<PAGE>   1
                                                         
                                                         
================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q

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



                    FOR THE QUARTER ENDED SEPTEMBER 30, 1998


                          Commission File Number 0-2762


                                   MAXCO, INC.
             (Exact Name of Registrant as Specified in its Charter)


                Michigan                                       38-1792842
                --------                                       ----------
    (State or other Jurisdiction of                         (I.R.S. Employer
      Incorporation or Organization)                      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  X             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 September 30, 1998
      -----                                    ---------------------------------

   Common Stock                                          3,261,695 shares
================================================================================

                                       1

<PAGE>   2


                                                        
                                     PART I

                              FINANCIAL INFORMATION

                           CONSOLIDATED BALANCE SHEETS
                          MAXCO, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
                                                                September 30,         March 31,
                                                                    1998                1998
                                                                 (Unaudited)
                                                               --------------------------------
                                                                          (in thousands)
ASSETS

CURRENT ASSETS
<S>                                                              <C>             <C>     
     Cash and cash equivalents                                   $  1,325        $  1,040
     Marketable securities--Note 3                                    255             400
     Accounts and notes receivable, less allowance of
         $608,000 ($565,000 at March 31, 1998)                     23,926          16,280
     Inventories--Note 2                                            4,455           3,579
     Prepaid expenses and other                                       607             303
                                                                 --------        --------
                                      TOTAL CURRENT ASSETS         30,568          21,602

MARKETABLE SECURITIES - LONG TERM--Note 3                           2,002           7,657
PROPERTY AND EQUIPMENT
     Land                                                             732             732
     Buildings                                                     11,605          10,553
     Machinery, equipment, and fixtures                            24,335          20,854
                                                                 --------        --------
                                                                   36,672          32,139
     Allowances for depreciation                                   (9,469)         (8,321)
                                                                 --------        --------
                                                                   27,203          23,818
OTHER ASSETS
     Investments                                                   17,439          15,842
     Notes and contracts receivable and other                       4,020           3,056
     Intangibles                                                    2,819           2,992
     Restricted cash for acquisition of equipment--Note 4             447           1,088
                                                                 --------        --------
                                                                   24,725          22,978

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

                                                                 $ 84,498        $ 76,055
                                                                 ========        ========
</TABLE>



                                       2
<PAGE>   3


<TABLE>
<CAPTION>



                                                                              September 30,       March 31,
                                                                                  1998              1998
                                                                               (Unaudited)
                                                                            --------------------------------------
                                                                                         (in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
<S>                                                                                <C>           <C>    
     Notes payable                                                                 $   226       $   226
     Accounts payable                                                               12,301         6,568
     Employee compensation                                                           2,054         2,058
     Taxes, interest, and other liabilities                                          2,257         2,028
     Current maturities of long-term obligations                                     1,789         1,490
                                                                                   -------       -------
                             TOTAL CURRENT LIABILITIES                              18,627        12,370

LONG-TERM OBLIGATIONS, less current maturities                                      28,599        27,698

DEFERRED INCOME TAXES                                                                1,316         1,180

STOCKHOLDERS' EQUITY 
     Preferred stock:
         Series Three: 10% cumulative redeemable, $60 face
            value; 14,988 shares issued and outstanding                                690           690
         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
               (6,680 at March 31, 1998)                                               798           802
     Common stock, $1 par value; 10,000,000 shares
         authorized, 3,261,695 issued shares (3,307,910 at                          
         March 31, 1998)                                                             3,262         3,308
     Net unrealized gain on marketable securities                                       55            47
     Retained earnings                                                              28,761        27,570
                                                                                   -------       -------
                                                                                    35,956        34,807

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

                                                                                   $84,498       $76,055
                                                                                   =======       =======
</TABLE>



See notes to consolidated financial statements

                                       3
<PAGE>   4





               CONSOLIDATED STATEMENTS OF OPERATIONS (CONDENSED)
                          MAXCO, INC. AND SUBSIDIARIES


<TABLE>
<CAPTION>


                                                                                                Three Months Ended September 30,
                                                                                               1998                  1997
                                                                                            (Unaudited)           (Unaudited)
                                                                                         ------------------    ------------------
                                                                                          (in thousands, except per share data)

<S>                                                                                             <C>                   <C>
Net sales                                                                                       $ 35,553              $ 29,342
Costs and expenses:
     Cost of sales and operating expenses                                                         28,146                22,344
     Selling, general and administrative                                                           5,233                 4,120
     Depreciation and amortization                                                                   728                   591
                                                                                                --------              --------
                                                                                                  34,107                27,055
                                                                                                --------              --------
                                                                     OPERATING EARNINGS            1,446                 2,287
Other income (expense)
     Investment income                                                                               256                   247
     Interest expense                                                                               (629)                 (485)
                                                                                                --------              --------
                                                                  INCOME BEFORE FEDERAL
                                      INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES            1,073                 2,049
Federal income tax expense                                                                           376                   720
                                                                                                --------              --------
                                         INCOME BEFORE EQUITY IN EARNINGS OF AFFILIATES              697                 1,329
Equity in earnings (loss) of affiliates, net of deferred tax                                         (88)                  103
                                                                                                --------              --------
                                                                             NET INCOME              609                 1,432
Less preferred stock dividends                                                                      (102)                 (103)
                                                                                                --------              --------
                                                  NET INCOME APPLICABLE TO COMMON STOCK              507                 1,329
                                                                                                ========              ========

NET INCOME PER COMMON SHARE - BASIC                                                             $    .16              $    .39
                                                                                                ========              ========

NET INCOME PER COMMON SHARE - ASSUMING DILUTION                                                 $    .15              $    .38
                                                                                                ========              ========
</TABLE>




See notes to consolidated financial statements


                                       4
<PAGE>   5


                               CONSOLIDATED STATEMENTS OF OPERATIONS (CONDENSED)
                                          MAXCO, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>


                                                                                              Six Months Ended September 30,
                                                                                               1998                  1997
                                                                                            (Unaudited)           (Unaudited)
                                                                                         ------------------    ------------------
                                                                                          (in thousands, except per share data)

<S>                                                                                             <C>                   <C>
Net sales                                                                                       $ 71,249              $ 57,181
Costs and expenses:
     Cost of sales and operating expenses                                                         56,354                43,270
     Selling, general and administrative                                                          10,103                 8,265
     Depreciation and amortization                                                                 1,425                 1,192
                                                                                                --------              --------
                                                                                                  67,882                52,727
                                                                                                --------              --------
                                                                     OPERATING EARNINGS            3,367                 4,454
Other income (expense)
     Investment income                                                                               472                   460
     Interest expense                                                                             (1,231)                 (981)
                                                                                                --------              --------
                                                                  INCOME BEFORE FEDERAL
                                      INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES            2,608                 3,933
Federal income tax expense                                                                           913                 1,379
                                                                                                --------              --------
                                         INCOME BEFORE EQUITY IN EARNINGS OF AFFILIATES            1,695                 2,554
Equity in earnings of affiliates, net of deferred tax                                                 42                   203
                                                                                                --------              --------
                                                                             NET INCOME            1,737                 2,757
Less preferred stock dividends                                                                      (204)                 (186)
                                                                                                --------              --------
                                                  NET INCOME APPLICABLE TO COMMON STOCK            1,533                 2,571
                                                                                                ========              ========

NET INCOME PER COMMON SHARE - BASIC                                                             $    .47              $    .75
                                                                                                ========              ========

NET INCOME PER COMMON SHARE - ASSUMING DILUTION                                                 $    .46              $    .73
                                                                                                ========              ========
</TABLE>






See notes to consolidated financial statements


                                       5
<PAGE>   6



                               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONDENSED)
                                         MAXCO, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>




                                                                                                  Six Months Ended September 30,
                                                                                                    1998           1997
                                                                                                (Unaudited)     (Unaudited)
                                                                                              --------------------------------------
                                                                                                        (in thousands)
OPERATING ACTIVITIES
<S>                                                                                              <C>            <C>    
    Net Income                                                                                   $ 1,737        $ 2,757
    Adjustments to reconcile net income to net cash provided
       by operating activities:
          Depreciation and other non-cash items                                                    1,497          1,200
          Changes in operating assets and liabilities                                             (2,867)        (2,544)
                                                                                                 -------        -------
                                                 NET CASH PROVIDED BY OPERATING ACTIVITIES           367          1,413

INVESTING ACTIVITIES
    Payments received on notes receivable                                                              3          3,443
    Redemption of (investment in) marketable securities                                            5,812           (793)
    Investment in affiliates                                                                      (2,261)        (1,510)
    Purchases of property and equipment                                                           (4,764)        (3,236)
    Other                                                                                           (117)           220
                                                                                                 -------        -------
                                                     NET CASH USED IN INVESTING ACTIVITIES        (1,327)        (1,876)
FINANCING ACTIVITIES
    Proceeds from long-term obligations                                                            2,829          2,140
    Proceeds from restricted cash for acquisition of equipment                                       641
    Repayments on long-term obligations and notes payable                                         (1,629)          (986)
    Changes in capital stock                                                                        (392)        (1,006)
    Dividends paid on preferred stock                                                               (204)          (186)
                                                                                                 -------        -------
                                       NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES         1,245            (38)
                                                                                                 -------        -------
                                          INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS           285           (501)
                                          CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD         1,040          1,609
                                                                                                 -------        -------
                                                CASH AND CASH EQUIVALENTS AT END OF PERIOD       $ 1,325        $ 1,108
                                                                                                 =======        =======
</TABLE>






See notes to consolidated financial statements

                                       6
<PAGE>   7


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MAXCO, INC. AND SUBSIDIARIES
                               SEPTEMBER 30, 1998




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, 1998.

     The results of operations for the interim periods presented are not
     necessarily indicative of the results for the full year. Certain other
     amounts in the consolidated financial statements have been reclassified to
     conform with the current presentation.

NOTE 2 - Inventories
     The major classes of inventories, at the dates indicated were as follows:

<TABLE>
<CAPTION>
                                          September 30,               March 31,
                                              1998                      1998
                                              ----                      ----
                                           (Unaudited)
                                                      (in thousands)
<S>                                         <C>                        <C>
    Raw materials                           $    920                   $   723
    Finished goods and
       work in progress                          897                     1,077
    Purchased products
       for resale                              2,638                     1,779
                                            --------                   -------
                                            $  4,455                   $ 3,579
                                            ========                   =======

</TABLE>


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 gain, net of deferred tax, of approximately $55,000 being
     reported as part of stockholders' equity at September 30, 1998.


                                       7
<PAGE>   8


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                          MAXCO, INC. AND SUBSIDIARIES



NOTE 4 - Restricted Cash
     The Company has borrowings under its variable rate tax exempt revenue bond.
     The use of the proceeds from these borrowings is restricted to the
     acquisition of certain equipment. The unexpended portion of $.4 million is
     included in restricted cash at September 30, 1998.

NOTE 5 - Long-Term Debt
     In the first quarter of 1998, the Company's Ersco unit secured a commitment
     for a $10.0 million credit facility, available under certain circumstances,
     to fund acquisitions.

NOTE 6 - Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per
share:

<TABLE>
<CAPTION>

                         
                                                        Three Months Ended             Six Months Ended
                                                           September 30,                 September 30,
                                                          1998         1997             1998       1997
                                                    --------------------------     ---------------------------
                                                               (in thousands, except per share data)
NUMERATOR:
<S>                                                      <C>          <C>          <C>          <C>    
  Net income                                             $   609      $ 1,432      $ 1,737      $ 2,757
  Preferred stock dividends                                 (102)        (103)        (204)        (186)
                                                         -------      -------      -------      -------

NUMERATOR FOR BASIC EARNING PER SHARE--INCOME
        AVAILABLE TO COMMON STOCKHOLDERS                     507        1,329        1,533        2,571

Effect of dilutive securities:
                                                         -------      -------      -------      -------

NUMERATOR FOR DILUTED EARNINGS PER SHARE--INCOME
  TO COMMON STOCKHOLDERS AFTER ASSUMED CONVERSIONS           507        1,329        1,533        2,571

DENOMINATOR:
  DENOMINATOR FOR BASIC EARNINGS PER SHARE--
  WEIGHTED-AVERAGE SHARES                                  3,270        3,384        3,284        3,447

Effect of dilutive securities:
  Employee stock options                                      45           83           49           73
                                                         -------      -------      -------      -------
Dilutive potential common shares                              45           83           49           73
                                                         -------      -------      -------      -------

DENOMINATOR FOR DILUTED EARNINGS PER SHARE--ADJUSTED
  WEIGHTED-AVERAGE SHARES AND ASSUMED CONVERSIONS          3,315        3,467        3,333        3,520
                                                         =======      =======      =======      =======

BASIC EARNINGS PER SHARE                                 $   .16      $   .39      $   .47      $   .75
                                                         =======      =======      =======      =======
DILUTED EARNINGS PER SHARE                               $   .15      $   .38      $   .46      $   .73
                                                         =======      =======      =======      =======
</TABLE>


                                       8
<PAGE>   9


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                          MAXCO, INC. AND SUBSIDIARIES



NOTE 7 - Comprehensive Income
     Effective April 1, 1998, the Company adopted Statement of Financial
     Accounting Standards No. 130, "Reporting Comprehensive Income." Statement
     130 established new rules for the reporting and display of comprehensive
     income and its components. The adoption of this Statement requires
     unrealized gains or losses on marketable securities to be included in
     comprehensive income, which prior to adoption were only reported separately
     in shareholders' equity.

     The  components of  comprehensive  income for the three and six months 
     ended  September 30, 1998 and 1997 were  as follows:

<TABLE>
<CAPTION>


                                              Three Months Ended      Six Months Ended
                                                September 30,          September 30,
                                              ------------------     -----------------
                                    
                                                1998       1997        1998      1997
                                              -------    -------     -------   -------
                                                            (in thousands)

<S>                                           <C>        <C>        <C>        <C>   
Net earnings                                  $  609     $1,432     $1,737     $2,757
Unrealized gains on marketable securities         14         59          8        158
                                              ------     ------     ------     ------
                                              $  623     $1,491     $1,745     $2,915
                                              ======     ======     ======     ======
</TABLE>


 The components of accumulated comprehensive income, net of related tax at
 September 30, 1998 and March 31, 1998 are as follows:

<TABLE>
<CAPTION>


                                                    September 30,           March 31,
                                                        1998                  1998
                                               ------------------------------------------
                                                             (in thousands)
<S>                                               <C>                  <C>       
 Unrealized gains on marketable securities        $      55            $      47 
</TABLE>




                                       9
<PAGE>   10


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                          MAXCO, INC. AND SUBSIDIARIES
                               SEPTEMBER 30, 1998

MATERIAL CHANGES IN FINANCIAL CONDITION

Cash generated from net income, sale of marketable securities, and proceeds from
long-term borrowings in the first six months of the year were used by Maxco in
its operating activities to fund higher levels of working capital items, in
investing activities to purchase property and equipment, and to invest in
additional affiliates.

At September 30, 1998, a higher level of working capital items, primarily
accounts receivable and inventory, resulted in consumption of liquid resources.
The higher sales activity by the Company's construction supplies segment (Ersco)
over the traditionally slower fourth quarter of the prior year was the principal
cause of this increased investment.

In addition to the higher working capital requirements during the summer peak
construction period by the construction supplies segment, Maxco is investing in
the growth of the concrete construction supplies industry by actively seeking
acquisitions and other opportunities in key market areas. During the second
quarter, Ersco established a new sales and distribution facility in Louisville,
Kentucky to serve the growing construction market in Northern Kentucky and
Southern Ohio. Subsequent to September 30, 1998, Ersco purchased a company in
Columbus, Ohio which provides concrete forming and shoring equipment to concrete
construction contractors. Ersco is a participant in the overall consolidation of
the construction industry. This unit, in the first quarter of 1998, secured a
commitment for a $10.0 million credit facility, available under certain
circumstances, to fund acquisitions.

In addition to investments in property and equipment for the expansion of the
construction supplies segment, the Company invested in property and equipment
for its heat treating segment (Atmosphere Annealing). This investment was made
to improve the efficiency and capacity of this metal heat treating unit in
anticipation of higher sales.

During the first quarter, Maxco also acquired a one-third interest in Blasen
Brogan Asset Management Company, a Lansing, Michigan based registered investor
advisory firm.

Effective August 1, 1998, the Company acquired a 50% equity interest in and
agreed to finance certain debt of Mid-State Industrial Services, Inc., which is
in the business of selling, leasing, and servicing lift trucks. In addition, the
Company acquired a 40% equity interest in a software developer, whose customers
primarily are in the light manufacturing and distribution industries. The
Company's cash outflow for its investment in these two affiliates was
approximately $1.5 million.

Subsequent to September 30, 1998, Maxco sold its 45% equity interest in
Strategic Interactive, Inc. to Provant, Inc. for cash and stock. The transaction
contains an earn out provision based on the future performance of Strategic
Interactive over the next three years that could result in additional
compensation to Maxco.

The Company believes that its current financial resources, together with cash
generated from operations, and its available resources under its lines of credit
will be adequate to meet its cash requirements for the next year.

                                       10


<PAGE>   11


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
                          MAXCO, INC. AND SUBSIDIARIES

MATERIAL CHANGES IN RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO 1997

Net sales from continuing operations increased to $35.6 million compared to
$29.3 million in last year's second quarter. Second quarter results reflect
operating earnings of $1.4 million compared to $2.3 million for the comparable
period in 1997. Net income was $609,000 or $.15 per share assuming dilution
compared to last year's $1.4 million or $.38 per share assuming dilution.

Higher sales in the current period occurred at Maxco's construction supplies
segment (Ersco) over the comparable 1997 period primarily as a result of Ersco's
acquisition of an Illinois based sales unit in January 1998, additional
construction activity due to increased availability of federal highway repair
dollars, and a strong general construction market. Sales of heat treating
services by its heat treating segment (Atmosphere Annealing) were modestly lower
than the prior year's comparable quarter. Sales at this unit, however, were less
than planned as a result of a strike at one of its automotive customers and
delay of certain other planned programs.

The construction supplies segment generated additional operating earnings in the
current period over last year due primarily to their increased sales level.
Gross margin percentage at this unit was lower, however, because a significant
portion of their increased sales level for the three months was product sales to
highway contractors on a direct shipment basis which generally have a lower
margin. The operating earnings for Maxco's heat treating segment were
approximately $500,000 lower in the current period over the 1997 comparable
period. This reduction in operating earnings at Atmosphere Annealing was caused
by lower sales of heat treating services, increased employee benefit expenses
and higher costs related to facility improvements which became operational
during the period. The higher facilities costs were incurred as a result of the
expansion of certain facilities of this unit in anticipation of increased sales.
The planned sales increase was delayed in part to a labor strike at one of its
major customers as well as certain other programs being delayed until the
expansion of the facilities was completed. Operating earnings were also affected
by an operating loss which occurred at Pak Sak, Maxco's packaging products
segment, as a result of lower sales and gross margin percentage at this unit.

Net interest expense increased in 1998 from the prior year quarter due to
additional long-term borrowings and reduction in marketable securities, the
proceeds of which were used for investments in new affiliates, repurchases of
the Company's stock, and additional purchases of property and equipment.

Maxco's equity in its earnings of affiliates was lower in 1998 due to a loss by
Medar for the three month period of approximately $1.1 million compared to net
income of $420,000 for the comparable period in 1997. As a result, Maxco
recorded a charge of $250,000 as a share of the losses from this affiliate in
the current period compared to earnings of $94,000 for the comparable period in
1997. Medar's revenues and operating results were lower then Medar anticipated
because of several projects that have shifted into the fourth quarter of the
calendar year.



                                       11
<PAGE>   12



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
                          MAXCO, INC. AND SUBSIDIARIES

SIX MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO 1997

Net sales from continuing operations increased to $71.2 million compared to
$57.2 million in last year's second quarter. Second quarter results reflect
operating earnings of $3.4 million compared to $4.5 million for the comparable
period in 1997. Net income was $1.7 million or $.46 per share assuming dilution
compared to last year's $2.8 million or $.73 per share assuming dilution.

Higher sales for the six months occurred at Maxco's construction supplies
segment (Ersco) over the comparable 1997 period primarily as a result of Ersco's
acquisition of an Illinois based sales unit in January 1998, additional
construction activity due to increased availability of federal highway repair
dollars, and a strong general construction market. Sales of heat treating
services were modestly lower at Atmosphere Annealing compared to the prior year
six-month period. Sales at this unit, however, were less than planned for the
current period as a result of a strike at one of its automotive customers and
the delay in certain other planned programs.

For the current six month period, the construction supplies segment generated
additional operating earnings over last year due to their increased sales level.
Gross margin percentage at this unit was lower, however, as a significant
portion of their increased sales level was product sales to highway contractors
on a direct shipment basis, which generally have a lower margin. The operating
earnings increase at this unit was offset by reduced operating earnings of
approximately $1.2 million at Atmosphere Annealing. This reduction in operating
earnings at Atmosphere Annealing was caused by lower sales of heat treating
services, increased employee benefit expenses and higher costs related to
facility improvements which became operational during the period. The higher
facilities costs were incurred as a result of the expansion of certain
facilities of this unit in anticipation of increased sales. The planned sales
increase was delayed in part to a labor strike at one of its major customers as
well as certain other programs being delayed until the expansion of the
facilities was completed. Operating earnings were also affected by an operating
loss which occurred at Pak Sak, Maxco's packaging products segment, as a result
of lower sales and gross margin percentage at this unit.

Net interest expense increased for the first six months of 1998 from the
comparable period in the prior year due to additional long-term borrowings and
reduction in marketable securities, the proceeds of which were used for
investments in new affiliates, repurchases of the Company's stock, and
additional purchases of property and equipment.

Equity in earnings of affiliates was lower in 1998 due to a loss of
approximately $1.0 million reported by its Medar affiliate during the six month
period. As a result, Maxco reported a charge of $225,000 as its share of Medar's
loss for the six months. Medar's revenues and operating results were lower than
Medar anticipated because of several projects that have shifted into the fourth
quarter of the calendar year.



                                       12
<PAGE>   13



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
                          MAXCO, INC. AND SUBSIDIARIES


IMPACT OF THE YEAR 2000 ISSUE

The Company recognizes the need to ensure its operations will not be adversely
impacted by year 2000 software issues and continues to evaluate and manage the
risks associated with this problem. The Company believes that based on initial
assessments, the cost of achieving year 2000 compliance is not estimated to be
materially over the cost of normal software upgrades and replacements which are
expected to be incurred through September 30, 1999.

In addition to reviewing its internal year 2000 issues, Maxco has begun to
analyze any third party readiness. Due to the diverse nature of Maxco's
operations and its many suppliers and vendors, no significant loss of business
is anticipated as a result of any of its customers or vendors not being year
2000 ready.



                                       13
<PAGE>   14




                                     PART II

                                OTHER INFORMATION

Item 1.  Legal Proceedings

         None

Item 2.  Changes in Securities

         None

Item 3.  Defaults Upon Senior Securities

         None

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

         The annual meeting of shareholders was held on August 25, 1998. The
         matters voted upon were the election of directors, adoption of a new
         Stock Option Plan, and other business which may come before the
         meeting (of which there was none). The results of votes were as
         follows:

         Election of directors:

                                             For                 Withheld
                                        --------------       ---------------

         
          Max A. Coon                     2,849,274              188,911
         
          Eric L. Cross                   2,853,774              184,411
         
          Charles J. Drake                2,717,544              320,641
         
          Joel I. Ferguson                2,717,499              320,686
         
          Richard G. Johns                2,853,774              184,411
         
          Vincent Shunsky                 2,853,759              184,426
         
          J. Michael Warren               2,849,274              188,911
         
          Michael W. Wisti                2,853,759              184,426
         
          Andrew S. Zynda                 2,711,541              326,644

          Adoption of stock option plan:

                 For             Against          Abstain         Non-Vote     
                 ---             -------          -------         --------     
              1,963,945          249,369          12,636           812,235

Item 5.  Other Information

         None

                                       14


<PAGE>   15


                                     PART II

                          OTHER INFORMATION (CONTINUED)

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).

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.

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.

10.8              Stock  Purchase  Agreement  (sale of  FinishMaster,  Inc.)  
                  effective  July 9,  1996,  is  hereby incorporated by 
                  reference from registrants Form 10-K dated June 18, 1996.

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.



                                       15
<PAGE>   16


                                     PART II

                          OTHER INFORMATION (CONTINUED)

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.

10.17*            Third  amendment to amended and restated loan  agreement 
                  between  Comerica Bank and Maxco, Inc. dated 
                  September 24, 1998.

10.18*            Maxco, Inc. 1998 Employee Stock Option Plan

27*               Financial Data Schedule

Item 6(b)         Reports on Form 8-K

                  None

*Filed herewith

                                       16
<PAGE>   17


  

                                   SIGNATURES

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

                                        MAXCO, INC.



Date November 12, 1998                   \S\ VINCENT SHUNSKY                  
     ----------------                   ---------------------------------------
                                        Vincent Shunsky, Vice President-Finance
                                        and Treasurer (Principal Financial and
                                        Accounting Officer)





  



                                     17
<PAGE>   18


                               INDEX TO 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).

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.

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.

10.8              Stock  Purchase  Agreement  (sale of  FinishMaster,  Inc.)  
                  effective  July 9,  1996,  is  hereby incorporated by 
                  reference from registrants Form 10-K dated June 18, 1996.

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.



                                       
<PAGE>   19


                                INDEX TO EXHIBITS


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.

10.17*            Third  amendment to amended and restated loan  agreement 
                  between  Comerica Bank and Maxco, Inc. dated 
                  September 24, 1998.

10.18*            Maxco, Inc. 1998 Employee Stock Option Plan

27*               Financial Data Schedule

Item 6(b)         Reports on Form 8-K

                  None

*Filed herewith