PART I

                       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 August 31, 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
                  September 30, 1996         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 -
                   August 31, 1996  and May 31, 1996.............................................................4

                  Condensed Consolidated Statements of Operations -
                  Three Months Ended August 31, 1996  and August 31, 1995,
                   respectively..................................................................................5

                  Condensed Consolidated Statements of Cash Flows -
                  Three Months Ended August 31, 1996  and
                   August 31, 1995...............................................................................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 AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                         August 31,          May, 31
                                                                           1996                1996
                                                                        (Unaudited)         (Audited)
<S> <C>
                                Assets

Current Assets:
        Cash and cash equivalents                                      $   153,600         $   364,100
        Accounts receivable, net of allowance, $178,000 and $249,700     2,236,400           1,325,500
        Inventories                                                      2,906,400           3,505,900
        Prepaid expenses and other                                          28,900              24,600
                                                                       -----------         -----------
        Total Current Assets                                             5,325,300           5,220,100
                                                                       -----------         -----------

Property, Plant and Equipment                                            6,899,500           6,869,300
Less:  Accumulated Depreciation                                         (5,475,600)         (5,387,600)
                                                                       -----------         -----------
                                                                         1,423,900           1,481,700
Other Assets, in 1996, principally capitalized software of
         $193,200 and $206,100                                             311,200             324,000
                                                                       -----------         -----------
        Total Assets                                                   $ 7,060,400         $ 7,025,800
                                                                       ===========         ===========
               Liablilities and Stockholders' Deficit

Current Liabilities:
        Advances from factor                                           $   317,000         $   146,500
        Current maturities of long-term debt                               218,600             244,800
        Accounts payable, trade                                          1,429,000           1,541,600
        Accrued expenses and other payables                              1,195,400           1,224,400
                                                                      ------------        ------------
        Total Current Liabilities                                        3,160,000           3,157,300
                                                                      ------------        ------------

Long-Term debt - less current maturities (including
        $8,982,900 and $8,966,700 due to controlling shareholder)        9,778,300           9,800,100
Other long-term liabilities                                                282,200             292,300
                                                                      ------------        ------------
        Total Long-Term Liabilities                                     10,060,500          10,092,400
                                                                      ------------        ------------
        Total Liabilities                                               13,220,500          13,249,700
                                                                      ------------        ------------
Stockholders' Deficit:
        Common Stock, $0.25 par value, 50,000,000 and 10,000,000         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                                            (14,655,800)        (14,719,600)
                                                                      ------------        ------------
                                                                        (5,709,900)         (5,773,700)
        Less:  Unearned ESOP shares                                             --                  --
               Treasury Stock, at cost (526,632 shares)                   (450,200)           (450,200)
                                                                      ------------        ------------
        Total Stockholders' Deficit                                     (6,160,100)         (6,223,900)
                                                                      ------------        ------------
        Total Liabilities and Stockholders' Deficit                   $  7,060,400        $  7,025,800
                                                                      ============        ============
</TABLE>


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

                                       4

<PAGE>

                 GENERAL KINETICS INCORPORATED AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                                       Three Months Ended
                                                 August 31,          August 31,
                                                    1996                1995

Net Sales                                       $ 3,490,000         $ 4,900,800
Cost of Sales                                     2,484,900           3,576,100
                                                -----------         -----------
Gross Profit                                      1,005,100           1,324,700
                                                -----------         -----------

Selling, General & Administrative                   654,300             807,500

Product Research, Development & Improvement         181,600             257,400
                                                -----------         -----------

Total Operating Expenses                            835,900           1,064,900
                                                -----------         -----------

Operating Income                                    169,200             259,800

Interest Expense                                    105,400             111,700
                                                -----------         -----------
Net Income                                      $    63,800         $   148,100
                                                ===========         ===========
Net Earnings per share                          $      0.00         $      0.01
                                                ===========         ===========
Weighted Average Number of Common Shares
  and Dilutive Equivalents Outstanding           25,508,925          25,508,925
                                                ===========         ===========


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

                                       5

<PAGE>

                 GENERAL KINETICS INCORPORATED AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                       Three Months Ended
                                                  August 31,         August 31,
                                                    1996                1995

Cash Flows From Operating Activities:
Net Income                                       $   63,800         $   148,100
  Adjustments to reconcile net income
  to net cash used in operating activities:
    Depreciation and amortization                   100,800             118,600
    Gain on disposal of equipment                        --                (100)
    ESOP compensation                                    --               3,300
    Amortization of bond discount                    16,200              16,200
  (Increase) Decrease in Assets:
    Accounts Receivable                            (910,900)            475,200
    Inventories                                     599,500              20,800
    Prepaid Expenses                                 (4,300)             30,600
    Other assets - Software Development Costs            --             (53,700)
    Other assets                                         --               4,700
  Increase (Decrease) in Liabilities:
    Accounts Payable - Trade                       (112,600)           (255,100)
    Accrued Expenses                                (29,000)            102,000
    Other Long Term Liabilities                     (10,100)             (9,600)
                                                 ----------         -----------
        Net cash provided by/(used) in
          Operating Activites                      (286,600)            601,000
                                                 ----------         -----------

Cash Flows from Investing Activities:
   Acquisition of property, plant and equipment     (30,200)            (33,300)
   Net proceeds from sale of property, plant
     and equipment                                       --               1,000
                                                 ----------         -----------
        Net cash used in Investing Activities       (30,200)            (32,300)
                                                 ----------         -----------

Cash Flows from Financing Activities:
  Advances from Factor/Borrowings
    on Demand Notes Payable                         733,600             632,700
  Repayments of Advances from Factor/
    Demand Notes Payable                           (563,100)         (1,037,000)
  Borrowings on Long Term Debt                           --                  --
  Repayments on Long Term Debt                      (64,200)            (48,200)
                                                 ----------         -----------
        Net cash used in Financing Activities       106,300            (452,500)
                                                 ----------         -----------

Net (decrease) increase in cash and cash
  equivalents                                      (210,500)            116,200

Cash and Cash Equivalents:  Beginning of Period     364,100             212,200
                                                 ----------         -----------
Cash and Cash Equivalents:  End of Period        $  153,600         $   328,400
                                                 ==========         ===========
Supplemental Disclosures of Cash Flow Information:
  Cash paid during the year for:
    Interest                                     $  105,400         $    98,100
    Income Taxes                                         --                  --
Supplemental Disclosures of Non Cash Investing
  and Financing Activities:
    Reduction in paid in capital based on fair market
      value of ESOP shares                       $       --         $    71,650


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

                                       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 ended  August 31,  1996,  and August 31, 1995,  include the
accounts of General Kinetics Incorporated 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 period ended August 31,
1996, are not necessarily  indicative of the results to be expected for the full
year.


Note 2 - Proposed Sale of the Secure Communications Division

         In July  1996,  the  Company  reached a  preliminary  understanding  in
principle to sell the assets of its Secure Communications Division ("SCD") to an
undisclosed third party. The proposed  transaction remains subject to conclusion
and execution of a definitive agreement,  receipt of any required approvals, and
other contingencies.  A previous preliminary  understanding  reached in December
1995 to sell the  division  to  another  third  party  had not  progressed  to a
definitive  agreement.  The Company has not been actively attempting to sell the
division, but has considered certain offers as presented to it.

         Under the terms of the preliminary understanding, the assets to be sold
consist primarily of accounts  receivable,  inventories,  capitalized  software,
property, plant and equipment. These assets are offset by certain liabilities to
be acquired by the purchaser, consisting primarily of accounts payable and other
accrued liabilities related to the division.

         Based on the terms of the preliminary  understanding,  the Company does
not anticipate a loss on the sale of the division.

                                       7

<PAGE>

         Net sales of SCD for the three  months  ended  August 31, 1996 and 1995
were   approximately   $850,900  and  $2.3   million,   respectively.   The  net
income/(loss)  for the  division  for the three months ended August 31, 1996 and
1995 were approximately $(34,800) and $10,100,  respectively.  These amounts are
included in the accompanying income statement.

         Assets and  liabilities  proposed to be sold consisted of the following
at August 31 and May 31, 1996:

                                     August 31, 1996            May 31, 1996
                                     ---------------            ------------

Accounts receivable                    $  604,710                $  429,839
Inventories                             2,374,755                 2,490,382
Prepaid expenses                            6,910                     6,910
Property, plant and Equip.                172,425                   198,567
Other assets                              296,579                   304,429
                                        ---------                 ---------
         Total assets                   3,455,379                 3,429,667
                                        ---------                 ---------
Accounts payable                          526,151                   692,798
Accrued expenses                          400,930                   419,163
                                        ---------                 ---------
         Net assets to be sold         $2,528,299                $2,317,716
                                       ==========                ==========


         The  accompanying  balance sheets and statements of operations have not
been restated to reflect the potential transaction.



Note 3 - Commitments and Contingencies

   No significant changes.



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, Gutzwiller & Partner, AG now being
renamed RABO Investment Management AG ("Gutzwiller").  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 three months ended August 31, 1996 and
1995,  both primary and fully diluted  earnings per share  amounted to less than
$0.01 and $0.01, respectively.

                                       8

<PAGE>

Note 5 - Notes Payable

At May 31 and August 31, 1996 convertible  debentures  issued to Gutzwiller 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 August 31, 1996,
however, the lender has agreed to waive the violations through May 31, 1997. The
debt has been  classified  as a  current  liability  at August  31,  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 $141,800 was outstanding at August 31,
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

Three Months Ended August 31, 1996, Compared to Three Months Ended August 31,
1995

   Net sales for the three months ended August 31, 1996 were  approximately $3.5
million  compared  to net sales of  approximately  $4.9  million for the quarter
ended August 31, 1995. The Electronic  Enclosure  Division's net sales increased
from  approximately  $2.4  million  for the  quarter  ended  August 31,  1995 to
approximately $2.6 million for the quarter ended August 31, 1996. However, sales
in the Secure Communications Division were $850,900 for the quarter ended August
31, 1996 compared to approximately $2.3 million in the corresponding  quarter of
the prior fiscal year. This reduction occurred principally because sales for the
quarter ended August 31, 1995 included  approximately  $1.5 million in shipments
under a contract with a supplier of fax machines to the German government. Final
deliveries  under this contract were  completed in April 1996, and there were no
deliveries under this contract for the quarter ended August 31, 1996.

Sales, General & Administrative  costs were approximately  $654,300 in the first
quarter of fiscal  1996 to as compared  to  approximately  $807,500 in the first
quarter of the prior fiscal year.  The  reduction  was  principally  due to cost
savings measures undertaken in the Secure Communications  Division to offset the
reduction in sales discussed above.

   For the three  months ended August 31,  1996,  the Company  showed  operating
income of  approximately  $169,200  compared to operating income of $259,800 for
the comparable  quarter of the prior year. The decrease was due principally to a
decrease  in net  income  in SCD of  approximately  $45,000  and an  expense  of
approximately  $59,000 during the quarter ended August 31, 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.




Liquidity and Capital Resources

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  in the  first  quarter  of  fiscal  1997.  In

                                       10

<PAGE>

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 as compared to the prior three fiscal years.  The division must continue to
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.   If  the
Company  does  not  sell  its  Secure Communications  Division  in  accordance
with  the  preliminary   understanding discussed above,  successful  operations
will depend,  to a large extent, on the success of the new TS-21  tactical  fax
machine and the  division's  ability to market the secured communications
products overseas and to domestic markets.

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 July 1996, the Company  reached a preliminary  understanding  in principle to
sell its Secure  Communications  Division to an  undisclosed  third  party.  The
proposed transaction remains subject to conclusion and execution of a definitive
agreement,  receipt of any  required  approvals,  and other  contingencies.  The
Company  has  not  been  actively  attempting  to  sell  the  division,  but has
considered   certain   offers  as  presented  to  it.  A  previous   preliminary
understanding reached on December 12, 1995 to sell the division to another third
party had not progressed to a definitive agreement.

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 August 31, 1996, the balance due Reservoir was $317,000.  The Company expects
to  continue  to  draw  on this  credit  facility  in the  future  to  alleviate
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.  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,  but such deferral  appears  unlikely to continue absent changes in
the  Company's  circumstances,  and there can be no  assurance  that a return to
compliance will be accomplished or that the listing will be continued.

The Company  anticipates that  implementation of the 1-for-3 reverse stock split
recommended by the American Stock Exchange and approved by

                                       11

<PAGE>

shareholders  at the 1995 Annual  Meeting  would be delayed  until after the
closing of the  proposed transaction to sell the Secure Communications Division.

Management believes that cash on hand as of August 31, 1996 ($153,600),  careful
management of operating costs and cash  disbursements,  and accounts  receivable
financing to alleviate short term cash requirements should enable the Company to
meet its cash requirements through May 31, 1997.

                                       12

<PAGE>

                          PART II   OTHER INFORMATION


Item 6 - Exhibits and Reports on Form 8-K


   (b) Reports of Form 8-K

       None

                                       13

<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: October 15, 1996                        /s/ Larry M. Heimendinger
     ------------------------------           -------------------------------
                                              Chairman of the Board
                                              (Principal Executive Officer)



Date: October 15, 1996                        /s/ Sandy B. Sewitch
     ------------------------------           -------------------------------
                                              Chief Financial Officer
                                              (Principal Accounting Officer and
                                              Principal Financial Officer)

                                       14