<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 DECEMBER 31, 1996


                         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 December 31, 1996
                 ------------  --------------------------------

                 Common Stock           3,682,780 shares

================================================================================


                                       1
<PAGE>   2
                                   PART I

                            FINANCIAL INFORMATION

                         CONSOLIDATED BALANCE SHEETS
                        MAXCO, INC. AND SUBSIDIARIES

                                      
<TABLE>
<CAPTION>
                                                        December 31,  March 31,
                                                              1996       1996
                                                                      (Restated-
                                                                       Note 2)
                                                        ------------------------
                                                               (in thousands)
<S>                                                         <C>       <C>
ASSETS
CURRENT ASSETS
 Cash and cash equivalents                                  $ 3,322     $   735
 Marketable securities--Note 4                                4,510
 Accounts and notes receivable, less allowance of
  $352,000 in 1996 ($327,000 at March 31, 1996)              11,452       6,699
 Inventories--Note 3                                          3,836       3,729
 Prepaid expenses and other                                      36         345
 Net current assets of discontinued businesses--Note 2          668      27,169
                                                            -------   ---------
                                      TOTAL CURRENT ASSETS   23,824      38,677
MARKETABLE SECURITIES - LONG TERM--Note 4                     9,277
PROPERTY AND EQUIPMENT
 Land                                                           470         470
 Buildings                                                    6,569       6,399
 Machinery, equipment, and fixtures                           8,033       6,876
                                                            -------   ---------
                                                             15,072      13,745
 Allowances for depreciation                                 (5,895)     (4,506)
                                                            -------   ---------
                                                              9,177       9,239
OTHER ASSETS
 Investments - Note 5                                         6,246       8,177
 Notes and contracts receivable and other                     4,655         942
 Intangibles                                                    468         496
 Net non-current assets of discontinued businesses--Note 2    1,061      11,013
                                                            -------   ---------
                                                             12,430      20,628
                                                            -------   ---------
                                                            $54,708     $68,544
                                                            =======   =========
</TABLE>


                                      2

<PAGE>   3




<TABLE>
<CAPTION>
                                                     December 31,  March 31,
                                                          1996        1996
                                                                   (Restated-
                                                                    Note 2)
                                                     ------------------------
                                                           (in thousands)
<S>                                                    <C>         <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
 Notes payable                                            $   226     $   236
 Accounts payable                                           4,185       4,778
 Employee compensation                                      1,242         821
 Taxes, interest, and other liabilities                     4,322         265
 Current maturities of long-term obligations                  659       1,026
                                                          -------     -------
                            TOTAL CURRENT LIABILITIES      10,634       7,126
LONG-TERM OBLIGATIONS, less current maturities              5,628      26,815
DEFERRED INCOME TAXES                                       2,708       4,973
INTERESTS OF MINORITY HOLDERS IN
 DISCONTINUED BUSINESS                                                 10,304
STOCKHOLDERS' EQUITY
 Preferred stock:
  Series Two: 12% cumulative redeemable, convertible,
   $50 par value; 18,000 shares issued - Note 8               900         900
  Series Three: 10% cumulative redeemable, $60 face
   value; 15,931 shares issued and outstanding
   (16,050 at March 31, 1996)                                 746         754
 Common stock, $1 par value; 10,000,000 shares
  authorized, 3,682,780 issued shares (4,227,442 at
  March 31, 1996)                                           3,683       4,227
 Additional paid-in capital                                               686
 Net unrealized gain on marketable securities                  39
 Retained earnings                                         30,370      12,759
                                                          -------     -------
                                                           35,738      19,326
                                                          -------     -------
                                                          $54,708     $68,544
                                                          =======     =======

</TABLE>

See notes to consolidated financial statements


                                      3
<PAGE>   4


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




<TABLE>
<CAPTION>
                                                         Three Months Ended December 31,
                                                           1996                 1995
                                                        (Unaudited)          (Unaudited)
                                                                              (Restated-
                                                                               Note 2)
                                                    ------------------   ------------------
                                                     (in thousands, except per share data)
<S>                                                        <C>                  <C>
Net sales                                                     $ 15,955              $14,485
Costs and expenses:
  Cost of sales and operating expenses                          13,200               11,856
  Selling, general and administrative                            2,095                2,139
                                                              --------              -------
                                                                15,295               13,995
                                                              --------              -------
          OPERATING EARNINGS                                       660                  490
Other income (expense)                                            (526)              (2,208)
          INCOME (LOSS) FROM CONTINUING OPERATIONS            --------              ------- 
                       BEFORE FEDERAL INCOME TAXES                 134               (1,718)
                                                   
Federal income tax expense (benefit)                                47                 (589)
                                                              --------              -------
          INCOME (LOSS) FROM CONTINUING OPERATIONS                  87               (1,129)
Income (loss) from discontinued businesses--Note 2                (693)                  54
                                                              --------              -------
                                        NET INCOME                (606)              (1,075)
Less preferred stock dividend                                      (51)                 (51)
                                                              --------              -------
          NET INCOME APPLICABLE
            TO COMMON STOCK                                       (657)              (1,126)
                                                              ========              =======
NET INCOME (LOSS) PER COMMON SHARE--Primary
  Continuing operations                                       $    .01              $  (.27)
  Discontinued businesses                                         (.18)                 .01
                                                              --------              -------
                                                              $   (.17)             $  (.26)
                                                              ========              =======
  Weighted average number of shares of common stock
  and common stock equivalents outstanding                       3,760                4,349
                                                              ========              =======
</TABLE>

See notes to consolidated financial statements

                                      4

<PAGE>   5


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




<TABLE>
<CAPTION>
                                                         Nine Months Ended December 31,
                                                           1996                 1995
                                                        (Unaudited)          (Unaudited)
                                                                             (Restated-
                                                                               Note 2)
                                                     -------------------------------------
                                                     (in thousands, except per share data)
<S>                                                           <C>                  <C>
Net sales                                                      $54,172              $49,106
Costs and expenses:
  Cost of sales and operating expenses                          45,492               41,158
  Selling, general and administrative                            6,711                6,380
                                                               -------              -------
                                                                52,203               47,538
                                                               -------              -------
        OPERATING EARNINGS                                       1,969                1,568
Other income (expense)                                          34,633               (3,729)
                                                               -------              -------
          INCOME (LOSS) FROM CONTINUING OPERATIONS   
                       BEFORE FEDERAL INCOME TAXES              36,602               (2,161)
Federal income tax expense (benefit)                            13,723                 (757)
                                                               -------              -------
          INCOME (LOSS) FROM CONTINUING OPERATIONS              22,879               (1,404)
Income (loss) from discontinued businesses--Note 2                (594)                 405
                                                               -------              -------
                                        NET INCOME              22,285                 (999)
Less preferred stock dividend                                     (153)                (153)
                                                               -------              -------
              NET INCOME APPLICABLE
                TO COMMON STOCK                                 22,132               (1,152)
                                                               =======              =======
NET INCOME (LOSS) PER COMMON SHARE--Primary
  Continuing operations                                        $  5.66              $  (.35)
  Discontinued businesses                                         (.15)                 .09
                                                               -------              -------
                                                                  5.51              $  (.26)
                                                               =======              =======
NET INCOME (LOSS) PER COMMON SHARE--Fully Diluted
  Continuing operations                                        $  5.37
  Discontinued businesses                                      $  (.14)
                                                               -------
                                                               $  5.23
                                                               =======
  Weighted average number of shares of common stock  
  and common stock equivalents outstanding                       4,018                4,377
                                                               =======              =======
</TABLE>

See notes to consolidated financial statements

                                      5

<PAGE>   6


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




CONSOLIDATED STATEMENTS OF CASH FLOWS
MAXCO, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                      Nine Months Ended December 31,
                                                                               1996         1995
                                                                            (Unaudited)  (Unaudited)
                                                                                          (Restated-
                                                                                           Note 2)
                                                                            -----------  -----------
                                                                               (in thousands)
<S>                                                                         <C>          <C>
OPERATING ACTIVITIES                                                  
  Net Income                                                                  $  22,285    $   (999)
  (Income) loss  from Discontinued Businesses                                       594        (405)
                                                                              ---------    --------
  Income (Loss) from Continuing Operations                                       22,879      (1,404)
  Adjustments to reconcile net income to net cash provided            
    by (used in) operating activities:                                
      Cash received in excess of gain recognized on sale of           
        FinishMaster stock                                                       23,275
      Deferred taxes and other non-cash charges                                   1,184         297
      Changes in operating assets and liabilities                                (4,479)     (1,576)
                                                                              ---------    --------
                NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES             42,859      (2,683)
INVESTING ACTIVITIES                                                  
  Purchase of additional shares of Medar stock                                    (876)
  Investment in marketable securities                                          (13,641)
  Purchases of property and equipment                                             (781)      (2,987)
  Other                                                                            178       (2,665)
                                                                              ---------    --------
                              NET CASH USED IN INVESTING ACTIVITIES            (15,120)      (5,652)
FINANCING ACTIVITIES                                                  
  Redemption of preferred stock                                                     (8)          (2)
  Proceeds from long-term obligations                                              487        9,522
  Repayments on long-term obligations and notes payable                        (19,726)        (332)
  Proceeds from exercise of stock options                                          170           10
  Acquisition and retirement of common stock                                    (5,922)        (577)
  Dividends paid on preferred stock                                               (153)        (153)
                                                                              ---------    --------
                NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES            (25,152)       8,468
                                                                              ---------    --------
                              INCREASE IN CASH AND CASH EQUIVALENTS              2,587          133
                   CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                735          254
                                                                              ---------    --------
                         CASH AND CASH EQUIVALENTS AT END OF PERIOD           $  3,322     $    387
                                                                              ========     ========
</TABLE>

See notes to consolidated financial statements

                                      6

<PAGE>   7


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MAXCO, INC. AND SUBSIDIARIES
                               DECEMBER 31, 1996




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, 1996.

  Previously issued financial statements have been restated as a result of the
  Company entering into certain transactions regarding its consolidated
  subsidiaries and its investment in Medar, Inc. (see Notes 2 and 5).

  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.  The effect of stock options and
  potential conversion of redeemable convertible preferred stock was
  antidilutive for the three months ended December 31, 1996 and the three and
  nine months ended December 31, 1995.

  Effective April 1, 1996, the Company adopted FASB Statement No. 121,
  Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
  to be Disposed Of, which requires impairment losses to be recorded on
  long-lived assets used in operations when indicators of impairment are
  presented and the undiscounted cash flows estimated to be generated by those
  assets are less than the assets carrying amount.  This statement also
  addresses the accounting for long-lived assets that are expected to be
  disposed.  The effect of adopting FASB Statement No. 121 was not material.

NOTE 2 - Discontinued Businesses

  On July 9, 1996, Maxco completed an agreement to sell its 4,045,000 shares
  (67 percent interest) of FinishMaster, Inc. and for Maxco to enter into an
  agreement not to compete for a total consideration of $62.6 million.  More
  than 90 percent of the total consideration was in cash with the balance
  payable over the five year term of the non-compete agreement.  As a result of
  this transaction, an after tax gain of $22.0 million was recognized in the
  second quarter.


                                      7


<PAGE>   8


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


  Effective October 31, 1996, Maxco sold the business and substantially all the
  assets (consisting principally of accounts receivable, inventory and fixed
  assets) of Maxco's wholly owned subsidiary, Wright Plastic Products, Inc.,
  including substantially all the assets of Wright's subsidiary, Pacer Tool and
  Mold, Inc. to Plastic Acquisition Co. LLC, a privately held company.   The
  assets of approximately $10 million were purchased for cash, assumption of
  certain liabilities and a note.  The assets were sold for an amount which
  approximates book value.

  Effective January 27, 1997, Maxco sold the business and certain assets
  (consisting of accounts receivable, inventory, fixed assets and intangibles)
  of Maxco's wholly owned subsidiary, Akemi, Inc. to Axson North America, a
  Houston based subsidiary of privately held Axson, S.A., based in Paris,
  France.  Agreement of the sales price of approximately $2.0 million in cash
  was reached based on an arms-length negotiation.  In addition, Maxco
  purchased approximately 7.4 percent of the capital stock of Axson, S.A. for
  approximately $1.9 million.

  As a result of these sales, the results of operations for these units have
  been reported separately as discontinued operations in the consolidated
  statements of operations for the current and prior periods.

NOTE 3 - Inventories
  The major classes of inventories, at the dates indicated were as follows:


<TABLE>
<CAPTION>
                               December 31,                 March 31,        
                                  1996                        1996           
                               -----------                  ---------        
                               (Unaudited)              (Restated-Note 2)
                                                          (in thousands) 
        <S>                    <C>                      <C>              
           
        Raw materials                 $623                       $587
        Finished goods and   
         work in progress            1,390                      1,574
        Purchased products   
         for resale                  1,823                      1,568
                               -----------                  ---------
                                    $3,836                     $3,729
                               ===========                  =========
</TABLE>


NOTE 4 - 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 $39,000 being reported
  as part of stockholders' equity at December 31, 1996.

                                      8

<PAGE>   9


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

The following is a summary of marketable securities held at December 31, 1996.


<TABLE>
<CAPTION>
                                      Gross        Gross
                       Amortized   Unrealized    Unrealized  Estimated
                         Cost         Gains         Loss     Fair Value
                       ---------   ----------    ----------  ----------
                                       (in thousands)
<S>                    <C>         <C>            <C>        <C>
Corporate Securities     $ 6,810    $      40       $    61     $ 6,789
U.S. Government Notes      6,918           81             1       6,998
                       ---------   ----------    ----------  ----------
                         $13,728    $     121       $    62     $13,787
                       =========   ==========    ==========  ==========
</TABLE>

The amortized cost and estimated fair value of marketable securities at 
December 31, 1996, by contractual maturity is as follows:


<TABLE>
<CAPTION>
                                                Amortized  Estimated 
                                                  Cost     Fair Value
                                                ---------------------
<S>                                             <C>        <C>       
                                                   (in thousands)    
Available-for-Sale
      Due in one year or less                     $ 4,561     $ 4,510
      Due after one year through five years         4,491       4,531
      Due after five years through ten years        4,676       4,746
                                                ---------   ---------
                                                  $13,728     $13,787
                                                =========   =========
</TABLE>

NOTE 5 - Investment in Medar, Inc.

  During the three months ended December 31, 1996, Maxco purchased 156,000
  shares of Medar stock bringing its ownership percentage to over 20%.
  Accordingly, the Company is required to change its method of carrying its
  Medar investment from a security available for sale under FASB 115 to the
  equity method for accounting for investments.  At December 31, 1996, Maxco
  owned 1,893,405 shares of Medar's common stock (aggregate market value of
  $10.7 million).

  The financial statements have been restated to show Medar as an equity
  investment as if the change had occurred as of April 1, 1995, the date that
  Maxco first reported the Medar investment as available for sale under FASB
  115.  The effect of the restatement was to decrease net income as reported
  previously for the three and nine months ended December 31, 1995, by
  $1,157,000 or $.27 per share for the three months and $1,543,000 or $.37 per
  share for the nine months.  This restatement has required a reversal of the
  amount previously reflected as a separate component of stockholders equity
  which at September 30, 1996 amounted to $3 million.

NOTE 6 - Long-Term Debt
  As a result of the sale of the Company's FinishMaster stock on July 9, 1996,
  Maxco's revolving line of credit was reduced to zero at that date.  Maxco's
  revolving credit agreement allows Maxco to borrow up to $12.0 million on an
  unsecured basis.  There was no balance outstanding under this line on
  December 31, 1996.

                                      9

<PAGE>   10


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


NOTE 7 - Acquisition of Business

  Effective January 1, 1997, Maxco acquired the business and substantially all
  of the assets (consisting principally of accounts receivable, inventory and
  fixed assets) of Lansing, Michigan based Atmosphere Annealing, Inc.  This
  entity was privately owned by four individuals, including a 25% ownership by
  the spouse of Maxco Chairman, Max A. Coon.  Atmosphere Annealing provides
  metal heat treating to Midwestern industrial users and employs approximately
  370 people at facilities in Lansing, Michigan; Canton, Ohio; and North
  Vernon, Indiana.

  The net assets were acquired for approximately $13 million subject to the
  audited financial statements of the seller as of December 31, 1996, which
  have not been issued at this date.  The determination of the final purchase
  price will be made by February 28, 1997.  The audited financial statements
  and proforma financial information will be filed at a later date.

  The consideration to be paid for these assets will consist of the assumption
  of funded debt of approximately $6.5 million, cash and the issuance of a
  subordinated note.  Once the final purchase price is determined, the sellers
  will have received one half of the purchase price, net of funded debt
  assumed, in cash with the balance in the form of a subordinated note.  At the
  preliminary closing of this transaction $3.0 million was paid to the sellers.

NOTE 8 - Redemption of Series Two Preferred Stock

  Effective January 1, 1997, the Company redeemed its entire issue of
  cumulative non-voting Series Two Preferred Stock.  The redemption of this
  stock eliminated a class of stock which had rights to convert into
  approximately 230,000 shares of common stock.  At the option of the holder,
  this redemption was accomplished in some cases by issuing shares of a newly
  established Series Four Preferred Stock which is redeemable, is non-voting,
  has no conversion rights, and will pay a dividend at the rate of 10% a year.
  Alternatively, certain holders of the Series Two Preferred Stock accepted
  payment in the form of an unsecured subordinated note which bears interest at
  the rate of 10% a year.  In addition, 140,000 shares of common stock were
  exchanged in January 1997 for  shares of the Series Four Preferred Stock.


                                      10

<PAGE>   11


                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                          MAXCO, INC. AND SUBSIDIARIES
                               DECEMBER 31, 1996



MATERIAL CHANGES IN FINANCIAL CONDITION

On July 9, 1996, Maxco completed an agreement to sell its 67 percent interest
in FinishMaster, Inc.  The agreement called for Maxco to sell its 4,045,000
shares of FinishMaster and for Maxco to enter into an agreement not to compete
for a total consideration of $62.6 million.  More than 90 percent of the total
consideration was in cash, with the balance payable over the five year term of
the non-compete agreement.  As a result of this transaction, an after tax gain
of $22.0 million was reported during the second quarter and in the nine-months
ended December 31, 1996.

$21.3 million of the proceeds were used to retire Maxco's revolving line of
credit on that date.  The credit agreement was subsequently amended to allow
Maxco to borrow up to $12.0 million on an unsecured basis (none of which was
outstanding at December 31, 1996).  Remaining net proceeds from the sale were
invested in marketable securities.

Financing activities other than the repayment of debt were the acquisition and
retirement of approximately 600,000 shares of Maxco's common stock for $5.9
million through December 31, 1996.  Net cash provided by operating activities
was $43.0 million resulting primarily from the sale of FinishMaster stock.

During the three months ended December 31, 1996, Maxco purchased 156,000 shares
of Medar stock bringing its ownership percentage to over 20%.  Accordingly, the
company was required to change its method of carrying its Medar investment from
a security available for sale under FASB 115 to an equity investment.  The
financial statements have been restated to show Medar as an equity investment
as if the change had occurred as of April 1, 1995.  The effect of the
restatement was to decrease net income as reported previously for the three
months ended December 31, 1995 by $1,157,000 or $.27 per share and $1,543,000
or $.37 per share for the nine months ended December 31, 1995.  This
restatement has required the reversal of the amount previously reflected as a
separate component of stockholders equity which at September 30, 1996 amounted
to $3 million.

Effective October 31, 1996, Maxco sold the business and substantially all the
assets of Wright Plastic Products, Inc.  The assets of approximately $10
million were purchased for cash, the assumption of certain liabilities, and a
note.

Subsequent to December 31, 1996, Maxco sold the business and certain assets of
Akemi, Inc. for approximately $2.0 million in cash.  In addition, Maxco
purchased approximately 7.4% of the capital stock of Axson, S.A. for $1.9
million.  Results of operations for Akemi, Wright and FinishMaster have been
classified as discontinued businesses in the accompanying financial statements.



                                      11
<PAGE>   12


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


The recent divestitures of Akemi and Wright have eliminated operations that had
posted operating losses during the last two years.  For the nine months ended
December 31, 1996, Akemi incurred a net loss of $1.2 million and Wright
recorded net earnings of approximately $100,000.  In the comparable period of
the prior year, Akemi incurred a net loss of $500,000 while Wright's net loss
for that period was approximately $900,000.  Offsetting these losses was the
net income contributed by FinishMaster's operations.  For the nine months ended
December 31, 1996, this contribution amounted to $470,000 compared to net
earnings for the same period of the prior year of $1.8 million.  The net amount
of these losses have been included in the statement of operations under the
caption income (loss) from discontinued businesses.

Subsequent to December 31, 1996, Maxco completed several transactions that will
impact its future performance.

Effective January 1, 1997, Maxco acquired the business and assets of Atmosphere
Annealing, Inc., a Lansing based metal heat treating company with annual
revenues of approximately $27 million.  It additionally acquired a 50% interest
in a new limited liability company which owns and develops real estate in
central Michigan and purchased 15 percent of the common stock of Strategic
Interactive, which provides web based training, education and other corporate
communication solutions.

Maxco also redeemed in January 1997, its series two preferred stock,
eliminating a class of stock which had rights to convert into approximately
230,000 shares of common stock.  This redemption was accomplished by either, at
the option of the holder, issuing shares of series four preferred stock which
is redeemable but has no conversion rights or issuing subordinated debt.  The
Company also acquired and retired 140,000 shares of its common stock in
exchange for shares of series four preferred stock.

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



                                      12
<PAGE>   13


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


MATERIAL CHANGES IN RESULTS OF OPERATIONS

Three Months Ended December 31, 1996 Compared to 1995

Net sales from continuing operations increased to $15.9 million compared to
$14.5 million in last year's third quarter.  Third quarter results reflect
income from continuing operations of approximately $87,000 compared to a loss
of $1,129,000 for the comparable period in 1995.  The current period reflects a
net loss of $606,000 or $.17 per share compared to last year's net loss of
$1,075,000 or $.26 per share.  Prior year results have been restated to reflect
Maxco's change in its accounting for its investment in Medar from a security
available for sale under FASB 115 to an equity investment.  The effect of these
restatements was to reduce net income as reported previously in 1995 by
$1,157,000 or $.27 per share.

The sales growth for the three months ended December 31, 1996, was primarily
attributable to the construction supplies group (Ersco and Wisconsin Wire).
Sales increased $1.2 million at Maxco's construction supplies businesses as a
result of increased market share.

Operating earnings increased for the three months primarily because of the
higher volume in the current period.  Operating earnings were impacted, however
at the construction supplies group as gross margin percentage at this unit was
lower than those of the comparable prior period as a result of a highly
competitive market for the resteel portion of their business.

Higher operating earnings were recognized at Pak-Sak during this period
primarily as a result of an increase in sales caused by a changing customer mix
and an improvement in gross margin percentage at this unit.

A significant improvement in income from continuing operations was achieved due
to a lower level of losses from other income and expense items during the
current period.  A principal cause of this improvement was that interest income
was generated as a result of the investment earnings of the cash proceeds for
the sale of Maxco's interest in FinishMaster.  Interest expense was also
reduced as a portion of these proceeds were used to retire $21.3 million in
debt under Maxco's revolving line of credit.  Additionally, operating results
at Medar during this current period contributed to the year to year
improvement.

Losses from discontinued businesses for the three month period increased as a
result of operating losses incurred at Akemi.

                                      13

<PAGE>   14


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


Nine Months Ended December 31, 1996 Compared to 1995

Net sales from continuing operations increased to $54.2 million compared to
$49.1 million in last year's nine month period.  Nine month results reflect
earnings from continuing operations of $22.9 million compared to a loss of
$1,404,000 for the comparable period in 1995.  Net income was $22.3 million or
$5.23 on a fully diluted basis per share compared to a net loss of $999,000 or
$.26 per share.  Prior year results have been restated to reflect Maxco's
change in its accounting for its investment in Medar from a security available
for sale under FASB 115 to an equity investment.  The effect of this
restatement was to reduce net income as reported previously for the nine months
ended December 31, 1995 by $1,543,000 or $.37 per share.

The primary contribution to the increase in volume for the nine months was the
construction supplies group.  Sales increased $3.9 million at Maxco's
construction supplies businesses as a result of increased market share.  Sales
also improved at Pak-Sak due to improved market share during this period.

Increased volumes experienced by the Company during the first nine months
allowed earnings from operations to increase from the comparable period of the
prior year. An increase in operating earnings at Pak-Sak, due primarily to its
sales volume increase, was offset partially by a reduction in operating
earnings for the construction supplies group.  Operating earnings at the
construction supplies   group decreased despite the sales volume increase for
this unit as gross margin percentage was lower than those of the comparable
period due to a highly  competitive market for the resteel portion of their
business.

A significant improvement in income from continuing operations was the
recognition of other income of $34.6 million for the nine months ended December
31, 1996, compared to a loss of $3,729,000 in the prior nine months.  This
improvement was due primarily to the recognition of approximately a $35 million
pre tax gain on the sale of Maxco's interest in FinishMaster stock which
occurred on July 9, 1996.  In addition, interest income was generated in the
current period as a result of the investment of the cash proceeds received from
the sale of Maxco's interest in FinishMaster.  Interest expense was also
reduced as a portion of these proceeds were used to retire $21.3 million in
debt under Maxco's revolving line of credit.  Additionally, operating results
at Medar during this current period contributed to the year to year
improvement.

Losses from discontinued businesses for the nine month period increased from
the prior year primarily as a result of operating losses, through the date of
sale for Akemi.


                                      14

<PAGE>   15


                                    PART II

                               OTHER INFORMATION


Item 1.  Legal Proceedings

         None

Item 2.  Changes in Securities

         Effective January 1, 1997, the Company redeemed all 18,000 shares of
         its previously issued Series Two Preferred Stock.  The redeemed
         shareholders had the option of exchanging their shares for newly
         issued Series Four Preferred Stock or for a subordinated note of equal
         face value.  24,688 shares of Series Four Preferred Stock with face
         values of $51.50 and 4 notes with a total value of $582,000 were
         issued to the ten former Series Two Preferred Stockholders.
        
         Two common stockholders, Douglas E. Crist and Lewis D. Johns, also
         received 21,746 shares of Series Four Preferred Stock in exchange for
         140,000 shares of common stock.  There were no underwriters or brokers
         involved in the transaction and no commissions were paid.  The Company
         relied on Section 3(a)(9) of the Securities Act of 1933 for    
         exemption of the securities from registration.

Item 3.  Defaults Upon Senior Securities

         None

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

         None

Item 5.  Other Information

         None

Item 6.  Exhibits and Reports on Form 8-K


3        Restated Articles of Incorporation and By-laws are hereby incorporated
         by reference from Form S-4 dated November 4, 1991 (File No. 33-43855).

4.1      Resolution establishing Series Two Preferred Shares is 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.


                                      15

<PAGE>   16


                                   PART II
                        OTHER INFORMATION (CONTINUED)

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.

10.3     Amended and restated loan agreement between Comerica Bank and Maxco,
         Inc. dated as of October 31, 1994 is hereby incorporated by reference
         from registrant's Form 10-K dated June 13, 1995.

10.4     First amendment to the amended and restated loan agreement between     
         Comerica Bank and Maxco, Inc., dated as of May 9, 1995 is hereby       
         incorporated by reference from registrants Form 10-K dated June 13,
         1995.

10.5     Second amendment to the amended and restated loan agreement between
         Comerica Bank and Maxco, Inc., dated as of September 8, 1995, is
         hereby incorporated by reference from registrants Form 10-Q dated
         November 10, 1995.

10.6     Third amendment to the amended and restated loan agreement between
         Comerica Bank and Maxco, Inc., dated as of May 15, 1996, is hereby     
         incorporated by reference from registrants Form 10-K dated June 18,
         1996.

10.7     Fourth amendment to amended and restated loan agreement dated as of
         July 9, 1996 is hereby incorporated by reference from registrants Form
         10-Q dated August 9, 1996.

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 
         registrants 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 registrants Form 8-K
         dated  January 17, 1997.

10.12*   Asset purchase agreement  - Axson North America, Inc.

11*      Statement Re:  Computation of Per Share Earnings

27*      Financial Data Schedule


*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  February 14, 1997          \S\ VINCENT SHUNSKY
      -----------------          ---------------------------------------
                                 Vincent Shunsky, Vice President-Finance
                                 and Treasurer (Principal Financial and
                                 Accounting Officer)



                                      17
<PAGE>   18
                                EXHIBIT INDEX



4.3     Memorandum of Action By Written Consent of the Board of Directors

10.12   Asset Purchase Agreement

11      Statement Re: Computation of Per Share Earnings

27      Financial Data Schedule