SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                   FORM 10-Q

                   Quarterly Report under Section 13 or 15(d)

                     of the Securities Exchange Act of 1934
For Quarter Ended November 30, 1996               Commission File Number 0-1738
                                                                         ------

                         GENERAL KINETICS INCORPORATED

             (Exact Name of Registrant as Specified in its Charter)



              Virginia                                    54-0594435
  (State or Other Jurisdiction of           (I.R.S. Employer Identification No.)
   Incorporation or Organization)



14130-C Sullyfield Circle, Chantilly, VA                             20151
(Address of Principal Executive Offices)                             (Zip Code)


Registrant's Telephone Number, including Area Code     703-802-9300


                                    Indicate by checkmark 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 number of shares of Registrant's  Common
                                    Stock outstanding as of  January 5, 1997

                                                                6,508,925 Shares



<PAGE>


                                     INDEX
<TABLE>
<CAPTION>
                                                                                                              Page No.
<S> <C>
                  Cautionary Statement Under the Private Securities Litigation Reform Act of 1995................ 3

Part I - Financial Information

         Item I - Consolidated Financial Statements

                  Condensed Consolidated Balance Sheets -
                          November  30, 1996  and May 31, 1996................................................... 4

                         Condensed Consolidated Statements of Operations -
                         Six Months and Three Months Ended November 30, 1996  and  November 30, 1995,
                          respectively........................................................................... 5

                         Condensed Consolidated Statements of Cash Flows -
                         Six Months and Three Months  Ended  November 30, 1996  and
                          November  30, 1995, respectively....................................................... 6

                         Notes to Condensed Consolidated Financial Statements.................................... 7

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


Part 2 - Other Information

         Item 6 - Exhibits and Reports on Form 8-K...............................................................13
</TABLE>

                                       2

<PAGE>


CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Statements in this Quarterly Report on Form 10-Q under the caption "Management's
Discussion and Analysis of Financial  Condition and Results of  Operations",  as
well  as  oral  statements  that  may be made  by the  Company  or by  officers,
directors or employees of the Company acting on the Company's  behalf,  that are
not historical fact constitute  "forward-looking  statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.  These  forward-looking  statements
involve risks and  uncertainties,  including,  but not limited to, the risk that
the Company may not be able to obtain  additional  financing if  necessary;  the
risk  the  Company  may in  the  future  have  to  comply  with  more  stringent
environmental  laws or  regulations,  or more vigorous  enforcement  policies of
regulatory  agencies,   and  that  such  compliance  could  require  substantial
expenditures  by the  Company;  the  risk  that the  Company  may not be able to
maintain  its  listing on the  American  Stock  Exchange;  and the risk that the
Company may not be able to continue the necessary  development of its operations
on a profitable  basis.  In addition,  the Company's  business,  operations  and
financial  condition are subject to substantial risks which are described in the
Company's reports and statements filed from time to time with the Securities and
Exchange  Commission,  including  the  Company's  annual report of Form 10-K, as
amended, for the fiscal year ended May 31, 1996, and this Report.



                        PART I    FINANCIAL INFORMATION

Item 1 - Consolidated Financial Statements

         The unaudited  consolidated  financial  statements of General  Kinetics
Incorporated  ("GKI" or the  "Company")  set  forth  below  have  been  prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain  information  and  note  disclosures  normally  included  in the  annual
financial  statements  prepared in accordance with generally accepted accounting
principles  have  been  condensed  or  omitted   pursuant  to  those  rules  and
regulations. The Company believes that the disclosures made are adequate to make
the information presented not misleading.

         In  the  opinion  of  management  of  the  Company,   the  accompanying
consolidated  financial  statements reflect all adjustments  (consisting only of
normal  recurring  adjustments)  that are necessary for a fair  presentation  of
results for the  periods  presented.  It is  suggested  that these  consolidated
financial   statements  be  read  in  conjunction  with  the  audited  financial
statements  for the fiscal  years  ended May 31,  1996 and 1995 set forth in the
Company's annual report on Form 10-K for the fiscal year ended May 31, 1996.

                                       3

<PAGE>


                         GENERAL KINETICS INCORPORATED
                          Consolidated Balance Sheets
<TABLE>
<CAPTION>

                                                                               November 30,         May, 31
                                                                                   1996               1996
                                                                               (Unaudited)         (Audited)
                                                                             --------------     ---------------
                                     Assets
<S> <C>
Current Assets:
     Cash and cash equivalents                                               $     319,500        $     364,100
     Accounts receivable, net of allowance, $168,000 and $249,700                1,622,300            1,325,500
     Inventories                                                                   562,000            3,505,900
     Prepaid expenses and other                                                    125,000               24,600
     Assets held for Sale                                                        2,242,400                    -
                                                                             -------------        -------------
     Total Current Assets                                                        4,871,200            5,220,100
                                                                             -------------        -------------

Property, Plant and Equipment                                                    4,849,600            6,869,300
Less:  Accumulated Depreciation                                                 (3,609,500)          (5,387,600)
                                                                             -------------        -------------
                                                                                 1,240,100            1,481,700
Other Assets, in 1996, principally capitalized software of
     $206,100 at May 31, 1996                                                       14,600              324,000
                                                                             -------------        -------------

     Total Assets                                                            $   6,125,900        $   7,025,800
                                                                             =============        =============


                     Liablilities and Stockholders' Deficit

Current Liabilities:
     Advances from factor                                                    $     269,800        $     146,500
     Current maturities of long-term debt                                          212,900              244,800
     Accounts payable, trade                                                     1,104,700            1,541,600
     Accrued expenses and other payables                                           810,500            1,224,400
                                                                             -------------        -------------
     Total Current Liabilities                                                   2,397,900            3,157,300
                                                                             -------------        -------------

Long-Term debt - less current maturities (including
     $8,999,100 and $8,966,700 due to controlling shareholder)                   9,755,500            9,800,100
Other long-term liabilities                                                        272,600              292,300
                                                                             -------------        -------------
     Total Long-Term Liabilities                                                10,028,100           10,092,400
                                                                             -------------        -------------

     Total Liabilities                                                          12,426,000           13,249,700
                                                                             -------------        -------------

Stockholders' Deficit:
     Common Stock, $0.25 par value, 50,000,000                                   1,759,000            1,759,000
         shares authorized, 7,035,557 shares issued, 6,508,925
         shares outstanding
     Additional Contributed Capital                                              7,186,900            7,186,900
     Accumulated Deficit                                                       (14,795,800)         (14,719,600)
                                                                             -------------        -------------
                                                                                (5,849,900)          (5,773,700)
     Less:
               Treasury Stock, at cost (526,632 shares)                           (450,200)            (450,200)
                                                                             -------------        -------------
     Total Stockholders' Deficit                                                (6,300,100)          (6,223,900)
                                                                             -------------        -------------

     Total Liabilities and Stockholders' Deficit                             $   6,125,900        $   7,025,800
                                                                             =============        =============
</TABLE>

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


                                     Page 4


<PAGE>

                         GENERAL KINETICS INCORPORATED
                     Consolidated Statements of Operations
<TABLE>
<CAPTION>
                                                                Six Months Ended                       Three Months Ended
                                                         November 30,      November 30,          November 30,        November 30,
                                                            1996              1995                   1996                1995
                                                            ----              ----                   ----                ----
<S> <C>
Net Sales                                              $   4,726,900      $   4,977,600          $   2,087,800      $   2,344,800
Cost of Sales                                              3,428,300          4,011,600              1,514,500          2,079,900
                                                       -------------      -------------          -------------      -------------
Gross Profit                                               1,298,600            966,000                573,300            264,900
                                                       -------------      -------------          -------------      -------------

Selling, General & Administrative                            865,600            908,200                403,400            456,800

Product Research, Development & Improvement                   66,600            (13,900)                 7,500            (13,900)
                                                       -------------      -------------          -------------      -------------

Total Operating Expenses                                     932,200            894,300                410,900            442,900
                                                       -------------      -------------          -------------      -------------

Operating Income (Loss)                                      366,400             71,700                162,400           (178,000)

Interest Expense                                             202,000            186,600                 96,600             75,000
                                                       -------------      -------------          -------------      -------------

Net income (loss) from continuing operations                 164,400           (114,900)                65,800           (253,000)

Net income(loss) from discontinued operations               (240,700)            75,900               (205,900)            65,900
                                                       -------------      -------------          -------------      -------------

Net Loss                                               $     (76,300)     $     (39,000)         $    (140,100)     $    (187,100)
                                                       =============      =============          =============      =============

Earnings per share
  Primary
     Income (loss) from continuing operations                   0.01              (0.02)                  0.00              (0.04)
     Income (loss) from discontinued operations                (0.01)              0.01                  (0.01)              0.01
                                                       -------------      -------------          -------------      -------------

   Net loss per share                                  $       (0.00)     $       (0.01)         $       (0.00)     $       (0.03)
                                                       =============      =============          =============      =============

Weighted Average Number of Common Shares
  and Dilutive Equivalents Outstanding                    25,508,925          6,508,925             25,508,925          6,508,925
                                                       =============      =============          =============      =============
</TABLE>




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


                                     Page 5


<PAGE>

                         GENERAL KINETICS INCORPORATED
                     Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                                Six Months Ended
                                                                         November 30,         November 30,
                                                                         ------------         ------------
                                                                             1996                 1995
                                                                             ----                 ----
<S> <C>
Cash Flows From Operating Activities:
Net (Loss)                                                            $      (76,300)      $      (39,000)
  Adjustments to reconcile net income
  to net cash used in operating activities:
    Depreciation and amortization                                             74,500              251,500
    Gain on disposal of equipment                                                  -                1,100
    ESOP compensation                                                              -               10,000
    Amortization of bond discount                                             32,300               32,300
  (Increase) Decrease in Assets:
    Accounts Receivable                                                     (726,200)             425,400
    Inventories                                                              453,400              627,900
    Prepaid Expenses                                                        (107,300)               4,100
    Other assets - Software Development Costs                                      -              (73,100)
    Other assets                                                               5,000               50,400
  Increase (Decrease) in Liabilities:
    Accounts Payable - Trade                                                 255,900             (599,900)
    Accrued Expenses                                                           3,600               42,900
    Other Long Term Liabilities                                              (19,700)             (19,200)
                                                                      --------------       --------------

        Net cash provided by/(used) in Operating Activites                  (104,800)             714,400
                                                                      --------------       --------------

Cash Flows from Investing Activities:
  Acquisition of property, plant and equipment                               (31,500)            (116,200)
  Net proceeds from sale of property, plant and equipment                          -                1,000
  Change in assets held for sale                                              75,300                    -
                                                                      --------------       --------------

        Net cash  provided by/(used) in Investing Activities                  43,800             (115,200)
                                                                      --------------       --------------

Cash Flows from Financing Activities:
  Advances from Factor/Borrowings
    on Demand Notes Payable                                                1,543,900              820,500
  Repayments of Advances from Factor/
    Demand Notes Payable                                                  (1,420,600)          (1,227,500)
  Borrowings on Long Term Debt                                                     -               90,000
  Repayments on Long Term Debt                                              (106,900)            (109,100)
                                                                      --------------       --------------

        Net cash provided by/(used) in Financing Activities                   16,400             (426,100)
                                                                      --------------       --------------

Net (decrease) increase in cash and cash equivalents                         (44,600)             173,100

Cash and Cash Equivalents:  Beginning of Period                              364,100              212,200
                                                                      --------------       --------------
Cash and Cash Equivalents:  End of Period                             $      319,500       $      385,300
                                                                      ==============       ==============

Supplemental Disclosures of Cash Flow Information:
  Cash paid during the year for:
    Interest                                                          $      154,800       $      245,600
    Income Taxes                                                                   -                    -
Supplemental Disclosures of Non Cash Investing
  and Financing Activities:
    Reduction in paid in capital based on fair market
         value of ESOP shares                                         $            -       $      140,000
    Increase in assets held for sale                                  $       75,300       $            -
</TABLE>

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

                                     Page 6


<PAGE>



                 GENERAL KINETICS INCORPORATED AND SUBSIDIARIES

                    Notes to Condensed Financial Statements
                                  (Unaudited)



Note 1 - Basis of Presentation

         The condensed  consolidated  financial  statements at May 31, 1996, and
for the three  months and six months ended  November 30, 1996,  and November 30,
1995,  respectively,  include  the  accounts  of General  Kinetics  Incorporated
("GKI")  and its  wholly-owned  subsidiary,  Food  Technology  Corporation.  All
material intercompany accounts and transactions have been eliminated.

         The financial  information  included herein is unaudited.  In addition,
the  financial  information  does not include  all  disclosures  required  under
generally  accepted  accounting  principles  in that  certain  note  information
included  in the  Company's  Annual  Report  has  been  omitted;  however,  such
information  reflects all  adjustments  (consisting  solely of normal  recurring
adjustments)  which are,  in the  opinion  of  management,  necessary  to a fair
presentation of the results of the interim periods.

         The results of  operations  for the three  month and six month  periods
ended  November 30, 1996,  are not  necessarily  indicative of the results to be
expected for the full year.


Note 2 - Sale of the Secure Communications Division

         As  of  December  5,  1996,  GKI  completed  the  sale  of  its  secure
communications business to Cryptek Secure Communications, LLC (the "Purchaser"),
a Delaware limited liability company, the majority of whose equity interests are
owned by affiliates of Angelo Gordon & Co., L.P.

         In the  transaction  GKI  received  $1.75  million in cash,  a $750,000
secured  promissory  note payable over three years (bearing  interest at 1% over
the prime rate) and $1.5 million face amount of 6% convertible  preferred equity
of the  Purchaser  which must be  redeemed  by the  Purchaser  within five years
(unless previously converted). Such preferred equity interest is convertible, at
GKI's option, into 4.2% of the regular membership  interests in the Purchaser on
a diluted basis. The Purchaser also assumed certain  liabilities  related to the
secure  communications  business,  subject  to the terms and  conditions  of the
agreement of sale.  The foregoing  summary is not a complete  description of the
terms and conditions of the reported transaction;  reference is made to the copy
of the  agreement  between the  Purchaser and GKI attached as Exhibit 2.1 to the
Form 8-K dated  December 20, 1996.  Such summary is qualified in all respects by
such reference.

                                       7

<PAGE>

         The  consideration  received  by  GKI  for  its  secure  communications
business was determined in arms-length  negotiations with the Purchaser.  GKI is
not aware of any material  relationship  between it or any of its  directors and
officers, or between any affiliate or the directors or officers of any affiliate
and the Purchaser, that existed at the date of the disposition.

         Operating  results of the SCD for the six months and three months ended
November  30,  1996  are  shown  separately  in the  accompanying  statement  of
operations.  The  statement  of  operations  for the six months and three months
ended November 30, 1995 have been restated and operating results of SCD are also
shown  separately.  Net sales of SCD for the six months ended  November 30, 1996
and 1995 were approximately $1.6 million and $4.4 million, respectively. The net
income/(loss)  for the division  for the six months ended  November 30, 1996 and
1995 were approximately  ($240,700) and $75,900 respectively.  These amounts are
included as a discontinued operation in the accompanying income statement.

         Assets  and  liabilities  of the  SCD  consisted  of the  following  at
November 30 and May 31, 1996:

                                        November 30, 1996      May 31, 1996

Accounts receivable                         $  454,432           $  429,839
Inventories                                  2,380,613            2,490,382
Prepaid expenses                                 2,517                6,910
Property, plant and Equip.                     152,569              198,567
Other assets                                   201,269              304,429
                                             ---------            ---------
         Total assets                        3,191,400            3,429,667
                                             ---------            ---------
Accounts payable                               544,398              692,798
Accrued expenses                               404,640              419,163
                                             ---------            ---------
         Net assets to be sold              $2,242,362           $2,317,716
                                            ==========           ==========


         Net  assets to be sold,  at their  book  values,  have been  classified
separately in the  accompanying  balance sheet at November 30, 1996. The May 31,
1996 balance sheet has not been restated.

         The Company expects to realize a gain of approximately  $150,000 on the
sale of SCD, net of estimated  disposal  costs and an  estimated  provision  for
operating  losses  during the  phase-out  period.  As of November 30, 1996,  the
Company has recorded  approximately $86,600 in deferred closing costs related to
the sale of SCD.

Note 3 - Commitments and Contingencies

   No significant changes.

                                       8

<PAGE>

Note 4 - Net Income/(Loss)Per Share

   Primary and fully  diluted net  earnings/(loss)  per share have been computed
using the weighted average number of common shares and common  equivalent shares
outstanding,  to the extent  dilutive.  Common  equivalent  shares consist of 19
million shares issuable upon conversion of Convertible  Subordinated  Debentures
issued to the Company's  majority  shareholder,  RABO  Investment  Management AG
("RABO"), formerly Gutzwiller & Partner, AG. Outstanding  stock options were not
determined to be dilutive, and therefore no effect was given  to  them  for  the
current  period.  Net income for the period was  adjusted  for  the  elimination
of  interest  expense  for  the  convertible  debt,  net  of  applicable  income
taxes,  while  the  average  number of  shares of common  stock and common stock
equivalents were increased. For the six months ended November 30, 1996 and 1995,
both  primary  and  fully  diluted  earnings/(loss)  per  share  from continuing
operations were $0.01 and ($0.02), respectively.



Note 5 - Notes Payable

At May 31 and November 30, 1996 convertible  debentures initially issued to RABO
have an aggregate  principal amount of $9.5 million,  mature in August 2004, are
convertible  into common stock at a conversion  price of 50 cents per share, and
bear interest at 1% per annum,  which is payable annually beginning August 1995.
Shares   issuable  upon  conversion  are  also  subject  to  certain  rights  to
registration under the Securities Act of 1933, as amended.


Other Real Estate Mortgage Loans

   The Company was in  violation  of certain  loan  covenants of the real estate
mortgage agreement on the Company's  Johnstown facility as of November 30, 1996,
however, the lender has agreed to waive the violations through May 31, 1997. The
debt has been  classified  as a current  liability  at November  30, 1996 in the
accompanying financial statements.

   Additionally,  as  previously  reported,  the  Company  has  entered  into  a
Forbearance  Agreement  with the  holder  of the  real  estate  mortgage  on the
Company's Orlando facility (under which $114,400 was outstanding at November 30,
1996). Pursuant to the Forbearance  Agreement,  a redemption notice with respect
to the bonds originally issued to finance the facility,  previously delivered by
the  mortgage  holder,  was  withdrawn  and  the  Company  has  agreed  to  make
accelerated  payments of $10,000 per month in principal  and interest  until the
remaining principal is paid in full.

                                       9

<PAGE>


GENERAL KINETICS INCORPORATED


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

Six Months Ended November 30, 1996, Compared to Six Months Ended November 30,
1995

   Net sales for  continuing  operations  for the six months ended  November 30,
1996 were approximately $4.7 million compared to net sales of approximately $5.0
million for the six months ended  November 30, 1995.  The  Electronic  Enclosure
Division's  net sales  decreased  from  approximately  $4.63 million for the six
months ended November 30, 1995 to approximately $4.58 million for the six months
ended  November  30,  1996.  There was a  decrease  in sales in Food  Technology
Corporation  of  approximately  $200,000 due to a decrease in demand for sorting
equipment  in the  six  months  ended  November  31,  1996  as  compared  to the
corresponding period of the prior fiscal year.


   Sales,  General &  Administrative  costs were  approximately  $865,600 in the
first six months of fiscal 1996 to as compared to approximately  $908,200 in the
first six months of the prior fiscal year.  Total operating  expenses  increased
from $894,300 to $932,200 principally due to an expense of approximately $66,600
during the six months ended  November 30, 1996 for research and  development  in
respect to the feasibility of potential new products or services,  through joint
ventures or otherwise, outside of the Company's present operating divisions.


   For the six months  ended  November 30, 1996,  the Company  showed  operating
income of approximately $366,400 compared to operating income of $71,700 for the
comparable  six months of the prior  year.  The  increase  was  principally  due
to an increase in gross profit margin of approximately  10% in the first half of
fiscal 1997 in the Electronic Enclosure Division as compared to the same  period
in the prior fiscal year.


   There  was a net loss from  discontinued  operations  (SCD) of  approximately
$240,700 on net sales of $1.6 million  during the six months ended  November 30,
1996 as compared  to net income of $75,900 on net sales of $4.4  million for the
corresponding period of the prior fiscal year.


Three Months Ended November 30, 1996, Compared to Three Months Ended November
30, 1995

   Net sales for  continuing  operations for the three months ended November 30,
1996 were approximately $2.1 million compared to net sales of

                                       10

<PAGE>

approximately  $2.3  million  for  the quarter  ended  November  30,  1995.  The
Electronic  Enclosure Division's net sales decreased  from  approximately  $2.26
million for  the  quarter  ended   November  30,  1995  to  approximately  $2.01
million for the  quarter ended November 30, 1996.  The decrease in sales was due
principally  to a  decrease  in  demand and  management's  efforts to target new
contracts  with  higher  profit margins.

   Sales,  General &  Administrative  costs were  approximately  $403,400 in the
second quarter of fiscal 1996 to as compared to approximately  $456,800  in  the
second  quarter of the prior fiscal year. For the three  months  ended  November
30,  1996,  the  Company  showed  operating  income  of  approximately  $162,400
compared  to  an  operating loss of approximately  $178,000 for  the  comparable
quarter of the prior year.  The improvement was  due principally  to an increase
in gross profit margin of approximately 16% in the second quarter of fiscal 1997
in the Electronic  Enclosure  Division as compared to  the corresponding  period
in the prior fiscal year.


Liquidity and Capital Resources


         As  of  December  5,  1996,  GKI  completed  the  sale  of  its  secure
communications  business to the Purchaser  identified  above. In the transaction
GKI received $1.75 million in cash, a $750,000  secured  promissory note payable
over three years  (bearing  interest at 1% over the prime rate) and $1.5 million
face amount of 6% convertible  preferred  equity of the Purchaser  which must be
redeemed by the Purchaser within five years (unless previously converted).  Such
preferred  equity  interest is  convertible,  at GKI's option,  into 4.2% of the
regular membership  interests in the Purchaser on a diluted basis. The Purchaser
also assumed certain liabilities related to the secure communications  business,
subject to the terms and  conditions  of the  agreement of sale.  The  foregoing
summary  is not a  complete  description  of the  terms  and  conditions  of the
reported transaction; reference is made to the copy of the agreement between the
Purchaser  and GKI  attached  as Exhibit  2.1 to the Form 8-K dated  December 5,
1996. Such summary is qualified in all respects by such reference.

         The Company has suffered recurring losses from operations and has a net
capital  deficiency that raise  substantial doubt about the Company's ability to
continue as a going concern.  However, the operating loss for fiscal 1996 showed
significant improvement over the prior three fiscal years, and there was a small
operating profit from continuing operations in the first half of fiscal 1997. In
the Electronic Enclosure Division,  productivity improvements along with efforts
to target new contracts with higher profit margins for the Company resulted in a
significant  improvement in gross profits for the 1996 fiscal year and the first
half of fiscal 1997 as compared to the prior three  fiscal  years.  The division
must  continue  to

                                       11

<PAGE>


market  electronic  enclosure products to government and commercial markets, and
enter into contracts which the  division  can  complete  with  favorable  profit
margins to continue to operate  profitably  in  fiscal 1997. Management believes
that it has taken appropriate steps to  return  the  Company  to  profitability,
however, there  can  be  no  assurance  that  revenues will increase or that the
Company  will be  able to generate  revenues  or margins  sufficient  to achieve
profitability in fiscal 1997.


         In June 1993,  the  Company  entered  into a factoring  agreement  with
Reservoir  Capital  Corporation  ("Reservoir")  in  which  Reservoir  agreed  to
purchase  eligible  Accounts  Receivable from the Company at an assignment price
equal  to 80%  of the  outstanding  amount  of  such  accounts  receivable.  The
factoring  agreement  with Reservoir was renewed in December 1994, and continues
on a  month-to-month  basis. At November 30, 1996, the balance due Reservoir was
$269,800.  The  Company  does not  expect  to  continue  to draw on this  credit
facility  in the short term and plans to use the  proceeds  from the sale of the
secure communications division to alleviate any short-term cash requirements.

         The Company  continues to be out of  compliance  with  certain  listing
requirements  of the American  Stock Exchange by virtue of recent trading prices
of its  common  stock  as well  as  stockholders'  equity  and  working  capital
deficits,  recent losses and other  factors.  However,  the Company has actively
taken  steps to  address  the  Exchange's  guidelines,  and has  discussed  with
representatives  of the  Exchange  its  situation  and  the  basis  on  which  a
termination of listing might continue to be deferred. The Exchange has agreed to
defer  consideration of termination in light of, among other things, the sale of
the secure communications  division;  however,  there can be no assurance that a
return to compliance will be accomplished or that the listing will be continued.

Management  believes that cash on hand as of November 30, 1996  ($319,500),  the
proceeds from the sale of the secure  communications  division  discussed above,
and careful management of operating costs and cash  disbursements  should enable
the Company to meet its cash requirements through May 31, 1997.

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<PAGE>

                          PART II   OTHER INFORMATION




Item 6 - Exhibits and Reports on Form 8-K


   (b) Reports of Form 8-K

       Form  8-K  dated  December  5,  1996  reporting  the  Sale of the  Secure
       Communications Division.


       Exhibits included in Form 8-K:


                             2.1  Asset  Purchase   Agreement   between  General
                             Kinetics    Incorporated    and   Cryptek    Secure
                             Communications,  LLC, a Delaware limited  liability
                             company  formed by affiliates  of Angelo,  Gordon &
                             Co., L.P., dated as of November 1, 1996

                             2.2  List of Contents of Exhibits and Schedules  to
                             the Asset Purchase Agreement.

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<PAGE>


                                   SIGNATURES

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


                         GENERAL KINETICS INCORPORATED



Date: January  14, 1997                     /s/ Larry M. Heimendinger
      _________________                     _________________________________
                                            Chairman of the Board
                                            (Principal Executive Officer)

Date: January 14, 1997                      /s/ Sandy B. Sewitch
      _________________                     _________________________________
                                            Chief Financial Officer
                                            (Principal Accounting Officer and
                                            Principal Financial Officer)


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