  |      
|                                           
|                                           
|                                           
|                                           
|                                            | Heat treating         |                                 |                            | 610             |      |                    |        | 1,321             |     |       |        | 2,639  |       |       |         | 3,700  |      
|                                           
|                                           
|                                           
|                                           
|                                            | Packaging products    |                                 |                            | (109            | )    |                    |        | (514              | )   |       |        | (194   | )     |       |         | (562   | )    
|                                           
|                                           
|                                           
|                                           
|                                            | Corporate and other   |                                 |                            | (819            | )    |                    |        | (630              | )   |       |        | (2,367 | )     |       |         | (2,109 | )    
|                                            |                       |                                 |                            |                 |      |                    |        |                   |     |       |        |        |       |       |         |       
|                                           
|                                           
|                                           
|                                           
|                                            |                       | Total Operating Earnings (Loss) |                            | $               | (786 | )                  |        | $                 | 263 |       |        | $      | 3,122 |       |         | $      | 5,594 |      
|                                            |                       |                                 |                            |                 |      |                    |        |                   |     |       |        |        |       |       |         |       
|Depreciation and amortization expense:     
|                                           
|                                           
|                                           
|                                           
|                                            | Construction supplies |                                 | $                          | 653             |      |                    | $      | 489               |     |       | $      | 1,902  |       |       | $       | 1,360  |      
|                                           
|                                           
|                                           
|                                           
|                                            | Heat treating         |                                 |                            | 605             |      |                    |        | 481               |     |       |        | 1,814  |       |       |         | 1,444  |      
|                                           
|                                           
|                                           
|                                           
|                                            | Packaging products    |                                 |                            | 184             |      |                    |        | 192               |     |       |        | 565    |       |       |         | 546    |      
|                                           
|                                           
|                                           
|                                           
|                                            | Corporate and other   |                                 |                            | 107             |      |                    |        | 87                |     |       |        | 331    |       |       |         | 267    |      
|                                            |                       |                                 |                            |                 |      |                    |        |                   |     |       |        |        |       |       |         |       
|Total Depreciation and Amortization Expense |                       | $                               | 1,549                      |                 |      | $                  | 1,249  |                   |     | $     | 4,612  |        |       | $     | 3,617   |       
|                                            |                       |                                 |                            |                 |      |                    |        |                   |     |       |        |        |       |       |         |       
|Capital expenditures:                      
|                                           
|                                           
|                                           
|                                           
|                                            | Construction supplies |                                 | $                          | 373             |      |                    | $      | 1,413             |     |       | $      | 3,563  |       |       | $       | 4,163  |      
|                                           
|                                           
|                                           
|                                           
|                                            | Heat treating         |                                 |                            | 621             |      |                    |        | 1,637             |     |       |        | 5,267  |       |       |         | 4,332  |      
|                                           
|                                           
|                                           
|                                           
|                                            | Packaging products    |                                 |                            | 53              |      |                    |        | 119               |     |       |        | 158    |       |       |         | 617    |      
|                                           
|                                           
|                                           
|                                           
|                                            | Corporate and other   |                                 |                            | 0               |      |                    |        | 19                |     |       |        | 1      |       |       |         | 28     |      
|                                            |                       |                                 |                            |                 |      |                    |        |                   |     |       |        |        |       |       |         |       
|                                            |                       |                                 | Total Capital Expenditures |                 | $    | 1,047              |        |                   | $   | 3,188 |        |        | $     | 8,989 |         |        | $     | 9,140 |        
|                                            |                       |                                 |                            |                 |      |                    |        |                   |     |       |        |        |       |       |         |       



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

NOTE 9  INVESTMENT IN AXSON, S.A.

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

10



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##### Table of Contents



NOTE 10  DEBT

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company is currently in default on certain financial and other covenants
as required by its $18 million line of credit with a bank. As such the
outstanding balances on the line ($10.8 million at December 31, 2000) and a
term note ($7.2 million at December 31, 2000) have been classified as current
in the accompanying financial statements. The interest rates on the line and
the term note are prime plus 1.5% and prime plus 1.0% respectively. On
January 11, 2001, the loan agreement with the bank was amended extending the
maturity date of the line of credit to August 1, 2002. There are ongoing
negotiations with the bank to obtain waivers of default. Management
anticipates that the negotiations will be completed by the end of the fiscal
year.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 11  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 12  SUBSEQUENT EVENT

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On November 2, 2000, Maxco signed a letter of intent to sell Ersco
Corporation, its construction supplies unit, to privately held Lofland
Acquisitions, Inc., a Dallas based affiliate of the Lofland Company which
supplies reinforcing steel and concrete construction supplies to contractors,
for a combination of cash and Lofland Acquisitions stock. Negotiations
between Maxco and Lofland were terminated on December 6, 2000, as the
companies were unable to reach agreement on the terms of the proposed
transaction. Ersco Corporation will continue to operate as a wholly owned
subsidiary of Maxco.

11



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##### Table of Contents






MATERIAL CHANGES IN FINANCIAL CONDITION

Operating activities for the nine months generated $9.4 million in cash, of
which earnings, after non-cash adjustments, generated $4.7 million. Net working
capital decreased from the March 31, 2000 level,
primarily due to a higher accounts payable level.

Cash was used in investing activities during the nine months to purchase
additional equipment for Maxcos heat-treating unit (Atmosphere Annealing), and
its Construction Supplies unit (Ersco). Cash used in investing activities was
partially offset by cash generated from the sale of marketable securities and
from the sale of the Companys 7% interest in Axson, S.A. of France.

Net proceeds from additional long-term debt were used primarily to fund the
purchase of equipment.
Cash was used to reduce the outstanding balance on the Companys line of credit
by $5.0 million to comply with the collateral levels of the formula based
borrowing arrangement. Through March 31, 2000, the Company was not on a similar
type formula based borrowing arrangement.

At December 31, 2000, the Company continued to classify one of its lines of
credit and one of its term notes as short term due to the Company being in
default on certain financial and other covenants under its $18 million line of
credit with a bank. The interest rates on the line and the term note are prime
plus 1.5% and prime plus 1.0% respectively. On January 11, 2001, the
loan agreement with the bank was amended extending the maturity date
of the line of credit to August 1, 2002. There are ongoing negotiations with
the bank to obtain waivers of default. Management anticipates that these
negotiations will be completed by the end of the fiscal year.

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 December 31, 2000, the 2,240,605 shares of Integral Vision (formerly Medar)
common stock that Maxco owns had an aggregate market value of approximately
$1.1 million ($1.4 million at February 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.

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##### Table of Contents



At December 31, 2000, the 249,230 shares of Provant common stock that Maxco
owns had an aggregate market value of approximately $1.1 million ($1.6 million
at February 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.

On November 2,
2000, Maxco signed a letter of intent to sell Ersco Corporation, its
construction supplies unit, to privately held Lofland Acquisitions, Inc., a
Dallas based affiliate of the Lofland Company which supplies reinforcing steel
and concrete construction supplies to contractors, for a combination of cash
and Lofland Acquisitions stock. Negotiations between Maxco and Lofland were
terminated on December 6, 2000, as the companies were unable to reach agreement
on the terms of the proposed transaction. Ersco Corporation will continue to
operate as a wholly owned subsidiary of Maxco.

MATERIAL CHANGES IN RESULTS OF OPERATIONS

Three Months Ended December 31, 2000 Compared
to 1999

Net sales decreased to $33.5 million compared to $34.0 million in last years
third quarter. Third quarter results reflect an operating loss of $786,000
compared to earnings of $263,000 for the comparable period in 1999. Net loss
was $1.7 million or $.58 per share assuming dilution compared to last years
loss of $493,000 or $.19 per share assuming dilution.

Sales and operating earnings for the three months ended December 31, 2000 and
1999 by each of the companys segments were as follows:

|                      |  |                    |        |                    |  |                |      |        |  |   |        |           |  |   |       |  
|--------------------- |  | ------------------ | ------ | ------------------ |  | -------------- | ---- | ------ |  | - | ------ | --------- |  | - | ----- | -
|                      |  | Three Months Ended |        | Three Months Ended
|                      |  | December 31, 2000  |        | December 31, 1999 
|                      |  |                    |        |                   
|                      |  |                    |        |                    |  | Operating      |      |        |  |   |        | Operating
|                      |  |                    |        |                    |  | Earnings       |      |        |  |   |        | Earnings 
|                      |  | Sales              |        | (loss)             |  | Sales          |      | (loss)
|                      |  |                    |        |                    |  |                |      |       
|                      |  |                    |        |                    |  | (in
thousands)
|Construction supplies |  | $                  | 19,900 |                    |  | $              | (468 | )      |  | $ | 20,524 |           |  | $ | 86    |  
|                     
|                     
|                     
|                     
|Heat treating         |  |                    | 9,655  |                    |  |                | 610  |        |  |   | 9,793  |           |  |   | 1,321 |  
|                     
|                     
|                     
|                     
|Packaging products    |  |                    | 3,876  |                    |  |                | (109 | )      |  |   | 3,562  |           |  |   | (514  | )

Lower sales in the current period occurred at Maxcos construction supplies
unit over the comparable 1999 period primarily as a result of reduced
construction activity due to worse than normal weather conditions in the
Midwest region, particularly in the month of December 2000. Despite a slowdown
in the automotive industry, sales at Atmosphere Annealing, which provides heat
treating services to automotive companies and suppliers, were comparable to the
prior year quarter.

Consolidated gross profit (net sales less cost of sales and operating expenses)
decreased to $7.7 million or approximately 23% of sales from $8.2 million or
24% of sales. The Companys heat treating units gross profit was lower due to
lower sales and the increase in the cost of natural gas that is used in the
heat treating process. Gross profit at the Companys construction supplies unit
was lower due to lower sales and that a greater proportion of its
sales were on a direct shipment basis, which typically have a lower margin than
sales from inventory. Gross profit improved at the
Companys packaging products unit (Pak-Sak) as a result of selling to fewer but
higher volume customers, thereby realizing manufacturing efficiencies such as
lower scrap and setup costs.

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Selling, general, and administrative expenses increased to $6.9 million from
$6.7 million. The increase primarily resulted at the construction supplies unit
due to additional wages and other expenses incurred to support the planned
growth of this unit. Since the growth has not materialized to the levels
anticipated, management has begun a program to reduce selling, general, and
administrative expenses.

Depreciation and amortization expense for the three months ended December 31,
2000 increased as a result of the additional depreciation resulting from the
purchases of property and equipment by Atmosphere Annealing and Ersco since the
third quarter of the prior year.

As a result of the above, operating earnings decreased to a loss of
approximately $786,000 from earnings of $263,000 in last years comparable
period.

Net interest expense increased from the prior year quarter due to additional
long-term borrowings, the proceeds of which were used for investments in the
Companys affiliates and additional purchases of property and equipment.

On June 30, 1999, Integral Vision sold its welding controls division for cash
and debt. The gain recognized through December 31, 1999 on this transaction was
$8.7 million, of which Maxco recognized $522,000 for the three months ended
December 31, 1999.

Nine Months Ended December 31, 2000 Compared to 1999

Net sales increased to $131.1 million compared to $125.2 million in last years
comparable nine-month period. Results for this period include operating
earnings of $3.1 million compared to $5.6 million for the comparable period in
1999. Net loss was $654,000 or $.31 per share assuming dilution compared to
last years net income of $2.7 million or $.75 per share assuming dilution.

Sales and operating earnings for the nine months ended December 31, 2000 and
1999 by each of the companys segments were as follows:

|                      |  |                   |        |                   |  |                |       |        |  |   |        |           |  |   |       |  
|--------------------- |  | ----------------- | ------ | ----------------- |  | -------------- | ----- | ------ |  | - | ------ | --------- |  | - | ----- | -
|                      |  | Nine Months Ended |        | Nine Months Ended
|                      |  | December 31, 2000 |        | December 31, 1999
|                      |  |                   |        |                  
|                      |  |                   |        |                   |  | Operating      |       |        |  |   |        | Operating
|                      |  |                   |        |                   |  | Earnings       |       |        |  |   |        | Earnings 
|                      |  | Sales             |        | (loss)            |  | Sales          |       | (loss)
|                      |  |                   |        |                   |  |                |       |       
|                      |  |                   |        |                   |  | (in
thousands)
|Construction supplies |  | $                 | 88,564 |                   |  | $              | 3,044 |        |  | $ | 83,177 |           |  | $ | 4,565 |  
|                     
|                     
|                     
|                     
|Heat treating         |  |                   | 30,092 |                   |  |                | 2,639 |        |  |   | 29,579 |           |  |   | 3,700 |  
|                     
|                     
|                     
|                     
|Packaging products    |  |                   | 12,158 |                   |  |                | (194  | )      |  |   | 12,161 |           |  |   | (562  | )

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Higher sales in the current period occurred at Maxcos construction supplies
unit over the comparable 1999 period as a result of a strong general
construction market, increased availability of federal highway repair dollars,
as well as an increase in form rental revenues. Sales were negatively impacted
towards the end of the nine month period due to the extreme weather conditions
in the Midwest. Despite a slowdown in the automotive industry toward the end of
the nine month period, sales at Atmosphere Annealing, which provides heat
treating services to automotive companies and suppliers, were comparable to the
nine-month period of the prior year.

Consolidated gross profit (net sales less cost of sales and operating expenses)
decreased to $29.3 million or approximately 22% of sales from $29.4 million or
23% of sales. The construction supplies unit generated additional gross profit
in the current period over last year due to its increased sales level. Gross
margin percentage at this unit was lower, however, since the increased sales
were on a direct shipment basis, which typically have a lower margin than sales
from inventory. Gross profit at Atmosphere Annealing was lower than the prior
year primarily due to the increase in natural gas prices. Natural gas is a
major cost component of the heat treating process.

Selling, general, and administrative expenses increased to $21.6 million from
$20.2 million. The increase primarily resulted at the construction supplies
unit due to additional wages and other expenses incurred to support the planned
growth of this unit. Since the planned growth has not materialized to the
levels anticipated, management has begun a program to reduce selling, general,
and administrative expenses to support its current sales level.

The increase in depreciation expense in 2000 was attributable to depreciation
by Ersco on purchases of rental forms and shoring equipment. Additionally,
depreciation by Atmosphere Annealing also increased as a result of new
equipment including additional furnaces and facility improvements placed in
service since December of last year.

As a result of the above, operating earnings decreased to approximately $3.1
million from $5.6 million in last years comparable period.

Investment and interest income increased for the nine-month period ended
December 31, 2000 primarily due to the recording of Maxcos share of the
minimum contingent consideration, which, during the second quarter, was agreed
to be paid in fiscal 2002 to former shareholders of Strategic Interactive
(Maxcos former 45% owned affiliate sold to Provant, Inc. in October, 1998).
Interest expense increased from the prior year period due to additional
long-term borrowings, the proceeds of which were used for investments in the
Companys affiliates and additional purchases of property and equipment.

On June 30, 1999, Integral Vision, Inc. (formerly Medar Inc.) sold its welding
division for cash and debt. The gain recognized through December 31, 1999 on
this transaction was $8.7 million of which Maxco recognized $2.1 million for
the nine months ended December 31, 1999.

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##### Table of Contents



NEW FINANCIAL ACCOUNTING PRONOUNCEMENT
In 1998, the Financial Accounting Standards Board issued Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities. Statement 133 is
effective for fiscal years beginning after June 15, 2000. The Company expects
to adopt the new statement effective April 1, 2001. The statement requires the
Company to recognize all derivatives on the balance sheet at fair value. The
Company has not evaluated the potential effect the adoption of this statement
will have on its results of operations or financial condition.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial
Statements. SAB 101 provides guidance for revenue recognition under certain
circumstances. The accounting and disclosures prescribed by SAB 101 will be
effective for the fourth quarter of fiscal year 2001. The Company believes
there will be no material impact resulting from the application of SAB 101.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
The Companys variable interest expense is sensitive to changes in the general
level of United States interest rates. Some of the Companys interest expense
is fixed through long-term borrowings to mitigate the impact of such potential
exposure. Additionally, the Company entered into an interest rate swap
agreement based on a notional amount of $5.0 million to manage its exposure to
interest rate changes. The swap involves the exchange of fixed and variable
interest payments without changing the notional principal amount. The Company
had total outstanding variable rate long-term borrowings of $23.8 million at
December 31, 2000. A 1% increase from the prevailing interest rates at December
31, 2000 on the unhedged variable rate portion of the Companys long-term
borrowings would increase interest expense on an annualized basis by $196,000
based on principal balances at December 31, 2000.

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##### Table of Contents









|          |  |                                                                                                                                        
|--------- |  | ---------------------------------------------------------------------------------------------------------------------------------------
|Item 1.   |  | Legal Proceedings                                                                                                                      
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|          |  | None                                                                                                                                   
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|Item 2.   |  | Changes in Securities                                                                                                                  
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|          |  | None                                                                                                                                   
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|         
|Item 3.   |  | Defaults Upon Senior Securities                                                                                                        
|         
|         
|         
|         
|         
|          |  | The Company is currently in default on certain financial and
other covenants as required by its $18 million line of credit
with a bank.
|         
|         
|         
|         
|         
|Item 4.   |  | Submission of Matters to a Vote of Security Holders                                                                                    
|         
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|          |  | None                                                                                                                                   
|         
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|Item 5.   |  | Other Information                                                                                                                      
|         
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|          |  | None                                                                                                                                   
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|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.                                                                                                                                                                                                                                                        

18



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##### Table of Contents



|          |  |                                                                                                                                                                                                   
|--------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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, 2000.                                                                            
|         
|         
|         
|         
|         
|Item 6(b) |  | Reports on Form 8-K                                                                                                                                                                               
|         
|         
|         
|         
|         
|          |  | None                                                                                                                                                                                              

*Filed herewith

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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:    February 14, 2001 |  | \S\ VINCENT SHUNSKY                                                                               
|                           |  |                                                                                                   
|                           |  | Vincent Shunsky, Vice President-Finance
and Treasurer (Principal Financial and
Accounting Officer)

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EXHIBIT INDEX

|              |  |                                                                                                                       
|------------- |  | ----------------------------------------------------------------------------------------------------------------------
|EXHIBIT 10.22 |  | Seventh amendment to amended and restated loan agreement
between Comerica Bank and Maxco, Inc. dated January 11,
2001.