UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

(Mark One)
[ X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
          OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

[    ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
          OF THE SECURITIES EXCHANGE ACT OF 1934

   For the transition period from ..................to........................

                      For the quarter ended June 30, 2001
                         Commission File Number 0-21717

                           CASCO INTERNATIONAL, INC.
                           -------------------------
             (Exact Name of Registrant as specified in its charter)

             Delaware                                   56-0526145
            ----------                                 ------------
    (State or other jurisdiction of                   (I.R.S. Employer
     incorporation or organization)                   Identification No.)

              13900 Conlan Circle, Suite 150, Charlotte, NC 28277
              ---------------------------------------------------
               (Address of principal executive offices)(Zip Code)

Registrant's telephone number, including area code (704) 482-9591
Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:

                         Common Stock, $0.01 par value
                         -----------------------------
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  Registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. YES X NO __.

The aggregate  market value of the voting shares held by  non-affiliates  of the
Registrant  as of August 13, 2001 was  $3,388,695  (computed by reference to the
average bid and asked prices of such shares on such date).

Number  of  Common  Shares,  each  with  $0.01  par  value,  of  the  Registrant
outstanding as of date: August 10, 2001: 1,774,186 Common Shares.

<PAGE>



                         PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                            CASCO INTERNATIONAL, INC.
                                 BALANCE SHEETS
                       June 30, 2001 and December 31, 2000


                 ASSETS                                2001             2000
                                                      ---------      ----------
                                                      (RESTATED)     (RESTATED)
                                                     (unaudited)
<S>                                                      <C>              <C>
Current Assets:

     Cash ........................................ $  1,273,922    $      4,551
     Accounts receivable .........................    2,590,759       4,955,595
     Inventory ...................................    3,898,834       4,316,076
     Prepaid expenses ............................    1,050,792         959,623
     Deferred tax asset ..........................      102,000         102,000
                                                      ---------      -----------

                 Total current assets ............    8,916,307      10,337,845

Buildings and equipment:
     Buildings ...................................    2,657,263       2,657,263
     Equipment ...................................    3,595,241       3,537,335
                                                      ---------      -----------
                                                      6,252,504       6,194,598
     Less accumulated depreciation ...............   (3,434,974)     (3,137,550)
                                                      ---------      -----------
                                                      2,817,530       3,057,048
Land .............................................      111,468         111,468
                                                      ---------      -----------
                 Total property and equipment, net    2,928,998       3,168,516

Other assets:

     Cost in excess of net assets acquired, net of
     accumulated amortization of $683,297 and
     $615,471 respectively .......................    2,202,772       2,270,598
Other ............................................      777,233         767,167
                                                      ---------      -----------
                                                      2,980,005       3,037,765
                                                     ----------      -----------
TOTAL ASSETS ..................................... $ 14,825,310    $ 16,544,126
                                                     ==========      ===========


    The accompanying notes are an integral part of the financial statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                            CASCO INTERNATIONAL, INC.
                                 BALANCE SHEETS
                       June 30, 2001 and December 31, 2000


     LIABILITIES AND STOCKHOLDERS' EQUITY               2001            2000
                                                     ---------       ----------
                                                    (RESTATED)        (RESTATED)
                                                    (unaudited)
<S>                                                      <C>              <C>
Liabilities:
     Accounts payable ............................      325,501    $    488,726
     Short-term debt obligations .................      146,919       1,858,485
     Accrued liabilities .........................      239,985         329,858
     Advanced deposits-current ...................    2,615,550       2,615,550
     Accrued taxes payable .......................         --           125,000
                                                     ----------      -----------
                 Total current liabilities .......    3,327,955       5,417,619
                                                     ----------      -----------

Long-term debt ...................................    1,985,904       2,054,236
Advanced deposits-noncurrent .....................    2,151,805       1,966,003
Deferred tax liability ...........................      592,375         519,775
                                                     ----------      -----------

Total Liabilities ................................    8,058,039       9,957,633
Commitments and contingencies ....................         --              --

Stockholders' equity:
     Preferred Shares:  $.01 par value; authorized
       300,000 shares; none issued and outstanding         --              --
     Common Shares par value $.01, authorized
       5,000,000, issued 1,783,200 ...............       17,832          17,832
     Capital in excess of par value ..............    6,502,584       6,484,584
     Retained earings (deficit) ..................      264,883         102,105
                                                      ---------      -----------
                                                      6,785,299       6,604,521
     Less treasury stock, at cost 9,014 shares ...      (18,028)        (18,028)
                                                      ---------      -----------

                 Total stockholders' equity ......    6,767,271       6,586,493
                                                     ----------      -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ....... $ 14,825,310    $ 16,544,126
                                                     ==========      ===========




    The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                            CASCO INTERNATIONAL, INC.
                            STATEMENTS OF OPERATIONS
      For the three months and the six months ended June 30, 2001 and 2000
                                    Unaudited


                             Three Months                    Six Months
                      -------------------------     ---------------------------
                         2001           2000           2001            2000
                      ---------      ----------     -----------      ----------
                      (RESTATED)     (RESTATED)     (RESTATED)       (RESTATED)
<S>                      <C>             <C>            <C>               <C>

Revenue ........   $  5,292,400    $  5,354,550    $ 10,628,715    $ 10,597,514

Operating costs and expenses:
     Cost of
      goods sold      2,648,418       2,825,687       5,265,585       5,561,638
     Selling, general and
      administrative  2,158,022       2,297,518       4,619,038       4,578,315
     Depreciation and
      amortization      185,881         191,619         375,265         380,594
                      ---------       ---------      ----------     ------------
          Total operating costs and
           expenses   4,992,321       5,314,824      10,259,888      10,520,547

Operating income (loss) 300,079          39,726         368,827          76,967

Other income and (expenses)
     Interest expense . (40,390)        (66,565)        (87,449)       (131,376)
                      ---------       ---------       ---------       ---------
          Total other income and
           (expenses)   (40,390)        (66,565)        (87,449)       (131,376)

Income (loss) before
 income taxes ..        259,689         (26,839)        281,378         (54,409)
Benefit (provision) for
 income taxes ..       (109,300)         11,000        (118,600)         22,400
                     ----------       ---------        ---------       --------
Net Income (loss)  $    150,389    $    (15,839)   $    162,778    $    (32,009)
                     ==========       =========        =========       =========

EARNINGS PER SHARE BASIC
Net Income (loss)  $       0.08    $      (0.01)   $       0.09    $      (0.02)
                     ==========       =========         ========       =========

EARNINGS PER SHARE DILUTIVE
Net Income (loss)  $       0.08    $      (0.01)   $       0.09    $      (0.02)
                     ==========       =========        ========        =========

Weighted average common shares
 outstanding - basic  1,774,186       1,783,200       1,774,186       1,783,200
                     ==========      ==========       =========       ==========
Weighted average common shares
 outstanding -
  dilutive            1,787,341       1,783,200       1,776,137       1,783,200
                     ==========      ==========       =========       ==========

    The accompanying notes are an integral part of the financial statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                            CASCO INTERNATIONAL, INC.
                            STATEMENTS OF CASH FLOWS
                 For the six months ended June 30, 2001 and 2000
                                    Unaudited


                                                       2001            2000
                                                      --------       ---------
                                                     (RESTATED)      (RESTATED)

<S>                                                      <C>              <C>
Cash flows from operating activities:
     Net (loss) income .........................   $    162,778    $    (32,009)
     Adjustments to reconcile net (loss) income to cash
        provided by operating activities:
        Depreciation and amortization ..........        375,265         380,594
        Deferred provision (benefit) ...........         72,600         (87,400)
        Warrant compensation expense ...........         18,000          18,000
        Changes in assets and liabilities:
        (Increase) decrease in assets:
           Accounts receivable .................      2,364,836       1,931,753
           Inventory ...........................        417,242          98,196
           Prepaid expenses and other assets ...       (111,250)         88,404
        Increase (decrease) in liabilities:
           Accounts payable and accrued liabilities    (253,098)       (631,812)
           Taxes Payable ..........................    (125,000)       (355,000)
           Advance deposits .......................     185,802         (99,016)
                                                      ---------       ----------
             Total adjustments ....................   2,944,397       1,343,719
                                                      ---------       ----------

Net cash provided by operating activities .........   3,107,175       1,311,710
                                                      ---------       ----------
Cash flows from investing activities:
     Sale of equipment ............................        --              --
     Payments for purchases of property and equipment   (57,906)       (176,208)
                                                      ---------       ----------
Cash used in investing activities ....................  (57,906)       (176,028)


Cash flows from financing activities:
     Proceeds from debt obligation .................  2,195,964       9,738,312
     Principal payments on debt .................... (3,975,862)    (10,879,024)
                                                     -----------     -----------
Cash used in financing activities .................. (1,779,898)     (1,140,712)

Increase (decrease) in cash ....................      1,269,371          (5,030)
Cash, beginning of period ......................          4,551           6,797
                                                     -----------     -----------

Cash, end of period ............................   $  1,273,922    $      1,767
                                                     ===========      ==========
Other Cash Flow Information:
     Cash payments during the year for:
        Interest ...............................   $     79,197    $    146,400
        Income taxes, net of refunds ...........        291,200         420,000



    The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>


                           CASCO INTERNATIONAL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                                   Unaudited

     The accompanying  financial  statements have not been audited,  but reflect
all adjustments  which,  in the opinion of management,  are necessary for a fair
presentation of financial position, results of operations and cash flows for the
periods presented.  All adjustments are of a normal and recurring nature.  These
financial  statements  should be read in conjunction with the Company's  audited
financial  statements  and notes thereto for the fiscal year ended  December 31,
2000.

OPTIONS

     During the six months  ended June 30, 2001,  no options were granted  under
the Company's 2000 Incentive  Stock Option Plan. The Company has not declared or
paid any cash dividends on the Common Stock.

EARNINGS PER SHARE

     Basic  income  per  share is  calculated  as  income  available  to  common
stockholders  divided  by the  weighted  average of common  shares  outstanding.
Diluted  earnings per share is calculated as diluted income  available to common
stockholders  divided by the diluted  weighted  average number of common shares.
Diluted  weighted  average number of common shares has been calculated using the
treasury stock method for Common stock equivalents,  which includes Common Stock
issuable  pursuant to stock options and Common Stock warrants.  The following is
provided to reconcile the earnings per share calculations:

<TABLE>
<CAPTION>



                        Three Months Ended June 30,    Six Months Ended June 30,
                              2001          2000         2001           2000
                            ---------     --------      -------      ----------
                            (RESTATED)    (RESTATED)    (RESTATED)    (RESTATED)
<S>                          <C>              <C>          <C>          <C>

Income (loss) applicable to
common shares ........   $   150,389   $   (15,839)   $   162,778   $   (32,009)
                         ===========    ===========   ===========   ============

Weighted average common
Shares outstanding - basic 1,774,186     1,783,200      1,774,186     1,783,200

Effect of dilutive stock
options ...................   13,155          --            1,951          --
                         -----------    -----------    ----------    -----------

Weighted average shares
outstanding - diluted      1,787,341     1,783,200      1,776,137     1,783,200
                        ============    ===========    ==========     ==========

</TABLE>


EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin  ("SAB") No. 101,  "Revenue  Recognition in Financial  Statements." The
guidance in SAB 101 must be adopted during the fourth quarter of fiscal 2000 and
the  effects,  if any,  are  required  to be  recorded  through  a  retroactive,
cumulative-effect  adjustment  as of the  beginning of the fiscal  year,  with a
restatement of all prior interim  quarters in the year.  Management has reviewed
their policies for revenue  recognition in comparison to the requirements in SAB
101and  no change  occurred  to its  income  statement  presentation,  operating
results or financial position as a result of implementing SAB 101.
<PAGE>

PRIOR PERIOD ADJUSTMENT

The  financial  statements  and  related  notes  have been  restated  to reflect
compensation expense, net of tax for warrants issued to R.L. Renck and Co., Inc.
for the three months and six months ended June 30,  2001and 2000.  The impact to
the financial statements is as follows:
<TABLE>
<CAPTION>

June 30, 2001
                         Three Months Ended               Six Months Ended
                        As filed        Restated        As filed        Restated
                        --------        --------        --------       ---------
<S>                      <C>              <C>             <C>             <C>

Operating Income        $309,079        $300,079        $386,287        $368,827
Net income              $155,389        $150,389        $172,778        $162,778
Earnings Per Share:
  Basic                 $  0.09         $  0.08         $  0.10         $  0.09
  Diluted               $  0.09         $  0.08         $  0.10         $  0.09



June 30, 2000
                          Three Months Ended               Six Months Ended
                        As filed        Restated        As filed        Restated
                        --------        --------        --------        --------

Operating Income       $ 48,726        $ 39,726        $ 94,967        $ 76,967
Net income (loss)      $(10,839)       $(15,839)       $(22,009)       $(32,009)
Earnings (Loss) Per Share:
  Basic                 $  0.00         $ (0.01)        $ (0.01)        $ (0.02)
  Diluted               $  0.00         $ (0.01)        $ (0.02)        $ (0.02)

</TABLE>


ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

Quarter Ended June 30, 2001 Compared to Quarter Ended June 30, 2000:

     Revenues  for the three  months  ended  June 30,  2001  approximated  $5.29
million,  compared to $5.35  million in revenues for the three months ended June
30,  2000,  a  decrease  of 1.16% or  approximately  $60,000.  The  decrease  is
attributable  to the  increased  rate  of  unemployment  and  the  reduction  of
workforces at existing customers.

     Revenues  for the six  months  ended  June  30,  2001  approximated  $10.63
million,  compared to $10.60  million in revenues  for the six months ended June
30,  2000,  an  increase  of 0.29% or  approximately  $30,000.  The  increase is
attributable to new customers in the new markets with employed account managers.
<PAGE>

     Cost of goods sold for the three  months  ended June 30, 2001  approximated
$2.65 million,  compared to  approximately  $2.83 million for cost of goods sold
for the three months  ended June 30, 2000, a decrease of 6.27% or  approximately
$177,000. The decrease in cost of goods sold was attributable to the decrease in
revenue,  the increase in the number of new accounts  sold at the current  price
level and the continued  exiting of low margin custom accounts.  As a percentage
of revenues,  cost of goods sold  decreased to 50.04% for the three months ended
June 30, 2001,  from 52.77% for the three months ended June 30, 2000.  The 2.73%
decrease in the cost of goods sold, as a percentage of revenues was  principally
attributable  to the Company's  decision to implement  yearly price increases to
existing customers, as well as an increase in the number of new accounts sold at
the current price level and the continued exiting of low margin custom accounts.

     Cost of goods sold for the six  months  ended  June 30,  2001  approximated
$5.27 million,  compared to  approximately  $5.56 million for cost of goods sold
for the six months  ended June 30,  2000,  a decrease of 5.32% or  approximately
$296,000. The decrease in cost of goods sold was attributable to the increase in
the number of new  accounts  sold at the current  price level and the  continued
exiting of low margin  custom  accounts.  As a percentage  of revenues,  cost of
goods sold  decreased  to 49.54% for the six months  ended June 30,  2001,  from
52.48% for the six months ended June 30, 2000. The 2.94% decrease in the cost of
goods sold,  as a percentage  of revenues was  principally  attributable  to the
Company's decision to implement yearly price increases to existing customers, as
well as an increase  in the number of new  accounts  sold at the  current  price
level and the continued exiting of low margin custom accounts.

     Selling,  general,  and  administrative  expense for the three months ended
June 30, 2001  approximated  $2.16  million,  compared to $2.30  million for the
three months ended June 30, 2000, a decrease of 6.10% or approximately $139,000.
The decrease in selling,  general,  and  administrative  expense was principally
attributable  to the decrease in revenues as well as the  Company's  decision to
outsource its marketing functions. As a percentage of revenues, selling, general
and administrative decreased to 40.78% for the three months ended June 30, 2001,
from 42.90% for the three months ended June 30,  2000.  The 2.12%  decrease as a
percentage of revenues was principally  attributable to the decrease in revenues
as well as the Company's decision to outsource its marketing functions,  and the
elimination of the costs  associated  with  preparations to launch the Company's
efulfillment subsidiary in 2000.

     Selling,  general, and administrative expense for the six months ended June
30, 2001  approximated  $4.62  million,  compared  to $4.58  million for the six
months ended June 30, 2000, an increase of 0.89% or approximately  $41,000. As a
percentage of revenues,  selling, general and administrative increased to 43.46%
for the six months  ended June 30,  2001,  from 43.20% for the six months  ended
June 30, 2000. The 0.26%  increase as a percentage of revenues were  principally
attributable  to the costs  associated  with the  potential  merger  with  Davis
Holdings of North Carolina.

     Interest expense was approximately  $40,000 for the three months ended June
30,  2001,  compared  to $66,500 for the three  months  ended June 30,  2000,  a
decrease  of  approximately  $26,500.  For the six months  ended June 30,  2001,
interest expense was  approximately  $87,500 compared to approximately  $131,000
for the six months ended June 30, 2000, a decrease of approximately $43,500. The
decrease in interest expense was primarily due to a decreased average balance on
the Company's line of credit and the reduction of the Company's  long-term debt.
The  average  outstanding  debt for the  first six  months in 2001  approximated
$2.166  million  compared  to $3.311  million  for the first six months in 2000.
Additionally,  the  average  interest  rate for the  first  six  months  in 2001
approximated 7.69% compared to approximately 8.23% for the same period in 2000.
<PAGE>

     Depreciation and amortization  expense was  approximately  $186,000 for the
three  months  ended June 30,  2001,  compared to $192,000  for the three months
ended June 30, 2000, a decrease of 2.99% or approximately  $6,000.  Depreciation
and  amortization  expense was  approximately  $375,000 and $381,000 for the six
months  ended  June 30,  2001 and 2000  respectively,  an  increase  of 1.40% or
approximately $6,000.

     Income tax  provision  was $118,600 for the six months ended June 30, 2001,
compared to an income tax  benefit of $22,400 for the six months  ended June 30,
2000. The provisions for income tax were calculated through the use of estimated
income tax rates based upon the income before taxes.


LIQUIDITY AND CAPITAL RESOURCES

     The Company's  primary  sources of liquidity  have been cash generated from
operating  activities and amounts  available under its existing credit facility.
The Company's primary uses of funds consist of financing inventory,  receivables
and acquisitions.

     The  Company  has  adopted a growth  strategy  which  focuses on  increased
efforts of the Company's  existing sales force and the use of independent  field
representatives  in order to expand  current  market  share  and enter  into new
markets.

     The Company  anticipates  that  operating cash flows during the next twelve
months, coupled with its ability to borrow under the credit facility, will cover
operating  expenditures and meet the short-term debt obligations.  The Company's
credit  facility  was due and payable in full on July 30,  2001.  The lender has
committed to extending the credit facility until July 1, 2002.

     Current assets decreased approximately $1,422,000 due mostly from decreases
in  accounts  receivable  ($2,365,000)  and  inventory  ($417,000)  offset by an
increase in cash ($1,269,000). The decrease in accounts receivable is due to the
seasonality of sales being greater in the fourth quarter due to holiday sales in
November  and  December.  The  decrease  in  inventory  is  due  to an  improved
purchasing  strategy coupled with an improved  processing and inventory ordering
system. Current liabilities decreased  approximately  $2,090,000 due mostly from
decreases in short-term debt obligations ($1,712,000),  and accounts payable and
accrued liabilities  ($253,000),  and taxes payable ($125,000).  The decrease in
short-term  debt  obligations was due to the pay down of the line of credit from
the excess cash generated from operations.  The decrease in accounts payable was
due to the decreased inventory purchases.

     Cash increased approximately  $1,269,000.  Net cash provided from operating
activities was approximately  $3,107,000.  Net cash used in investing activities
was  approximately  $58,000 due to payments  for  purchases  of new  information
systems equipment and warehouse equipment. Net cash used by financing activities
was  approximately  $1,780,000,  which was due to the  reduction  on the line of
credit.

     The  Company  does not  anticipate  any  material  expenditures  out of the
ordinary  course of business for property and  equipment  during the next twelve
months.  Management  believes  that  present  resources  will  meet  anticipated
requirements.
<PAGE>

     On May 8, 2001 the Company  announced that it has entered into an Agreement
and Plan of  Merger  with  Davis  Holdings  of North  Carolina,  Inc.  and Davis
Acquisition of North Carolina,  Inc., (the "Davis Group"). The completion of the
merger will have an effect on the Company's liquidity and capital structure. The
Company is concerned with the  uncertainty of the economy and the uncertainty of
the  increased  unemployment  rates in  recent  months.  If these  trends  would
continue it could affect the liquidity in an adverse way over an extended period
of time. The Company is aware of no legal or other contingencies,  the effect of
which are  believed by  management  to be  reasonably  likely to have a material
adverse effect on the Company's financial statements.

SEASONALITY

     The Company's  business is highly seasonal,  with  approximately 36% of its
revenues and most of its profits  recorded in the months of November,  December,
and January. As a result, the Company's working capital requirements are highest
during  November and December when the  combination of receivables and inventory
are at peak levels.  The Company typically  experiences losses in its second and
third quarters.

     As the results of the Company's  growth  strategy  develop,  the effects of
seasonality should be diminished. The business segments on which the Company has
chosen  to  focus  offer  steadier  revenue  flows,  as well as more  consistent
requirements for working capital.

INFLATION

     Although the Company  cannot  determine  the precise  effects of inflation,
inflation has an influence on the cost of the  Company's  products and services,
supplies, salaries, and benefits. The Company attempts to minimize or offset the
effects of inflation through increased sales volumes and sales prices,  improved
productivity,  alternative  sourcing of products and supplies,  and reduction of
other costs.  The Company  generally has been able to offset the impact of price
increases  from  suppliers by increases in the selling  prices of the  Company's
products and services.

CAUTIONARY STATEMENT

     Statements  included  in  this  Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations,  in other sections of this Annual
Report,  and in future  filings by the Company with the  Securities and Exchange
Commission, in the Company's press releases and in oral statements made with the
approval of an authorized  executive officer which are not historical or current
facts including,  without limitation,  not discussed its ability to grow through
acquisition  and strategic  alliances and through  expanding its current  market
share and entering new markets,  the adequacy of the company's cash resources to
fund  its  current  operations,   the  Company's  expectation  with  respect  to
expenditures  for property and equipment,  and the Company's  expectations  with
respect  to  the   diminished   effect  of   seasonality  on  its  business  are
"forward-looking  statements" made pursuant to the safe harbor provisions of the
Private  Securities  Litigation  Reform  Act of 1995 and are  subject to certain
risks and  uncertainties  that could cause actual  results to differ  materially
from historical  results and those presently  anticipated or projected.  Readers
are  cautioned  not  to  place  undue  reliance  on  any  such   forward-looking
statements,  which  speak  only as of the date  made.  The  following  important
factors,  among  others,  in some cases have  affected  and in the future  could
affect  the  Company's  actual  results  and could  cause the  Company's  actual
financial   performance  to  differ   materially  from  that  expressed  in  any
forward-looking  statement:  (i) the competitive conditions that currently exist
in the Company's  industry,  which could adversely  impact sales and erode gross
margins;  (ii) many of the Company's  competitors are  significantly  larger and
better capitalized than the Company; (iii) the Company's loan agreement contains
a number of  significant  covenants  that restrict the ability of the Company to
engage in certain  activities,  including  the payment of dividends and requires
that the  Company  maintain  specified  financial  ratios,  including  a minimum
capital base, and minimum pretax profits from operations; and (iv) the inability
to carry out marketing and sales plans would have a materially adverse impact on
the  Company's  profitability.  The  foregoing  list should not be  construed as
exhaustive and the Company disclaims any obligations  subsequently to revise any
forward-looking  statements to reflect events or circumstances after the date of
such  statements or to reflect the occurrence of  anticipated  or  unanticipated
events.
<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
         MARKET RISK

     The Company is exposed to the impact of interest  rate  changes on its debt
obligations.  The Company is not exposed to foreign currency  exchange rate risk
or investment risk.

     Interest Rate Risk. The Company's  exposure to market rate risk for changes
in interest rates relates primarily to the Company's  short-term debt obligation
line of  credit.  The  interest  rate on this line of  credit is prime  plus 1/4
percent.  The  prime  interest  rate at June  30,  2001 was  6.75  percent.  The
Company's line of credit is renewable and negotiable  yearly. The fluctuation of
the  interest  rate may increase  interest  expense if the prime  interest  rate
increases before the line of credit could be renegotiated to a fixed rate loan.

<PAGE>


                          PART II - OTHER INFORMATION


ITEM 1:   LEGAL PROCEEDINGS

     The Company is not  involved in any  material  pending  legal  proceedings,
other than ordinary, routine litigation incidental to its business.

ITEM 2:   CHANGES IN SECURITIES
             None

ITEM 3:   DEFAULTS UPON SENIOR SECURITIES
             None

ITEM 4:   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
             None

ITEM 5:   OTHER INFORMATION

     The Davis Group has offered to acquire all of the outstanding shares of the
Company not currently held by them. A Special Committee of the outside directors
was formed to consider the offer and has recommend for approval the latest offer
of $2.10  per  share for the  outstanding  shares  of common  stock not owned by
members of the Davis Group.

ITEM 6:   EXHIBITS AND REPORTS ON FORM 8K

(a) Exhibits.
        None

(b) Reports on Form 8-K
        None


                                   SIGNATURE

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

                                            CASCO INTERNATIONAL, INC.
                                            Registrant

Date:   August 10, 2001                     By:   /s/ Jeffrey A. Ross
                                                  -------------------------
                                                      Jeffrey A. Ross
                                                      Principal Financial and
                                                      Accounting Officer