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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

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

For the Quarter Ended December 31, 2001

Commission File Number 0-2762

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

|                                                                              |  |                                                  
|----------------------------------------------------------------------------- |  | -------------------------------------------------
|Michigan(State or other Jurisdiction of
Incorporation or Organization)        |  | 38-1792842(I.R.S. Employer
Identification Number)
|                                                                              |  |                                                  
|1118 Centennial Way
Lansing, Michigan(Address of principal executive offices) |  | 48917(Zip Code)                                  

Registrants Telephone Number, including area code: (517) 321-3130

Indicate by check mark whether the registrant (1) has filed all annual, quarterly and other reports required to
be filed by Section 12 or 15 (d) of the Securities Exchange Act of 1934 during the preceding twelve months and
(2) has been subject to the filing requirements for at least the past 90 days.

|               |  |        
|-------------- |  | -------
|Yes CHECK MARK |  | No ____

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

|             |  |                                 |  | 
|------------ |  | ------------------------------- |  | 
|Class        |  | Outstanding at January 31, 2002
|             |  |                                
|Common Stock |  | 3,101,195 shares               



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TABLE OF CONTENTS



|                                                                                      |  |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I                                                                               
|FINANCIAL INFORMATION                                                                
|CONSOLIDATED BALANCE SHEETS                                                          
|CONSOLIDATED STATEMENTS OF OPERATIONS (Condensed)                                    
|CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed)                                    
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                           
|MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|PART II                                                                              
|OTHER INFORMATION                                                                    
|SIGNATURES                                                                           
|EXHIBIT INDEX                                                                        
|9th Amendment to amended/restated loan agreement                                     



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PART I

FINANCIAL INFORMATION

CONSOLIDATED BALANCE
SHEETSMaxco, Inc. and Subsidiaries

|                                       |                                                                                                     |                      |        |                |        |   |           |         |        | 
|-------------------------------------- | --------------------------------------------------------------------------------------------------- | -------------------- | ------ | -------------- | ------ | - | --------- | ------- | ------ | 
|                                       |                                                                                                     |                      |        | December 31,   |        |   | March 31, |        
|                                       |                                                                                                     |                      |        | 2001           |        |   | 2001      |        
|                                       |                                                                                                     |                      |        | (Unaudited)    |        |   |           |        
|                                       |                                                                                                     |                      |        |                |       
|                                       |                                                                                                     |                      |        | (in thousands) |       
|ASSETS                                 |                                                                                                     |                      |        |                |        |   |           |        
|CURRENT ASSETS                         |                                                                                                     |                      |        |                |        |   |           |        
|                                       | Cash and cash equivalents                                                                           |                      | $      | 384            |        |   | $         | 968     |       
|                                       | Accounts and notes receivable, less allowance of
$447,000 ($570,000 at March 31, 2001)              |                      |        | 19,615         |        |   |           | 19,998  |       
|                                       | Advances to affiliate                                                                               |                      |        | 3,008          |        |   |           | 3,008   |       
|                                       | InventoriesNote 2                                                                                  |                      |        | 4,660          |        |   |           | 6,493   |       
|                                       | Prepaid expenses and other                                                                          |                      |        | 1,064          |        |   |           | 795     |       
|                                       | Income taxes receivable                                                                             |                      |        | 591            |        |   |           | 1,343   |       
|                                       |                                                                                                     |                      |        |                |        |  
|                                       |                                                                                                     | TOTAL CURRENT ASSETS |        |                | 29,322 |   |           |         | 32,605 | 
|MARKETABLE SECURITIESLONG TERMNote 3 |                                                                                                     |                      | 137    |                |        |   | 1,511     |        
|PROPERTY AND EQUIPMENT                 |                                                                                                     |                      |        |                |        |   |           |        
|                                       | Land                                                                                                |                      |        | 732            |        |   |           | 732     |       
|                                       | Buildings                                                                                           |                      |        | 12,146         |        |   |           | 12,144  |       
|                                       | Machinery, equipment, and fixtures                                                                  |                      |        | 52,096         |        |   |           | 53,728  |       
|                                       |                                                                                                     |                      |        |                |        |  
|                                       |                                                                                                     |                      | 64,974 |                |        |   | 66,604    |        
|                                       | Allowances for depreciation                                                                         |                      |        | (24,064        | )      |   |           | (19,945 | )     
|                                       |                                                                                                     |                      |        |                |        |  
|                                       |                                                                                                     |                      | 40,910 |                |        |   | 46,659    |        
|OTHER ASSETS                           |                                                                                                     |                      |        |                |        |   |           |        
|                                       | Investments                                                                                         |                      |        | 6,727          |        |   |           | 8,224   |       
|                                       | Notes and contracts receivable and other, less
allowance of $1,167,000 ($335,000 at March 31, 2001) |                      |        | 6,227          |        |   |           | 4,411   |       
|                                       | Intangibles                                                                                         |                      |        | 3,383          |        |   |           | 3,753   |       
|                                       | Deferred income taxes                                                                               |                      |        | 445            |        |   |           | 287     |       
|                                       |                                                                                                     |                      |        |                |        |  
|                                       |                                                                                                     |                      | 16,782 |                |        |   | 16,675    |        
|                                       |                                                                                                     |                      |        |                |        |  
|                                       |                                                                                                     | $                    | 87,151 |                |        | $ | 97,450    |        
|                                       |                                                                                                     |                      |        |                |        |  

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|                                               |                                             |                                                                                                   |        |        |                |   |        |           |        |   | 
|---------------------------------------------- | ------------------------------------------- | ------------------------------------------------------------------------------------------------- | ------ | ------ | -------------- | - | ------ | --------- | ------ | - | 
|                                               |                                             |                                                                                                   |        |        | December 31    |   |        | March 31, |       
|                                               |                                             |                                                                                                   |        |        | 2001           |   |        | 2001      |       
|                                               |                                             |                                                                                                   |        |        | (Unaudited)    |   |        |           |       
|                                               |                                             |                                                                                                   |        |        |                |  
|                                               |                                             |                                                                                                   |        |        | (in thousands) |  
|LIABILITIES AND STOCKHOLDERS EQUITY           |                                             |                                                                                                   |        |        |                |   |        |          
|                                              
|CURRENT LIABILITIES                            |                                             |                                                                                                   |        |        |                |   |        |          
|                                               | Notes payableNote 7                        |                                                                                                   | $      | 16,091 |                |   | $      | 17,088    |       
|                                               | Accounts payable                            |                                                                                                   |        | 17,811 |                |   |        | 19,632    |       
|                                               | Employee compensation                       |                                                                                                   |        | 2,321  |                |   |        | 2,741     |       
|                                               | Taxes, interest, and other liabilities      |                                                                                                   |        | 2,178  |                |   |        | 1,906     |       
|                                               | Current maturities of long-term obligations |                                                                                                   |        | 7,180  |                |   |        | 3,480     |       
|                                               |                                             |                                                                                                   |        |        |                |  
|                                               | TOTAL CURRENT LIABILITIES                   |                                                                                                   |        | 45,581 |                |   |        | 44,847    |       
|                                              
|LONG-TERM OBLIGATIONS, less current maturities |                                             |                                                                                                   | 15,311 |        |                |   | 24,831 |          
|                                              
|CONTINGENT LIABILITIES AND OTHER               |                                             |                                                                                                   | 243    |        |                |   | 938    |          
|                                              
|STOCKHOLDERS EQUITY                           |                                             |                                                                                                   |        |        |                |   |        |          
|                                               | Preferred stock:                            |                                                                                                   |        |        |                |   |        |           |       
|                                               |                                             | Series Three: 10% cumulative redeemable, $60 face
value; 14,784 shares issues and outstanding     |        |        | 678            |   |        |           | 678    |  
|                                               |                                             | Series Four: 10% cumulative redeemable, $51.50 face
value; 46,414 shares issues and outstanding   |        |        | 2,390          |   |        |           | 2,390  |  
|                                               |                                             | Series Five: 10% cumulative redeemable, $120 face
value; 6,648 shares issues and outstanding      |        |        | 798            |   |        |           | 798    |  
|                                               |                                             | Series Six: 10% cumulative callable, $160 face
value; 20,000 shares authorized, issued  none     |        |        |                |   |        |           |        |  
|                                               |                                             | Common stock, $1 par value; 10,000,000 shares
authorized, 3,101,195 shares issued and outstanding |        |        | 3,101          |   |        |           | 3,101  |  
|                                               |                                             | Other comprehensive loss                                                                          |        |        | (125           | ) |        |           | (1,140 | )
|                                               |                                             | Retained earnings                                                                                 |        |        | 19,174         |   |        |           | 21,007 |  
|                                               |                                             |                                                                                                   |        |        |                |  
|                                               |                                             |                                                                                                   | 26,016 |        |                |   | 26,834 |          
|                                               |                                             |                                                                                                   |        |        |                |  
|                                               |                                             | $                                                                                                 | 87,151 |        |                | $ | 97,450 |          
|                                               |                                             |                                                                                                   |        |        |                |  

| |  | See notes to consolidated financial statements
| |  | ----------------------------------------------

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




|                                                      |                                                                                |   |        |                                     |   |                                       |        |        |             |   |        |  
|----------------------------------------------------- | ------------------------------------------------------------------------------ | - | ------ | ----------------------------------- | - | ------------------------------------- | ------ | ------ | ----------- | - | ------ | -
|                                                      |                                                                                |   |        |                                     |   | Three Months Ended December 31,       |       
|                                                      |                                                                                |   |        |                                     |   | 2001                                  |        |        | 2000        |  
|                                                      |                                                                                |   |        |                                     |   | (Unaudited)                           |        |        | (Unaudited) |  
|                                                      |                                                                                |   |        |                                     |   |                                       |       
|                                                      |                                                                                |   |        |                                     |   | (in thousands, except per share data) |       
|Net sales                                             |                                                                                | $ | 29,048 |                                     |   | $                                     | 33,515 |       
|Costs and expenses:                                   |                                                                                |   |        |                                     |   |                                       |        |       
|                                                      | Cost of sales and operating expenses                                           |   |        | 22,527                              |   |                                       |        | 25,831 |            
|                                                      | Selling, general and administrative                                            |   |        | 5,950                               |   |                                       |        | 6,921  |            
|                                                      | Depreciation and amortization                                                  |   |        | 1,622                               |   |                                       |        | 1,549  |            
|                                                      |                                                                                |   |        |                                     |   |                                      
|                                                      |                                                                                |   | 30,099 |                                     |   |                                       | 34,301 |       
|                                                      |                                                                                |   |        |                                     |   |                                      
|                                                      |                                                                                |   |        | Operating Loss                      |   |                                       | (1,051 | )      |             |   | (786   | )
|Other income (expense)                                |                                                                                |   |        |                                     |   |                                       |        |       
|                                                      | Investment and interest income (loss)Note 10                                  |   | (495   | )                                   |   |                                       | 207    |       
|                                                      | Interest expense                                                               |   |        | (912                                | ) |                                       |        | (1,268 | )          
|                                                      |                                                                                |   |        |                                     |   |                                      
|                                                      | Loss Before Federal Income Taxes and
Equity in Earnings (Losses) of Affiliates |   |        | (2,458                              | ) |                                       |        | (1,847 | )          
|Federal income tax benefit                            |                                                                                |   | (829   | )                                   |   |                                       | (591   | )     
|                                                      |                                                                                |   |        |                                     |   |                                      
|                                                      | Loss Before Equity in Earnings (Losses) of Affiliates                          |   |        | (1,629                              | ) |                                       |        | (1,256 | )          
|Equity in earnings (losses) of affiliates, net of tax |                                                                                |   | (22    | )                                   |   |                                       | (453   | )     
|                                                      |                                                                                |   |        |                                     |   |                                      
|                                                      |                                                                                |   |        | Net Loss                            |   |                                       | (1,651 | )      |             |   | (1,709 | )
|Less preferred stock dividends                        |                                                                                |   | (102   | )                                   |   |                                       | (102   | )     
|                                                      |                                                                                |   |        |                                     |   |                                      
|                                                      |                                                                                |   |        | Net Loss Applicable to Common Stock |   | $                                     | (1,753 | )      |             | $ | (1,811 | )
|                                                      |                                                                                |   |        |                                     |   |                                      
|Net Loss Per Common Share  Basic                     |                                                                                | $ | (0.57  | )                                   |   | $                                     | (0.58  | )     
|                                                      |                                                                                |   |        |                                     |   |                                      
|Net Loss Per Common Share  Assuming Dilution         |                                                                                | $ | (0.57  | )                                   |   | $                                     | (0.58  | )     
|                                                      |                                                                                |   |        |                                     |   |                                      

| |  | See notes to consolidated financial statements
| |  | ----------------------------------------------

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

|                                                      |                                        |                                                                                         |                                     |                                                                |        |                                       |         |         |             |      |       |  
|----------------------------------------------------- | -------------------------------------- | --------------------------------------------------------------------------------------- | ----------------------------------- | -------------------------------------------------------------- | ------ | ------------------------------------- | ------- | ------- | ----------- | ---- | ----- | -
|                                                      |                                        |                                                                                         |                                     |                                                                |        | Nine Months Ended December 31,        |        
|                                                      |                                        |                                                                                         |                                     |                                                                |        | 2001                                  |         |         | 2000        |     
|                                                      |                                        |                                                                                         |                                     |                                                                |        | (Unaudited)                           |         |         | (Unaudited) |     
|                                                      |                                        |                                                                                         |                                     |                                                                |        |                                       |        
|                                                      |                                        |                                                                                         |                                     |                                                                |        | (in thousands, except per share data) |        
|Net sales                                             |                                        | $                                                                                       | 115,021                             |                                                                |        | $                                     | 131,063 |        
|Costs and expenses:                                   |                                        |                                                                                         |                                     |                                                                |        |                                       |         |        
|                                                      | Cost of sales and operating expenses   |                                                                                         |                                     | 90,761                                                         |        |                                       |         | 101,753 |            
|                                                      | Selling, general and administrative    |                                                                                         |                                     | 18,671                                                         |        |                                       |         | 21,576  |            
|                                                      | Depreciation and amortization          |                                                                                         |                                     | 4,932                                                          |        |                                       |         | 4,612   |            
|                                                      |                                        |                                                                                         |                                     |                                                                |        |                                      
|                                                      |                                        |                                                                                         | 114,364                             |                                                                |        |                                       | 127,941 |        
|                                                      |                                        |                                                                                         |                                     |                                                                |        |                                      
|                                                      |                                        |                                                                                         |                                     | Operating Earnings                                             |        |                                       | 657     |         |             |      | 3,122 |  
|Other income (expense)                                |                                        |                                                                                         |                                     |                                                                |        |                                       |         |        
|                                                      | Investment and interest incomeNote 10 |                                                                                         |                                     | 95                                                             |        |                                       |         | 1,209   |            
|                                                      | Interest expense                       |                                                                                         |                                     | (3,012                                                         | )      |                                       |         | (3,582  | )          
|                                                      |                                        |                                                                                         |                                     |                                                                |        |                                      
|                                                      |                                        | Income (Loss)
Before Federal Income Taxes and Equity
in Earnings (Losses) of Affiliates |                                     |                                                                | (2,260 | )                                     |         |         | 749         |     
|Federal income tax expense (benefit)                  |                                        |                                                                                         | (740                                | )                                                              |        |                                       | 328     |        
|                                                      |                                        |                                                                                         |                                     |                                                                |        |                                      
|                                                      |                                        |                                                                                         |                                     | Income (Loss) Before
Equity in
Earnings (Losses) of Affiliates |        |                                       | (1,520  | )       |             |      | 421   |  
|Equity in earnings (losses) of affiliates, net of tax |                                        |                                                                                         | (8                                  | )                                                              |        |                                       | (1,075  | )      
|                                                      |                                        |                                                                                         |                                     |                                                                |        |                                      
|                                                      |                                        |                                                                                         |                                     | Net Loss                                                       |        |                                       | (1,528  | )       |             |      | (654  | )
|Less preferred stock dividends                        |                                        |                                                                                         | (306                                | )                                                              |        |                                       | (306    | )      
|                                                      |                                        |                                                                                         |                                     |                                                                |        |                                      
|                                                      |                                        |                                                                                         | Net Loss Applicable to Common Stock |                                                                | $      | (1,834                                | )       |         | $           | (960 | )    
|                                                      |                                        |                                                                                         |                                     |                                                                |        |                                      
|Net Loss Per Common Share  Basic                     |                                        | $                                                                                       | (0.59                               | )                                                              |        | $                                     | (0.31   | )      
|                                                      |                                        |                                                                                         |                                     |                                                                |        |                                      
|Net Loss Per Common Share  Assuming Dilution         |                                        | $                                                                                       | (0.59                               | )                                                              |        | $                                     | (0.31   | )      
|                                                      |                                        |                                                                                         |                                     |                                                                |        |                                      

| |  | See notes to consolidated financial statements
| |  | ----------------------------------------------

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

|                                                                                |                                                     |                                             |        |        |       |                                |        |        |             |  |  | 
|------------------------------------------------------------------------------- | --------------------------------------------------- | ------------------------------------------- | ------ | ------ | ----- | ------------------------------ | ------ | ------ | ----------- |  |  | 
|                                                                                |                                                     |                                             |        |        |       | Nine Months Ended December 31, |       
|                                                                                |                                                     |                                             |        |        |       | 2001                           |        |        | 2000        | 
|                                                                                |                                                     |                                             |        |        |       | (Unaudited)                    |        |        | (Unaudited) | 
|                                                                                |                                                     |                                             |        |        |       |                                |       
|                                                                                |                                                     |                                             |        |        |       | (in thousands)                 |       
|Operating Activities                                                            |                                                     |                                             |        |        |       |                                |        |       
|Net Loss                                                                        |                                                     | $                                           | (1,528 | )      |       | $                              | (654   | )     
|Adjustments to reconcile net loss to net cash provided
by operating activities: |                                                     |                                             |        |        |       |                                |        |       
|                                                                                |                                                     | Depreciation and other non-cash items       |        |        | 4,827 |                                |        |        | 5,360       | 
|                                                                                |                                                     | Changes in operating assets and liabilities |        |        | 782   |                                |        |        | 4,680       | 
|                                                                                |                                                     |                                             |        |        |       |                               
|                                                                                | Net Cash Provided By Operating Activities           |                                             |        | 4,081  |       |                                |        | 9,386  |            
|Investing Activities                                                            |                                                     |                                             |        |        |       |                                |        |       
|                                                                                | Proceeds from sale-leaseback                        |                                             |        | 3,000  |       |                                |        |        |            
|                                                                                | Purchases of property and equipment                 |                                             |        | (1,538 | )     |                                |        | (8,989 | )          
|                                                                                | Sale of investment                                  |                                             |        | 750    |       |                                |        | 1,143  |            
|                                                                                | Advances to affiliates                              |                                             |        |        |       |                                |        | (522   | )          
|                                                                                | Payments received on notes receivable               |                                             |        | 591    |       |                                |        | 234    |            
|                                                                                | Redemption of marketable securities                 |                                             |        |        |       |                                |        | 2,530  |            
|                                                                                | Investment in affiliates                            |                                             |        |        |       |                                |        | (272   | )          
|                                                                                | Other                                               |                                             |        | 69     |       |                                |        | 300    |            
|                                                                                |                                                     |                                             |        |        |       |                               
|                                                                                | Net Cash Provided By (Used In) Investing Activities |                                             |        | 2,872  |       |                                |        | (5,576 | )          
|Financing Activities                                                            |                                                     |                                             |        |        |       |                                |        |       
|
|Net repayments on lines of credit                                               |                                                     |                                             | (2,200 | )      |       |                                | (3,500 | )     
|Proceeds from other debt obligations                                            |                                                     |                                             |        |        |       |                                | 3,294  |       
|Repayments on other debt obligations                                            |                                                     |                                             | (3,918 | )      |       |                                | (2,826 | )     
|Payments on contingent liability                                                |                                                     |                                             | (1,113 | )      |       |                                |        |       
|Dividends paid on preferred stock                                               |                                                     |                                             | (306   | )      |       |                                | (306   | )     
|                                                                                |                                                     |                                             |        |        |       |                               
|                                                                                | Net Cash Used In Financing Activities               |                                             |        | (7,537 | )     |                                |        | (3,338 | )          
|                                                                                |                                                     |                                             |        |        |       |                               
|                                                                                | Increase
(Decrease) in Cash and Cash Equivalents    |                                             |        | (584   | )     |                                |        | 472    |            
|                                                                                | Cash and Cash Equivalents at Beginning of Period    |                                             |        | 968    |       |                                |        | 542    |            
|                                                                                |                                                     |                                             |        |        |       |                               
|                                                                                | Cash and Cash Equivalents at End of Period          |                                             | $      | 384    |       |                                | $      | 1,014  |            
|                                                                                |                                                     |                                             |        |        |       |                               

| |  | See notes to consolidated financial statements
| |  | ----------------------------------------------

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Maxco, Inc. and Subsidiaries
December 31, 2001
(Unaudited)

NOTE 1  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

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



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The results of operations for the interim periods presented are not necessarily indicative of the results
for the full year. Maxcos sales and operating results have varied substantially from quarter to quarter.
Net sales are typically lower in the third and fourth quarters. The most significant factors affecting these
fluctuations are the seasonal buying patterns of the Companys customers due to inclement weather and the
reduced number of business days during the holiday season. In addition, the timing of acquisitions or the
occasional sale of corporate investments may cause substantial fluctuations of operating results from
quarter to quarter. Maxco expects its net sales and operating results to continue to fluctuate from quarter
to quarter.



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

NOTE 2  INVENTORIES

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

|                                    |  |                |       |  |           |   |       | 
|----------------------------------- |  | -------------- | ----- |  | --------- | - | ----- | 
|                                    |  | December 31,   |       |  | March 31, |  
|                                    |  | 2001           |       |  | 2001      |  
|                                    |  |                |      
|                                    |  | (in thousands) |      
|Raw materials                       |  | $              | 370   |  |           | $ | 531   | 
|Finished goods and work in progress |  |                | 842   |  |           |   | 1,293 | 
|Purchased products for resale       |  |                | 3,448 |  |           |   | 4,669 | 
|                                    |  |                |       |  |           |  
|                                    |  | $              | 4,660 |  |           | $ | 6,493 | 
|                                    |  |                |       |  |           |  

NOTE 3  MARKETABLE SECURITIES

| |                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company classifies its marketable securities as securities available for sale under FASB 115, Accounting
for Certain Investments in Debt and Equity Securities. Available-for-sale securities are carried at fair
value, with the unrealized gains and losses, net of tax, reported as a separate component of stockholders
equity.

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NOTE 4  EARNINGS PER SHARE

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

|                                                                                                    |  |                                       |        |   |                   |   |        |      |  |   |        |   |  |   |       |  
|--------------------------------------------------------------------------------------------------- |  | ------------------------------------- | ------ | - | ----------------- | - | ------ | ---- |  | - | ------ | - |  | - | ----- | -
|                                                                                                    |  | Three Months Ended                    |        |   | Nine Months Ended |  
|                                                                                                    |  | December 31,                          |        |   | December 31,      |  
|                                                                                                    |  |                                       |        |   |                   |  
|                                                                                                    |  | 2001                                  |        |   | 2000              |   |        | 2001 |  |   | 2000   |  
|                                                                                                    |  |                                       |        |   |                   |   |        |      |  |   |        |  
|                                                                                                    |  | (in thousands, except per share data) |       
|NUMERATOR:                                                                                          |  |                                       |        |   |                   |   |        |      |  |   |        |   |  |   |       |  
|Net Income                                                                                          |  | $                                     | (1,651 | ) |                   | $ | (1,709 | )    |  | $ | (1,528 | ) |  | $ | (654  | )
|Preferred stock dividends                                                                           |  |                                       | (102   | ) |                   |   | (102   | )    |  |   | (306   | ) |  |   | (306  | )
|                                                                                                    |  |                                       |        |   |                   |   |        |      |  |   |        |  
|Numerator for basic and diluted earnings per
shareincome available to common stockholders          |  |                                       | (1,753 | ) |                   |   | (1,811 | )    |  |   | (1,834 | ) |  |   | (960  | )
|                                                                                                   
|DENOMINATOR:                                                                                        |  |                                       |        |   |                   |   |        |      |  |   |        |   |  |   |       |  
|Denominator for basic earnings per shareweighted
average shares                                    |  |                                       | 3,101  |   |                   |   | 3,101  |      |  |   | 3,101  |   |  |   | 3,101 |  
|                                                                                                   
|Effect of dilutive securities:                                                                      |  |                                       |        |   |                   |   |        |      |  |   |        |   |  |   |       |  
|Employee stock options                                                                              |  |                                       |       |   |                   |   |       |      |  |   |       |   |  |   |      |  
|                                                                                                    |  |                                       |        |   |                   |   |        |      |  |   |        |  
|Dilutive potential common shares                                                                    |  |                                       |       |   |                   |   |       |      |  |   |       |   |  |   |      |  
|                                                                                                    |  |                                       |        |   |                   |   |        |      |  |   |        |  
|                                                                                                   
|Denominator for diluted earnings per shareadjusted
weighted average shares and assumed conversions |  |                                       | 3,101  |   |                   |   | 3,101  |      |  |   | 3,101  |   |  |   | 3,101 |  
|                                                                                                    |  |                                       |        |   |                   |   |        |      |  |   |        |  
|                                                                                                   
|BASIC EARNINGS PER SHARE                                                                            |  | $                                     | (0.57  | ) |                   | $ | (0.58  | )    |  | $ | (0.59  | ) |  | $ | (0.31 | )
|                                                                                                    |  |                                       |        |   |                   |   |        |      |  |   |        |  
|DILUTED EARNINGS PER SHARE                                                                          |  | $                                     | (0.57  | ) |                   | $ | (0.58  | )    |  | $ | (0.59  | ) |  | $ | (0.31 | )
|                                                                                                    |  |                                       |        |   |                   |   |        |      |  |   |        |  

NOTE 5  COMPREHENSIVE INCOME (LOSS)

| |                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------
| | The components of comprehensive income
(loss) for the three and nine months ended December 31, 2001 and 2000 are as
follows:

|                                                   |  |                    |        |   |                   |                |        |      |  |   |        |   |  |   |        |  
|-------------------------------------------------- |  | ------------------ | ------ | - | ----------------- | -------------- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                   |  | Three Months Ended |        |   | Nine Months Ended |               
|                                                   |  | December 31,       |        |   | December 31,      |               
|                                                   |  |                    |        |   |                   |               
|                                                   |  | 2001               |        |   | 2000              |                |        | 2001 |  |   | 2000   |  
|                                                   |  |                    |        |   |                   |                |        |      |  |   |        |  
|                                                   |  |                    |        |   |                   | (in thousands) |        |      |  |   |       
|Net loss                                           |  | $                  | (1,651 | ) |                   | $              | (1,709 | )    |  | $ | (1,528 | ) |  | $ | (654   | )
|Unrealized gains (losses) on marketable securities |  |                    | 2,075  |   |                   |                | (447   | )    |  |   | 1,140  |   |  |   | (557   | )
|Unrealized gains (losses) on swap agreement        |  |                    | 49     |   |                   |                |       |      |  |   | (83    | ) |  |   |       |  
|                                                   |  |                    |        |   |                   |                |        |      |  |   |        |  
|Comprehensive income (loss)                        |  | $                  | 473    |   |                   | $              | (2,156 | )    |  | $ | (471   | ) |  | $ | (1,211 | )
|                                                   |  |                    |        |   |                   |                |        |      |  |   |        |  



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

|                                           |  |                |      |   |           |   |        |  
|------------------------------------------ |  | -------------- | ---- | - | --------- | - | ------ | -
|                                           |  | December 31,   |      |   | March 31, |  
|                                           |  | 2001           |      |   | 2001      |  
|                                           |  |                |      |   |           |  
|                                           |  | (in thousands) |     
|Unrealized losses on marketable securities |  | $              |     |   |           | $ | (1,140 | )
|Unrealized loss on swap agreement          |  |                | (125 | ) |           |   |       |  
|                                           |  |                |      |   |           |  
|Other comprehensive loss                   |  | $              | (125 | ) |           | $ | (1,140 | )
|                                           |  |                |      |   |           |  

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NOTE 6  INDUSTRY SEGMENT INFORMATION



| |                                                               
| | --------------------------------------------------------------
| | The following summarizes Maxcos industry segment information:

|                         |                           |   |                |        |  |           |        |        | 
|------------------------ | ------------------------- | - | -------------- | ------ |  | --------- | ------ | ------ | 
|                         |                           |   | December 31,   |        |  | March 31, |       
|                         |                           |   | 2001           |        |  | 2001      |       
|                         |                           |   |                |        |  |           |       
|                         |                           |   | (in thousands) |       
|Identifiable assets:     |                           |   |                |        |  |           |        |       
|Construction supplies    |                           | $ | 26,959         |        |  | $         | 32,759 |       
|Heat treating            |                           |   | 31,449         |        |  |           | 34,714 |       
|Packaging products       |                           |   | 4,716          |        |  |           | 5,538  |       
|Corporate and other      |                           |   | 17,300         |        |  |           | 16,215 |       
|Investments and advances |                           |   | 6,727          |        |  |           | 8,224  |       
|                         |                           |   |                |        |  |          
|                         | Total Identifiable Assets |   | $              | 87,151 |  |           | $      | 97,450 | 
|                         |                           |   |                |        |  |          

|                                       |                       |                                             |                            |                                 |       |                    |        |        |                   |                |        |        |       |       |         |        |       |       |         | 
|-------------------------------------- | --------------------- | ------------------------------------------- | -------------------------- | ------------------------------- | ----- | ------------------ | ------ | ------ | ----------------- | -------------- | ------ | ------ | ----- | ----- | ------- | ------ | ----- | ----- | ------- | 
|                                       |                       |                                             |                            |                                 |       | Three Months Ended |        |        | Nine Months Ended |               
|                                       |                       |                                             |                            |                                 |       | December 31,       |        |        | December 31,      |               
|                                       |                       |                                             |                            |                                 |       | 2001               |        |        | 2000              |                |        | 2001   |       |       | 2000    |       
|                                       |                       |                                             |                            |                                 |       |                    |        |        |                   |               
|                                       |                       |                                             |                            |                                 |       |                    |        |        |                   | (in thousands) |        |        |       |       |        
|Net sales:                             |                       |                                             |                            |                                 |       |                    |        |        |                   |                |        |        |       |       |         |       
|                                       | Construction supplies |                                             | $                          | 17,820                          |       |                    | $      | 19,900 |                   |                | $      | 79,026 |       |       | $       | 88,564 |      
|                                       | Heat treating         |                                             |                            | 8,101                           |       |                    |        | 9,655  |                   |                |        | 25,900 |       |       |         | 30,092 |      
|                                       | Packaging products    |                                             |                            | 3,046                           |       |                    |        | 3,876  |                   |                |        | 9,848  |       |       |         | 12,158 |      
|                                       | Corporate and other   |                                             |                            | 81                              |       |                    |        | 84     |                   |                |        | 247    |       |       |         | 249    |      
|                                       |                       |                                             |                            |                                 |       |                    |        |        |                   |                |        |       
|                                       |                       |                                             |                            | Total Net Sales                 |       | $                  | 29,048 |        |                   | $              | 33,515 |        |       | $     | 115,021 |        |       | $     | 131,063 | 
|                                       |                       |                                             |                            |                                 |       |                    |        |        |                   |                |        |       
|Operating earnings (loss):             |                       |                                             |                            |                                 |       |                    |        |        |                   |                |        |        |       |       |         |       
|                                       | Construction supplies |                                             | $                          | (607                            | )     |                    | $      | (468   | )                 |                | $      | 723    |       |       | $       | 3,044  |      
|                                       | Heat treating         |                                             |                            | 348                             |       |                    |        | 610    |                   |                |        | 1,872  |       |       |         | 2,639  |      
|                                       | Packaging products    |                                             |                            | (162                            | )     |                    |        | (109   | )                 |                |        | (154   | )     |       |         | (194   | )    
|                                       | Corporate and other   |                                             |                            | (630                            | )     |                    |        | (819   | )                 |                |        | (1,784 | )     |       |         | (2,367 | )    
|                                       |                       |                                             |                            |                                 |       |                    |        |        |                   |                |        |       
|                                       |                       |                                             |                            | Total Operating Earnings (Loss) |       | $                  | (1,051 | )      |                   | $              | (786   | )      |       | $     | 657     |        |       | $     | 3,122   | 
|                                       |                       |                                             |                            |                                 |       |                    |        |        |                   |                |        |       
|Depreciation and amortization expense: |                       |                                             |                            |                                 |       |                    |        |        |                   |                |        |        |       |       |         |       
|                                       | Construction supplies |                                             | $                          | 620                             |       |                    | $      | 653    |                   |                | $      | 1,956  |       |       | $       | 1,902  |      
|                                       | Heat treating         |                                             |                            | 752                             |       |                    |        | 605    |                   |                |        | 2,221  |       |       |         | 1,814  |      
|                                       | Packaging products    |                                             |                            | 179                             |       |                    |        | 184    |                   |                |        | 539    |       |       |         | 565    |      
|                                       | Corporate and other   |                                             |                            | 71                              |       |                    |        | 107    |                   |                |        | 216    |       |       |         | 331    |      
|                                       |                       |                                             |                            |                                 |       |                    |        |        |                   |                |        |       
|                                       |                       | Total Depreciation and Amortization Expense |                            | $                               | 1,622 |                    |        | $      | 1,549             |                |        | $      | 4,932 |       |         | $      | 4,612 |      
|                                       |                       |                                             |                            |                                 |       |                    |        |        |                   |                |        |       
|Capital expenditures:                  |                       |                                             |                            |                                 |       |                    |        |        |                   |                |        |        |       |       |         |       
|                                       | Construction supplies |                                             | $                          | 314                             |       |                    | $      | 373    |                   |                | $      | 906    |       |       | $       | 3,563  |      
|                                       | Heat treating         |                                             |                            |                                |       |                    |        | 621    |                   |                |        | 556    |       |       |         | 5,267  |      
|                                       | Packaging products    |                                             |                            | 19                              |       |                    |        | 53     |                   |                |        | 76     |       |       |         | 158    |      
|                                       | Corporate and other   |                                             |                            |                                |       |                    |        |       |                   |                |        |       |       |       |         | 1      |      
|                                       |                       |                                             |                            |                                 |       |                    |        |        |                   |                |        |       
|                                       |                       |                                             | Total Capital Expenditures |                                 | $     | 333                |        |        | $                 | 1,047          |        |        | $     | 1,538 |         |        | $     | 8,989 |        
|                                       |                       |                                             |                            |                                 |       |                    |        |        |                   |                |        |       



| |                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| | Accounting policies of the business segments are consistent with those described in the summary of
significant accounting policies (see Note 1).



| |                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Identifiable assets are those assets that are used in Maxcos operations in each industry segment. Corporate
assets are principally cash, notes receivable, investments, and corporate office properties.
|
| | Maxco has no significant foreign operations, export sales, or inter-segment sales.                                                                                                                       

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NOTE 7  DEBT

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Effective October 1, 2001, Maxco obtained waivers of defaults and an amended agreement with one of its
primary lenders. Per the amended agreement, the Company is required
to repay $1.5 million by March 31, 2002 and $2.4 million by June 30, 2002 from the proceeds from the sale of certain investments. As such, the outstanding non-current
balance on the borrowings from this lender ($12.3 million at December 31, 2001) has been classified as long
term in the accompanying financial statements. The Company is currently in default of certain covenants as
required by loan agreements with another primary lender. As such, the outstanding balance on these
borrowings ($14.9 million at December 31, 2001) has been classified as current in the accompanying financial
statements. There are ongoing negotiations with the lender to obtain waivers of default and amendments to
these covenants or to enter into a forbearance agreement. Management anticipates that the negotiations will be completed by March 2002.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company has guaranteed various debt obligations of certain real
estate investments of its less than majority owned entities in the
aggregate amount of approximately $45.7 million as of
December 31, 2001. Approximately $10.3 million of this
amount is currently in default with one lender. These entities are
currently working with the lender to rectify the default issues. The
Company does not believe that there is any significant degree of risk
related to any of its guarantees because of sufficient underlying
asset values supporting the respective debt obligations.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The accompanying financial statements have been prepared on the basis that the Company will continue as a
going concern. The Companys ability to meet its short term and long term debt service and other obligations
(including compliance with financial covenants) will be dependent upon its future operating performance and
the successful renegotiation of its credit facilities. These dependencies will be subject to financial,
business and other factors, certain of which are beyond the Companys control, such as prevailing economic
conditions. There can be no assurance that, in the event the Company were to require additional financing,
such additional financing would be available on satisfactory terms. The Company believes that funds
generated by its operations and funds available under other credit facilities, will be sufficient to finance
short term capital needs, as well as to fund existing operations for the foreseeable future. However, in the
event that the Company is unable to successfully renegotiate its credit facilities, the Company has liquid
long term equity investments that could be used to meet its short term and long term debt service
requirements and fund operating cash flows.

NOTE 8  FEDERAL INCOME TAXES

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

NOTE 9  INTEREST RATE SWAP AGREEMENTS

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



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The adoption of Statement No. 133 on April 1, 2001 resulted in a pre-tax charge of $42,000 in other
comprehensive income. During the nine months ended December 31, 2001, changes in the fair value of the
interest rate swap agreement were recognized in comprehensive income and amounted to a $83,000 loss. The
Company has recorded a $125,000 unrealized loss in other comprehensive loss to record the fair value of the
swap agreements at December 31, 2001.

NOTE 10  INVESTMENT IN PROVANT, INC.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the quarter, the Company recorded investment income of $2.0 million representing additional
consideration to be received from Provant from the sale of the Companys investment in Strategic
Interactive, Inc. (Maxcos former 45% owned affiliate sold to Provant, Inc. in October 1998). Additionally,
in accordance with FAS 115, the Company recorded a charge of $3.1 million in the current quarter to
recognize a decline in the value of its investment in Provant, Inc. that has been deemed other than
temporary. This decline in value had been previously considered temporary and was reported as a component
of other comprehensive loss.

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##### Table of Contents



NOTE 11  RELATED PARTY TRANSACTIONS

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On December 20, 2001 the Company sold its 50% equity interest in Mid-State Industrial Services, Inc. to
Maxco President, Max A. Coon, for $1.75 million, of which $750,000 was paid in cash with the remainder being
applied to amounts due Mr. Coon for advances he had made to the Company and its affiliates. Additionally, Mid-State
retired the $0.5 million obligation it had with Maxco. A portion of the proceeds from the sale was used to
retire certain obligations not related to Mid-State which were guaranteed by the Company.



| |                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On August 17, 2001 Maxco entered into a sale-leaseback agreement with a limited liability company in which
Max A. Coon is a member. The Company sold approximately $3.0 million in assets to the LLC that are now
being leased back to the Company for a period of 60 months.

NOTE 12  NEW ACCOUNTING PRONOUNCEMENTS

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On July 20, 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting
Standards (SFAS) No. 141, Business Combinations and SFAS No. 142 Goodwill and Other Intangible
Assets. These pronouncements significantly change the accounting for business combinations, goodwill, and
intangible assets. SFAS No. 141 eliminates the pooling-of-interests method of accounting for business
combinations and further clarifies the criteria to recognize intangible assets separately from goodwill.
The requirements of SFAS No. 141 are effective for any business combination accounted for by the purchase
method that is completed after June 30, 2001. Under SFAS no. 142 goodwill and indefinite lived intangible
assets are no longer amortized but are reviewed for impairment annually (or more frequently if impairment
indicators arise). Separable intangible assets that are not deemed to have an indefinite life will continue
to be amortized over their useful lives. The amortization provisions of SFAS No. 142 apply to goodwill and
intangible assets acquired after June 30, 2001. With respect to goodwill and intangible assets acquired
prior to July 1, 2001, companies are required to adopt the pronouncement in their fiscal year beginning
after December 15, 2001.



| |                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company will adopt the new rules on accounting for goodwill and other intangible assets April 1, 2002.
The Company has not completed its analysis of the effect of adopting these statements and what effect the
adoption will have on the financial statements.

NOTE 12  SUBSEQUENT EVENT

| |                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------
| | In January 2002, the Company sold an
insignificant portion of its ownership interest in L/M Associates,
LLC for $100,000.

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##### Table of Contents






MANAGEMENTS DISCUSSION AND ANALYSIS OF

|                                                                                             | 
|-------------------------------------------------------------------------------------------- | 
|FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Maxco, Inc. and Subsidiaries
December 31, 2001

MATERIAL CHANGES IN FINANCIAL CONDITION

Operating activities for the nine months ended December 31, 2001 generated $4.1 million in cash, of which
earnings, after non-cash adjustments, generated $3.3 million. Individual working capital component levels changed
from the March 31, 2001 level generating approximately $782,000 in cash.

Investing activities provided $2.9 million in cash primarily as a result of a sale-leaseback transaction with a
related party that occurred during the second quarter and the sale of the Companys investment in Mid-State
Industrial Services, Inc. These transactions were partially offset by purchases of additional equipment for
Maxcos heat-treating unit (Atmosphere Annealing) and construction supplies unit (Ersco).

Cash was used in financing activities to reduce the outstanding balances on the Companys lines of credit by $2.2
million. Repayments of other obligations amounted to $5.0 million. The Company is required to repay by June 30,
2002 a total of $3.9 million from the proceeds from the sale of certain investments. At December 31, 2001, the
Company classified certain of its borrowings as short term due to the Company being in default of certain
covenants. There are ongoing negotiations with the lender to obtain waivers of default and amendments to these
covenants or to enter into a forbearance agreement. Management anticipates that these negotiations will be completed by March 2002.

The Companys ability to meet its short term and long term debt service and other obligations (including
compliance with financial covenants) will be dependent upon its future operating performance and the successful
renegotiation of its credit facilities. These dependencies will be subject to financial, business and other
factors, certain of which are beyond the Companys control, such as prevailing economic conditions. There can be
no assurance that, in the event the Company were to require additional financing, such additional financing would
be available on satisfactory terms. The Company believes that funds generated by its operations and funds
available under other credit facilities will be sufficient to finance short term capital needs, as well as to
fund existing operations for the foreseeable future. However, in the event that the Company is unable to
successfully renegotiate its credit facilities, the Company has liquid long term equity investments that could be
used to meet its short term and long term debt service requirements and fund operating cash flows.

At December 31, 2001, the 2,240,605 shares of Integral Vision (formerly Medar) common stock that Maxco owns had
an aggregate market value of approximately $224,000 ($538,000 at February 12, 2002). Maxcos investment in
Integral Vision is reflected in Maxcos financial statements under the equity method for all periods presented as
the Company owns greater than 20% of Integral Visions outstanding stock.

At December 31, 2001, the 249,230 shares of Provant common stock that Maxco owns had an aggregate market value of
approximately $137,000 ($160,000 at February 12, 2002). Maxcos investment in Provant is reflected in Maxcos
financial statements under the cost method as an available-for-sale security as the Company owns less than 20% of
Provants outstanding stock. On

12



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##### Table of Contents



December 11, 2001 the Company reached an agreement with Provant, Inc. in which
Maxco will receive on April 15, 2002 $1.1 million in cash and, at Provants discretion, an additional $1.6
million in cash or Provant stock.

MATERIAL CHANGES IN RESULTS OF OPERATIONS

Three Months Ended December 31, 2001 Compared to 2000
Net sales decreased to $29.0 million compared to $33.5 million in last years third quarter. Third quarter
results reflect an operating loss of $1.1 million compared to a loss of $786,000 for the comparable period in
2000. Net loss was $1.7 million or $.57 per share assuming dilution compared to a loss of $1.7 million or $.58
per share assuming dilution in the prior year period.

Sales and operating earnings for the three months ended December 31, 2001 and 2000 by each of the companys
segments were as follows:

|                      |  |                    |        |  |                    |                |      |           |  |   |        |  |           |   |      |  
|--------------------- |  | ------------------ | ------ |  | ------------------ | -------------- | ---- | --------- |  | - | ------ |  | --------- | - | ---- | -
|                      |  | Three Months Ended |        |  | Three Months Ended |               
|                      |  | December 31, 2001  |        |  | December 31, 2000  |               
|                      |  |                    |        |  |                    |               
|                      |  |                    |        |  |                    | Operating      |      |           |  |   |        |  | Operating |  
|                      |  |                    |        |  |                    | Earnings       |      |           |  |   |        |  | Earnings  |  
|                      |  | Net Sales          |        |  | (Loss)             |                |      | Net Sales |  |   | (Loss) | 
|                      |  |                    |        |  |                    |                |      |           |  |   |        | 
|                      |  |                    |        |  |                    | (in thousands) |      |           |  |   |       
|Construction supplies |  | $                  | 17,820 |  |                    | $              | (607 | )         |  | $ | 19,900 |  |           | $ | (468 | )
|Heat treating         |  |                    | 8,101  |  |                    |                | 348  |           |  |   | 9,655  |  |           |   | 610  |  
|Packaging products    |  |                    | 3,046  |  |                    |                | (162 | )         |  |   | 3,876  |  |           |   | (109 | )

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

Consolidated gross profit (net sales less cost of sales and operating expenses) decreased to $6.5 million from
$7.7 million. Consolidated gross margin (gross profit as a percentage of net sales) decreased to 22% from 23%.
The decrease in gross profit was primarily the result of the reduced sales from inventory at Ersco. The
increased proportion of sales at Ersco on a direct shipment basis, which generally have a lower margin compared
to sales from inventory, contributed to the reduction in the overall gross margin. Although gross margin improved
at Atmosphere Annealing and Pak Sak, gross profit decreased due to lower sales volume. The operating expense
portion as used in arriving at gross profit was reduced by $1.9 million as a result of reduced sales and facility expenses.

Selling, general, and administrative expenses (SG&A) decreased to $6.0 million from $6.9 million. The decrease
primarily resulted at Ersco due to reduced selling expenses and reduced costs as a result of an expense reduction
program. Atmosphere Annealing and Pak Sak have also lowered their SG&A through cost cutting measures.

Depreciation and amortization expense for the three months ended December 31, 2001 was comparable to the prior
year.

As a result of the above, operating loss increased to approximately $1.1 million from $786,000 in last years
comparable period.

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Investment and interest income decreased for the three month period ended December 31, 2001. During the quarter,
the Company recorded investment income of $2.0 million representing additional consideration to be received from
Provant from the sale of the Companys investment in Strategic Interactive, Inc. (Maxcos former 45% owned
affiliate sold to Provant, Inc. in October 1998). Additionally, in accordance with FAS 115, the Company recorded
a charge of $3.1 million in the current quarter to recognize a decline in the value of its investment in Provant,
Inc. that has been deemed other than temporary. This decline in value had been previously considered temporary
and was reported as a component of other comprehensive loss. The Company also recognized a gain of approximately
$422,000 on the sale of its investment in Mid-State Industrial Services. Interest expense decreased from the
prior year quarter due to reduced borrowings and a reduction in the average interest rate associated with these
borrowings.

Equity in earnings of affiliates net of tax increased approximately $431,000 from a loss of $453,000 to a loss of
$22,000. This was primarily the result of the Companys investment in Integral Vision, Inc. At March 31, 2001,
the Company adjusted the carrying value of its investment in Integral Vision, Inc. to its estimated fair value as
the Company determined that the investment was impaired. Since managements estimate of the fair value of this
investment at December 31, 2001 has not changed, the Company did not recognize any gain or loss on the
investment. Maxcos share of Integral Visions net loss for the three months ended December 31, 2000 was
$366,000, net of tax.

Nine Months Ended December 31, 2001 Compared to 2000
Net sales decreased to $115.0 million compared to $131.1 million in last years comparable nine-month period.
Results for this period include operating earnings of $657,000 compared to $3.1 million for the comparable period
in 2000. Net loss was $1.5 million or $.59 per share assuming dilution compared to last years net loss of
$654,000 or $.31 per share assuming dilution.

Sales and operating earnings for the nine months ended December 31, 2001 and 2000 by each of the companys
segments were as follows:

|                      |  |                   |        |  |                   |                |       |           |  |   |        |  |           |   |       |  
|--------------------- |  | ----------------- | ------ |  | ----------------- | -------------- | ----- | --------- |  | - | ------ |  | --------- | - | ----- | -
|                      |  | Nine Months Ended |        |  | Nine Months Ended |               
|                      |  | December 31, 2001 |        |  | December 31, 2000 |               
|                      |  |                   |        |  |                   |               
|                      |  |                   |        |  |                   | Operating      |       |           |  |   |        |  | Operating |  
|                      |  |                   |        |  |                   | Earnings       |       |           |  |   |        |  | Earnings  |  
|                      |  | Net Sales         |        |  | (Loss)            |                |       | Net Sales |  |   | (Loss) | 
|                      |  |                   |        |  |                   |                |       |           |  |   |        | 
|                      |  |                   |        |  |                   | (in thousands) |       |           |  |   |       
|Construction supplies |  | $                 | 79,026 |  |                   | $              | 723   |           |  | $ | 88,564 |  |           | $ | 3,044 |  
|Heat treating         |  |                   | 25,900 |  |                   |                | 1,872 |           |  |   | 30,092 |  |           |   | 2,639 |  
|Packaging products    |  |                   | 9,848  |  |                   |                | (154  | )         |  |   | 12,158 |  |           |   | (194  | )

The decrease in net sales at Ersco was a result of a slower economy, greater competitive market conditions, and a
lower level of commercial construction compared to the prior year. The decrease in net sales at Atmosphere
Annealing was due to a slowdown in production experienced by its automotive customers. Lower net sales at Pak
Sak were primarily due to the general economic slowdown and additional competitive pressures.

Consolidated gross profit (net sales less cost of sales and operating expenses) decreased to $24.3 million from
$29.3 million. Consolidated gross margin (gross profit as a percentage of net sales) decreased to 21% from 22%.
The decrease in gross profit was primarily the result of the reduced sales from inventory at Ersco. The
increased proportion of sales at Ersco on a direct shipment basis,

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which generally have a lower margin compared
to sales from inventory, contributed to the reduction in the overall gross margin. Although gross margin improved
at Atmosphere Annealing and Pak Sak, gross profit decreased due to lower sales volume. The operating expense
portion as used in arriving at gross profit was reduced by $5.5 million as a result of reduced sales and facility expenses.

Selling, general, and administrative expenses decreased to $18.7 million from $21.6 million. The decrease
primarily resulted at Ersco due to reduced selling expenses and reduced costs as a result of an expense reduction
program. Atmosphere Annealing and Pak Sak have also lowered their SG&A through cost cutting measures.

Depreciation and amortization expense for the nine months ended December 31, 2001 increased as a result of the
additional depreciation resulting from the purchases of property and equipment by Atmosphere Annealing and Ersco
since December of last year.

As a result of the above, operating earnings decreased to approximately $657,000 from $3.1 million in last years
comparable period.

Investment and interest income decreased for the nine month period ended December 31, 2001. During the period,
the Company recorded investment income of $2.0 million representing its remaining share of the additional
consideration to be paid to former shareholders of Strategic Interactive, Inc. (Maxcos former 45% owned
affiliate sold to Provant, Inc. in October 1998). Additionally, in accordance with FAS 115, the Company recorded
a charge of $3.1 million in the current period to recognize a decline in the value of its investment in Provant,
Inc. that has been deemed other than temporary. This decline in value had been previously considered temporary and was reported as a
component of other comprehensive loss. The Company also recognized a gain of approximately $422,000 on the sale
of its investment in Mid-State Industrial Services. Interest expense decreased from the prior year due to
reduced borrowings and a reduction in the average interest rate associated with these borrowings.

Equity in earnings of affiliates increased approximately $1.1 million from a loss of $1.1 million to a loss of
$8,000. This was primarily the result of the Companys investment in Integral Vision, Inc. At March 31, 2001,
the Company adjusted the carrying value of its investment in Integral Vision, Inc. to its estimated fair value as
the Company determined that the investment was impaired. Since managements estimate of the fair value of this
investment at December 31, 2001 has not changed, the Company did not recognize any gain or loss on the
investment. Maxcos share of Integral Visions net loss for the nine months ended December 31, 2000 was $937,000
net of tax.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
The Companys variable interest expense is sensitive to changes in the general level of United States interest
rates. Some of the Companys interest expense is fixed through long-term borrowings to mitigate the impact of
such potential exposure. Additionally, the Company entered into an interest rate swap agreement based on a
notional amount of $5.0 million to manage its exposure to interest rate changes. The swap involves the exchange
of fixed and variable interest payments without changing the notional principal amount. The Company had total
outstanding variable rate short and long term borrowings of $33.4 million at December 31, 2001. A 1% increase
from the prevailing interest rates at December 31, 2001 on the unhedged variable rate portion of the Companys
short and long-term borrowings would increase interest expense on an annualized basis by $297,000 based on
principal balances at December 31, 2001.

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##### Table of Contents









PART II
OTHER INFORMATION

|          |  |                                                                                                                       |  | 
|--------- |  | --------------------------------------------------------------------------------------------------------------------- |  | 
|Item 1.   |  | Legal Proceedings                                                                                                    
|         
|          |  | None                                                                                                                 
|         
|Item 2.   |  | Changes in Securities                                                                                                
|         
|          |  | None                                                                                                                 
|         
|Item 3.   |  | Defaults Upon Senior Securities                                                                                      
|         
|          |  | The Company is
currently in default on certain  covenants as required by its $5 million line of credit with a lender.
|         
|Item 4.   |  | Submission of Matters to a Vote of Security Holders                                                                  
|         
|          |  | None                                                                                                                 
|         
|Item 5.   |  | Other Information                                                                                                    
|         
|          |  | None                                                                                                                 
|         
|Item 6(a) |  | Exhibits                                                                                                             
|         
|3         |  | Restated
Articles of  Incorporation  are hereby  incorporated  from Form 10-Q
dated February 13, 1998.               
|         
|3.1       |  | By-laws  are
hereby  incorporated  by  reference  from Form S-4 dated  November 4, 1991 (File No. 33-43855).         

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|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | 
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|4.2   |  | Resolution
establishing Series Three Preferred Shares is hereby incorporated by
reference from Form S-4 dated November 4, 1991 (File No. 33-43855).                                                                                                                                                                                                                                                                                              
|     
|4.3   |  | Resolution
authorizing the redemption of Series Two Preferred Stock and
establishing Series Four Preferred Stock and the terms of the
subordinated notes is hereby incorporated by reference from Form 10-Q dated February 14, 1997.                                                                                                                                                                                                             
|     
|4.4   |  | Resolution
establishing Series Five Preferred Shares is hereby incorporated by reference from Form 10-K dated June 5, 1997.                                                                                                                                                                                                                                                                                                                      
|     
|4.5   |  | Resolution
establishing Series Six Preferred Shares is hereby incorporated by reference from Form 10-K dated June 23, 1999.                                                                                                                                                                                                                                                                                                                      
|     
|10.1  |  | Incentive stock
option plan adopted August 15, 1983, including the amendment
(approved by shareholders August 25, 1987) to increase the authorized
shares on which options may be granted by two hundred fifty thousand
(250,000), up to five hundred thousand (500,000) shares of the common
stock of the company is hereby incorporated by reference from the
registrant's annual report on Form 10-K for the fiscal year ended March 31, 1988.
|     
|10.9  |  | Asset purchase
agreement - Wright Plastic Products, Inc. is hereby incorporated by
reference from registrants Form 10-Q dated November 14, 1996.                                                                                                                                                                                                                                                                                                 
|     
|10.10 |  | Amended and
restated loan agreement between Comerica Bank and Maxco, Inc. dated
December 31, 1996 is hereby incorporated by reference from Form 10-Q dated November 14, 1996.                                                                                                                                                                                                                                                                    
|     
|10.11 |  | Asset purchase
agreement for the purchase of Atmosphere Annealing, Inc. is hereby
incorporated by reference from Form 8-K dated January 17, 1997.                                                                                                                                                                                                                                                                                                
|     
|10.12 |  | Asset purchase
agreement - Axson North America, Inc. is hereby incorporated by
reference from Form 10-Q dated February 14, 1997.                                                                                                                                                                                                                                                                                                                  | 
|     
|10.13 |  | Loan agreement
between Michigan Strategic Fund and Atmosphere Annealing, Inc. is
hereby incorporated by reference from Form 10-Q dated February 13, 1998.                                                                                                                                                                                                                                                                                        
|     
|10.14 |  | Loan agreement
between LAM Funding, L.L.C. and borrower including Guaranty-Maxco, Inc. is hereby incorporated by reference from Form 10-Q dated February 13, 1998.                                                                                                                                                                                                                                                                               
|     
|10.15 |  | First Amendment
to amended and restated loan agreement between Comerica Bank and Maxco, Inc. dated August 1, 1997, is hereby incorporated by reference from Form 10-K dated June 24, 1998.                                                                                                                                                                                                                                                       
|     
|10.16 |  | Second amendment
to amended and restated loan agreement between Comerica
Bank and Maxco, Inc. dated June 24, 1998 is hereby
incorporated by reference from Form 10-K dated June 24, 1998.                                                                                                                                                                                                                                                        

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##### Table of Contents



|          |  |                                                                                                                                                                                                    |  | 
|--------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|10.17     |  | Third amendment
to amended and restated loan agreement between Comerica Bank and
Maxco, Inc. dated September 24, 1998, is hereby incorporated by reference from Form 10-Q dated November 12, 1998.
|         
|10.18     |  | Maxco, Inc. 1998
Employee Stock Option Plan is hereby incorporated by reference from
Form 10-Q dated November 12, 1998.                                                                           
|         
|10.19     |  | Fourth amendment
to amended and restated loan agreement between Comerica Bank and
Maxco, Inc. dated June 22, 1999, is hereby incorporated by reference
from Form 10-K dated June 23, 1999.         | 
|         
|10.20     |  | Fifth amendment
to amended and restated loan agreement between Comerica bank and
Maxco, Inc. dated September 1, 1999 is hereby incorporated by reference from Form 10-Q dated November 12, 1999.  
|         
|10.21     |  | Sixth amendment to amended and restated loan agreement between Comerica Bank and Maxco, Inc. dated July 12, 2000 is hereby
incorporated by reference from Form 10-K dated July 14, 2000.          
|         
|10.22     |  | Seventh amendment
to amended and restated loan agreement between Comerica Bank and
Maxco, Inc. dated January 11, 2001
is hereby incorporated by reference from Form 10-Q dated
February 14, 2001. 
|         
|10.23     |  | Eighth amendment
to amended and restated loan agreement between Comerica Bank and
Maxco, Inc. dated March 19, 2001 is hereby incorporated by reference
from Form 10-K dated July 13, 2001.        
|         
|10.24*    |  | Ninth amendment
to amended and restated loan agreement between Comerica Bank and Maxco, Inc. dated October 1, 2001.                                                                               
|         
|Item 6(b) |  | Reports on Form 8-K None                                                                                                                                                                          
|         
|         

|* |  | Filed herewith
|- |  | --------------

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SIGNATURES

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

|      |                   |  |  |                                                                                                                       
|----- | ----------------- |  |  | ----------------------------------------------------------------------------------------------------------------------
|      |                   |  |  | MAXCO, INC.                                                                                                           
|     
|Date: | February 19, 2002 |  |  | /S/ VINCENT
SHUNSKY
Vincent Shunsky, Vice President-Finance
and Treasurer (Principal Financial and
Accounting Officer)

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EXHIBIT INDEX

|            |  |                                                                                                                     |  | 
|----------- |  | ------------------------------------------------------------------------------------------------------------------- |  | 
|EXHIBIT NO. |  | DESCRIPTION                                                                                                         | 
|            |  |                                                                                                                    
|10.24       |  | Ninth amendment
to amended and restated loan agreement between Comerica Bank and Maxco, Inc. dated October 1, 2001.

20