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

For the period ended                                              March 31, 1997

                                       OR

(   )    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) of the Securities
         Exchange Act of 1934

For the transition period from ________________________ to _____________________

                                                         Commission  File Number
                                                                   0-2545
                                                           --------------------

                          Allied Research Corporation
               --------------------------------------------------
             (Exact name of Registrant as specified in its charter)

         Delaware                                       04-2281015
------------------------------                   -----------------------
(State or other jurisdiction of                  (I.R.S. Employer Number)
 incorporation or organization)

8000 Towers Crescent Drive, Suite 750
Vienna, Virginia                                             22182
________________________________________                   _________
(Address of principal executive offices)                   (Zip Code)

Registrant's telephone number, including area code:               (703) 847-5268

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
                        ___               ___

Indicate  the  number of shares  outstanding of each of the issuer's  classes of
common stock,  as of March 31, 1997: 4,528,058.


<PAGE>





                          ALLIED RESEARCH CORPORATION

                                     INDEX

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                                           PAGE
PART I.           FINANCIAL INFORMATION - UNAUDITED                                                       NUMBER
<S> <C>


         Item 1.  Financial Statements



                  Condensed Consolidated Balance Sheets

                           December 31, 1996 and March 31, 1997.............................................2,3



                  Condensed Consolidated Statements of Earnings

                           Three months ended March 31, 1997 and 1996.........................................4



                  Condensed Consolidated Statements of Cash Flows

                           Three months ended March 31, 1997 and 1996.........................................5



                  Notes to Condensed Consolidated Financial Statements........................................6



         Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations..................................................................10



PART II. OTHER INFORMATION...................................................................................13
</TABLE>


<PAGE>


                          Allied Research Corporation

                     CONDENSED CONSOLIDATED BALANCE SHEETS

                             (Thousands of Dollars)

                                     ASSETS

                                  (Unaudited)

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                               March 31, 1997      December 31, 1996
                                                                               --------------      -----------------
<S> <C>
CURRENT ASSETS
    Cash and equivalents, including restricted cash                               $21,621              $32,860
    Accounts receivable                                                            21,043               11,889
    Costs and accrued earnings on uncompleted contracts                             7,321               14,694
    Inventories                                                                     6,069                7,171
    Prepaid expenses and deposits                                                   3,209                3,880
                                                                                  -------              -------
           Total current assets                                                    59,263               70,494


PROPERTY, PLANT AND EQUIPMENT - AT COST
    Buildings and improvements                                                     12,431               13,316
    Machinery and equipment                                                        30,716               33,030
                                                                                  -------              -------
                                                                                   43,147               46,346
    Less accumulated depreciation                                                  31,210               33,106
                                                                                  -------              -------
                                                                                   11,937               13,240
    Land                                                                            1,311                1,412
                                                                                  -------              -------
                                                                                   13,248               14,652

OTHER ASSETS
    Intangibles, net of amortization                                                5,732                6,124
    Other                                                                             689                  678
                                                                                  -------              -------
                                                                                    6,421                6,802
                                                                                  -------              -------

                                                                                  $78,932              $91,948
                                                                                  =======              =======
</TABLE>

The accompanying notes are an integral part of these statements.

                                       2

<PAGE>


                          Allied Research Corporation

               CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED

                             (Thousands of Dollars)

                                  LIABILITIES

                                  (Unaudited)

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

<TABLE>
<CAPTION>
                                                                                March 31, 1997     December 31, 1996
                                                                                --------------     -----------------
<S> <C>
CURRENT LIABILITIES
    Notes payable                                                                 $  1,022            $  3,318
    Current maturities of long-term debt                                            12,336              14,099
    Accounts and trade notes payable                                                14,489              18,571
    Accrued liabilities                                                              4,389               4,702
    Customer deposits                                                                5,252              10,935
    Income taxes                                                                     1,343                 805
                                                                                  --------            --------

           Total current liabilities                                                38,831              52,430



LONG-TERM DEBT, less current maturities                                              6,999               7,443



DEFERRED INCOME TAXES                                                                  599                 628




STOCKHOLDERS' EQUITY
    Preferred stock, no par value; authorized, 10,000
        shares; none issued                                                              -                   -
    Common stock, par value, $.10 per share; authorized
        10,000,000 shares; issued and outstanding, 4,528,058
        in 1997 and 4,443,092 in 1996                                                  453                 444
    Capital in excess of par value                                                  11,508              10,846
    Retained earnings                                                               19,465              17,482
    Accumulated foreign currency translation adjustment                              1,077               2,675
                                                                                  --------            --------
                                                                                    32,503              31,447
                                                                                  --------            --------

                                                                                   $78,932             $91,948
                                                                                   =======             =======
</TABLE>

The accompanying notes are an integral part of these statements.


                                       3


<PAGE>


                          Allied Research Corporation

                 CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

                             (Thousands of Dollars)

                                  (Unaudited)

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                       Three months ended March 31
                                                                                       ---------------------------
                                                                                        1997                  1996
                                                                                        -----                 ----
<S> <C>
Revenue                                                                            $     29,765         $     23,527

Cost and expenses
    Cost of sales                                                                        24,275               18,395
    Selling and administrative                                                            3,322                3,464
    Research and development                                                                367                  411
                                                                                   ------------         ------------
                                                                                         27,964               22,270
           Operating income                                                               1,801                1,257

Other income (deductions)
    Interest expense                                                                      (508)                (678)
    Interest income                                                                         253                  397
    Other - net                                                                             639                (116)
                                                                                   ------------         ------------
                                                                                            384                (397)

           Earnings before income taxes                                                   2,185                  860

Income taxes                                                                                201                  224
                                                                                   ------------         ------------

           NET EARNINGS                                                           $       1,984        $         636
                                                                                   ============         ============

Net income per common share                                                     $           .44       $          .14
                                                                                 ==============        =============

Weighted average number of shares                                                     4,472,340            4,422,634
</TABLE>

The accompanying notes are an integral part of these statements.

                                       4

<PAGE>


                          Allied Research Corporation

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (Thousands of Dollars)

                                  (Unaudited)

-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                         Three months ended March 31
                                                                                         ----------------------------
Increase (decrease) in cash and equivalents                                            1997                1996
                                                                                       ----                ----
<S> <C>

Cash flows from operating activities
    Net earnings                                                                       $  1,983            $     636
    Adjustments to reconcile net earnings to net cash provided by
        (used in) operating activities
           Depreciation and amortization                                                    403                  352
           Changes in assets and liabilities
                  Accounts receivable                                                   (9,176)                1,879
                  Costs and accrued earnings on uncompleted contracts                     6,316               (2,174)
                  Inventories                                                               590                 (234)
                  Prepaid expenses and other assets                                         375                 (340)
                  Accounts payable, accrued liabilities and
                      customer deposits                                                  (7,943)              (1,212)
                  Income taxes                                                              608                  361
                                                                                       --------            ----------

                         Net cash (used in ) operating activities                        (6,844)                (732)

Cash flows (used in) investing activities
    Capital expenditures                                                                   (326)                (114)
                                                                                       --------            ----------

                         Net cash (used in ) investing activities                          (326)                (114)

Cash flows from financing activities
    Principal payments of long-term debt                                                      -               (1,291)
    Net increase (decrease) in short-term borrowings                                     (2,700)                (924)
    Stock award/stock plan                                                                  494                   32
    Options exercised                                                                       176                    -
    Deposits - restricted cash                                                            -                    2,340
                                                                                       --------            ----------

                         Net cash (used by) provided by financing activities             (2,030)                 157

    Effects of exchange rate changes on cash                                             (2,038)                (694)
                                                                                       --------            ----------

                         NET (DECREASE) IN CASH AND
                             CASH EQUIVALENTS                                           (11,238)              (1,383)

Cash and equivalents at beginning of year                                                32,859               15,744
                                                                                       --------            ----------

Cash and equivalents at end of period                                                  $ 21,621              $14,362
                                                                                       ========            ==========

Supplemental Disclosures of Cash Flow Information
    Cash paid during the period for
        Interest                                                                            220            $     516
        Taxes                                                                               150                   60
</TABLE>

The accompanying notes are an integral part of these statements.

                                       5


<PAGE>


                          Allied Research Corporation

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                 March 31, 1997

                             (Thousands of Dollars)

                                  (Unaudited)

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


NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    The condensed  consolidated balance sheets as of March 31, 1997 and December
    31,  1996,  the  condensed  consolidated  statements  of  earnings  and  the
    condensed  consolidated  statements of cash flows for the three months ended
    March 31, 1997 and 1996, have been prepared by the Company without audit. In
    the  opinion of  management,  all  adjustments  (which  include  only normal
    recurring  adjustments)  necessary to present fairly the financial position,
    results of  operations  and  changes in cash flow at March 31, 1997 and 1996
    have been made.

    Certain information and footnote  disclosures normally included in financial
    statements   prepared  in  accordance  with  generally  accepted  accounting
    principles  have been  condensed  or  omitted.  It is  suggested  that these
    condensed  consolidated financial statements be read in conjunction with the
    financial  statements and notes thereto  included in the Company's  December
    31,  1996 Form 10-K  filed  with the  Securities  and  Exchange  Commission,
    Washington, D.C. 20549. The results of operations for the period ended March
    31, 1997 and 1996 are not  necessarily  indicative of the operating  results
    for the full year.


NOTE 2 - PRINCIPLES OF CONSOLIDATION

    The  condensed  consolidated  financial  statements  include the  accounts
    of Allied  Research  Corporation  (a Delaware  Corporation) and the
    Company's  wholly-owned  subsidiaries,  Mecar, S.A. (a Belgian Company),
    Allied Research Corporation Limited (a United Kingdom Company), Barnes &
    Reinecke, Inc. (a Delaware Corporation).

    Mecar,  S.A.'s  wholly-owned  Belgian  subsidiaries  include,  Sedachim,
    S.I., Tele Technique Generale and VSK Electronics  N.V. and its
    wholly-owned  subsidiaries,  Classics,  B.V.B.A.  Dectectia,  N.V.,  IDCS,
    N.V. and Belgian Automation Units, N.V. (collectively "The VSK Group").

    Significant intercompany transactions have been eliminated in consolidation.


NOTE 3 - RESTRICTED CASH

    Mecar is generally  required  under the terms of its contracts  with foreign
    governments to provide  performance  bonds,  advance payment  guarantees and
    letters of credit.  The credit  facility  agreements  used to provide  these
    financial guarantees generally place restrictions on cash deposits and other
    liens on Mecar's assets.  Cash totaling  approximately  $17,729 at March 31,
    1997 ($20,116 at December 31, 1996) are  restricted or pledged as collateral
    for various bank agreements and are comprised as follows:

<TABLE>
<CAPTION>
                                                                 1997              1996
                                                                 ----              ----
<S> <C>
      Cash
          Credit facility and related term loan agreements     $12,163           $18,382
          Other bank guarantees and letters of credit            1,306             1,734
          Notes payable                                             -                -
                                                               -------           -------
                                                               $13,469           $20,116
                                                               =======           =======
</TABLE>

                                       6

<PAGE>


                          Allied Research Corporation

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                 March 31, 1997

                             (Thousands of Dollars)

                                  (Unaudited)

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


NOTE 4 - INVENTORIES

    Inventories are composed of raw materials and supplies.


NOTE 5 - NOTES PAYABLE

    Barnes and Reinecke has a $1,250  revolving  line-of-credit  agreement which
    had an  outstanding  balance  at March  31,  1997 of $750.  The  outstanding
    borrowings  under the  similar  line were $250 at  December  31,  1996.  The
    line-of-credit  bears  interest  at the prime  rate plus .5% and  expires in
    June,  1997.  Borrowings  under the  line-of-credit  are secured by eligible
    accounts receivable,  as defined in the agreement, and are guaranteed by the
    Company.  The agreement  contains  covenants  requiring the  maintenance  of
    certain financial ratios and other matters.

    Mecar has a $878  line-of-credit  agreement  with a foreign bank which has a
    balance of $272 at March 31, 1997 and no balance at December 31,  1996.  The
    line is secured by a cash  deposit  pledge  equal to the full  amount of the
    line.


NOTE 6 - CREDIT FACILITY

    The Company is obligated under a credit agreement (the old Agreement) with a
    banking pool comprised of four foreign banks that provided credit facilities
    primarily  for letters of credit,  bank  guarantees,  performance  bonds and
    similar instruments required for specific sales contracts. The old Agreement
    provides  for certain  bank  charges  and fees as the line is used,  plus an
    annual fee of approximately 2% of guarantees  issued.  As of March 31, 1997,
    the credit facility had been fully utilized and guarantees of $10,507 remain
    outstanding.

    The Company has a credit  agreement (the new Agreement)  with a banking pool
    comprised of five foreign banks that provide  similar credit  facilities for
    new  contracts.  The bank fee structure  under the new Agreement and the old
    Agreement is similar.

    At March 31, 1997, advances under the old agreement were secured by deposits
    of $5,045,  plus term deposits of $10,599.  The term deposits  correspond to
    the term loan agreement with two of the  institutions in its foreign banking
    pool.  The proceeds were place in deposit  accounts as collateral for credit
    facility  advances  made  by the  pool  under  the  old  Agreement.  Amounts
    outstanding are also  collateralized by pledges of approximately  $27,600 on
    Mecar's  assets,  letters of credit and  certain  funds  received  under the
    contracts financed.  Both Agreements provide for restrictions on payments or
    transfers to Allied and ARCL for management fees,  intercompany  loans, loan
    payments,  the  maintenance  of certain net worth  levels and the payment of
    bank fees and charges.

    The Company is also liable for  guarantees and other  instruments  issued on
    its behalf by other banks which approximate  $1,734 at March 31, 1997, which
    are collateralized by $1,252 of time deposits.

                                       7

<PAGE>


                          Allied Research Corporation

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                 March 31, 1997

                             (Thousands of Dollars)

                                  (Unaudited)

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


NOTE 7 - LONG-TERM FINANCING

    Mecar is obligated on an approximately  $5,000 mortgage on its manufacturing
    and  administration  facilities.  As  amended,  the  balance  of the loan is
    payable in annual principal  installments of approximately  $600 and matures
    in 2004.  The  Company is also  obligated  on several  mortgages  on The VSK
    Group's  buildings which has a balance of approximately  $1,200 at March 31,
    1997. The mortgages are payable in annual installments of approximately $250
    plus interest.

    Barnes & Reinecke is obligated on two notes payable to its bank which have a
    total balance due of $183 at March 31, 1997 and $292 at December 31, 1996.

    Scheduled  annual  maturities of long-term  obligations as of March 31, 1997
are approximately as follows:

               Year                                            Amount
               ----                                            ------
               1997                                           $12,336
               1998                                             1,700
               1999                                             1,200
               2000                                             1,200
               2001                                               800
                Thereafter                                      2,100




NOTE 8 - INCOME TAXES

    The Company  adopted the provisions of Statement of Financial  Accounting
    Standards No. 109,  "Accounting  for Income Taxes" ("SFAS No. 109").

    The provision for income taxes differs from the anticipated combined federal
    and state statutory rates due to operating  losses and earnings from foreign
    subsidiaries.

    The  Company's  Belgian  subsidiaries  have unused net  operating  losses of
    approximately  $2,200 at March 31, 1997,  which under  Belgian law cannot be
    carried back but may be carried forward indefinitely.

    As  of  March  31,  1997,   the  Company  had  unused   foreign  tax  credit
    carryforwards of approximately $750 which expire through 2009.

    Deferred tax  liabilities  have not been  recognized  for bases  differences
    related  to  investments  in  the  Company's   Belgian  and  United  Kingdom
    subsidiaries.  These  differences,  which  consist  primarily of  unremitted
    earnings intended to be indefinitely  reinvested,  aggregated  approximately
    $21,000 at March 31, 1997 and $18,800 at December 31, 1996. Determination of
    the amount of unrecognized deferred tax liabilities is not practicable.

                                       8


<PAGE>


                          Allied Research Corporation

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                 March 31, 1997

                             (Thousands of Dollars)

                                  (Unaudited)

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


NOTE 9 - EARNINGS (LOSS) PER SHARE

    Stock  options   outstanding  have  not  been  included  in  the  per  share
    computation  because there would not be a material effect on earnings (loss)
    per share.



                                       9
<PAGE>


                          Allied Research Corporation

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                                 March 31, 1997

                             (Thousands of Dollars)

                                  (Unaudited)

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

    The Company conducts its business through its wholly-owned  subsidiaries:
    Mecar,  S.A.,  ("Mecar"),  a Belgian corporation;  Barnes & Reinecke,  Inc.
    ("Barnes"),  a Delaware corporation,  headquartered in Illinois;  Allied
    Research Corporation Limited ("Limited"),  a U.K. company; as well as a
    group of Belgian corporations  acquired by  Mecar  in 1994  and  1995  led
    by VSK  Electronics,  N.V.,  Teletechnique  General,  S.A.  and  IDCS,  S.A.
    (collectively,  the "VSK Group").  This discussion refers to the financial
    condition and results of operations of the company on a consolidated basis.

    Revenue

    Revenue for the first three months of 1997 was  $29,765,  an increase of 27%
    over the comparable  period in 1996,  principally  due to increased  revenue
    from Mecar. Mecar sales were $23,258, or up 47% compared to the period ended
    March 31, 1996.  Barnes'  revenue was $2,276,  down 33% compared to the same
    period in 1996  principally  due to delays in  obtaining  financing on a key
    contract.  The VSK Group's revenue for the quarter was about the same as the
    prior  period at  approximately  $4,250.  Limited did not have  revenue this
    period or in last year's comparable period.

    Backlog

    As of March 31,  1997,  the  Company's  backlog was  approximately  $145,000
    compared  with  $79,600 at December  31, 1996 and $60,333 at March 31, 1996.
    During the first  quarter of 1997,  Mecar  received an order for $84 million
    from its principal customer.

    Operating Costs and Expenses

    Cost of sales for the first three months of 1997 were approximately $24,275,
    or 82% of sales, as compared to $18,395,  or 78%, for the first three months
    of 1996. The increase is primarily due to the product mix.

    Selling and  administrative  expenses were  approximately  $3,322, or 11% of
    revenue, for the three months ended March 31, 1997 as compared to $3,464, or
    15%, for the three months ended March 31, 1996. This decrease is a result of
    increased revenue.

    Research and Development

    Research and  development  expenses were 1% as a ratio of sales at March 31,
    1997 and 2% as a ratio of sales for the three month  period  ended March 31,
    1996, a decrease primarily due to an increase in volume.

                                       10

<PAGE>

                          Allied Research Corporation

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                                 March 31, 1997

                             (Thousands of Dollars)

                                  (Unaudited)

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




    Interest Expense

    Interest  expense for the first three months of 1997 decreased,  compared to
    the same period in 1996, as a result of decreased borrowing levels.

    Interest Income

    Interest  income  decreased as a result of a decrease in funds available for
investment.

    Other - Net

    For the three months ended March 31, 1997, Other - Net represents  primarily
    currency  gains,  net of currency  losses,  resulting from foreign  currency
    transactions.

    Net Earnings

    The Company  earned a $1,984 profit ($.44 per share)  compared with a $0.636
     profit  ($0.14 per share) in the first three months of 1996.  The increased
     net earnings was primarily  attributable to an increased volume of business
     at Mecar.

    Liquidity and Capital Resources

    During the first three months of 1997 and throughout 1996, Allied funded its
    operations  principally  with  internally  generated cash and back-up credit
    facilities  required for foreign  government  contracts.  Mecar continues to
    finance its  activities  via credit  facilities  supplied by a foreign  bank
    pool.  Mecar is limited  by its bank pool  agreement  in the  amounts it may
    transfer to Allied or other  affiliates.  At March 31, 1997, the Company had
    unrestricted  cash  (i.e.,  cash not  required by the terms of the bank pool
    agreement to collateralize contracts) of approximately $8,152, compared with
    approximately  $12,000 at December  31, 1996.  The decrease in  unrestricted
    cash was  caused in large  part by  substantial  payments  during  the first
    quarter of 1997,  of Company  payables  and other  liabilities.  The Company
    anticipates  receiving a down payment on the large contract that was awarded
    in the first quarter 1997 of  approximately  $4,000 and upon  receipt,  that
    down payment will be pledged as collerateral.

    Accounts  receivable at March 31, 1997  increased  over December 31, 1996 by
    $9,153 and cost and accrued earnings on uncompleted  contracts  decreased by
    $7,372 from March 31, 1996 levels.  Inventories  decreased  $1,102.  Prepaid
    expenses and deposits  decreased $673 primarily due to a decrease in prepaid
    expenses.  Current  liabilities  decreased by $13,600 from December 31, 1996
    levels as a result of decreases in accounts payable, notes payables, current
    maturities on long-term debt, accrued liabilities and customer deposits.

    In summary,  working  capital was  approximately  $20,433 at March 31, 1997,
    which is an increase of $2,369  from  December  31,  1996.  The  increase is
    primarily attributable to operating activities at Mecar.

                                       11

<PAGE>

                          Allied Research Corporation

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                                 March 31, 1997

                             (Thousands of Dollars)

                                  (Unaudited)

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

PART II.        OTHER INFORMATION

                None.

                                       12

<PAGE>


                          Allied Research Corporation



SIGNATURE

  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.

                                            ALLIED RESEARCH CORPORATION




                                            /s/ J. R. Sculley
                                            _________________________________
Date:  May 2, 1997                          J. R. Sculley
                                            Chairman of the Board,
                                            Chief Executive Officer and
                                            Chief Financial Officer


                                       13