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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    FORM 10-Q

(Mark One)

 X  Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
    Act of 1934 FOR THE PERIOD ENDED MARCH 31, 1997

                                       OR

    Transition report pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934

COMMISSION FILE NUMBER: 000-02677

                           GAP INSTRUMENT CORPORATION


         New York                                    11-1781357
State or other jurisdiction of           (I.R.S. Employer Identification Number)
incorporation or organization


100 Horse Block Rd., Yaphank, New York                  11980
(Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code: (516) 924-1700

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 May 1, 1997:
<TABLE>
<CAPTION>
Common Stock: $.000001 par value                          111,290,603
----------------------------------                      ----------------
<S>                                                     <C>
            Class                                       Number of Shares
</TABLE>

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                               GAP INSTRUMENT INC.


                                      Index
<TABLE>
<CAPTION>
                                                                                   Page No.
                                                                                   --------
PART I.      Financial Information
<S>                                                                                  <C>
             Item 1.              Financial Statements                                3

                                  Condensed Statements of Income -
                                  Quarters Ended December 31,1996 and
                                  March 31, 1997 And March 31, and
                                  June 30, 1996                                       3

                                  Condensed Balance Sheets -
                                  March 31, 1997 and
                                  June 30, 1996                                       4

                                  Condensed Statements of Cash Flows -
                                  Six Months Ended March 31, 1997
                                  And June 30, 1996 (Second Fiscal Quarter            5

                                  Notes to Condensed Financial Statements             6

             Item 2.              Management's Discussion and Analysis of
                                  Results of Operations and Financial
                                  Condition                                           6

PART II.     Other Information

             Item 1.              Legal Proceedings                                   6

             Item 6.              Exhibits and Reports on Form 8-K                    6

             Signatures                                                               7
</TABLE>


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<PAGE>   3
PART I               FINANCIAL INFORMATION

ITEM 1.              Condensed Financial Statements

                               GAP INSTRUMENT INC.
                          CONDENSED STATEMENT OF INCOME
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                          Three Months Ended                 Six Months Ended
                                                          ------------------                 ----------------
                                                     December 31,       March 31,       March 31,         June 30,
                                                         1996             1996            1997             1996
                                                     -----------      -----------      -----------      -----------
<S>                                                  <C>              <C>              <C>              <C>
Net sales                                            $    92,279      $    35,126      $    96,543      $   124,932

Costs and Expenses
   Cost of sales                                          28,286           25,881           54,232           43,938
     Selling, general and administrative expense          79,355           30,720          137,603           74,807
                                                     -----------      -----------      -----------      -----------

           Total costs and expenses                      107,641           56,601          191,835          118,745
                                                     -----------      -----------      -----------      -----------

           Net Income (loss) from operations             (15,362)         (21,475)         (95,292)           6,187

Reorganization expenses - professional fees                                                   --             (6,500)
                                                                                       -----------      -----------

           Net Income (Loss)                             (15,362)         (21,475)         (95,292)            (313)

Accumulated deficit - beginning                      $(3,982,881)     $(3,563,503)     $(3,982,881)     $(3,563,503)
                                                     -----------      -----------      -----------      -----------

Accumulated deficit - end                            $(3,998,243)     $(3,584,978)     $(4,078,173)     $(3,563,816)
                                                     -----------      -----------      -----------      -----------

Earnings per share:
           Net income (loss) per share               $       .00      $       .00      $       .00      $       .00
                                                     -----------      -----------      -----------      -----------
</TABLE>



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                               GAP INSTRUMENT INC.
                            CONDENSED BALANCE SHEETS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                            Second Fiscal Quarter Ended
                                                            ---------------------------
                                                             March 31,         June 30,
                                                               1997             1996
                                                           -----------      -----------
<S>                                                        <C>              <C>
           ASSETS
CURRENT ASSETS
           Cash and cash equivalents                       $     6,542      $       435
           Accounts receivable                                  10,509           26,055
                                                           -----------      -----------
                     Total Current Assets                       17,051           26,490
PROPERTY AND EQUIPMENT, at cost, less
           accumulated depreciation                             44,317           34,139
                                                           -----------      -----------
                     Total Current Assets                  $    61,368      $    60,629
                                                           -----------      -----------

LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
           Accounts payable and accrued expenses           $   174,514      $    19,127
           Liabilities resulting from Plan of
              Reorganization, current maturities                37,730           47,194
           Deferred revenue and customer deposits               66,963             --
           Due to shareholders                                 114,000           66,000
                                                           -----------      -----------
                     Total Current Liabilities             $   393,207      $   132,321
OTHER LIABILITIES
           Liabilities resulting from Plan of
              Reorganization, less current maturities          150,918          170,484
                                                           -----------      -----------
                     Total Liabilities                     $   544,125      $   302,805
                                                           -----------      -----------

COMMITMENTS AND CONTINGENCIES (Note 3)

SHAREHOLDERS' DEFICIT
           Common stock: 604,000,000 shares authorized
           At 6/30/96:  $.00001 par value, 108,543,353
             shares issued and outstanding                                        1,085
           At 3/31/97: $.000001 par value, 111,290,603
             shares issued and outstanding                         111
           Additional paid-in capital                        3,595,305        3,341,717
           Accumulated deficit                              (4,078,173)      (3,584,978)
                                                           -----------      -----------
                     Total Shareholders' Deficit              (482,757)        (242,176)
                                                           -----------      -----------

                     TOTAL LIABILITIES AND
                     SHAREHOLDERS' DEFICIT                 $    61,368      $    60,629
                                                           -----------      -----------
</TABLE>

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                              GAP INSTRUMENT CORP.

                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                   FOR THE SECOND QUARTER OF THE FISCAL YEARS
                     ENDED MARCH 31, 1997 AND JUNE 30, 1996
<TABLE>
<CAPTION>
                                                              Second Fiscal Quarter Ended
                                                              ---------------------------
                                                                March 31,     June 30,
                                                                  1997          1996
                                                              ------------   ----------
<S>                                                            <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
           Net income (loss)                                   $(95,292)     $   (313)
                                                               --------      --------

           Changes in assets and liabilities:
             Accounts receivable                                 61,626        35,725
             Other assets                                          --         (13,033)
             Deferred revenue and customer deposits              36,371
             Accounts payable and accrued expenses               (2,086)      (11,080)
                                                               --------      --------
                               Total adjustments                 95,911        11,612

                     Net cash provided by operating
                       activities                                   619        11,299
                                                               --------      --------

CASH FLOWS FROM FINANCING ACTIVITIES
           Shareholder loans                                     13,000        10,000
           Repayment of reorganization debt                     (28,061)         --
           Liabilities from Plan of Reorganization                 --         (19,311)
                                                               --------      --------

                     Net cash used by financing activities      (15,061)       (9,311)
                                                               --------      --------

NET INCREASE (DECREASE) IN CASH                                 (14,442)        1,988

CASH - beginning                                                 20,984        (1,553)
                                                               --------      --------

CASH - end                                                     $  6,542      $    435
                                                               --------      --------
</TABLE>


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                               GAP INSTRUMENT INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

1.         The condensed financial statements at March 31, 1997 are unaudited
           and reflect all adjustments which are, in the opinion of management,
           necessary for a fair presentation of the financial position and
           operating results for the interim period. All such adjustments are of
           a normal recurring nature. The results of operations for the interim
           period shown in this report is not necessarily indicative of results
           to be expected for the fiscal year.

2.         The Company has changed its fiscal year from December 31 to September
           30. The accompanying financial statements include unaudited financial
           statements for the second quarter of the fiscal 1997 year from
           October 1, 1996 to March 31, 1997, unaudited financial statements for
           the second quarter of the fiscal 1996 year from January 1, 1996 to
           June 30, 1996.

3.         The Company is a party to litigation involving a former officer of
           the Company. Management believes that the settlement of the claim
           will not have a material adverse effect on the Company's financial
           position or results of operations.


                              GAP INSTRUMENT CORP.


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


Six Months Ended March 31, 1997 and June 30, 1996

The Company's second quarter net loss of $95,292 compares unfavorably to the
second quarter of the prior nine-month fiscal 1996 year in which a net loss of
$313 was reported. The decrease is due primarily to the repayment of liabilities
resulting from the Plan of Reorganization. These liabilities are discussed fully
in MD&A submitted with Form 10-K for the fiscal year ending September 30, 1996
and should be read in conjunction with the accompanying financials for this
interim period.

Net sales for the first and second quarters were $96,543 and $124,932 for March
31, 1997 and June 30, 1996, respectively. Selling, general, and administrative
expenses of $137,603 and $74,807 for the same periods indicates a rise in the
expense of diversifying the Company's business from strictly a military product
manufacturer to a Value Added Network for the Federal Government and as an
Internet Service provider (ISP) for federal contractors.

As GAP Instrument Corp. continues in the diversification process, it should be
noted that subscriptions for the network service are increasing as shown by the
rise in deferred revenue.


PART II    OTHER INFORMATION

ITEM 1.    Legal Proceedings

On September 24, 1993, the Company filed petitions for relief under chapter 11
of the federal bankruptcy laws in the United States Bankruptcy court for the
Eastern district of New York, The Company operated under the Court's protection
until October 5, 1995, when the Court confirmed the Company's plan of
reorganization. Pursuant to plan, the Company was relieved of all long-term debt
agreements. The Company's remaining liabilities were negotiated. The company
recognized an extraordinary gain of $293,870, representing the difference
between the carrying value of the liabilities and the amounts required to be
repaid by the Company. The resulting liabilities are reflected in the balance
sheet as "Liabilities Resulting from the Plan of Reorganization."

The Company is a party to litigation involving a former officer of the Company.
Management believes that the settlement of the claim will not have a material
adverse effect on the Company's financial position or results of operations.

ITEM 6.    Exhibits and Reports on Form 8-K


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           A.        Exhibits

                     None.

           B.        Forms 8-K

                     The Company filed a Form 8-K dated November 8, 1996,
                     reporting changes in registrant's certifying accountant.

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.

Dated: February 14, 1997


GAP INSTRUMENT INC.
(Registrant)

/S/ James M.  Edwardson
   --------------------------------------
James M.  Edwardson
Chairman of the Board of Directors,
and Chief Operating Officer

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