<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

|X|     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
        EXCHANGE ACT OF 1934.

                  FOR THE QUARTERLY PERIOD ENDED JUNE 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 0-5260

                            GENERAL AUTOMATION, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter).

           DELAWARE                                           95-2488811
           --------                                           ----------
(State or other jurisdiction of                       (I.R.S. employer I.D. No.)
 incorporation or organization)

17731 MITCHELL NORTH, IRVINE, CALIFORNIA                        92614
----------------------------------------                        -----
(Address of principal executive offices)                     (Zip code)

Registrant's telephone number including area code:  (949) 250-4800
                                                  ------------------

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 registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days:

No [ ]    Yes  [X]

As of August 6, 1998 there were 9,332,641 shares of common stock of the
Registrant outstanding.

<PAGE>   2

PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                    GENERAL AUTOMATION, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                               RESTATED
                                                                             ------------
                                                        JUNE 30              SEPTEMBER 30
                                                          1998                   1997
                                                      ------------           ------------
<S>                                                   <C>                    <C>         
ASSETS
------

Current Assets:

     Cash                                             $  1,090,000           $    797,000
     Accounts receivable, less allowances of
       $423,000 and $309,000 respectively                5,026,000              5,492,000
     Due from related parties                                3,000                 56,000
     Inventories                                         3,551,000              4,999,000
     Prepaid expenses                                    1,004,000                839,000
     Deferred tax asset                                     (2,000)                     0
                                                      ------------           ------------

          Total current assets                          10,672,000             12,183,000

Long-term receivables                                       82,000                570,000
Property, plant and equipment, net of
 accumulated depreciation and
 amortization                                            2,098,000              2,431,000
Goodwill, net of amortization                            6,103,000              7,085,000
Other assets                                             2,694,000              1,994,000
                                                      ------------           ------------

TOTAL ASSETS                                          $ 21,649,000           $ 24,263,000
                                                      ============           ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                        2

<PAGE>   3

                    GENERAL AUTOMATION, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                             RESTATED
                                                                           ------------
                                                       JUNE 30             SEPTEMBER 30
                                                        1998                   1997
                                                    ------------           ------------
<S>                                                 <C>                       <C>      
LIABILITIES
-----------

Current liabilities:

     Bank line of credit                            $  1,875,000              1,884,000
     Accounts payable                                  4,403,000              3,671,000
     Deferred revenue                                  4,691,000              5,013,000
     Other accrued liabilities                         3,220,000              2,243,000
     Notes payable and current
      maturities of long-term debt                     5,257,000              5,495,000
                                                    ------------           ------------

          Total current liabilities                   19,446,000             18,306,000
                                                    ------------           ------------


Long-term debt, excluding current portion              3,808,000              3,269,000

Total Liabilities                                     23,254,000             21,575,000
                                                    ------------           ------------

SHAREHOLDERS' EQUITY
--------------------

     Common stock par value $.10 per share
     Authorized 30,000,000 shares;
      issued and outstanding 9,332,641
      at June 30, 1998 and 9,232,591
      at September 30, 1997                              933,000                923,000
     Additional paid-in capital                       45,626,000             45,516,000
     Deficit                                         (48,106,000)           (43,672,000)
     Translation adjustment                              (58,000)               (79,000)
                                                    ------------           ------------

TOTAL SHAREHOLDERS' EQUITY                            (1,605,000)             2,688,000
                                                    ------------           ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          $ 21,649,000           $ 24,263,000
                                                    ============           ============
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                        3

<PAGE>   4

                    GENERAL AUTOMATION, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                           * RESTATED
                                                                           ----------
                                                   THREE MONTHS ENDED                      NINE MONTHS ENDED
                                                         JUNE 30,                               JUNE 30,
                                              -----------------------------           ----------------------------
                                                  1998            1997 *                  1998           1997 *
                                              ------------     ------------           ------------    ------------
<S>                                           <C>              <C>                    <C>             <C>         
SALES - PRODUCT                               $  2,628,000     $  2,401,000           $  8,029,000    $  8,174,000
SALES - SERVICE REVENUE                          4,858,000        6,285,000             15,517,000      19,147,000
                                              ------------     ------------           ------------    ------------
                  Total                          7,486,000        8,686,000             23,546,000      27,321,000
                                              ------------     ------------           ------------    ------------

COSTS AND EXPENSES:
 Cost of sales - Product                         2,522,000        1,396,000              6,791,000       5,811,000
 Cost of sales - Service                         2,641,000        2,996,000              9,505,000      10,438,000
 Research and development                          335,000          759,000              1,209,000       2,509,000
 Selling and administrative                      2,788,000        3,119,000              7,838,000       7,808,000
 Depreciation                                      164,000          121,000                522,000         358,000
 Amortization                                      538,000          330,000              1,613,000         990,000
 Other, net                                         (5,000)         424,000                 66,000         524,000
                                              ------------     ------------           ------------    ------------

                                                 8,983,000        9,145,000             27,544,000      28,438,000
                                              ------------     ------------           ------------    ------------

OPERATING INCOME                                (1,497,000)        (459,000)            (3,998,000)     (1,117,000)

Interest income                                      1,000           14,000                  7,000          42,000
Interest expense                                  (129,000)         (89,000)              (383,000)       (237,000)
                                              ------------     ------------           ------------    ------------

     INCOME BEFORE INCOME TAXES                 (1,625,000)        (534,000)            (4,374,000)     (1,312,000)

Provision for income taxes                          11,000         (120,000)                61,000
                                              ------------     ------------           ------------    ------------

NET INCOME                                    $ (1,636,000)    $   (414,000)          $ (4,435,000)   $ (1,312,000)
                                              ============     ============           ============    ============

NET (LOSS) INCOME PER SHARE:
              BASIC                           $      (0.18)    $      (0.05)          $      (0.48)   $      (0.15)

              FULLY DILUTED                   $      (0.18)    $      (0.05)          $      (0.48)   $      (0.15)
                                              ============     ============           ============    ============


WEIGHTED AVERAGE SHARES OUTSTANDING:
              BASIC                              9,295,924        9,016,711              9,284,528       8,972,465

              FULLY DILUTED                      9,295,924        9,016,711              9,284,528       8,972,465
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                        4

<PAGE>   5

                    GENERAL AUTOMATION, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                             F.Y. 1997 HAS BEEN RESTATED
                                                            -----------------------------
                                                              FOR THE NINE MONTHS ENDED
                                                            -----------------------------
                                                              JUNE 30,           JUNE 30,
                                                               1998               1997
                                                            -----------       -----------
<S>                                                         <C>               <C>         
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
NET (LOSS)/INCOME                                           ($4,435,000)      $  (144,000)

Adjustments to reconcile net income (loss) to net cash
 provided by (used in) operating activities:
  Depreciation and amortization                               2,135,000         1,051,000

  Changes in assets and liabilities:
       (Increase)decrease:
           Receivable                                           519,000        (1,236,000)
           Inventories                                        1,448,000           557,000
           Prepaid expenses                                     205,000           (68,000)
          Other assets                                         (698,000)         (111,000)
       Increase (decrease):
          Accounts payable                                      732,000         1,228,000
          Deferred revenue                                     (322,000)          494,000
          Accrued expense                                       977,000          (593,000)
                                                            -----------       -----------
              NET CASH PROVIDED BY (USED IN)
                    OPERATING ACTIVITIES                        561,000         1,178,000

CASH FLOWS (USED IN) INVESTING ACTIVITIES:
  Acquisitions                                                 (282,000)       (1,661,000)
  Purchase of property, plant and equipment                     (49,000)         (150,000)
  Proceeds from disposal of assets
  Capitalized software costs                                   (496,000)
  Investment in subsidiaries
                                                            -----------       -----------

              NET CASH USED IN INVESTING ACTIVITIES            (827,000)       (1,811,000)

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
  Proceeds from issuance of common stock                        120,000            87,000
  Proceeds from issuance of notes                             2,359,000         2,162,000
  Principal payments on notes payable                        (1,978,000)         (580,000)
  Proceeds from sale of SGA Pacific                                                     0
                                                            -----------       -----------
             NET CASH PROVIDED BY (USED IN)
                   FINANCING ACTIVITIES                         501,000         1,669,000
                                                            -----------       -----------

EFFECTS OF EXCHANGE RATE CHANGES ON CASH                         58,000            31,000

Increase (decrease) in cash                                     293,000         1,067,000
Cash at beginning of period                                     797,000           119,000
                                                            -----------       -----------

Cash at end of period                                       $ 1,090,000       $ 1,186,000
                                                            ===========       ===========

      Cash paid during the period for:
          Interest                                          $   383,000       $   237,000
                                                            ===========       ===========

          Income taxes                                      $    61,000           271,000
                                                            ===========       ===========
</TABLE>

         The accompanying notes are an integral part of these statements

                                        5
<PAGE>   6

                   GENERAL AUTOMATION, INC., AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1 - INVENTORY

Inventories consists of the following at June 30, 1998:

Material and purchased sub-assemblies                  $1,991,036

Support systems, spare parts and subassemblies, net     1,089,879

Work in process                                           314,852

Finished goods                                            560,335

Less:  Reserves                                          (404,667)
                                                       ----------

          Total Inventory                              $3,551,425
                                                       ==========

NOTE 2 - DEFERRED REVENUE

Revenues for sales and the associated cost of goods sold are recognized when
product is shipped and no significant obligation remains. Revenues for
maintenance service contracts are recognized on a monthly basis ratable over the
period of the contracts. Cash payments received and billings in advance of
revenue recognition are recorded as a liability "advances from customers" and
recognized as revenue is earned.

NOTE 3 - USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with general
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 the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

NOTE 4 - INTERIM FINANCIAL INFORMATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10Q. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring items) considered
necessary for a fair presentation have been included. Operating results for the
interim period are not necessarily indicative of the results that may be
expected for the fiscal year. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K and related Form 10-K/A.


                                       6
<PAGE>   7

NOTE 5-EARNINGS PER SHARE

The Financial Accounting Standard Board has issued Statement No. 128, "Earnings
per Share" which supersedes APB Opinion No. 15. Statement No. 128 requires the
presentation of basic and diluted earnings per share amounts. Diluted per share
amounts assume the conversion, exercise or issuance of all potential common
stock instruments unless the effect is to reduce a loss or increase the income
per common share from continuing operations. The Company has adopted Statement
No. 128 for the periods ended June 30, 1998. All prior earnings per share
amounts have been restated to conform to the new Statement.

The weighted average number of common shares and common share equivalents
outstanding during the three-month period used to compute basic and diluted
earnings per share is as follows:

<TABLE>
<CAPTION>
                                                   June 30,             June 30,
                                                     1998                 1997
                                                     ----                 ----
<S>                                                <C>                  <C>      
Weighted average common shares used
in computation of basic earnings per share         9,295,924            9,016,711

Effect of dilutive securities:
   Common stock options                                *                    *

Weighted average common and common-
share equivalents used in computation of
diluted earnings per share                         9,295,924            9,016,711
</TABLE>

*Excluded since the effect is anti-dilutive


                                       7
<PAGE>   8

                    GENERAL AUTOMATION, INC. AND SUBSIDIARIES

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

The discussion in this document contains trend analysis and other 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. Actual results could differ materially from those projected in the
forward-looking statements throughout this document.

The Company has previously reported that an internal audit disclosed errors in
financial statements for the years ended September 30, 1995, 1996 and 1997 and
that those financial statements would have to be restated. At the date of the
filing of this report, the Company's independent auditors are completing the
audits of those financial statements. The financial disclosures in this report
are made as if those financial statements have been restated to correct those
errors. Additionally, the comparative quarters for the periods ended June 30,
1998 and 1997 are reported as if the quarter ended June 30, 1997 had been
restated to incorporate the effect of the correction of errors.

(1)  MATERIAL CHANGES IN FINANCIAL CONDITION:

As previously reported, the Company was successful in borrowing funds against
its corporate headquarters in May 1998, which netted proceeds of $860 thousand
to be used for working capital. For the period ended June 30, 1998 this
transaction is reflected in the cash position increasing by 37% over the year
ended September 30, 1997 (RESTATED), to $1.1 million. Total assets at June 30,
1998 vs September 30, 1997 have declined by 11%. This decline is primarily
identified by the increase in cash, mentioned above, combined with a 29% decline
in inventories and another 14% amortization of goodwill. In relation to the
decline in inventories, and as also previously reported, the Company has
consolidated certain operations from its Marlborough, MA operations to its
headquarters in Irvine, CA. During this process, the Company made one-time
write-downs of inventory during the quarter ended June 30, 1998 totaling
approximately $400 thousand, net, due to obsolescence.

The most significant change between the June 30, 1998 vs the September 30, 1997
balance sheets is the decline in total shareholder's equity. For the period
ended June 30, 1998 total shareholder's equity is reported at a deficit of $1.6
million, reflecting not only the prior period adjustments previously reported,
but also the year to date loss reported at June 30, 1998 of $4.4 million. These
losses, combined with the negative capital structure of $1.6 million and a
deficit working capital position at June 30, 1998 of $8.8 million, are
indicative of a deteriorating financial condition and an ill-liquid structure
which management deems critical. In order to address these issues, and as
discussed in previous Form 10-Q filings, management is attempting to
re-negotiate the terms and conditions of business entity acquisitions which took
place in 1995 and 1996. Management is working towards a goal of reaching terms
that will eliminate a material amount of existing debt to these creditors and
concomitantly strengthen the capital structure of the Company.

Management is also working towards terms that will lead towards compliance with
the American Stock Exchange guidelines. As reported, the Exchange has notified
the Company that its continued listing eligibility is being reviewed. If the
Company is ultimately de-listed from the American Stock Exchange, it could have
a material negative impact on the market value of the Company's publicly traded
stock.

                                       8
<PAGE>   9

No assurances can be made at the present time that these negotiations will
ultimately prove successful, and until those negotiations are complete
management is unable to determine the numerical impact those terms would have on
the Company's financial statements. There can also be no assurances that even if
these negotiations are successful and the Company does meet the American Stock
Exchange guidelines, that the Company's stock will continue its listing on the
Exchange.

The Company has also previously reported that its primary bank, Comerica Bank,
had amended its credit line by lowering it to $2.2 million from $5 million. The
bank had made demand for payment in full on this credit facility, though
continues to work with the Company until another lender is found to replace the
bank. Negotiations with a substitute lender are continuing at the date of this
report though no assurances can be given that the Company will be successful in
closing a replacement loan. If the Company is not successful in obtaining a
replacement lender, the on-going operations of the Company would be adversely
effected.

Other balance sheet considerations include the noted 35% increase in "other
assets" at June 30, 1998. The largest component of this increase is attributed
to the capitalization of certain software development costs that relate to the
Company's MvBase product, and other enhancements to existing product.
Additionally, a 44% increase in "other accrued liabilities" is attributed
primarily to an increase of accrued royalty expense of $200 thousand, a
reclassification of debt of approximately $400 thousand from "accounts payable"
and a $200 thousand accrual for expenses related to the previously reported
restatement of financial statements.

Also reported in previous Form 10-Q filings is the Company has been successful
in converting certain short-term trade debt totaling $1.4 million to a long-term
debt amortized over 24 months. Management is continuing its efforts to identify
opportunities of improving its cash management by working closely with key
vendors and customers in this regard.

(2) MATERIAL CHANGES IN RESULTS OF OPERATIONS:

For the three-month period ended June 30, 1998 the Company is reporting a loss
of $1.6 million on total revenues of $7.4 million, compared to the June 30,
1997(RESTATED) loss of $414 thousand on total revenues of $8.7 million. This
translates to a year-to-date nine-month loss of $4.4 million on total revenues
of $23 million, vs. the restated 1997 nine-month loss of $1.3 million on total
revenues of $27 million. Comparing cost of sales during these same time periods
indicates those costs remained relatively flat, which accounts for the increase
in losses for the periods, considering the decline in total revenues. Management
has determined the decline in revenues, a trend which management believes will
continue in fiscal 1998, is attributed to an aging service contract portfolio.
Management believes the best strategy to reverse this declining trend in
revenues is through the acquisition of existing contract portfolios, as well as
focusing its sales force towards finding new opportunities to expand the service
contract business. Both of these concepts have been discussed in prior Form 10-Q
filings, as well as the pending acquisition of NCE, Inc., which the Company
continues to pursue.

Management notes that the loss reported for the three months ended June 30, 1998
includes non-cash charges of amortization and goodwill totaling approximately
$700 thousand, and totals over $2.2 million for the nine months ended June 30,
1998. The loss also includes one-time charges of over $600 thousand in the three
month period ended June 30, 1998 related to inventory and royalty expense
discussed above. Management is mindful of the cuts in expenses related to job
consolidations discussed above which has been reported as an annualized savings
of over $900 thousand. The effects of these savings is becoming apparent in the
lower "research and development" and "selling and administrative" expenses for
the three months ended June 30, 

                                       9
<PAGE>   10

1998 vs June 30, 1997. Management will continue seeking ways of eliminating job
duplication and other over-head costs deemed unnecessary in order to improve the
earnings of the Company.

(3) YEAR 2000 ISSUES AND CONSEQUENCES

As the end of the century draws near, there is concern that Year 2000 technology
problems may wreak havoc on global economies and materially effect the operating
results of companies. General Automation, Inc. is taking the steps necessary to
insure that this potential problem does not adversely affect its operating
results in the future. In this regard, Management is continuing its
as-yet-incomplete assessment of Year 2000 issues.

Because the Company's products are primarily written in licensed versions of the
Pick Operating System, there is effectively no Year 2000 problem due to the
design of the Pick System which took this into account at its inception.
However, the "applications" written for the Pick System, and, other Operating
Systems which host our Pick Data Base implementation, could potentially have
Year 2000 issues. Also, third-parties which the Company has material
relationships with, such as vendors, may, or may not, be Year 2000 compliant. In
both of these instances, the Company is taking the steps necessary to verify
Year 2000 compliance and expects this assessment to be complete within the first
quarter of fiscal 1999.

(a)  Company's State of Readiness

     The Company is confident that its own internal systems are Year 2000
     compliant, or planned up-grades are in place; e.g. accounting, reporting,
     etc. However, the Company is continuing its efforts to verify third party
     compliance, primarily through the use of questionnaires. Areas in which the
     Company will focus its concerns will be:

     o  The equipment and software for its wide-area frame-relay network
     o  Telephone switches and hand-sets 
     o  Corporate-headquarter alarm and entry systems 
     o  E-mail software 
     o  Other peripheral equipment such as fax machines, scanners, printers, etc

(b)  Costs Associated with Year 2000 Issues

     Management has not, at this date, made any estimates of costs associated
     with this procedure. However, Management does anticipate that selling Year
     2000 compliant software-upgrades will actually be an income-producer in the
     near future. The Company has not made estimates yet as to the potential
     income to be gained from these upgrades.

(c)  Risks Associated with Year 2000 Issues

     Management is unaware of any material risk's associated with Year 2000
     issues at the present time. Management does expect that, as previously
     discussed, additional revenues could be generated as a result of selling
     product up-grades that address this issue.

(d)  Contingency Plans

     Because the complete assessment of Year 2000 issues is incomplete, the
     Company has not developed contingency plans for this issue. Management
     expects the assessment and any related necessary contingency plans will be
     complete within the first quarter of its fiscal 1999.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

N/A

                                      10
<PAGE>   11

                    GENERAL AUTOMATION, INC. AND SUBSIDIARIES

                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

None.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.

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)  Exhibits

     27   Financial Data Schedule

(b)  Reports on Form 8-K

     None.


                                   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 Automation, Inc.
------------------------
Registrant



  /s/ Jane M. Christie                                    August 18, 1998
----------------------                                    ---------------
Jane M. Christie
President & Chief Executive Officer


  /s/ Richard H. Nance                                    August 18, 1998
----------------------                                    ---------------
Richard H. Nance
Vice President & Chief Financial Officer

                                      11