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 September 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 November 9, 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: November 9, 2001: 1,774,186 Common Shares.

<PAGE>

           PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

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


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

     Cash ........................................ $  1,263,681    $      4,551

     Accounts receivable .........................    2,573,912       4,955,595

     Inventory ...................................    4,463,516       4,316,076

     Prepaid expenses ............................      995,092         959,623

     Deferred tax asset ..........................      102,000         102,000
                                                    -----------      -----------
                 Total current assets ............    9,398,201      10,337,845

Buildings and equipment:

     Buildings ...................................    2,657,263       2,657,263
     Equipment ...................................    3,640,467       3,537,335
                                                    -----------      -----------
                                                      6,297,730       6,194,598
     Less accumulated depreciation ...............   (3,571,162)     (3,137,550)
                                                    -----------      -----------
                                                      2,726,568       3,057,048
Land .............................................      111,468         111,468
                                                    -----------      -----------

                 Total property and equipment, net    2,838,036       3,168,516

Other assets:
     Cost in excess of net assets acquired, net of
     accumulated amortization of $717,210 and
     $615,471 respectively .......................    2,168,859       2,270,598
Other ............................................      779,752         767,167
                                                    -----------      -----------
                                                      2,948,611       3,037,765
                                                    -----------      -----------
TOTAL ASSETS ..................................... $ 15,184,848    $ 16,544,126
                                                    ===========      ===========


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

<PAGE>

<TABLE>
<CAPTION>


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



LIABILITIES AND STOCKHOLDERS' EQUITY                    2001            2000
                                                   ------------    -------------
                                                    (unaudited)
<S>                                                      <C>             <C>

Liabilities:

     Accounts payable ............................ $  1,061,629    $    488,726
     Short-term debt obligations .................      148,845       1,858,485
     Accrued liabilities .........................      138,972         329,858
     Advanced deposits-current ...................    2,615,550       2,615,550
     Accrued taxes payable .......................         --           125,000
                                                    -----------     ------------
                 Total current liabilities .......    3,964,996       5,417,619
                                                    -----------     ------------
Long-term debt ...................................    1,949,217       2,054,236
Advanced deposits-noncurrent .....................    1,915,079       1,966,003
Deferred tax liability ...........................      557,875         519,775
                                                    -----------     ------------
Total Liabilities ................................    8,387,167       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 ..............    6,511,584       6,484,584
     Retained earnings ...........................      286,293         102,105
                                                    -----------      -----------
                                                      6,815,709       6,604,521
     Less treasury stock, at cost 9,014 shares ...      (18,028)        (18,028)
                                                    -----------      -----------
                 Total stockholders' equity ......    6,797,681       6,586,493
                                                    -----------      -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ....... $ 15,184,848    $ 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 nine months ended September 30, 2001 and 2000
                                    Unaudited




                               Three Months              Nine Months
                        ------------------------    ---------------------------

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

<S>                      <C>             <C>             <C>            <C>

Revenue              $  4,800,633   $  4,551,050   $  15,429,348   $ 15,148,564


Operating costs and expenses:
     Cost of
      goods sold        2,322,357      2,323,023       7,587,942      7,884,661
     Selling, general
      and
      administrative    2,226,028      2,290,980       6,845,066      6,869,295
     Depreciation and
      amortization        175,108        190,531         550,373        571,125
                        ---------      ---------       ---------      ----------
          Total operating
           costs and
           expenses     4,723,493      4,804,534      14,983,381     15,325,081

Operating income (loss)    77,140       (253,484)        445,967       (176,517)

Other income and (expenses)
     Interest expense     (40,230)       (83,233)       (127,679)      (214,609)
                        ---------      ---------      ----------     -----------
          Total other income
           and (expenses) (40,230)       (83,233)       (127,679)      (214,609)

Income (loss) before
 income taxes              36,910       (336,717)        318,288       (391,126)
Benefit (provision) for
 income taxes             (15,500)       135,100        (134,100)       157,500
                        ---------      ---------       ---------      ----------

Net Income (loss)    $     21,410   $   (201,617)  $     184,188   $   (233,626)
                        =========      =========       =========      ==========

EARNINGS PER SHARE BASIC
Net Income (loss)    $       0.01   $      (0.11)  $        0.10   $      (0.13)
                        =========      =========       =========      ==========

EARNINGS PER SHARE DILUTIVE
Net Income (loss)    $       0.01   $      (0.11)  $        0.10   $      (0.13)
                        =========      =========       =========      ==========

Weighted average common shares
 outstanding - basic    1,774,186      1,783,200       1,774,186      1,783,200
                        =========      =========       =========      ==========
Weighted average common shares
 outstanding - dilutive 1,839,294      1,783,200       1,776,201      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 nine months ended September 30, 2001 and 2000
                                    Unaudited

                                                       2001              2000
                                                    -----------     -----------
                                                                      (RESTATED)
<S>                                                     <C>               <C>

   Cash flows from operating activities:
     Net (loss) income .........................   $    184,188    $   (233,626)
     Adjustments to reconcile net (loss) income to cash
        provided by operating activities:
        Depreciation and amortization ..........        550,373         571,125
        Deferred provision (benefit) ...........         38,100        (222,500)
        Warrant compensation expense ...........         27,000          27,000
        Changes in assets and liabilities:
        (Increase) decrease in assets:
           Accounts receivable .................      2,381,683       1,978,196
           Inventory ...........................       (147,440)         70,697
           Prepaid expenses and other assets ...        (63,076)        (21,738)
        Increase (decrease) in liabilities:
           Accounts payable and accrued liabilities     382,017        (647,856)
           Taxes Payable ...........................   (125,000)       (355,000)
           Advance deposits ........................    (50,924)         31,064
                                                     ----------       ----------
             Total adjustments .....................  2,992,733       1,415,988
                                                     ----------       ----------

Net cash provided by operating activities ..........  3,176,921       1,197,362
                                                     ----------       ----------

Cash flows from investing activities:
     Sale of equipment .............................       --              --
     Payments for purchases of property and equipment  (103,132)       (288,481)
                                                     ----------       ----------
Cash used in investing activities ...................  (103,132)       (288,481)

Cash flows from financing activities:
     Proceeds from debt obligation .............     13,962,517      13,962,517
     Principal payments on debt ................    (15,777,176)    (14,873,128)
                                                    -----------      -----------
Cash used in financing activities ..............     (1,814,659)       (910,611)

Increase (decrease) in cash ....................      1,259,130          (1,730)
Cash, beginning of period ......................          4,551           6,797
                                                     ----------      -----------

Cash, end of period ............................   $  1,263,681    $      5,067
                                                     ==========       ==========
Other Cash Flow Information:
     Cash payments during the year for:
        Interest ...............................   $    118,476    $     87,803
        Income taxes, net of refunds ...........        322,200         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 nine months ended  September  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            Nine Months Ended
                                   September 30,                 September 30,
                                2001            2000       2001         2000
                               -------       --------     -------      -------
                                             (RESTATED)               (RESTATED)
<S>                              <C>               <C>        <C>         <C>

Income (loss) applicable to
common shares .............   $    21,410    $ (201,617)  $   184,188 $(233,626)
                                =========     =========    ==========  =========
Weighted average common
Shares outstanding - basic      1,774,186     1,783,200     1,774,186  1,783,200

Effect of dilutive stock
options ...................        65,108          --           2,015       --
                                ---------     ---------     ---------  ---------
Weighted average shares
outstanding - diluted .....     1,839,294     1,783,200     1,776,201  1,783,200
</TABLE>
                                =========     =========     =========  =========
<PAGE>


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.

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 September 30, 2001and 2000. The impact
to the financial statements is as follows:

September 30, 2000
                                Three Months Ended       Nine Months Ended
                                As filed   Restated     As filed    Restated
                              ----------  ---------     --------    ---------
Operating Income (loss)      $(244,484) $  (253,484) $  (149,517) $  (176,517)
Net income (loss) .......... $(196,617) $  (201,617) $  (218,626) $  (233,626)
Earnings (Loss) Per Share:
  Basic .................... $   (0.11) $     (0.11) $     (0.12) $     (0.13)
  Diluted ...................$   (0.11) $     (0.11) $     (0.12) $     (0.13)



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

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

     Revenues for the three months ended September 30, 2001  approximated  $4.80
million,  compared  to $4.55  million in  revenues  for the three  months  ended
September 30, 2000, an increase of 5.48% or approximately $250,000. The increase
is  attributable  to new  customers  in the new markets  with  employed  account
managers, as well as increased revenues from existing customers.

     Revenues for the nine months ended September 30, 2001  approximated  $15.43
million,  compared  to $15.15  million in  revenues  for the nine  months  ended
September 30, 2000, an increase of 1.85% or approximately $280,000. The increase
is  attributable  to new  customers  in the new markets  with  employed  account
managers, as well as increased revenues from existing customers.

     Cost  of  goods  sold  for  the  three  months  ended  September  30,  2001
approximated $2.32 million,  compared to approximately $2.32 million for cost of
goods sold for the three months ended  September  30, 2000.  As a percentage  of
revenues,  cost of goods sold  decreased  to 48.38% for the three  months  ended
September 30, 2001,  from 51.04% for the three months ended  September 30, 2000.
The 2.67%  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  nine  months  ended   September  30,  2001
approximated $7.59 million,  compared to approximately $7.88 million for cost of
goods sold for the nine months ended  September 30, 2000, a decrease of 3.76% or
approximately  $290,000.  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 49.18% for the nine  months  ended
September 30, 2001, from 52.05% for the six months ended September 30, 2000. The
2.87%  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.
<PAGE>

     Selling,  general,  and  administrative  expense for the three months ended
September 30, 2001 approximated $2.23 million, compared to $2.29 million for the
three months  ended  September  30,  2000, a decrease of 2.84% or  approximately
$65,000.  The  decrease  in selling,  general,  and  administrative  expense was
principally  attributable  to the Company's  decision to outsource its marketing
functions  and the  reduction  of the  Company's  employed  account  managers in
nonproducing  markets.  As  a  percentage  of  revenues,  selling,  general  and
administrative  decreased  to 46.37% for the three months  ended  September  30,
2001,  from 50.34% for the three months  ended  September  30,  2000.  The 3.97%
decrease  as a  percentage  of  revenues  was  principally  attributable  to the
Company's decision to outsource its marketing functions,  the elimination of the
costs  associated  with  preparations  to  launch  the  Company's   efulfillment
subsidiary in 2000, and the reduction of the Company's employed account managers
in nonproducing markets.

     Selling,  general,  and  administrative  expense for the nine months  ended
September 30, 2001 approximated $6.85 million, compared to $6.87 million for the
nine months  ended  September  30,  2000,  a decrease of 0.35% or  approximately
$20,000.  As a  percentage  of  revenues,  selling,  general and  administrative
decreased to 44.36% for the nine months ended  September  30, 2001,  from 45.35%
for the nine months ended September 30, 2000. The 0.98% decrease as a percentage
of revenues were principally attributable to the Company's decision to outsource
its  marketing   functions,   the  elimination  of  the  costs  associated  with
preparations  to launch the Company's  efulfillment  subsidiary in 2000, and the
reduction of the Company's  employed account  managers in nonproducing  markets,
offset by the increased costs  associated  with the potential  merger with Davis
Holdings of North Carolina.

     Interest  expense  was  approximately  $40,000 for the three  months  ended
September 30, 2001, compared to $83,000 for the three months ended September 30,
2000, a decrease of approximately  $43,000.  For the nine months ended September
30, 2001, interest expense was approximately  $128,000 compared to approximately
$215,000  for  the  nine  months  ended   September  30,  2000,  a  decrease  of
approximately  $87,000.  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 nine
months in 2001  approximated $2.1 million compared to $3.4 million for the first
nine months in 2000. Additionally,  the average interest rate for the first nine
months in 2001 approximated  7.69% compared to approximately  8.32% for the same
period in 2000.

     Depreciation and amortization  expense was  approximately  $175,000 for the
three months ended September 30, 2001, compared to $191,000 for the three months
ended  September  30,  2000,  a  decrease  of  8.09% or  approximately  $15,000.
Depreciation and amortization  expense was  approximately  $550,000 and $571,000
for the nine months ended September 30, 2001 and 2000  respectively,  a decrease
of 3.63% or approximately $21,000.

     Income Tax provision  was $15,500 for the three months ended  September 30,
2001  compared to an income tax benefit of $135,100  for the three  months ended
September 30, 2000.  Income tax provision was $134,100 for the nine months ended
September  30, 2001,  compared to an income tax benefit of $145,500 for the nine
months ended  September 30, 2000. The provisions for income tax were  calculated
through  the use of  estimated  income tax rates  based  upon the income  before
taxes.

<PAGE>

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.  At September 30,
2001 the Company had 5,000,000 available on it's credit facility. The lender has
committed to extending the credit facility until April 15, 2003.

     Current assets decreased  approximately  $940,000 due mostly from decreases
in accounts  receivable  ($2,382,000) offset by an increase in cash ($1,259,000)
and  inventory  ($147,000).  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  increase in  inventory  is due to the build up of
inventory  for the  greater  sales in the fourth  quarter.  Current  liabilities
decreased approximately  $1,453,000 due mostly from decreases in short-term debt
obligations ($1,720,000),  and taxes payable ($125,000) offset by an increase in
accounts payable and accrued liabilities ($382,000).  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 increase in accounts payable was due to the
increased inventory purchases.

     Cash increased approximately  $1,259,000.  Net cash provided from operating
activities was approximately  $3,177,000.  Net cash used in investing activities
was  approximately  $103,000  due to payments for  purchases of new  information
systems equipment and warehouse equipment. Net cash used by financing activities
was  approximately  $1,815,000,  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.

     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.
<PAGE>



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, 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 operating cash flows and its ability
to  borrow  under  its  credit  facility  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 continued downturn in the U.S. economy
and the increase in unemployment; (ii) the competitive conditions that currently
exist in the Company's  industry,  which could adversely  impact sales and erode
gross margins (many of the Company's  competitors are  significantly  larger and
better  capitalized than the Company);  (iii) restrictions in the Company's loan
agreements  on the  ability  of the  Company  to engage in  certain  activities,
including the payment of dividends and  requirements  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 September  30, 2001 was 6.00 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.


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
<PAGE>


                                   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:   November 9, 2001                    By:   /s/ Jeffrey A. Ross
                                                  ------------------------
                                                      Jeffrey A. Ross
                                                      Principal Financial and
                                                      Accounting Officer