UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 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 quarterly period ended September 30, 1998

                               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 0-2977

                        General Magnaplate Corporation
            -----------------------------------------------------
           (Exact name of registrant as specified in its charter)

               New Jersey                                22-1641813
     -------------------------------                 ------------------
     (State or other jurisdiction of                    IRS Employer
     incorporation or organization)                  Identification No.

     1331 U.S. Route 1, Linden, New Jersey                     07036
     -------------------------------------                   ---------
     (Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code: (908) 862-6200
                                                    --------------
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 November 4, 1998 :

       Common Stock, No Par Value                             4,918,794
       --------------------------                         ------------------
                 (Class)                                  (Number of Shares)

<PAGE>
                               INDEX OF DOCUMENTS


PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS
                  Accountants' Report
                  Balance Sheet - End of Current Quarter
                  Balance Sheet - End of Prior Fiscal Year
                  Statement of Income
                  Statement of Changes in Financial Position
                  Notes to Consolidated Financial Statements

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               POSITION AND RESULTS OF OPERATIONS

PART II - OTHER INFORMATION

ITEM 1 - LEGAL  PROCEEDINGS  -  Although  the  Company  may from time to time be
involved in routine litigation incidental to its business, none of these actions
are  expected,  individually  or in the  aggregate,  to have a material  adverse
impact  upon the  company  or its  results  of  operations.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS - Not Applicable

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES - Not Applicable

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

ITEM 5 - OTHER  INFORMATION  - None 

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
                  (a) Exhibit 27 - Financial Data Schedule
                  (b) None


<PAGE>
                                 










                         GENERAL MAGNAPLATE CORPORATION
                                       AND
                            WHOLLY-OWNED SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                               THREE MONTHS ENDED
                           SEPTEMBER 30, 1998 AND 1997



<PAGE>
                         GENERAL MAGNAPLATE CORPORATION
                                       AND
                            WHOLLY-OWNED SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




                                                              

Accountants' Review Report                         

Consolidated Financial Statements:
 Consolidated Balance Sheets            
 Consolidated Statements of Income            
 Consolidated Statements of Comprehensive Income    
 Consolidated Statement of Changes in Stockholders' Equity  
 Consolidated Statements of Cash Flows   
 Notes to Consolidated Financial Statements    

Supplementary Information    



<PAGE>
MAURIELLO, FRANKLIN & LOBRACE
            A Professional Corporation
 CERTIFIED PUBLIC ACCOUNTANTS

                            45 Springfield Avenue, Springfield, New Jersey 07081
                                     Telephone (973) 379-5400 FAX (973) 379-3696


                           ACCOUNTANTS' REVIEW REPORT

To The Board of Directors of
  General Magnaplate Corporation:

         We have reviewed the accompanying  balance sheet of General  Magnaplate
Corporation  and  Wholly-Owned  Subsidiaries  as of  September  30, 1998 and the
related consolidated  statement of changes in stockholders' equity for the three
months  ended  September  30, 1998 and the related  consolidated  statements  of
income,  comprehensive  income,  and  cash  flows  for the  three  months  ended
September 30, 1998 and 1997. These financial  statements are the  responsibility
of the management of General Magnaplate Corporation.

         We conducted our review in accordance with standards established by the
American  Institution  of  Certified  Public  Accountants.  A review of  interim
financial statements consists primarily of applying analytical review procedures
to financial data and making inquiries of persons  responsible for financial and
accounting  matters.  It is  substantially  less  in  scope  than  an  audit  in
accordance with generally accepted auditing standards, the objective of which is
the  expression  of an opinion  regarding the  financial  statements  taken as a
whole. Accordingly, we do not express such an opinion.

         Based on our  review,  we are not aware of any  material  modifications
that should be made to the accompanying  financial  statements for them to be in
conformity with generally accepted accounting principles.

         Our review was made for the  purpose of  expressing  limited  assurance
that there are no material  modifications  that should be made to the  financial
statements  in  order  for  them to be in  conformity  with  generally  accepted
accounting principles.  The supplementary information for the three months ended
September  30,  1998  and  1997  included  in  the  accompanying   supplementary
information is presented for supplementary  analysis purposes.  Such information
has been  subjected  to the inquiry  and  analytical  procedures  applied in the
review of the basic financial  statements,  and we are not aware of any material
modifications that should be made thereto.

         The  balance  sheet for the year ended June 30, 1998 was audited by us,
and we  expressed  an  unqualified  opinion on it in our report dated August 10,
1998. We have not  performed any auditing  procedures on the balance sheet since
August 10, 1998.


                                               /s/ Mauriello, Franklin & LoBrace
                                               ---------------------------------
                                                   Mauriello, Franklin & LoBrace

October 27, 1998
<PAGE>
<TABLE>
<CAPTION>
                         GENERAL MAGNAPLATE CORPORATION
                                       AND
                            WHOLLY-OWNED SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS




                                                     September 30,     June 30,
         ASSETS                                           1998           1998
         ------                                      ------------    -----------
<S>                                                   <C>            <C>        
Current assets:
  Cash and cash equivalents ......................    $ 1,134,370    $ 1,301,317
  Marketable securities (Note 1) .................      2,901,793      3,136,420
  Accounts receivable--trade, net of
    allowance for doubtful accounts of
    $102,000 (June 30, 1998-$93,000) .............      1,416,828      1,326,070
  Inventories (Note 1) ...........................        354,142        355,285
  Prepaid expenses ...............................        181,490        190,817
  Other current assets ...........................        128,967        169,229
                                                      -----------    -----------

      Total current assets .......................    $ 6,117,590    $ 6,479,138

Property, plant, and equipment, at
  cost, net of accumulated
  depreciation (Notes 1 and 2) ...................      6,251,573      6,331,313

Cash surrender value of officers' life
  insurance ......................................        899,811        874,811

Note receivable-officer (Note 8) .................        486,781        490,686

Note receivable-related party partnership (Note 8)        195,000        195,000

Other assets (Note 3) ............................        614,382        609,453
                                                      -----------    -----------

    Total assets .................................    $14,565,137    $14,980,401
                                                      ===========    ===========

</TABLE>
                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<PAGE>
<TABLE>
<CAPTION>
                               GENERAL MAGNAPLATE CORPORATION
                                             AND
                                  WHOLLY-OWNED SUBSIDIARIES

                                 CONSOLIDATED BALANCE SHEETS


                                                              September 30,       June 30,
LIABILITIES AND STOCKHOLDERS' EQUITY                              1998             1998
------------------------------------                          ------------     ------------
<S>                                                           <C>              <C>         
Current liabilities:
  Current maturity of long-term debt .....................    $     28,593     $     29,841
  Accounts payable .......................................         176,056          434,915
  Accrued liabilities (Note 6) ...........................         281,622          426,234
  Corporate income taxes payable .........................         114,498           40,743
  Dividends payable ......................................         243,540              -0-
                                                              ------------     ------------

    Total current liabilities ............................    $    844,309     $    931,733
                                                              ------------     ------------

Long-term liabilities:
  Rent security deposit ..................................    $      9,193     $      9,193
  Accrued deferred compensation (Note 7) .................       1,343,669        1,319,864
  Long-term debt (Note 4) ................................         388,383          412,800
                                                              ------------     ------------

    Total long-term liabilities ..........................    $  1,741,245     $  1,741,857
                                                              ------------     ------------

    Total liabilities ....................................    $  2,585,554     $  2,673,590
                                                              ------------     ------------

Commitments and contingencies (Note 10)

Stockholders' equity:
  Common stock--no par value
    Authorized--5,000,000 shares
    Issued--4,918,794 shares of which 56,000 and 11,000
     shares are held as treasury stock respectively ......    $    223,180     $    223,180
  Retained earnings ......................................      12,270,159       12,338,744
  Accumulated other comprehensive income (loss) (Note 1) .        (218,858)        (189,388)
                                                              ------------     ------------

                                                              $ 12,274,481     $ 12,372,536
  Less--cost of 56,000 and 11,000 shares of treasury stock        (294,898)         (65,725)
                                                              ------------     ------------

     Total stockholders' equity ..........................    $ 11,979,583     $ 12,306,811
                                                              ------------     ------------

    Total liabilities and stockholders' equity ...........    $ 14,565,137     $ 14,980,401
                                                              ============     ============

</TABLE>
                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
                               GENERAL MAGNAPLATE CORPORATION
                                             AND
                                  WHOLLY-OWNED SUBSIDIARIES

                              CONSOLIDATED STATEMENTS OF INCOME
                       THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997


                                                                 1998                1997
                                                             -----------         -----------
<S>                                                          <C>                 <C>        
Gross revenue:
  Sales .............................................        $ 2,623,234         $ 2,680,860
Royalty income ......................................             52,042              56,172
  Investment and other income (loss) ................            (18,484)            158,469
                                                             -----------         -----------
                                                             $ 2,656,792         $ 2,895,501
                                                             -----------         -----------

Costs and expenses:
  Cost of sales .....................................        $ 1,295,458         $ 1,176,214
  Selling and administration ........................            904,381           1,021,208
  Depreciation and amortization .....................            172,570             153,466
  Interest ..........................................              8,328                 -0-
                                                             -----------         -----------
                                                             $ 2,380,737         $ 2,350,888
                                                             -----------         -----------

Income before corporate income taxes ................        $   276,055         $   544,613

Corporate income taxes (Notes 1 and 5) ..............            101,100             199,600
                                                             -----------         -----------

Net income ..........................................        $   174,955         $   345,013
                                                             ===========         ===========


Earnings per share (Note 1) .........................        $       .04         $       .07
                                                             ===========         ===========

Weighted average shares outstanding .................          4,873,316           4,918,794
                                                             ===========         ===========

</TABLE>
                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
                         GENERAL MAGNAPLATE CORPORATION
                                       AND
                            WHOLLY-OWNED SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                 THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997



                                                                   1998              1997
                                                                ---------         ---------

<S>                                                             <C>               <C>      
Net income .............................................        $ 174,955         $ 345,013

Other comprehensive income, net of tax:
  Foreign exchange translation adjustment ..............          (29,470)           (1,691)
                                                                ---------         ---------

Comprehensive income ...................................        $ 145,485         $ 343,322
                                                                =========         =========

</TABLE>
                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
                                             GENERAL MAGNAPLATE CORPORATION
                                                          AND
                                               WHOLLY-OWNED SUBSIDIARIES

                               CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                         THREE MONTHS ENDED SEPTEMBER 30, 1998




                                                                                       Accumulated
                                                                                           Other            Cost of
                                                      Common          Retained        Comprehensive         Treasury
                                                       Stock          Earnings        Income (Loss)          Stock
                                                     --------        -----------        ---------          --------- 
<S>                                                  <C>             <C>                <C>                <C>        
Balance, July 1, 1998                                $223,180        $12,338,744        $(189,388)         $  (65,725)

Net income for three months
  September 30, 1998                                                     174,955

Dividend declared ($.05 per share)                                      (243,540)

Acquisition of 45,000 shares of
  treasury stock                                                                                             (229,173)

Foreign exchange translation adjustment                                                   (29,470)
                                                     --------        -----------        ---------           ---------
Balance, September 30, 1998                          $223,180        $12,270,159        $(218,858)          $(294,898)
                                                     ========        ===========        =========           =========

</TABLE>
                SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
                                      GENERAL MAGNAPLATE CORPORATION
                                                    AND
                                         WHOLLY-OWNED SUBSIDIARIES
                                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                              THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

                                                                                1998              1997
                                                                            -----------       -----------
<S>                                                                         <C>               <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income .........................................................      $   174,955       $   345,013
                                                                            -----------       -----------
  Adjustments to reconcile net income to net cash provided
     by  operating activities:
      Depreciation and amortization ..................................      $   172,570       $   153,466
      Reserve for unrealized gain (loss) .............................          193,653           (57,891)
      Deferred tax credits ...........................................          (24,400)          (16,000)
      Allowance for doubtful accounts ................................           13,627            13,800
      Accrued deferred compensation ..................................           37,962            44,287
      Foreign exchange translation adjustment ........................          (29,470)           (1,691)
      Increase  (decrease) in cash  resulting from changes in
         current assets and liabilities:
         Marketable securities .......................................           40,974          (186,461)
         Accounts receivable .........................................         (104,385)           11,113
         Inventories .................................................            1,143                 0 
         Prepaid and other current assets ............................           61,642            72,788
         Accounts payable and accrued  liabilities ...................         (403,473)          (86,088)
         Corporate income taxes payable ..............................           73,755           136,770
                                                                            -----------       -----------
               Total adjustments .....................................      $    33,598       $    84,093
                                                                            -----------       -----------

    Net cash provided by  operating activities .......................      $   208,553       $   429,106
                                                                            -----------       -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property, plant, and equipment, net ...................      $   (88,908)      $  (226,519)
  Additions to patents and trademarks ................................          (10,426)           (5,343)
  Additions to deferred compensation contracts .......................                0           (17,288)
  Collection of note receivable-officer ..............................            3,672             3,064
  Increase in cash surrender value-officers' life insurance ..........          (25,000)          (23,316)
                                                                            -----------       -----------

    Net cash used in investing activities ............................      $  (120,662)      $  (269,402)
                                                                            -----------       -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments - long-term debt ................................      $   (25,665)      $         0 
   Acquisition of treasury stock .....................................         (229,173)                0 
                                                                            -----------       -----------

     Net cash used in financing activities ...........................      $  (254,838)      $        0 
                                                                            -----------       ----------

INCREASE  IN CASH (Note 11) ..........................................      $  (166,947)      $   159,704
  Cash and cash equivalents,  beginning of period ....................        1,301,317         1,216,824
                                                                            -----------       -----------
  Cash and cash equivalents,  end of period ..........................      $ 1,134,370       $ 1,376,528
                                                                            ===========       ===========
</TABLE>
                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
                         GENERAL MAGNAPLATE CORPORATION
                                       AND
                            WHOLLY-OWNED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1--Summary of Significant Accounting Policies

Principles of Consolidation

         The consolidated  financial  statements include the accounts of General
Magnaplate  Corporation  and  its  wholly-owned  subsidiaries;  accordingly  all
intercompany transactions and balances have been eliminated in consolidation.

Nature of Business

         The  Company  is in one  line  of  business.  It  provides  synergistic
coatings and other related services to commercial  customers' products from five
plants  located  in the United  States and  Canada.  Included  in the  Company's
consolidated  balance sheet at June 30, 1998 are $1,336,000 of net assets of the
Canadian operation.

         Marketable Securities

         All marketable  securities are  considered  trading  securities and are
valued at fair  market  value in  accordance  with SFAS No.  115.  Realized  and
unrealized  gains  and  losses  are  reported  in  current  period  income.  Net
unrealized  holding  gains  (losses) on trading  securities  of  ($193,653)  and
$57,891 were reported in 1998 and 1997, respectively. Cost exceeded market value
by $97,060 at September 30, 1998.  Market value exceeded cost by $60,719 at June
30, 1998.

Inventories

         Inventories  consist  principally  of  industrial  supplies and plating
solutions  which are valued at the lower of FIFO cost or market and are included
in Cost of Sales.

Depreciation and Amortization

         Property,  plant and equipment are stated at cost and  depreciation  is
provided  principally on a straight line basis using estimated  service lives of
3-5 years for  transportation  equipment,  5-10 years for factory  machinery and
office  equipment,  and 10-39 years for  buildings  and  building  improvements.
Expenditures for renewals and betterments are capitalized. Items of identifiable
property which are sold,  retired, or otherwise disposed of are removed from the
asset accounts, and any gains or losses thereon are reflected in income.

         Patents and  trademarks  are  amortized  on a straight  line basis over
periods not exceeding 10 years.
<PAGE>
                         GENERAL MAGNAPLATE CORPORATION
                                       AND
                            WHOLLY-OWNED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1--Summary of Significant Accounting Policies (Continued)

Corporate Income Taxes

         Taxes are provided  based on income  reported for  financial  statement
purposes,  including  deferred  taxes  which  are  principally  provided  due to
temporary differences between financial and tax reporting of certain revenue and
expense items.

Company Earnings Per Share

         Earnings  per share of common  stock  have been  computed  based on the
weighted average number of shares outstanding during the reporting periods.

Statement of Cash Flows

         For purposes of the statement of cash flows, the Company  considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.

Foreign Currency Translation Adjustment

         Assets  and  liabilities  of the  subsidiary  operating  in Canada  are
translated  into U.S.  dollars  using the exchange rate in effect at the balance
sheet date. Results of operations are translated using the average exchange rate
prevailing  throughout the period.  The effects of exchange rate fluctuations on
translating  foreign  currency  assets and  liabilities  into U.S.  dollars  are
included as part of the Accumulated Other Comprehensive  Income (Loss) component
of shareholders'  equity, while gains and losses resulting from foreign currency
transactions are generally included in income.

Use of Estimates

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure  of  contingent  assets  and  liabilities  at the  date of  financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.
<PAGE>
                         GENERAL MAGNAPLATE CORPORATION
                                       AND
                            WHOLLY-OWNED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 2--Property, Plant and Equipment

Property, plant and equipment are as follows:

                                                  September 30,        June 30,
                                                      1998               1998
                                                  -----------        -----------
Land .....................................        $ 1,020,627        $ 1,030,025
Buildings ................................          3,664,326          3,677,341
Building improvements ....................          3,720,985          3,670,396
Factory machinery ........................          4,039,203          3,995,672
Office equipment .........................            686,599            674,261
Transportation equipment .................            308,710            309,251
                                                  -----------        -----------

Total ....................................        $13,440,450        $13,356,946
Less--accumulated depreciation ...........          7,188,877          7,025,633
                                                  -----------        -----------

Net ......................................        $ 6,251,573        $ 6,331,313
                                                  ===========        ===========

Note 3--Other Assets

         Other assets are as follows:
                                                   September 30,   June 30,
                                                        1998        1998
                                                      --------    --------

Patents and trademarks, at cost, net of
     accumulated  amortization of $117,163
     and $113,241 ..............................      $127,429    $120,925
Deferred income taxes ..........................       311,243     298,463
Deferred compensation contracts ................       171,238     185,398
Mortgage financing costs .......................         4,472       4,667
                                                      --------    --------

                                                      $614,382    $609,453
                                                      ========    ========

Note 4--Long-Term Debt

         The  Company is indebted  to  Business  Development  Bank of Canada for
$457,925  borrowed  March  31,  1998  and  payable  in equal  monthly  principal
installments of $2,487 together with interest of 7.6% per annum  commencing June
23,  1998 with the final  payment due April 23,  2013.  The note is secured by a
first mortgage on real estate owned in Ajax, Ontario.

         Current  maturities  of the debt for the five years ended June 30, 2003
are as follows:  1999 - $29,841; 2000 - $29,841; 2001 - $29,841; 2002 - $29,841;
and 2003 - $29,841.
<PAGE>
                         GENERAL MAGNAPLATE CORPORATION
                                       AND
                            WHOLLY-OWNED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5--Corporate Income Taxes

     Components of corporate income taxes are as follows:
<TABLE>
<CAPTION>
                                                 Three Months Ended
                                                    September 30,
                                           -------------------------------
                                              1998                  1997
                                           ---------             ---------    
<S>                                        <C>                   <C>  
Current:        
   Federal ............................    $ 109,400             $ 190,200    
   State ..............................       16,100                25,400    
   Foreign ............................            0                     0    
                                           ---------             --------- 
                                           $ 125,500             $ 215,600  
                                           ---------             ---------    
   
Deferred:                                                                     
  Federal .............................    $ (19,300)            $ (12,400)   
  State ...............................       (5,100)               (3,600)   
  Foreign .............................            0                     0    
                                           ---------             ---------    
                                           $ (24,400)            $ (16,000)   
                                           ---------             ---------    
                                                                              
Total .................................    $ 101,100             $ 199,600    
                                           =========             =========
</TABLE>
         A reconciliation of the provision for corporate income taxes
compared with the amounts at the US statutory tax is as follows:      
<TABLE>
<CAPTION>
                                                              Three Months Ended
                                                                 September 30,
                                                           ------------------------
                                                              1998           1997
                                                           ---------      ---------
<S>                                                        <C>            <C>      
Based on U.S. statutory federal  tax rate of 34% ......    $  93,858      $ 185,168
Increase (decrease) in taxes resulting from:
            State taxes, net of federal tax benefit ...        7,260         14,388
            Non-deductible expenses (reportable income)          (18)            44
                                                           ---------      ---------
                Total .................................    $ 101,100      $ 199,600
                                                           =========      =========

Effective tax rate ....................................         36.6%          36.7%
</TABLE>
         The Canadian  subsidiary has available  unused tax benefits in the form
of operating loss  carryforwards of approximately  U.S. $80,000 to reduce future
Canadian  taxable income.  These  carryforwards  principally  expire in 2002 and
2003.  A  deferred  tax asset of  $38,000  has been  provided  subject to a 100%
valuation  allowance since it is not likely that the loss  carryforwards will be
utilized prior to their expiration.
<PAGE>
                         GENERAL MAGNAPLATE CORPORATION
                                       AND
                            WHOLLY-OWNED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 6--Accrued Liabilities

         Accrued liabilities are as follows:
<TABLE>
<CAPTION>
                                                      September 30,      June 30,
                                                          1998            1998
                                                        --------        --------
<S>                                                     <C>             <C>     
Compensation ...................................        $223,110        $347,184
Payroll, sales, and property taxes .............          23,907          29,168
401-k plan contribution ........................          20,808          20,040
Environmental and other costs ..................          13,797          29,842
                                                        --------        --------

                                                        $281,622        $426,234
                                                        ========        ========
</TABLE>
Note 7--Employee Benefits

         The Company  maintains a 401(k) savings plan which covers all full time
U.S.   employees.   The  Company  matches  50%  of  voluntary  pre-tax  employee
participant  contributions  up  to 4%  of  compensation  as  well  as  providing
discretionary  contributions  based on compensation for all employees.  Employer
discretionary  contributions,  which are forfeited  due to employee  termination
prior to the full seven year vesting period,  revert back to the Company.  Total
expense under the plan was $16,518 in 1998 and $12,487 in 1997.

         Pursuant to employment  contracts and letter  agreements  with officers
and key employees,  the Company maintains  non-qualified  incentive compensation
plans which are based on the  realization of pre-tax income and royalty  income.
Total expense under these plans was $64,044 in 1998 and $115,071 in 1997.

         The Company is obligated to provide a non-qualified  retirement pension
to its chief executive  officer.  Such obligation  provides a monthly benefit of
$7,100 and is payable for a period of fifteen  years to the  officer,  or to his
wife in the event of his death.  The Company is accruing the obligation over the
active term of  employment  of the  officer.  The Company is also  accruing  and
funding deferred compensation  contracts with two other officers based on 10% of
annual compensation.  Total expense under these three obligations was $37,962 in
1998 and $39,567 in 1997.
<PAGE>
                         GENERAL MAGNAPLATE CORPORATION
                                       AND
                            WHOLLY-OWNED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8--Related Party Transactions

         The Company engaged in the following related party transactions:  


                                                          Three Months Ended
                                                             September 30
                                                       -----------------------
                                                         1998            1997

Was charged computer consulting services
by an outside director of the Company;                 $16,545          $12,175
  
                                              
Accrued interest income on an original
installment note receivable of $235,000
due from a limited partnership
controlled by a stockholder of the
Company secured by a deed of trust on
the Texas real estate. The note bears
interest of 6.83% per annum collectible
annually for three years. Thereafter the
note shall be collected in (5) equal
annual principal installments of $47,000
plus interest of 6.83% per annum
commencing July 1, 1999 with the final
collection due July 1, 2003. The
receivable balance at September 30, 1998
was $195,000.                                          $ 3,330          $ 4,013

                                       
Charged interest income on a mortgage
note receivable of $550,000 from its
chief executive officer on December 16,
1996. The note is being repaid in (34)
equal monthly installments of $3,814
which includes interest of 6.16% per
annum commencing February 1, 1997 with
the final balloon payment of $512,124
due December 16, 1999. The receivable
balance at September 30, 1998 was
$502,049 and is secured by a real estate
first mortgage.                                        $  7,769         $ 8,377

                                
<PAGE>
                         GENERAL MAGNAPLATE CORPORATION
                                       AND
                            WHOLLY-OWNED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 9--Fair Value of Financial Instruments

Cash and Cash Equivalents,  Accounts  Receivable,  Accounts Payable, and Accrued
Liabilities--The  carrying amount  approximates  fair value because of the short
maturity of these instruments.

Marketable  Securities--The carrying amount approximates fair value because such
securities are valued based on market quotes.

Notes Receivable - Related Parties--The  carrying amount approximates fair value
because of similar  rates on issues  offered  to the  Corporation  under some or
similar provisions.

Accrued   Deferred   Compensation  and  Long-Term   Debt--The   carrying  amount
approximates  fair value  because  such  liabilities  are being  valued based on
current market values.

Note 10--Commitments and Contingencies

         Concentrations of Credit Risk

         The Company's financial  instruments that are exposed to concentrations
of credit risk consist  primarily of its cash,  marketable  securities and trade
receivables.

         The  Company's  cash  and  marketable  securities  are in  high-quality
securities  placed  with a wide  array of  institutions  with  high  credit  and
investment  ratings.  This  investment  policy limits the Company's  exposure to
concentrations of credit risk.

         The trade  receivable  balances,  reflecting the Company's  diversified
sources of revenue,  are dispersed across many different  geographic areas. As a
consequence,  concentrations  of credit risk are limited.  The Company routinely
assesses the financial  strength of its customers and generally does not require
collateral to support its credit sales.

Lease Commitment

         The  Company  leases  warehouse  space in its New Jersey  facility to a
tenant under an operating  lease  expiring  December  31, 1999.  Minimum  future
rentals to be received on the lease as of June 30, 1998 are as follows:  1998-99
- $118,443; and 1999-00 - $60,844.
<PAGE>
                         GENERAL MAGNAPLATE CORPORATION
                                       AND
                            WHOLLY-OWNED SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 11--Statement of Cash Flows
                                                      Three Months Ended
                                                         September 30,
                                                  -------------------------
                                                     1998            1997
                                                  ---------       ---------
Supplementary data:
  Interest expense paid                           $   8,328       $       0 
  Income taxes paid                                  51,745          78,830

Non-cash transaction:
  Declaration of dividend payable
     of $.05 and $.05 per share respectively        243,540         245,940

<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Position and Result
         of Operations:


Financial Condition
Liquidity and Capital Resources
Three-Months ended September 1998

     Cash and cash  equivalents  increased to  $1,134,370 at September 30, 1998,
with net cash increasing $166,947 from the $1,301,317 at June 30, 1998. Of this,
$208,553 net cash was provided by the  operating  activities  of the first three
months,  $120,662  was used by  investing  activities  and  $254,838 was used by
financing  activities.  During the three  months,  the  Registrant's  investment
activities  were primarily  comprised of $99,334 used for additions to property,
plant and equipment,  and for additions to patents and  trademarks,  and $25,000
for  additions  to cash  surrender  value-life  insurance.  The net cash used in
financing  activities was principally  from the acquisition of treasury stock of
$229,173, and principal payments on long term debt of $25,665.

     In  September  of 1998,  a $.05 per share  dividend  was  declared  and was
payable on October 9, 1998.

     Working capital of $5,273,281  decreased  $274,124 or 5.2% during the three
months and the working  capital  ratio  increased to 7.25 to 1 from 6.95 to 1 at
June 30,  1998.  The  decrease in working  capital  reflects  the third  quarter
dividend  ($243,539 in the aggregate) and the repurchase of the Company's  stock
discussed above.

     Stockholders'  equity per share at  September  30, 1998  decreased  2.4% to
$2.44 per share  compared  with $2.50 per share at June 30, 1998.  As previously
authorized by the Board,  45,000 shares of GMCC stock were purchased at the cost
of $229,173 and are currently  being held in the  treasury,  leaving the Company
with 4,918,794 shares  outstanding at September 30, 1998. Under the Registrant's
previously  announced  buyback program,  the Company is authorized to repurchase
shares of its common stock from time to time up to the total  purchase  price of
$1,500,000.

     Management  believes that internal cash flow from operations and/or incomes
from marketable  securities are expected to be sufficient to provide the capital
resources  necessary to support future  operating  needs, and does not currently
anticipate any material expenditures that will have significant impact on future
cash flows.


        Quarter --- September 30, 1998 compared with September 30, 1997:


      Sales  decreased  this quarter by 2.2% as reflected in the current  period
sales of  $2,623,234,  a decrease of $57,626  from the same  quarter  last year.
Sales at the New Jersey and Canadian  facilities showed increases of $77,477 and
28,787 respectively.  The Texas, California,  and Wisconsin facilities had lower
sales this quarter  compared to the same period last year. The reduced sales for
the Texas facility  reflect  continued low levels of oil  exploration due to the
low price of crude oil.  Oil  drilling  manufacturers  represent  a  significant
portion  of the  customer  base for the Texas  facility.  Reduced  sales for the
California facility reflect slowdowns in the airframe and electronics industries
<PAGE>
served by the plant,  caused both by the Asian  economic  crises,  which  slowed
orders  of parts for items  such as  aircraft,  and the  continued  decrease  in
military  contracting.  The  Wisconsin  facility's  main customer base is in the
food,  and pulp and paper  industries  which  currently are not expanding  their
manufacturing  plants,  resulting in no expenditures for our surface enhancement
processes  used on new  equipment.  Although  sales were lower  during  July and
August, they improved during September company-wide.

      Royalty and investment and other income for the first quarter were $52,042
and $(18,484) compared with $56,172 and $158,469 from last year's first quarter.
Although  royalty  income is down  slightly,  this is primarily  due to a timing
difference, as not all royalty reports were received from our licensees prior to
quarter end.  Additional  royalties due will be reported in the second  quarter.
Investment  income  decreased  111.7% or  $176,953.  The  Company  maintains  an
investment  portfolio to enhance earnings and provide  liquidity for future cash
needs. The portfolio is composed of equity securities,  U.S. Treasury Securities
and obligations of U.S. Government  agencies and government  sponsored entities,
and corporate debt.

      The Company has adopted  Statement of Financial  Accounting  Standards No.
115,  "Accounting for Certain  Investments in Debt and Equity Securities," (SFAS
115).  Under SFAS 115,  securities are classified as securities held to maturity
based on management's intent and the Company's ability to hold them to maturity.
Such securities are stated at cost,  adjusted for the purpose of selling them in
the near term are classified as trading securities,  which are carried at market
value. Realized gains and losses and gains and losses from marking the portfolio
to market value are included in trading  revenue.  Securities  not classified as
securities  held to maturity or trading  securities are classified as securities
available for sale, and are stated at fair value. Unrealized gains and losses on
securities  available for sale are excluded from results of operations,  and are
reported  as a  separate  component  of  stockholders'  equity,  net  of  taxes.
Securities  classified as available for sale include securities that may be sold
in response to changes in interest rates,  changes in prepayment risks, the need
to increase regulatory capital or other similar requirement.

     Management  determines the appropriate  classification of securities at the
time of  purchase.  At  September  30,  1998,  all of the  Company's  investment
securities were classified as trading securities.

     The $176,953  decline in trading  income is primarily  attributable  to the
mark to market adjustments to the portfolio, reflecting the market volatility of
August and  September.  Although the  Company's  portfolio  will  continue to be
subject to market changes, management believes the portfolio is well diversified
and is a prudent cash management tool for investing the Company's excess cash.

     Reflecting the factors discussed above, gross revenue for the first quarter
of this year totaled  $2,656,792,  a decrease of 8.2% or $238,709  from the same
quarter of last year.

      Total costs and expenses were $2,380,737 in the first quarter, an increase
of $29,849 or 1.3% from the same period last year.  Primary  components of costs
and expenses  included  costs of sales of  $1,295,458  an increase  over cost of
sales of $1,176,214 for the same quarter last year,  selling and  administration
expense of  $904,381,  a decline  from  selling and  administration  expenses of
$1,021,208 in the same quarter of last year, and  depreciation  and amortization
expenses of $ 172,570,  an increase over depreciation and amortization  expenses
of $ 153,466  in the same  quarter of last year.  The  increase  in the costs of
sales  reflects  increased  raw  material  costs  as  the  Company  expanded  it
operations and the Company's efforts to augment its sales force, particularly in
its Canadian facility.
<PAGE>
    Income  before  corporate  income  taxes was  $276,055 in this year's  first
quarter,  a decrease  of $268,558  or 49.3% from the  $544,613  achieved in last
year's first quarter.  Corporate income taxes and the effective tax rate for the
period were $101,100 and 36.6% respectively, compared with $199,600 and 36.7% in
the first quarter of last year.

     Based on the  above,  net  income  in the  first  quarter  of this  year of
$174,955  decreased  $170,058 or 49.3% from the $345,013 in the same period last
year.

     Earnings  per share were down 42.9% in this year's  first  quarter (or $.04
compared to $.07 in last  year's  first  quarter).  During the  quarter,  45,000
shares  of GMCC  stock  were  purchased  and  are  being  held in the  treasury,
resulting in a weighted average of shares outstanding of 4,873,316 compared with
4,918,794  for the same period last year.  However,  the  decrease in net income
more than offset the reduction in average outstanding shares.

Year 2000

      The Company has  recognized  the need to ensure that its computer  systems
will not be adversely  affected by the upcoming  calendar year 2000. The Company
has  assessed  how it may be  impacted  by  Year  2000  and has  formulated  and
commenced  implementation of a comprehensive plan to address known issues to its
computer  systems.  The plan,  as it relates  to  computer  systems,  involves a
combination of software modification,  upgrades and replacement.  The accounting
software  has  already  been  upgraded  at this time at a cost of  $11,000.  The
company estimates that the cost of Year 2000 compliance will not have a material
adverse  effect on future  results of  operations of the Company.  However,  the
Company  cannot  measure  the  impact  that the Year 2000 issue will have on its
vendors, suppliers, customers and other parties with which it conducts business.

Market Risk

     The Company's  Canadian  operations expose the Company to potential foreign
currency  exchange risk on cash flows  related to sales,  expenses and financing
transactions.  The Company  believes its  exposure to currency  rate risk is not
material,  and the Company has not used currency  exchange  contracts to address
this risk.
<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 MAGNAPLATE CORPORATION 
                                                         (Registrant)
                                              
                                             
DATE:  November 10, 1998                           /s/Candida C. Aversenti  
                                                   --------------------     
                                                   Candida C. Aversenti     
                                                   President                
                                                                            
                                                                            
                                                                            
                                                                            
DATE:  November 10, 1998                           /s/Susan E. Neri         
                                                   ----------------         
                                                   Susan E. Neri            
                                                   Chief Accounting Officer